The good, the bad and the ugly

Report on Business's look back at the crazy, the foolish and the brilliant of 2008 continues.

POLICY FUMBLES

The Alan Greenspan Prize for Bubble Blowing ... to Iceland. Take one small, open country. Mix in heavy flows of foreign money, runaway real estate prices and inflation, followed by stagflation. Now add a banking sector that adopted the same rigorous lending standards as Crazy Murray's Payday Loan Store. Recipe yields: A run on the currency, yo-yoing interest rates and one scary, petri-dish-sized example of what may still lie ahead for some larger economies. Chancellorship of the Mike

Tyson School of Negotiation ... to Newfoundland's favourite pugilist, Danny Williams. The Premier figures a recession is the perfect time for more political thespianism, sending prospective investors fleeing to provinces that aren't governed by madmen. His move to expropriate assets from nearly broke AbitibiBowater - retaliation for its closing of a newsprint mill - has sparked a nasty NAFTA fight over compensation. But what does he care if he ruins Newfoundland's reputation? Soon enough they'll be rolling in money, because oil's going to be $100 (U.S.) a barrel forever - right, Danny boy? Danny?

The Gordon Ramsay Award for Fretting About Your Soufflé While the Kitchen Burns ... to assorted central bankers, but especially to Jean-Claude Trichet of the European Central Bank. Let's see. Banks from Spain to Latvia are stressed to the breaking point, and the U.S. economic outlook is collapsing like a $2 lawn chair.

So what does Mr. Trichet do? He raises interest rates in the euro zone to the highest level in seven years, worrying about inflation. Oops. U.K. euro-skeptics would be gloating, if not that Gordon Brown now runs virtually the entire British banking sector by remote control.

The Honey, I Shrunk My Credibility Trophy ... a teeny-tiny piece of hardware to Finance Minister Jim Flaherty. No one will blame the guy for running a deficit in a recession - but maybe it wasn't such a wise idea to pledge in blood that you'd never have a deficit. Or to bash the Ontario government for giving money to the auto companies. Or to try to yank political party subsidies that represent 0.01 per cent of federal spending and claim it's an austerity measure. Has there ever been a Finance Minister flip-flop three times in a month before? It almost makes one nostalgic for the Michael Wilson years.

HOT BRANDS

Aeroplan: It's hard to believe that Gerry Schwartz once nearly bought 35 per cent of this business for just $245-million (Canadian). Freed from the millstone of Air Canada, now the Aeroplan logo's everywhere - even on your orange juice. The business was worth $5-billion before the meltdown of '08. Next step: Turning Aeroplan into a rare Canadian-based global brand. We'd never bet against Rupert Duchesne.

Metro: Let Loblaw spend tens of millions on consultants. The Metro guys know that the grocery business is 10-per-cent strategy, 90-per-cent execution. Just get the damn products on the shelves, baby, and price 'em right. And they're so good at it that they can deep six the ancient Dominion and A&P brands without fearing a customer backlash, taking the Metro name into Ontario. So far, investors love it.

Cirque du Soleil: Nothing seems to stop the Montreal entertainment company from new financial acrobatics. Not recession. Not depression. Not Las Vegas hotels so empty there are tumbleweeds rolling through the hallways. Nothing.

BlackBerry Storm: Good luck finding one. Did someone say iPhone? That's soooo 2007.

Tata Nano: Sure, the Tata group has run into political snags in its quest to build the world's first microcar for the masses. In India, what doesn't? At the equivalent of $2,500, the fuel-sipper will be the ultimate egalitarian transportation choice. Al Gore will hate all those new vehicles - unless Americans start replacing their SUVs with imported Nanos.

SIGNS OF THE TIMES

The Sam Zell Prize for Best Real Estate Deal ... goes to a gas company, EnCana Corp. It sold the Bow tower, which will be the tallest skyscraper in Western Canada, to H&R Real Estate Investment Trust in early 2007, hitting the peak of the commercial property market. H&R compounded its bad timing by dragging its feet on the financing and ran into the teeth of the credit crisis. It finally raised $200-million last week - at 11.5-per-cent interest from the folks at Fairfax Financial.

The Just Desserts Award (sponsored by the Canadian mining industry) ... to Xstrata's Mick Davis, the blustering mining boss who now owns half of Sudbury, thanks to his successful bid to buy Falconbridge two years ago, which busted up a merger with Inco. Mr. Davis sneered at those who questioned his strategy of buying anything that moved, for cash, late in the commodities bull market. Now Xstrata shares are down 86 per cent from their peak and its major shareholder, Glencore International, is thought to be under strain. If Glencore must sell, wouldn't that mean Xstrata itself is in play? Somewhere, Derek Pannell is smiling.

Six to watch in 2009

Caisse de dépôt et placement du Québec: "Crisis ridden" describes the Caisse well. Three CEOs in a row have left as bombs went off. Jean-Claude Scraire departed in '02 after poor performance in the tech and media bust. The likeable Henri-Paul Rousseau split in the middle of the ABCP mess. Now new boss Richard Guay is on medical leave amid rumours that losses have reached biblical proportions. If the investment portfolio keeps blowing up, how long can Quebec avoid a serious debate about blowing the Caisse up?

Bankruptcy lawyers: Now that the mergers-and-acquisitions lawyers have been sidelined, it's time for a different group of legalists to shine: the ones whose favourite initials are CCAA (Companies' Creditors Arrangement Act). AbitibiBowater, Nortel Networks and a cast of a hundred retailers are on the watch list. Guaranteed prediction for 2009: Insolvency experts will not be seeing their children much.

Nadir Mohamed: No one can really replace Ted Rogers. But if Mr. Mohamed isn't the board's choice for CEO, they'd better have the Messiah's name on a contract instead, or Rogers Communications shareholders will be taking to the streets with pitchforks. Sorry, Edward, you may have the genes, but you're still too green.

Hudson's Bay Co.: The 300-year turnaround story grinds on ... and on and on and on. George Heller couldn't do it. Jerry Zucker died, but there was precious little evidence he would have done it. Can new owner, NRDC Equity Partners? Or will the Bay become the Eaton's of 2009? If it disappears, will anyone outside the financial press even care?

Darren Entwistle: By all accounts, Mr. Intensity has had a miserable couple of years. The Telus income trust got batted down by Ottawa. His play for BCE fizzled. The feds compounded his woes by tilting the wireless auction against the incumbents. Telus TV hasn't exactly set the West on fire - advantage Shaw. And now the stock market gives the company about as much respect as it gives Bell, which isn't much. What will he do before his head explodes in frustration?

Leo de Bever: There's a new gorilla on the Canadian investment scene. The Alberta government lured the former Teachers executive back from Australia to run Alberta Investment Management Corp. The mission: build a western version of the Caisse, only more competent. Now he has $70-billion in his control at a time when Albertans are desperate for some evidence that they haven't squandered yet another oil boom. Pressure's on.