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Falconbridge up next
The Globe and Mail -- Caroline Alphonso
After the rash of big-name earnings reports this week, investors get a bit of a breather today. There are still a handful of companies reporting their quarterly results today, but not quite as many or as well-known.
One mining company up at bat is Toronto-based Falconbridge Ltd., which is to report its third-quarter earnings.
On average, analysts polled by Boston-based research firm Thomson Financial/First Call are expecting the company to earn a profit of 7 cents a share, compared with a loss of 15 cents a year earlier. There's certainly a wide range of estimates among analysts, with some calling for a loss of 2 cents a share to others forecasting Falconbridge will earn as much as 17 cents in the quarter.
There are two things weighing on Falconbridge at present.
First, base metal companies, such as Falconbridge, are dependent on a cyclical recovery and currently there's considerable uncertainty about the global economy. Many analysts believe mining companies will post strong revenue and profit growth as industrial production ramps up with an improving economy.
Also, putting a bit of pressure on Falconbridge's stock is the creeping takeover by Noranda Inc. Investors doubt they will make money as a result of a takeover bid from Falconbridge's parent company. Noranda owns 57 per cent of Falconbridge.
Brian MacArthur, an analyst at UBS Warburg Inc., said he expects third-quarter earnings for Falconbridge to be "unfavourably impacted" by a decline in nickel and copper prices. This, combined with lower volumes because of maintenance or vacation shutdowns will certainly affect Falconbridge's earnings, he said.
Trade surplus slippage
Economists are expecting Canada's trade surplus for August, out this morning, to fall modestly from the previous month.
After ballooning in July to $4.9-billion, on the back of heavy demand for forestry products and autos, the trade gap -- the difference between exports and imports -- is forecast to come in at about $4.7-billion.
Economists at BMO Nesbitt Burns Inc. say that shipments were weaker in August because of some cooling off in auto production and slower U.S. industrial activity. Although they expect the shipments number to stay positive, it will certainly be weaker. Higher energy prices helped, but look for most exports to be hit by weaker U.S. demand.
Despite this bump in the road, economists say that even with the recent slowdown in U.S. demand, Canadian manufacturing and exports have remained generally strong.
Marcos... thanks for the word of caution-- I looked at Claude Resources before the infamous PR. Back then it had a market cap exceeding $70 million.
Expensive then.
Maybe still expensive, even now... they've hedged one fifth of their production at Seabee - and like you were saying about their falling production - a fifth hedged could easily become a quarter, even a third. Who knows they may turn this thing around in the fourth quarter, I don't care. I bought it because it was technically oversold-- there should be a flip here today and some beer money tonight.
...otherwise I'll be on the wagon. <vbg>
Regards,
Michael
Larry Berman, chief technical strategist from CIBC is calling for at least a 3 month rally, if not a 6 month rally!
Yikes!!!
Anyway-- we still have a war to deal with... and the markets are somewhere North of manic.
Regards,
Michael
Jim... I like Matt, but unfortunately he declared war on SI. I just hope he doesn't sell his soul just to keep a few good writers.
About Edmonton, yeah-- I live here all right. Born and raised in Timmins Ontario, the infamous gold district where 60 million or so ounces of gold have been mined since the beginning of the century.
As for the weather, lol! It is sooooo warm-- us driller types fear for our jobs. Bring on the frost, bring on the ice roads and give us some of that -40 cold that spurs an intensive drilling season.
Regards,
Michael
...about your test, you'll probably survive-- if you keep it within the confines of your thread, and yes... I consider this YOUR thread. But I wouldn't try it anywhere else. FWIW, I find it distasteful and without respect to the very people that worked so hard to build this site.
Your getting the word out, your a great writer-- just keep the aimless bullshit to a minimum because the very people that read you now with undivided attention will all of a sudden become deaf and dumb.
Regards,
Michael
It's a Linwood Home ... American made. I was just at a home show last weekend and they had a booth there.
http://www.linwoodhomes.com/
Regards,
Michael
Kastel, this is my first mania-- I have a tendency of buying when the market is weak, and selling out when the market is even weaker. For what ever it's worth, real-estate has been a piss poor investment for me-- hit and miss at best.
If you still remember, early in the year I sold my condominium, thinking that the world was going to go bust within a 6 month time frame. Anyway, I found myself homeless after putting the unit for sale and then seeing it sold the next freaking day.
Too much Puplava, maybe even too much coffee.
I sold too soon. I realised that when I went out and looked for somewhere to rent. But it all worked out, bought the old house a week later - a cozy two story with a North/South facing 50'x150' lot in the downtown core of Edmonton.
Love the house, love the area and if silver ever gets to $150 an ounce, I'll knock the old barn down and get a new one built on my perfect lot.
Regards,
Michael
bonchance... if Marcos does object, have you ever thought of starting your own thread? You could call it "Canadian Natural Resources" (water, oil, gas, coal, uranium, pulp, mining)-- I'll even post on it.
Be sure to put it in the free zone.
In keeping with your natural gas picks...
http://www.bofasecurities.com/featuredresearch/content/docs/StorageFlash101702.pdf
Regards,
Michael
Kastel... Novicourt is on my list of stocks to look at-- but I haven't yet, sorry. Just looked at the chart... Is it hedged by any chance?
...bought CRJ-TSX #msg-543259
Regards,
Michael
Anyone notice that Northgate Ex. has traded over 3 million shares?
Positive spin or not... the house down the street, a freaking corner lot no-less sold in less of a week. The reason it took so long? There was a bidding war.
...keeping in mind that this is a fifty year old neighbourhood.
Regards,
Michael
Jim... Am I seeing a little green on my watchlist? I noticed NEM flipped into the plus column with a whole thirty cent lead. For-the-heck-of-it, I added a little Claude Resources-- talk about oversold or what? Yippee...
I think the last paragraph is the most important...
The housing market stood up well in the U.S. economic downturn and through the slow recovery, producing record levels of sales and mortgage lending as interest rates on the popular 30-year fixed-rate mortgage scraped lows unseen since the mid-1960s.
Is it sustainable?
Regards,
Michael
yeah... I couldn't of said it any better myself. Insurance, dammit! The trick here is to buy low, sell high... selling today would be the reverse of that timely advice.
If it makes this thread feel any better, Cummins debt was reduced to junk yesterday.
Regards,
Michael
Yikes!
Best And Worst Stocks Since Enron
http://www.forbes.com/2002/10/17/1017enron.html
Kinross to bail out Russian unit
The Globe and Mail -- Amy Carmichael
TORONTO -- Kinross Gold Corp. announced yesterday that it will spend $45.4-million (U.S.) to bail its Russian subsidiary out of debt and put an end to lawsuits launched by angry shareholders.
The Toronto-based gold producer said it will buy out the Russian shareholders and take 100-per-cent ownership of Omolon Gold Mining Co. The move will allow the shareholders to repay their debt to provincial and federal Russian governments. The three groups had entered into a partnership, putting $43-million into Omolon.
Kinross invested the same amount, buying a 50-per-cent stake.
Gordon McCreary, Kinross's vice-president of corporate development, said that buying out the shareholders was the right thing to do, especially now.
"It's a very robust economic project," he said. "The mine is at the end of its processing life. It's in what is generally called a harvest period and is generating a fair amount of cash flow."
The money to buy out the Russian shareholders is coming out of Omolon's cash on hand, Mr. McCreary said, not Kinross's accounts, making it even more financially viable.
Kinross, which struck a merger deal this spring to grow its international operations, may seek to reduce its ownership down the line, he said. The company is looking at further developments in the Russian province and more partnerships with the Magadan provincial government.
In a release, Kinross said it expects all lawsuits launched by the Russian shareholders will end once the deal, brokered by the Ministry of Finance of the Russian Federation, is completed.
This transaction is expected to close by mid-November.
The open-pit mining phase of the high-grade Kubaka deposit at Omolon's Birkachan mine concluded this month and the mill will continue to process stockpiled and other ore.
Resumption of exploration at Birkachan and other nearby targets is expected to restart in November.
Underlying the dispute are unpaid loans made by the Magadan administration to Omolon's Russian shareholders at the time Omolon was capitalized. The shareholders were unable to repay the loans and have been working to shift the burden of repayment to Omolon, Kinross said.
Two shareholders launched lawsuits against Omolon alleging that the shares they received were flawed as a result of registration deficiencies, therefore entitling shareholders to their money back with interest.
Kinross alleges the lawsuits have been encouraged by the Magadan Administration, the shareholders' major creditor.
Just as draft language of an agreement was being settled in September, one of the Russian shareholders obtained an order to freeze Omolon's bank accounts and gold inventory pending final resolution of its lawsuit.
Earlier this year, Kinross announced it was merging with TVX Gold Inc. of Toronto and Echo Bay Mines Ltd. of Englewood, Colo., in a deal worth more than $1.9-billion. The transaction will create the world's seventh-largest gold producer, with annual production of two million ounces a year.
In addition, less than 5 per cent of the proposed new company's gold reserves are committed at future set prices, giving the company the chance to profit from rising gold prices. Additionally, nearly two-thirds of annual production would be in the United States and Canada.
Gas guzzled despite economic gloom
Travelers driving, not flying; Love affair with SUVs continue
NEW YORK, Oct. 16 — U.S. motorists are gobbling up gasoline at break-neck pace due to a continuing “drive not fly” trend since last year’s Sept. 11 attacks and an ongoing love affair with gas-guzzling sport utility vehicles.
http://www.msnbc.com/news/822051.asp?0si=-
Tim... I'll have to spend some time to look this up, but someone over at SI wrote an excellent piece on the cost of generating electricity. Apparently, the energy it takes to build the infrastructure required for solar power-- is worth more than it can ever generate. Things like the cement foundation, the aluminum and the glass involved in the panels-- the upkeep? Even wind power is at the bottom of the efficiency scale-- these alternatives don't have stored energy within them like oil, gas, coal and uranium.
Regards,
Michael
Hmmm... this is getting a little beyond my comprehension-- got candles and a word burning stove? In our future, we'll see clusters of little companies after the big ones are finally bk'd. I hope you have a strong stomach.
-- I'm still looking at stink bidding some natural gas plays.
Regards,
Michael
Jim... you nailed it, yet again... my post to Tim was in fact a reminder that oil & gas don't have a CEO with a golden parachute and employees with stock options. There isn't a trading desk 4000 meters into the ground-- pipelines are made out of steel and not out of trees that grow within the walls of JPM.
Real tangible things are emerging from the morass of nonsensical casino bullshit endeavors.
They can't be trapped forever.
Regards,
Michael
Tim, I see some deals in the making. By looking at this chart it's hard to argue that "weather" is the primary driver for the energy sector.
Chart:
I've been looking at averaging my way back into some of the Alberta explorers, they seem to do quite well in the winter months-- starting at around December. CNQ is levered to heavy oil production.
Here's a chart from a company that's levered to natural gas.
Here's a chart from Canada's largest contract driller:
Anyway, as you can see, gold isn't the only game in town. IMHO, the oil and gas sector is much more tradeble and forgiving for the "not-so-experienced" speculator. By going long here-- odds are in your favour ... you'll eventually be compensated with a capital gain by just holding on if the entry point was a little sloppy. Gold on the other hand, can absolutely kill you if you insist on LTBH.
Regards,
Michael
After Jim's gone, I'll help you turn "Beat The Street" into a gloom and doom thread-- with the eventual goal of turning you into a gold bug. <vbg>
Regards,
Michael
...speaking of pop cans-- Alcan down 3-1/2% - Alcoa down 3%
lol... I founded a cycling club-- which eventually became the largest in North America. I retired from racing about 5 years ago-- still ride a cyclocross bike.
...stink bidding natural gas stocks, no success, yet.
Regards,
Michael
Norilsk To Try Avoid Palladium Sale On Spot Market In '02-03
10:15 EST Wednesday, Oct 16, 2002
MOSCOW -(Dow Jones)- Russian metals giant Norilsk Nickel Metals and Mining ( R.GMK) will not sell any palladium on the spot market in 2002 and will try to avoid it in 2003, Maxim Finsky, deputy chairman of the board, said Wednesday.
"We will leave some small volume of palladium for the spot market in 2003, but will use it uniquely if we need to stabilize the market," Finsky said.
He said Norilsk prefers long-term contracts and has already drawn up contracts which almost exhausted the palladium quota for 2003.
Norilsk last week reached a multiyear agreement with General Motors Corp. (GM) to sell platinum, palladium and rhodium.
"We have a number of contracts like this with other (automobile) companies, but we have agreed not to make them public," Finsky said.
Commenting on the loan backed by nickel exports in August, Finsky said that the company does not plan to attract any loans backed by other metals.
"We have worked out a mechanism to issue bonds, backed by metals' revenues, and can issue them when we consider necessary but not in the next year," Finsky said.
Finsky welcomes the government drafting legislation on making the platinum group metals more transparent.
"The information will give the market a chance to evaluate the capitalization of our company, as Norilsk is greatly undervalued," he said.
Company Web site: http://www.nornik.ru
-By Anna Ivanova-Galitsina, Dow Jones Newswires; 7095-974-8055; anna.galitsina@dowjones.com (This story was originally published by Dow Jones Newswires) Copyright (c) 2002 Dow Jones & Company, Inc. All Rights Reserved
actually they're comparable... they both leave your head spinning.
Placer Dome To Explore Wheaton River's El Oro Project
10/15/02
TORONTO, ONTARIO, Oct 15, 2002 (CCNMatthews via COMTEX) --
Wheaton River Minerals Ltd. ("Wheaton") is pleased to announce the signing of an agreement with Placer Dome CLA Ltd. ("Placer") on the El Oro Project, 150 kilometres northwest of Mexico City, in Mexico. The agreement calls for Placer to conduct exploration on the project, with staged expenditures of US$4 million by December 1, 2006 to earn a 75% interest. Placer can earn a further 10% interest by completing a bankable feasibility study. Upon completion of the feasibility study, Wheaton will also have the right to purchase back 10%, effectively maintaining its position at 25%.
The El Oro Project was acquired by Wheaton as one of the more than 40 exploration projects throughout Mexico included in the Minas Luismin, S.A. de C.V. acquisition, completed on June 19, 2002. El Oro is well known as one of the best examples of a world class bonanza style epithermal gold-silver vein system, with historic production totalling over 8 million ounces of gold and 110 million ounces of silver. The last significant production from the El Oro camp was in the 1920's, and modern exploration methods have yet to be tested in the area. Placer intends to employ proprietary exploration methods in the search for parallel vein systems.
Wheaton continues to entertain joint venture partners interested in advancing other projects in its Mexican exploration portfolio.
http://www.stockhouse.com/news/news.asp?newsid=1355865
Antamina Mine Chairman: Peru Politics Discouraging Mining
Dow Jones
LIMA -(Dow Jones)- Political developments in Peru are discouraging investments, and in the current climate no company would risk opening another mine the size of the giant Antamina copper-zinc mine, Compania Minera Antamina SA chairman Augusto Baertl said Tuesday.
"In the present conditions, I don't think that an Antamina would be started," he told reporters after a conference.
"With the uncertainty that is growing there won't be new investments, not only from abroad but neither from Peruvians," Baertl added.
The mine in the central Andes Mountains went into commercial production in October last year, requiring an investment of $2.3 billion.
Mining company officials have pointed to changes in labor laws and in the taxation structure as discouraging future investments.
Baertl said that new regional governments, to be elected in November, could create uncertainty if these governments try to obtain tax revenues by turning to corporations.
"There are a series of changes in the relationship between the state and companies as well as between the companies and workers, promoted by the political groups, that cause a lot of concerns," he said.
The company estimates average annual output of 991,000 tons of copper concentrates and 510,000 metric tons of zinc concentrates for the first ten years of the mine.
Beartl said that production was meeting forecast levels but that low prices for copper and zinc were negatively affecting the company's cash flows.
"But we are adjusting all budgets to a minimum in order to meet with the debt payments that that company has in terms of principle as well as for interest. It won't cause problems, but evidently such low copper prices as well as for zinc will impact the company," he said.
Antamina also said Tuesday it had signed a contract to supply copper concentrates worth $12 million a year to Spain's Atlantic Copper SA, a wholly owned smelting unit of Freeport-McMoRan Copper & Gold Inc. (FCX).
"It is a nominal contract with the aim of establishing a new commercial relation with a Spanish smelter that could open possibilities in the future," Baertl said.
Antamina is owned by BHP Billiton (BHP) with 33.75%; Noranda Inc. (NRD) with 33.75%; Teck Cominco Corp. (TEK.B) with 22.5% and Mitsubishi Corp. (J.MIB) with 10%.
-By Robert Kozak, Dow Jones Newswires; 511-221-7050; peru@dowjones.com
bc... no need to apologise, we're taxed to death from various levels of government-- it's like a big blurr.
Have you seen the latest from Research Capital?
Gold Research Weekly
http://www.researchcapital.com/docid.cfm?docid=3305
Regards,
Michael
Just out of curiosity... anyone stopped out of their gold stocks? I actually made some money here today, which tells you how oversold the they really are. FWIW, keep an eye out (maybe two) on Western Copper; they must be close to an update at their Penasquito Silver Project.
-
-
Nice run for the copper miners today:
Aur Resources leading the charge with 16% -- followed closely by Phelps Dodge at 14% and Noranda with a 8%
Copper Chart:
7.5% QST? and isn't it inclusive (harmonized) with the GST?
Regards,
Michael
Gold retains alure in troubled times
Coins become hot seller as battered investors seek safe harbour: INVESTING
----------- EDMONTON JOURNAL
Gold -- a traditional "safe haven" in times of financial skittishness -- is selling like hotcakes.
One gauge of gold's revival as an investment commodity is retail sales of the Royal Canadian Mint's solid gold Maple Leaf coin.
"We surpassed our annual sales target less than halfway through the year," says mint spokeswoman Diane Plouffe-Reardon.
The goal was to sell 200,000 ounces. By the end of September, sales of the coins were 258 per cent ahead of the same period of 2001.
"It's a normal trend," Plouffe-Reardon says. "When the (stock) markets are down, real estate and precious metals sales go up."
Within Canada, Alberta is usually a very good market for gold, said Patricia Mohr, an economist and commodities specialist with Scotiabank, which sells coins and one-ounce wafers.
The absence of a provincial sales tax in Alberta makes it the preferred place to pony up $550 or so to buy a Maple Leaf coin.
"It's been good for business," says Ray Nieman, owner of National Pride Coin & Stamp on Edmonton's south side. But the key, he said, is price fluctuation.
At the beginning of the year, gold was selling for under $280 US per ounce. Last month, it flirted with $330 US before settling back a couple of dimes.
"We welcome (price) activity," Nieman says. "Business is stagnant when the price doesn't move."
Some customers have been buying as a hedge against falling stock prices, says Alex Krimberg, co-owner of Alberta International Bullion Dealers & Refiners. "Others are putting it in gold because of concern about the (Canadian) dollar."
Neither Nieman nor Krimberg had comparative figures on sales this year and last.
But Krimberg says he has several customers who have returned to buy 10, 20 or even 50 coins at a time.
The investment interest in gold coins hasn't carried over to jewelry sales, however. The World Gold Council says worldwide sales of gold for jewelry declined by 1.7 per cent in the second quarter of 2002, while investment sales of gold rose 3.6 per cent.
"We tell customers not to buy jewelry as an investment," says Katrin Durand, general manager at Adamas Goldsmiths. The labour required to craft a ring or pendant makes them, ounce for ounce, far more expensive than a gold wafer.
Still, the market for rings and other baubles has been strong in Edmonton, she says, and sale of gold jewelry has been steady.
The new-found gold fever has also boosted shares of companies that mine it, says Bill Belovay, manager of BMO's precious metals fund. The Toronto Stock Exchange's sub-index of gold-company shares has increased by 12 per cent in 2002, while most other indices have tanked.
"There's not enough gold mined annually in the world to meet demand."
The current demand is often met by using gold from national banks, many of which have been selling off their bullion for years.
Nor is that situation likely to change any time soon, Belovay added. It would take a price of $380 US per ounce to bring significantly more mine production on stream, he says.
bavery@thejournal.southam.ca
http://www.canada.com/edmonton/edmontonjournal/info/business/story.html?id={EDBA3887-FFAE-4513-AC24-...
Bonchance... the next time I post something from the Financial Times I'll post the whole thing. The problem is that it's a same day link, after that it goes into the archives which is only viewed by subscribers.
The article you posted is pretty much the same thing, but only different. :)
Thanks
Michael
Augie... have added your PPO/MACD post to my "keep" list too.
Nice work -- thanks.
Yeah... the mining thread is a little thin-- but it's busier than what I've seen at SI... lately anyway. Seems like Russ has moved on and Claude Cormier is finally giving his newsletter readers some confidentiality.
Regards,
Michael
Yeah... I used to have the "Jailhouse" bookmarked, but then who wants to read a pissing contest, day in- day out... All I know is you become free when the issue is resolved.
It's actually a pretty good idea.
Ork... check in with Bob, I'm not sure of the exact amount-- but it's for a limited time only.
Regards,
Michael
Jim... and about Canada-- 90% of what we export goes into your country-- and half of that dollar value is energy. Manufacturing, construction and agriculture make up a paltry 25% of what is done here and the other seventy five percent?
...services.
There's an old saying, when the U.S. sneezes-- Canada catches a cold.
Regards,
Michael
Steeped in debt: Good times end, spending doesn't
By Shirleen Holt
Seattle Times business reporter
Michael Ealem had been working for a local Internet company eight months when he got laid off earlier this year. It was his fourth pink slip in two years.
Fed up and neck-deep in debt, he delivered a parting comment to his boss: "Do you have any idea what this is going to do to me?"
Four months later, the 44-year-old computer programmer still is unemployed and wondering how he's going to pay off more than $40,000 in loans and credit cards.
Ealem isn't the only worker who rode Washington's economy from the top to the bottom and ended up in financial distress.
Unexpected job loss, badly timed expenses — or in some cases, reckless spending — have plunged many once highly paid workers deeply into debt.
In Washington, personal bankruptcies rose 20 percent in 2001, and there are few signs that things have slowed this year. It's possible that some cases were filed in anticipation of tougher bankruptcy rules, now stalled in Congress, but there are other signs borrowers are in crisis.
Home foreclosures have nearly doubled in the past two years, from .58 percent in the first quarter of 2000 to 1.04 percent two years later, according to the Mortgage Brokers Association.
The debt clinic offering free help by the King County Bar Association is serving so many people it has boosted its stable of volunteer lawyers from three a night to five.
They handle typical cases — such as low-income families staving off aggressive creditors — but they're also seeing more laid-off workers who are living off their credit cards, said program manager Cathie Caldwell.
One computer engineer from South King County, who earned up to $125,000 annually before losing his job last October, says he has racked up more than $70,000 in credit-card debt in the past year.
A chunk went to pay for an unexpected expense for his family of three, the rest to pay the bills, including the minimums on credit cards. The engineer, who asked not to be identified, put his home on the market and sold his two cars. But he worries his family's fragile finances will collapse if he doesn't get a full-time job soon.
"We're bleeding cash at the rate of about $2,000 monthly," he says.
Recent Chapter 7 bankruptcy filings (which basically erases credit-card debt and allows filers to keep their cars and homes) illustrate how bad things got for some, whether it was living beyond their means, losing a job or being hit with unexpected medical bills:
• A Boeing production worker earning $48,000 a year owed $78,000 for credit cards, car loans, back rent and back taxes.
• A former Boeing worker who lost his job in the layoffs had debt of $93,658, most of it from credit cards.
• An unemployed software engineer from Redmond (an occupation that typically pays from $70,000 to $120,000 annually) had charged $136,277 on his credit cards.
• A merchandise manager from Everett earning $61,000 a year racked up $21,500 in medical bills that he couldn't pay.
A Lynnwood bankruptcy lawyer, Denice Patrick, works with dot-com refugees, laid-off Boeing workers (at least one a day) and others who once made well above the area's average $43,000 annual household income.
When they lost their jobs, those once manageable credit-card balances became overwhelming.
"If you've got a $1,500 mortgage payment, how much do you have left over after you buy food, pay utilities and make your car payment?" Patrick said.
Credit Catch-22s
Few people were willing to talk publicly about their finances or about going deeply into debt, but Ealem says he didn't spend lavishly. Yet like many computer programmers who thought their skills would always be in demand, he didn't save much, either.
He owes on his student loans from the University of Texas and balances on credit cards he's had since college.
"I've got a carton of milk on there that I got back in Houston in 1986," he quips.
Seattle's economy was buoyant when he decided to move to Washington in the summer of 2000.
The software company that hired him (Ealem won't name the companies he's worked for, citing clauses in his contracts that limit what he can say about them) offered a good salary and 20,000 shares in stock options.
What moving expenses the company didn't cover, Ealem charged on credit cards. He racked up more charges on an extended-stay motel in Bellevue until he and his then-wife, an administrative assistant, moved into a $1,600-a-month rental house.
Four months after he was hired, Ealem lost his job.
"All of the sudden we went from $120,000 to $40,000."
Ealem quickly got a job at another software company and his wife lost her job. In the next 18 months, Ealem would be laid off twice more, go through a divorce, and charge more moving expenses, this time for a $900-a-month studio apartment in Kirkland.
He lost his last job June 14.
Today, he can no longer afford his apartment but he can't afford to leave it, either.
"It's the Catch-22s that get you. It takes two of my unemployment checks to pay my rent. In order to get out of this lease, it would cost me $800, which is more than I have on hand at any one time."
He also can't sell his 1995 Volvo until he can come up with $700 for repairs. Feeling guilty about driving a car about to be repossessed (he's behind on the $367 monthly payments), he now takes the bus.
He ignores calls with "I.D. Unknown"; they may be creditors. His television long gone, he now watches episodes of "Buffy the Vampire Slayer" at a friend's house. He has no health insurance.
He's applied for all sorts of jobs — bookstores, a supermarket — but he doesn't hold out much hope that he'll be hired. "They're going to take one look at me and go 'Pfft, this guy is going to be gone as a soon as another job opens up.' "
He thought about going back to school, but he earned too much last year to qualify for student loans. The one option Ealem won't consider is bankruptcy. "I want to pay off these bills. I'm no deadbeat."
Spending continues
Unlike past recessions when consumers tightened their belts, many people have continued their spending patterns throughout this downturn. This is helping the economy, but it also is contributing to a dramatic rise in credit-card debt.
Today the average credit-card balance is $8,562, compared with an $2,985 average in 1990, according to the National Foundation for Credit Counseling.
More significantly, the percentage of a household's disposable income that goes to paying that debt rose from 16 percent in the early 1990s to 22 percent today.
Even in Washington, where the unemployment rate is at 7.2 percent (second in the nation behind Alaska's 7.3 percent) and companies are churning out pink slips at an alarming rate, the consumption continues.
"They buy boats, they buy cars, they buy houses. Buying, buying, buying," says Mike Alderson, chief executive of Smart Solutions, a Seattle credit-counseling agency.
"It's 'Oh, I'll get a $100,000 job. I'll get the money.' And then it's not there."
The results of giddy spending turn up in bankruptcy filings for Chapter 7.
One man, a sales liquidator from Snohomish County, claimed an astounding $1 million in liabilities, including unpaid notes on two 2000 Mercedes-Benzes.
A man from Mukilteo who listed his occupation as a salesman amassed more than $250,000 in charges with 26 credit cards.
Until recently, few people worried about paying off their credit cards and car loans. The economy was booming and median household incomes in Washington were growing, from $44,562 in 1997 to $46,007 in 2000. It wasn't until 2001 that the figure dropped to $43,101, pushed downward by the slumps in aerospace, telecommunications and technology.
"These are folks who had good income, were highly skilled, and all of the sudden the world just collapsed on them," says Michael Staten, director of Georgetown University's Credit Research Center. "There was really no reason for them to expect unemployment."
'Robbing Peter to pay Paul'
Tamara Chomenko-Cicero never thought she'd lose her $65,000-a-year job as a technical trainer with Primus Knowledge Solutions in Seattle.
She took the job in August 2000 because it seemed more stable than her contract arrangement with Boeing, where she also was a technical trainer.
A 35-year-old single mother, she lived with her two children in a home in Stanwood and drove a BMW 535i.
When the company laid her off eight months later, Chomenko-Cicero's comfortable income vanished. She got child support and unemployment insurance, but it wasn't enough to cover basic household expenses of $2,500 a month. She also had to make payments on her student loans and credit cards she'd run up while on business travel.
Soon, she was using those credit cards for household necessities, but she couldn't afford the minimum payments.
"I was robbing Peter to pay Paul. It got to the point where I was trying to put my utility bills on there, too."
She tapped her relatives and fiancé for money, something she found humiliating. Then she'd lay in bed at night and worry, conjuring up ideas to get herself out of this jam. "I'll do anything," she recalls thinking. "I'll waitress. I'll go hold up a bank."
The bottom came when her fiancé (now husband, John Cicero) drove her home one afternoon. She looked in the driveway and gasped.
"I said, 'Oh my god. The car is gone!' "
Her BMW had been repossessed.
Tired of a financial struggle that had lasted nearly a year, Chomenko-Cicero filed Chapter 7 in March.
She has since found a job with an established law firm, Davis Wright Tremaine, in Seattle, and she's rebuilding her finances. They don't include the biweekly manicures or $255 color and cuts she used to get at the beauty salon.
But she also has little patience with those who would criticize her for getting into such a mess.
"You hear that saying, 'Put a little away for a rainy day.' But nothing on the face of the planet can prepare you for the loss of a job or the whole change of your world. Nothing."
Shirleen Holt: 206-464-8316 or sholt@seattletimes.com.
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