This leads to the question, how low can it go?  Some analysts think it might not be long until gas producers are paying consumers to take the product off their hands.  Storage tanks are completely full and there is no where to send the massive amounts of gas being produced.  This is definitely not the ideal situation as the economics of many of these gas wells allow for profits to be made even at these rock low prices, but with demand where it is, there is really no choice but for prices to continue to decline until exploration halts and wells are shut in.

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Currently the US debt is sitting at $15 trillion dollars, and the interest payments owned by the government on that debt is either 0 or near zero.  In 1998, it took roughly 14% of the tax revenue to the interest owed on the debt. In 2004, it took only 9% of the tax revenue to pay back the interest on the debt. In 2011, it took slightly more but still less than 1998, with 10%.

That means for a dime on every tax dollar, the US gets to float 15 trillion dollars in debt. That is what we call leverage. *In 1993, it took 45% of Canadian tax revenue to pay the government debt when we prime minister Chrétien put  the brakes on spending. * But more importantly, what this really means is that with all the extra spending since 2008, the American tax payers only had to pay a penny for every dollar spent. That is a great deal in my mind. Well….it is a great deal until interest rates catch up…wait doesn’t this sound kind of familiar…kind of like the housing crisis…but that argument is for another day. Today we are focusing on the fact that the US has the ability to borrow and spend with great freedom.

This brings around the point that the US dollar is just another debt instrument that does not pay interest but meaning  can be redeemed for face value at any time, with no penalty. If other countries were to be concerned about rising interest rates and decided to stop buying US debt, they would be swapping them for US dollars. This is why Chinese debt holders have been exchange dollars in the open market and buying US treasuries securities, because they would rather be holding interest baring bonds then non interest baring dollars.

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The Canada Audit Regulator has review the work by Canadian accounting firms who audit the statements of Chinese companies listing on the TSX, and have labeled the reviews as disappointing.

After three months of reviews done on Chinese clients, the Audit regulator has released statements saying that they found major gaps in the audit work preformed. For example, one audit firm has been restricted from taking on any more Chinese clients. Several other firms have been required to do additional work on 12 of the files they reviewed.

“The disappointment we had was a lot of things that we felt were fundamental auditing processes and procedures were just not applied,” CPAB chief executive officer Brian Hunt said in an interview, “It’s just a disappointment on our part that things we would consider fundamental here in Canada just were not done, and I’m at somewhat of a loss to explain it.” Hunt would not comment if Sino Forest was among the files reviewed.

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The efforts come at a time when Harper is working on returning to a balanced budget which also includes making efforts to sustain social programs and fiscal positions over the next generation. He added that the center piece of the Canadian retirement system is the Canada Pension Plan which is currently fully funded.

Before jumping on the band wagon of people yelling and screaming at the proposed changes, lets talk about how the OAS works.

OAS is sent out to all seniors, but it is a income test benefit and depending on your income, your OAS payment may be clawed. Currently any senior who earns less than $69,000 a month gets full monthly OAS payment to a max of $540. Once your income is above $112, 000 your OAS is completely eliminated.

The Guaranteed Income supplement is paid to seniors who make less than $16, 368 and pays a maximum of $732 per month. Since Harper just raised this amount it is unlikely that he will change this.

Although the Harper government hasn’t announced the changes they will be making they did say that the focus of the program would be on medium and long term OAS collectors and ensuring the stability of the program. Current OAS collectors will continue to collect with out any changes.

This morning on the CBC eye opener, discussed the changes and their discussion with Jim Yih, a personal finance blogger went to the major changes 2012 (previously announced and passed).

Changes that will be happening in 2012:

Everyone will be receiving a CPP raise, since they have been building a surplus, making it easier to qualify for the maximum.

Currently you can take CPP at 60, without stopping work. To prevent it from draining, CPP will be increasing the penalty for collect it early (before your 65 birthday). Previously it was a 30% reduction, and it will be phased in over five years to a 36% discount.

They are also encouraging people to leave their CPP longer, so if you take it after 65, you could get a 42% bonus if you waited until 70.

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Union is based out of Ottawa, and provides individual annuities, life and accident insurance in five provinces, but mainly services a Quebec customer base. The company has been struggling over the last couple of years and cited poor investment returns over the last two years that brought them to the edge.

Regulators put pressure on Union to fix it problems, but they were unable to successfully raise capital or to sell themselves. At one point, potential buyers said they would have to be paid to take on their policies liabilities.

Union was able to increase their business volume which increased their revenue but it wasn’t enough to keep regulators happy. They were forced to wind up after their capital levels fell from 178% to 120%. Depending on the company capital levels need to be between 150-200%.

Grant Thorton, the law office in charge of Union is currently focused on transferring the policies to another insurance company to ensure policy holders continue to be serviced.

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The resulting sales drove up net income per share from 45 cents a share to 50 cents, beating the average estimate of 49 cents. Helping to drive the stores sales were their instant coffee, keurig brand single serve coffees and the low-calorie peppermint mocha. They ended their first quarter on a high note, stating that it was their most successful holiday season to date.

Ending this quarter on a high note, the store is planning on rolling out their product line which will bring happy hour to Starbucks. The store plans on introduction beer and wine to their stores after a successful experiment in six locations tried to increase traffic during the afternoon and evenings. The stores also paired the new drinks with a new menu that included fruit and cheese plates as well as focaccia with olive oil.

Starbucks was also making news today for being more expensive in Canada then the United States due to the higher-raw ingredient costs especially milk.

Starbucks ended the day up 1.19% at $47.48.

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Milk futures jumped 41% in 2011 due to  an increase in rising populations, increased exports and rising world incomes. Milk futures reached their highs in August 2011, but still ended the year as the number one commodity performer.

Following along with milk is dry whey, a milk by product used in sports drinks, snacks and baby formula. Whey priced increased 75.13%.

Lots of analyst believes that milk exports will rise in Canada, Mexico, Japan, China, Philippines and Indonesia, the six biggest buyers in the world.

Even though milk future rose during the year, it didn’t necessarily mean bigger pay days for the farmers, as feed prices also increased throughout the year.

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The company knew that they departure from Japan would be short lived and believe that  a new franchise or joint venture partner would provide significant opportunity for the company, they grossed $70 million in sales in 2009.

The companies invested $200 million on the plan to return to Japan, and are betting it all on their signature burger. The Foie Gras burger has the traditional square patty topped with truffle butter.  Such a dish would not be popular in North America, but following McDonalds lead on localized menu items, the Japanese diner appreciates the localized menu.

Wendy is the world’s 3^rd largest quick service hamburger company and owns a variety of corporations such as Arbys, T.J Cinnamons and Pasta Connection in their business portfolio. Their company trades on the NYSE under the symbol WEN. Their first location in Japan will be located in Tokyo’s Omotesando area and they plan to open 100 restaurants over the next five years and believe the country can support up to 700 restaurants. They will be rolling out their restaurants through a joint venture with Higa Industries who operated 180 Domino Restaurants.

Wendy’s was down 1.30% today to $5.34 US.

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After China announced that they were going to reduce export of rare metals in 2010, foreign firms began worrying about access to supplies and began looking for alternative deposits, which has led to mining expeditions around the world, with the majority searching in Canada.

Earlier this week Toyota announce that they would be entering a joint venture project with  Matamec to develop a rare earth mine in Quebec.  If the joint venture with Matamec turns out to be economically viable, Toyota will finance the entire dig and use the entire output to produce their hybrid vehicles.

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This was the biggest ECB infusion of credit in the 13 years of the  Euro. There was great excitement over the  additional 189 billion euros lent over the estimated 300 billion euros the market was expecting, mainly because it highlighted the needs of the European banks.

The Bank of England policy makers have left the option open for more cash to be available to the economy in February due to the risk of another recession from slower consumer spending and the euro crisis.

The news leave the possibility for a third round of quantitative easing which could happen in February. The European crisis, is also expected to create a third round in the United States as well as in Japan and the other banks in the European Union

It is wildly regarded that the second round of quantitative easing failed to solve the economic problems.

In other news, Rim turned down offers from Amazon and Microsoft to buy their struggling company.  Rim staff have reported that they prefer to fix their problems on their own.  Rim is up 10.54% on the news.

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