We understand that financial news can become monotonous on a week-to-week basis. This company is merging with that company; CEO so-and-so is being indicted with this or that. So, to break this repetitive streak, this week's Water Cooler Finance will not mention British Petroleum, oil spills or Barack Obama. (Did you miss last week's recap? Check out Water Cooler Finance: The iPhone Launch, Buffett's Lunch And BP's Lashing.)
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Thinking Outside of the Spill
President Barack Obama's administration has successfully lobbied to have British Petroleum (NYSE:BP) place $20 billion into a fund that will be used to pay for the company's recent oil spill. Not without criticism over his seemingly disconnected handling of the matter, Obama's demand for BP to take financial and environmental responsibility for the spill came to a head in a televised speech last Tuesday. Obama, who has been running a "clean energy" policy since he was in the election race, said the money will be used by BP to purchase and operate machinery that should be able to clean and dispose of up to 90% of the oil that was spilled into the Gulf of Mexico.
The $20 billion fund will be independently operated. And while thousands of organizations and individuals have submitted ideas to both stop the leak and clean up the oil - ranging from using human hair as an absorbent to multi-million dollar plugging and casing systems - only a small number are being seriously considered.
As of publication time, the solution being considered most favorably is a device created over 20 years ago by a researcher at the Idaho National Laboratory. The organization claims that its machine can separate up to 200 gallons per minute of oil from water. Since 1993, Idaho National Laboratory has had this device licensed to an organization called Ocean Therapy Solutions, which is owned by Hollywood's own Kevin Costner. Normally, I'd insert a joke about blowing up a tanker that's being manned by Dennis Hopper here, but it's just too soon. Besides - who stayed awake through Waterworld, anyway?
Living "House Poor"
New home construction has fallen 10% since the Homebuyer Tax Credit expired a few months back. Since the housing and mortgage markets were such an integral catalyst for the economic recession, it is feared that this drop in the non-incentive housing market could mean that economic recovery is still far from being realized.
The drop in housing starts is also affecting other markets. Since new homes are not being built by developers, interest rates and overall inflation have not begun a full rebound yet.
The homebuyer's tax credit was extended to April 30 earlier this year. It is suspected that this low level of housing activity will remain at least throughout the summer - which is usually the high season for home builders, sellers and buyers. (Learn more in The Truth About The First-Time Homebuyer Tax Credit.)
A Costly Summit
Despite its regular protesters and detractors, a recent survey sent to 1,000 Canadians regarding the G-20 and G-8 summits shows that most Canadians believe the meetings are important and worth the $1 billion bill.
Later this month, the Group of Twenty Finance Ministers and Central Bank Governors (G-20) will meet in Toronto, Ontario, Canada and the Group of Eight (G-8) will meet in Huntsville, Ontario, Canada. While the two summits attract annual protests, the telephone survey revealed that 76% agreed that they are important. Approximately 20% were opposed.
Canadian Prime Minister Stephen Harper has been criticized over the price tag of the summits. Specifically, the PM recently built a fake lake in downtown Toronto that is meant to cater to journalists and media visitors attending some of the events surrounding the G-8 summit. Price estimates for the lake have ranged from $57,000 to $1.9 million.
Of the key topics to be covered, health improvements for women in third-world countries, clean energy investment framework and the world economy are drawing a large amount of attention. (To learn more, see An Introduction To The International Monetary Fund.)
Dave's not Here, Man!
U.K. medical company GW Pharmaceuticals PLC has released the world's first prescription drug made from cannabis. The drug - Sativex - is marketed as a treatment for the symptoms of Multiple Sclerosis for patients who aren't responsive to other treatment attempts. Initially, Sativex is only available in the U.K. (though it was also tested on a limited number of patients in Canada), but meetings are planned to market the drug as a painkiller for cancer patients on our side of the pond.
Sativex is estimated to rake in between GBP50 million and GBP100 million from willing patients. (For more, check out Measuring The Medicine Makers.)
The Bottom Line
BP's woes are set to continue as the company warns that the spill may not be plugged until August. However, the world's attention will at least temporarily be turned to southern Ontario as the G-8 and G-20 summits get underway at the end of this month.
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