Financial thoughts

The number of people who signed contracts to buy homes rose in November, the fourth increase since hitting a low in June. Even with the gains, this year is shaping up to be the worst for home sales in 13 years.

The National Association of Realtors says its index of sales agreements for previously occupied homes increased 3.5 percent last month from a downwardly revised reading in October. Contract signings were up in the West and Northeast, but down in the South and Midwest.

Signings are 22.1 percent above June’s index reading, which was the lowest level since the private group began tracking the data in 2001. But signings are 5 percent lower than November 2009 when buyers were scrambling to close purchases to qualify for the first federal tax credit.

Completed home sales _ which the Realtors group measures in a separate report _ are expected to total about 4.8 million units this year. That’s much lower than the 6 million units that analysts consider a healthy pace. The last time sales were lower was 1997 when sales totaled 4.4 million units.

A third of the pending sales likely will be foreclosures or short sales, where a homeowner sells a house for less than what is owed on it, the NAR spokesman Walter Molony said. That tracks with the average for the year. These distressed sales go for discounts of up to 50 percent in some of the hardest-hit areas and will continue to weigh down home prices.

Many economists expect home prices to drop another 5 percent to 10 percent in the next six months before stabilizing. Prices fell in 20 of America’s largest cities in October, according to the Standard & Poor’s/Case-Shiller home price index released Tuesday.

There are several challenges facing the housing market aside from foreclosures. Potential buyers are worried about their jobs or are unable to qualify for a mortgage because lenders have tightened standards. And now mortgage rates are on the rise, gaining about two-thirds of a percentage point in the last month.

This week, the average rate on 30-year home loans rose to 4.86 percent from 4.81 percent, mortgage giant Freddie Mac said Thursday. That’s the highest level in seven months. It hit its lowest level in 40 years in November at 4.17 percent. The rate on the 15-year mortgage, a popular refinance option, also is rising.

The report on contract signings from the Realtors showed that signings jumped 18.2 percent in the West and edged up 1.8 percent in the Northeast. The Midwest region saw a 4.2 percent drop in signings in October and the South posted a 1.8-percent dip.

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The state of Missouri fined Huntleigh Securities Corp. $100,000 and censured the Clayton-based brokerage firm for failure to supervise a former employee, James McClellan Jr., who sold unregistered timeshare investments while working at Huntleigh.

Additionally, McClellan was permanently barred by the state from working in the securities industry after an audit found he sold $4.4 million worth of unregistered timeshare investments from 2002 to 2008, according to a statement issued Tuesday by the Secretary of State’s Office.

McClellan, who lives in Chesterfield, was one of the founders of Huntleigh in 1977 and has worked in the securities industry since 1965. He stopped working at Huntleigh in August 2010.

McClellan sold timeshare investments at Meadow Ridge, a resort property located in Egg Harbor, Wis., from April 2002 to April 2008 to Missouri residents, while he was employed at Wachovia and Huntleigh Securities, according to a consent order signed this month by McClellan and Missouri Securities Division’s Assistant Commissioner of Securities Mary Hosmer.

A state audit found that McClellan did not disclose to timeshare buyers that Meadow Ridge was in financial difficulty, that the sales were not under the control and supervision of his employers and that the investments in Meadow Ridge weren’t registered in the state of Missouri, as required by law.

McClellan sold the timeshare investments to 11 Missouri residents from April 2002 until April 2003 while he worked for Wachovia, according to the consent order, and to 12 Missouri residents from April 2003 to April 2008 while he was employed by Huntleigh. McClellan is the managing member and CEO of Meadow Ridge.

Reached at his Chesterfield home by phone Tuesday, McClellan said a Wisconsin attorney had advised him that it was lawful to sell the timeshare investments in Missouri. “My attorney advised me that the laws in Wisconsin and Missouri were the same,” he said. “Obviously, I got bad advice from my lawyer.”

McClellan said he will abide by the consent order and discontinue working in the securities industry in Missouri. He said he’s devoting his time now to running Meadow Ridge.

Under its consent order, Huntleigh agreed to pay the $100,000 fine to the Missouri Investor Education and Protection fund, as well as pay an additional $20,400 to cover the cost of the state’s audit.

Huntleigh’s president, Robert Chambers, did not return calls seeking comment.

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Forget the conventional wisdom that says veggies must be grown on vast farms in the Midwest. What if commercial-scale crops took root inside cavernous city warehouses, without sunlight or soil?

Call it urban farming 2.0. Over the past decade, city agriculture has largely been the province of non-profit organizations, school groups, renegade gardeners and restaurants sowing seeds on rooftops. But the newest breed of city farmers are businessfolk. In their hands, urban agriculture is scaling up to meet a rising demand in city centers for safe, organic and locally grown food.

One such indoor farm opened in September in Vancouver, growing lettuce and spinach inside an 8,000-square-foot warehouse using a hydroponic system that replaces dirt and weather with peat moss plugs and circulated water. High-efficiency LED lighting hits plants grown on stacked shelves.

The Eco Spirit-branded lettuce operation — which is owned by the local Squamish Nation tribe — now supplies eight stores for Choices Markets, a natural foods chain in greater Vancouver. The tribe licensed the technology from TerraSphere Systems in Canada and plans to grow the Eco Spirit label into a larger brand of locally grown produce.

"It’s clean, it’s safe, it’s good for the environment," says Nick Brusatore, technical director of Vancouver-based TerraSphere Systems, which started developing the indoor farming technology eight years ago. TerraSphere generated $4 million this year from equipment sales and technology licenses to organizations like the Squamish Nation. New indoor farms are slated for New York, New Jersey, Ontario and Rhode Island.

"The demand is there, without a doubt," says Brusatore. "We’re going to produce food everywhere."

Finding empty space won’t be a problem. America is littered with thousands of abandoned big box stores, a trend fueled by the sputtering economy. About 11% of commercial and industrial real estate nationwide remains empty — double the vacancy rate of just four years ago, according to Reis Inc., which tracks real-estate data.

Finding buyers is also fairly easy. Large grocers, from Wal-Mart (WMT, Fortune 500) to Whole Foods (WFMI, Fortune 500), have made selling locally grown food a priority in their stores.

"Urban agriculture is a growth industry," says Dickson Despommier, a Columbia University microbiology professor and author of The Vertical Farm. His book touts a vision for commercial-scale agriculture in high-tech greenhouses as high as 30 stories tall, with the footprint of an entire city block.

On the flip side: Critics worry that today’s urban farm startups will be huge — and short-lived — energy hogs, brought down by electrical bills they can’t afford.

"Scores of companies have tried to do this, even the big guys like General Mills 15 years ago," says Bruce Bugbee, a professor of crop physiology at Utah State University. "It’s too expensive. People don’t realize how much light it takes to grow plants."

Turning warehouses into farms

But that won’t stop entrepreneurs from trying. Jordan Motzkin, 22, of New York, has won grants from National Science Foundation and the College of the Atlantic for his startup, Big Box Farms, which finished testing a prototype in Maine and plans to open an indoor farm in an old Brooklyn warehouse early next year guaranteed approval cash advance loans.

He expects the farm to grow millions of pounds of organic lettuce and basil. Motzkin then hopes to replicate it, first with farms in Chicago and Philadelphia, then elsewhere in the nation.

He plans to run the entire operation — from indoor climate control to hydroponics and LED lighting — remotely using iPhone applications. Big Box Farms is also working with Philips Electronics to test out their latest generation of LED lights, which are not yet available to the public. Motzkin says the new LEDs could make a big difference, improving energy efficiency by 40% to 60%.

"You’re turning food into a factory scenario, where you can control the environment completely," says Chris Higgins, an industry consultant and owner of Hort Americas, a Dallas supplier of hydroponic growing systems. "They could get production 365 days a year, which would be a huge advantage. They’re on the cutting edge."

They also yield more produce. Despommier says a stacked hydroponic operation might yield about 64 heads of lettuce per square foot annually, compared to about three heads at a traditional outside farm.

Another new company, Gotham Greens, will use hydroponics to grow everything from bok choy to basil in an enclosed rooftop greenhouse in the middle of Brooklyn. The company raised $2 million from investors and should finish the 15,000-square-foot greenhouse this spring, producing 40 tons of crops a year, most of which will be sold to a local Whole Foods store.

In San Francisco, Cityscape Farms plans to grow lettuce and herbs and raise fish in water-based aquaponics systems in greenhouses set up on urban rooftops and vacant lots.

Cityscape CEO Mike Yohay predicts that by eliminating transportation costs and fertilizer, a 10,000-square-foot greenhouse could produce $500,000 in profit and 20 to 30 tons of food a year for local supermarkets and corporate cafeterias.

Some investors, however, still aren’t sold on the idea that indoor city farms can produce affordable food and carve out a big financial advantage over traditional farmers who may be just 60 to 100 miles away.

"We’ve seen half a dozen companies working on this," says Silicon Valley venture capitalist Paul Matteucci. "For the most part the quality of the product is excellent, but the costs are still too high."

But in Vancouver, Eco Spirit is optimistic. The indoor lettuce operation should generate $400,000 to $1 million in annual revenue, says Squamish Nation Chief Gibby Jacob. The tribe paid $2 million for the equipment and its franchise license from TerraSphere.

Since the produce began showing up in stores three months ago, consumers have literally eaten it up, says Mark Vickars, CEO of Choices Markets. They pay up to $5 for a 5.3-ounce container of the locally grown lettuce.

"The quality is excellent, the nutrient levels are high, the shelf life is long," Vickars says. "We’re always trying to go local, and this gives us local 365 days a year." 

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BARBERMurphy Group represented parties in these transactions:

South Africa has been formally asked to join the BRIC group of major emerging markets, comprising Brazil, Russia, India and China, bolstering its position as Africa’s champion.

Chinese President Hu Jintao wrote a letter to his South African counterpart, Jacob Zuma, to inform him of the decision and inviting him to the BRIC’s third heads of state meeting in Beijing next year, Chinese Foreign Minister Yang Jiechi said in a statement on his ministry’s website today.

South Africa, which has a population of 49 million compared with China’s 1.36 billion, is betting on raising its clout on the world stage by joining BRIC, while strengthening political and trade ties within the bloc. The country accounts for about a third of gross domestic product in sub-Saharan Africa and will offer BRIC members improved access to 1 billion consumers on the continent and mineral resources including oil and platinum.

Joining the group is “the best Christmas present ever,” South Africa’s Minister of International Relations and Cooperation Maite Nkoana-Mashabane told a reporters in Pretoria today. “We will be a good gateway for the BRIC countries. While we may have a small population, we don’t just speak for South Africa, we speak for Africa as a whole.”

Zuma has made state visits to all of the BRIC nations since coming to power in May last year.

South Africa is a “powerful country,” even though it’s small compared with the other BRIC nations, Alexei Vasiliev, Russian President Dmitry Medvedev’s envoy to Africa, said on Dec payday advance. 22.

Christmas Present

South Africa has an economy of $286 billion, which is less than a quarter of that of Russia, the smallest of the BRIC nations. Its population is also dwarfed by India’s 1.2 billion, Brazil’s 191 million and Russia’s 142 million.

“South Africa as a country is small, but if we go there as a regional market, that’s a different story,” said Martyn Davies, chief executive officer of Johannesburg-based Frontier Advisory, which provides research and corporate finance services on emerging markets. “For South Africa, it’s nice to be associated with the big boys.”

Jim O’Neill

Goldman Sachs Group Inc. economist Jim O’Neill coined the BRIC term in 2001 to describe the four nations that he estimates will collectively equal the U.S. in economic size by 2020. At their first summit in Russia in June last year, the BRIC heads of state called for emerging economies to have a greater voice in international financial institutions and for a more diversified global monetary system.

“South Africa’s economy is very small,” O’Neill said in an interview from London today. “For South Africa to be treated as part of BRIC doesn’t make any sense to me. But South Africa as a representative of the African continent is a different story.”

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Jean-Claude Trichet will retire as European Central Bank president next October with the euro area still needing record-low interest rates, according to economists who accurately predicted the region’s monetary policy this year.

The Frankfurt-based central bank will keep its key interest rate unchanged throughout 2011 amid low inflation, moderate growth and persisting fallout from the sovereign-debt crisis, said 12 of 17 economists in a Bloomberg News survey. The sample was taken among forecasters who correctly anticipated in January that the ECB’s benchmark would stay this year at 1 percent.

The new year approaches with Trichet celebrating his 68th birthday this week after leading Europe’s response to the turmoil, which at one point threatened to destroy the single currency and has already engulfed Greece and Ireland. Even after those nations received international bailouts, the cost of insuring Greek debt rose yesterday to the highest in a month and investors speculate that Portugal may be next to require aid. The euro has fallen 8.7 percent against the dollar in 2010.

“Problems in the banking sector won’t be resolved quickly, and banks in peripheral countries will continue to need support,” said Juergen Michels, chief euro-region economist at Citigroup Inc. in London. “There won’t be any major inflation pressures that would warrant a rate increase before 2012.”

The 17 economists questioned this month participated in a similar survey of 61 forecasters in January on the outlook for ECB policy in 2010. The median forecast then was the benchmark would be at 1.5 percent now with Deutsche Bank AG and Bank of America Merrill Lynch analysts among those predicting 2 percent.

Buying Bonds

The ECB cut its rate to 1 percent in May 2009 to fight the worst recession in its history. A year later the central bank began buying government bonds for the first time to ease credit- market tensions as investors focused on outsized budget deficits. As recently as this month, the ECB was forced to delay a further withdrawal of unlimited liquidity support to euro-area banks.

Lingering questions on whether Portugal and Spain require external help will keep the ECB “patient, cautious and prudent” as it leaves its rate on hold through next year, said Cedric Thellier, an economist at Natixis in Paris. He says the region faces a sluggish recovery even as Germany’s strength offsets weakness in the so-called peripheral economies.

Portugal’s credit rating was downgraded yesterday by Fitch Ratings to A+ from AA-. The company predicted the nation will suffer a recession next year.

The ECB this month forecast growth will slow in 2011 to about 1.4 percent from this year’s 1.7 percent, while inflation will advance to 1.8 percent from 1.6 percent. That’s still under the bank’s target of just below 2 percent. The region will expand in size in January as Estonia becomes its 17th member.

Recession Prospects

David Owen, chief economist at Jefferies International Ltd. in London, said the ECB’s numbers imply the “weakest growth on record.” Carl Weinberg, chief economist at High Frequency Economics Ltd. in Valhalla, New York, predicts the economy will “lapse into a deep recession, squeezed by a credit crunch and plagued by multiple bank failures.” Both forecasters expect no change in the main interest rate next year.

Adding to pressure on growth is the push to curb budget deficits to pacify investors. Portuguese 10-year bond yields rose by almost half a percentage point in the past two weeks. Those on similar Greek securities have returned to the 12 percent level they reached in May no fax payday advances. The cost of insuring Greek debt jumped 38 basis points yesterday to 1,019, according to CMA prices for credit-default swaps.

Deficit Measures

Measures to restore order to budget deficits will amount to 1.3 percent of the euro zone’s gross domestic product in 2011, with Ireland and Portugal cutting back about 4 percent and Greece as much as 6 percent, according to Julian Callow, chief European economist at Barclays Capital. He also forecasts no rate change in 2011.

Analysts at UniCredit SpA, Royal Bank of Scotland Group Plc and Standard Chartered Plc are among five forecasters expecting the ECB to begin rate increases in the second half of 2011.

“The ECB will want to start re-establishing its anti- inflation credentials,” said Sarah Hewin, senior economist at Standard Chartered in London, whose forecast for a 1.75 percent rate was the highest of those surveyed. Jacques Cailloux, chief euro-area economist at RBS, expects an increase to 1.5 percent as strength in core economies such as Germany keep them “ring- fenced” from debt strains.

Surging bond yields prompted the ECB to step up bond purchases following Ireland’s aid package. The region’s central banks have bought 72.5 billion euros ($95 billion) of government debt since the bond program was announced in May. The ECB has also committed to aid banks with as much liquidity as needed through the first quarter for periods of up to three months.

Crisis Response

“The ECB made very clear that in their view the crisis needs to be resolved by governments,” said Ken Wattret, an economist at BNP Paribas SA in London and another forecaster who was right in 2010. “But governments aren’t very quick, so the ECB is going to feel continuously obliged to step in.”

Economists are divided over how long the ECB will take to return to its pre-crisis refinancing system of cash auctions. While Greet Vander Roost at KBC Asset Management in Brussels expects the exit to be finished by the end of the second quarter, Citigroup’s Michels says the ECB will keep supplying unlimited liquidity in weekly operations into 2012.

Michels’s scenario would turn responsibility for normalizing ECB monetary policy to the next president as Trichet’s central banking career comes to an end after almost two decades and eight years at the ECB. Who will replace him will be a subject of heated debate for leaders next year with Bundesbank President Axel Weber and Bank of Italy Governor Mario Draghi most often linked to the job.

“By next November it ought to be a lot clearer how the crisis is playing out,” said Callow of Barclays Capital. “The challenge for Trichet’s successor is to mold the euro area into a more cohesive economic and financial entity.”

ECB Rate at end of 2011 Analistas Financieras International 1 percent Barclays Capital 1 percent BHF-Bank AG 1.5 percent BNP Paribas SA 1 percent Capital Economics Ltd. 1 percent Citigroup Inc. 1 percent High Frequency Economics Ltd. 1 percent Jefferies International Ltd. 1 percent JPMorgan Chase & Co. 1 percent KBC Asset Management 1 percent Lloyds TSB Corporate Markets 1.25 percent Natixis 1 percent Royal Bank of Scotland Group Plc 1.5 percent Standard Chartered Bank 1.75 percent Societe Generale SA 1 percent UniCredit Group 1.25 percent Wermuth Asset Management GmbH 1 percent

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Australian luxury home prices may fall in 2011 after listings of properties worth more than A$1 million rose about 40 percent more than average for this time of year, according to the Real Estate Institute of Australia.

“There’s about a 5 percent gap in what sellers expect and what buyers are willing to pay,” said Perth-based David Airey, president of the institute. “In the first and second quarters of 2011, there will be a rise in activity as sellers adjust prices down.”

Australia’s house prices may be overvalued by 5 percent to 10 percent, the International Monetary Fund said last week. An 11 percent advance in the Australian dollar this year, the second biggest among Group of 10 nations, is deterring foreign and expatriate buyers, while the most aggressive tightening of monetary policy in the developed world raised borrowing costs.

Prices of the most expensive 10 percent of Sydney properties dropped 7.5 percent in the six months to September, compared with an average 1.1 percent increase in the rest of the market, according to real estate researcher RP Data. Melbourne’s top end property prices fell 10.8 percent in the period, compared with an average 2.5 percent price climb for the remaining homes.

Australia’s luxury properties “were once considered to be safe havens during a downturn,” RP Data economist Tim Lawless said. “More recently, however, the premium housing sector has displayed a higher level of volatility.”

Auction Flop

An auction of homes ranging from A$2 million to A$10 million last month, held at the Sydney Opera House by real estate broker Ray White Group, sold only two of the 11 homes on offer.

“The luxury market is certainly softer than what it was,” Dan White, a director at Brisbane-based Ray White, said in an interview. “There’s a lot of speculation about house prices, comments that they’re overvalued. And that happened at the same time that rates started to increase. Buyers are now feeling that they can search for value.”

While the number of properties listed for sale is unlikely to rise further next year, volatility will remain until confidence in global markets returns, said White.

John McGrath, chief executive officer of Sydney-based realtor McGrath, said his company has seen a 50 percent increase in listings from the same time last year.

‘Buyers’ Market’

“The market above A$1 million is a buyers’ market now,” McGrath, whose company now has 37 offices in New South Wales, Queensland and Canberra, said. “There is underlying strength, but people are cautious. And if in doubt, these buyers will stay put till there’s more certainty.”

There will be a recovery of between 5 percent and 10 percent in the top end of the market next year, primarily in the second half, as economic confidence returns, said McGrath.

Demand for homes between A$2 million and A$5 million in particular has been slow, said Chris Curtis, managing director of Sydney-based buyers’ agent Curtis Associates. Professionals including investment bankers, accountants and lawyers — the most likely buyers in that range — are waiting out the uncertainty surrounding the U payday lenders.S. and European economies, he said.

More properties are selling before auction, “a sign of vendor nervousness,” Curtis said, with some sellers willing to cut prices by as much as 15 percent.

U.S., Europe

The U.S. is struggling to maintain a sustained recovery as mortgage foreclosures mount and the nation’s unemployment rate hovers near 10 percent, prompting fears of a double-dip recession. Uncertainty over Europe’s economic health lingers after Ireland last month followed Greece in seeking a European Union bailout.

Overseas buyers’ demand has dried up after the Australian dollar reached parity with the U.S. currency in October for the first time since 1982, said L. Janusz Hooker, chief executive officer of Sydney-based real estate broker LJ Hooker.

The Australian dollar, which peaked at $1.0183 last month, was traded at 99.64 U.S. cents at 2:34 p.m. Sydney time today and has climbed 11 percent this year versus the U.S. dollar.

LJ Hooker, which has 695 offices across the Asia-Pacific region, had about 23 percent more listings in November compared with a year earlier, according to data from the company.

“We had a robust first half and have seen a slowdown in the second half,” he said. “Investors typically look at the bigger trends, the U.S., Europe, and these have been one element contributing to that. There’s also a big portion of properties that have unrealistic pricing and this needs to come off.”

Record Sales

The market is “patchy,” with some strong sales still taking place, according Ken Jacobs, managing director of Sydney- based real estate agent Ken Jacobs, an affiliate of Christie’s Great Estates, which has the world’s biggest network of luxury property brokers.

An eight-bedroom mansion in Portsea, a resort town some 120 kilometers (75 miles) south of Melbourne, sold for more than A$25 million on Dec. 13, a record for Victoria state, according to Gerald Delany, executive chairman at Melbourne-based real estate broker Kay & Burton Pty, which handled the sale. The A$52 million September sale of Villa Veneto in Point Piper, an eastern suburb of Sydney, by LJ Hooker agent Bill Malouf, set a record for the country.

“I don’t think things will decline further, but I don’t think they’ll suddenly get better,” Jacobs said. “The market will become more firm, but the change will be gradual.”

Reserve Bank of Australia Governor Glenn Stevens raised interest rates seven times since October last year, citing a surge in home prices among reasons for the increases. Economists expect the central bank to raise rates by another three quarters of a percentage point by the end of next year, according to the median forecast of economists surveyed by Bloomberg.

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Visa Inc. and MasterCard Inc. may face permanent damage to the fastest-growing part of their business after the Federal Reserve proposed rules that could cut debit-card transaction fees by 84 percent.

“It is negative all around,” wrote Scott Valentin, an analyst at FBR Capital Markets, in a note to clients. “This significantly impacts the business model for the networks.”

Visa and MasterCard, the world’s biggest payment networks, plunged more than 10 percent in New York trading Thursday after the Fed proposed capping so-called interchange fees at 12 cents each. Currently, the networks charge merchants an average of 1 percent of the purchase, regardless of cost, and pass that money to banks that issue cards.

The change, if approved, would wipe out most of the $16.2 billion in revenue that debit cards generated last year for U.S. lenders, including Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co.

Debit cards have become an increasingly popular substitute for cash as credit card issuers cut off accounts and curbed lending amid the financial crisis and recession.

U.S. consumer spending with debit cards climbed 8 percent last year to $1.45 trillion, while credit purchases plunged 10 percent, according to the Nilson Report.

The average debit interchange fee last year was 44 cents per transaction, or 1.14 percent of the purchase price, according to a draft of the proposed rules. The Fed staff outlined plans that recommend setting interchange at 7 cents or 12 cents, a reduction of 73 percent to 84 percent payday loans lenders. Initial Wall Street estimates Thursday pegged the cut as high as 90 percent.

The proposed reductions would align U.S. interchange rates more closely with other countries, including Australia and the 27 nations of the European Union. Visa Europe Ltd., operator of the Continent’s biggest payments network, agreed to cut the fees to 0.2 percent as part of a deal to end EU antitrust action, the European Commission said last week. MasterCard agreed to the same rate last year.

Mastercard Worldwide said in a statement that the proposed cap would shift merchant costs directly to consumers.

“Experience demonstrates that consumers, not banks or payment networks are the biggest losers as a result of this regulation,” said Noah Hanft, MasterCard’s general counsel. “This type of price controls is misguided and anti-competitive, and in the end is harmful to consumers.”

The headquarters for MasterCard’s Global Technology and Operations division is in O’Fallon, Mo. Jim Issokson, a Mastercard spokesman, said that since the changes would mostly affect consumers, that facility would not be affected if the change goes through. MasterCard officials say approximately 1,800 people are employed there.

Visa, which derives about 20 percent of its revenue from U.S. debit, said the rules would create “unintended consequences” for the industry and consumers.

Kavita Kumar of the Post-Dispatch contributed to this report

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Hacking, the reclusive sport of individuals with socially crippling intelligence is being pulled from the depths of the suburban basement and thrust onto the podium.

Well, there might not be a podium, but there is talk of a cup.

Facebook has created a page containing details about a Hacker Cup in 2011. People can apply and compete online and a final 25 will be flown to compete in an algorithmic programming contest in California in the New Year for (U.S.) $5,000 and the title.

Alan Middleton, a marketing guru housed at the Schulich School of Business at York University, was admittedly a bit baffled at the prospect.

OTTAWA