Tuesday, March 31, 2009

CPPIB buys "stapled units" of debt and equity, much like a Canadian Income Trust


What became of Flaherty’s “leveling the playing field” when Pension Funds can own private income trust and not pay the 31.5% tax (whereas the average investor does) and pension funds can own income trust equivalents that the Department of Finance are trying to discourage as the alternative investment vehicle to replace income trusts, in the corporate form, as I (Catalyst Asset Management) recommended occur with BCE, but BCE’s Board refused to properly disclose to their shareholders in their single minded pursuit of doing a backroom deal with Ontario Teachers”.

How are the 70% of Canadians without pensions to provide themselves with pension income if they are being opposed by Jim Flaherty and the Department of Finance at every crooked turn in the road?


CPPIB buys "stapled units" of debt and equity,much like a Canadian Income Trust
CPP Investment Board buys infrastrcuture

Andrew Willis, today at 9:13 AM EDT

The cash-rich CPP Investment Board is using the downturn to buy into the broadcast transmission business, making a $1.73-billion play on Tuesday for Macquarie Communications Infrastructure Group.

The CPPIB, a $109-billion public sector pension fund with long time horizons, is purchasing assets from an Australian investment bank that faces all the pressures that come with quarterly performance expectations, and a credit crunch.

The Macquarie unit owns a 48 per cent stake in Arqiva, a U.K. broadcast transmission provider, 50 per cent stake of British network Airwave and 100 per cent of Broadcast Australia, a leading broadcast transmission provider.

The Macquarie division is publicly traded and structured in what's known as "stapled units" of debt and equity, much like a Canadian income trust. Shareholders in the Macquirie unit must approve the purchase; directors have already endorsed the offer.

Why I quit General Motors


This may come off sounding rather self-indulgent, but now that the CEO of General Motors, Rick Wagoner, has been fired by the President of the United States and GM is facing the real prospect of bankruptcy, what better time to say “I told you so”?

The very thing that made Rick Wagoner successful at becoming CEO of General Motors was the very thing that brought General Motors down as a company that designs, manufactures and markets cars and trucks. Look at where Rick Wagoner began his career. Upon graduation from Harvard with an MBA, Rick Wagoner begin working at GM in New York in their treasury department. This for a company that designs and builds cars in Detroit? Rick Wagoner was a finance guy and not what was termed in that day, as a ”car guy”. This is the very thing that brought GM to the state it is in today. GM has been run by a succession of bean counters and not a single “car guy” in the bunch, except for lately GM’s Vice Chairman Bob Lutz, who out of frustration has resigned.

I joined General Motors at about the same time as Rick Wagoner, with, in my case, an MBA degree from Queens. Graduating at the top of my class I had no end of groovy job offers to work at IBM (in finance) or McKinsey (in consulting) or with the numerous banks and brokerage firms that sought to employ the top graduates of the day, however I had no interest in these job offers and sought to work in an industry that I was passionate about, namely the car industry, in the hopes that some day I could influence automotive design based on my sense for what would inspire consumers to purchase GM products. The best place I thought to enter General Motors to learn the car business from the ground up wasn’t the treasury department in New York ( assuming it was even available to me), but rather the car assembly plant in Oshawa, and learn the realities of automotive assembly from the factory floor as a production supervisor and production co-ordinator and later as a process engineer.

I was so eager to pursue my new career with General Motors that I skipped my final exam in a Finance course because it meant starting a week earlier and the exam only counted for 40% of the mark, and I had already passed. Before joining GM, I however did take the time to read Alfred P. Sloan’s autobiography entitled “My years with General Motors” which described how he had built General Motors into the powerhouse it had become based on his strategy of different brands that would align themselves with the growing affluence of its customers and allow GM to capture their product loyalty from the humble beginnings of consumers of Chevrolet cars through to Pontiac, Oldsmobile, Buick and some day Cadillac.

From the very day that I began working at General Motors in April of 1979 I began to question what GM’s present day strategy was? I think I was the only one working at the company who was asking this question. I also realized that I would probably have had a better chance at communicating with the management of GM, if I had taken that job at McKinsey in consulting rather than working at the company itself. The barriers to upper management were impenetrable and only served to make the company more insulated from reality and inquiries from the ranks.

By 1979, Sloan’s separate car lines as a strategy no longer made sense in the marketplace as it once had and the accountants who were running General Motors had allowed the various distinct car lines to take on androgynous dimensions, as Buicks became indistinguishable from Chevrolets and vice versa, rendering the strategy even more meaningless, a point that I was making 30 years ago. Meanwhile GM’s car design itself and product quality was clearly inferior to the products coming out of Europe and Japan. I was strongly of the belief that GM was completely coasting and its management was completely out of touch with the marketplace. Worse, was that GM had no sense whatsoever about what their modern day strategy was, and failed to recognize that Sloan’s strategy and execution thereof, had long since run its course. General Motors was run by a bunch of cost accountants who were more intent on cutting the last dollar out of a car’s cost, without realizing that doing so would probably mean selling 20% fewer of that particular design. Not a very wise trade off when one considers the enormous fixed costs (as opposed to variable costs) associated with any new model launch/design.

I soon realized that it would be unwise of me to stick around General Motors for much longer and stake my future on a company that looked so bad from the inside. My concerns about GM’s strategy, or lack thereof were later confirmed shortly thereafter when GM started redirecting billions of discretionary investment dollars into acquiring non automotive business like EDS and Hughes Aerospace. After two years with the company and despite being the middle of a major recession, I quit General Motors at the end of 1981 to go work at Dome Petroleum in Calgary in the Corporate Planning and Economics department, comforted by the knowledge that at least I was close to where the decisions were being made. Little did I know that Dome Petroleum’s bankruptcy would precede that of General Motors by about 25 years, brought down by a tanking commodity price they couldn’t control and excessive levels of debt to acquire Hudson’s’ Bay Oil and Gas.

Strangely it was with Dome’s bankruptcy that I began thinking even worse of General Motors, since General Motors actually has more control over the variables of that industry that affect its future than those that affected Dome’s future, which in part was the justification cited by Barrack Obama for firing Rick Wagoner......a lack of leadership and a lack of vision. To that I would add, totally lacking as a “car guy” and no regard for what consumers want and what motivates them to purchase your products, namely product value and inspired designs.

How difficult of a challenge could that really have been for GM when it was at the top of the heap.....back in 1981? Except for the fact that it was run by bean counters at the time and their protégés in the fatal years to come and its self inflicted demise through neglect.

Monday, March 30, 2009

Mark Blarney


Hometown boy makes good as Bank of Canada governor

My comment:

I wonder what Mark Carney's teachers would think about their star pupil if they learned that while he was in the Department of Finance, in charge of the income trust file, that he fabricated the government's false analysis of tax leakage by arbitrarily leaving out the taxes that are paid on the 38% of income trusts held in RRSPs. That little sleight of hand caused Canadians to lose $35 billion of their life savings and caused a wave of foreign takeovers of Canadian trusts, such as Prime West Energy by Abu Dhabi Energy and Prime West Energy by Hong Kong billionaire Li Ka Shing.

Keep up the great work Mark.........NOT.

More absurd and contradictory advice from Stephen Harper


Harper is now advocating that Canadian banks expand abroad in the face of their relative strength and exploit the world’s financial meltdown. This advice totally contradicts Harper’s earlier move to deny Canadian companies the ability to expand abroad by denying them the ability to deduct interest on foreign acquisition debt. Which is it Harper? Expand, or don’t expand?

Furthermore, advising our relatively stable banks to expand in foreign markets at a time of greatest financial uncertainty and before global bank regulations are fixed, as they desperately need to be fixed, is like advising your teenager to go out and have unprotected sex in the middle of a world wide AIDs pandemic.

As usual, Harper’s shoot from the hip policy pronouncements are absurd and contradictory and against the interests of average Canadians who benefit from the relatively stable Canadian banking industry and the ruinous consolidation moves by Canada’s banks that was previously, and wisely denied by Paul Martin when he was Finance Minister.

This idiot comment by Harper ranks right up there with his comment of September 15, 2008 of: "If we were going to have some big crash or recession, we would have had it by now" or his equally inane advice of October 8, 2008 recommending that people go out and invest money in the stock market because he thought there were some good buying opportunities out there. As if he would even know?


PM tells Canada’s banks to expand overseas

By Julie MacIntosh, Francesco Guerrera and Bernard Simon in New York
March 30 2009 21:31
Financial Times

Canada’s banks should capitalise on the relative strength of their balance sheets by acquiring assets in the US and other countries, Stephen Harper, Canada’s prime minister, told the Financial Times on Monday.

Canada’s leading banks have stayed profitable and maintained dividends throughout the collapse of financial markets in other developed countries. Five of them – Royal Bank of Canada, Toronto-Dominion, Bank of Nova Scotia, Bank of Montreal, and Canadian Imperial Bank of Commerce – now rank among the 50 largest banks in the world.

Mergers between struggling global banks have been scarce, aside from those forced by governments, because few institutions have stayed strong enough to position themselves as buyers.

Mr Harper indicated Canada’s banks could lead an eventual charge toward consolidation, and said he would support such efforts as “an opportunity for Canada to expand its role in the world financial sector”.

“I’m not going to try running banks, but I hope our banks will see this as an opportunity to build the brand – the country’s brand, their own brand – and to expand their scope and profitability over time,” Mr Harper said. “I can assure you that the steps we’re taking in the financial sector will not be designed to promote greater protectionism.”

Several Canadian banks have a US presence. Toronto-Dominion sold its US TD Waterhouse brokerage operations to Ameritrade in 2006 in exchange for a stake in the new company. It took control of Banknorth in 2007, and bought Commerce Bank in 2008. Bank of Montreal owns Chicago-based Harris.

Mr Harper said he was frustrated some countries had loosened regulations that might have prevented the need for intervention in global banking systems.

“In the name of conservatism or free markets, in some cases, governments ignored very fundamental lessons we knew from history,” he said.

“Canada itself has shown that if you have a reasonable system of regulation, there is no need for governments to be nationalising banks and directing executive compensation and trying to micromanage economic activity,” he said.

“One could say we were over-regulated, but our solution is going to lead to us having the most free-enterprise financial sector in the world. We’re the only one not nationalising or partial-nationalising or de facto nationalising.”

Still, Canadian banking shares have suffered from scepticism over whether banks can maintain their dividends.

The potential for Canada’s banks to suffer a disadvantage against government-supported institutions was a “very real worry” in the short term, Mr Harper said, but not a long-term concern.

“I think in the longer term this government intervention in the final sector, if it’s not unwound, will lead to politicisation of the sector and poor management. I just don’t think government-run or . . . partially run banks are going to be very effective institutions over time.”

Copyright The Financial Times Limited 2009

NDP loses ground, Hargrove questions why party doesn't look for a new leader


Thanks, but we don’t need Buzz Hargrove to tell us that Jack Layton has lost touch with his roots. That became abundantly obvious when Jack Layton supported Jim Flaherty's income trust tax that lined the pockets of Big LifeCos and foreign private equity at the expense ($35 billion) of Canadians who were prudently saving for a dignified retirement. Something which Jack Layton supposedly is in favour of......protecting Canadians pension and retirement savings?

The fact that Jack Layton had no idea that this trust tax policy was based on a complete lie, a fact that was made obvious since it was only backed up by 18 pages of blacked out documents, also demonstrates that Jack Layton is very easily fooled by the very powers he professes he will protect his followers from. It also proves Jack Layton hasn’t got the faintest regard for the proper conduct of a democracy when blacked out documents define his standard for transparency on matters of far reaching tax policy.

Also, the fact that these trust businesses were easy targets for foreign private equity and their tax free income stripping LBOs, was totally lost on Jack Layton, the supposed Canadian nationalist. Who needs guards at the nation’s gates who are totally asleep on their watch duty, as Prime West Energy gets picked off by Abu Dhabi Energy or TransAlta Power gets picked off by Hong Kong billionaires and taxpaying Canadian owners are substituted for non tax paying foreigners. Or did that become that Jack Layton’s new constituency......foreign interests looking for government tax induced bargains at the expense of Canadian investors and retirees and causing a massive loss of tax revenue to the Canadian government estimated as $7.5 billion a year?

But I could say the very same thing about Buzz Hargrove. Jack Layton’s new critic, and the entire CAW, since Buzz Hargrove and the CAW were sold the same bill of goods on the income trust tax. The CAW’s so called economist Jim Stanford, is as competent an economist and has as much regard for the facts as Stephen Harper himself.......and his fellow enabler of the income trust tax, Jack Layton.


The Hill Times, March 30th, 2009
NEWS STORY
By Harris MacLeod and Abbas Rana
NDP loses ground, Hargrove questions why party doesn't look for a new leader

Pollster Nik Nanos calls it a steady decline in support for the NDP with voters moving to Liberals.

Former NDP activist and president of the Canadian Auto Workers union Buzz Hargrove says the New Democrats are losing ground to the Liberals because the party has lost touch with its roots, and instead focused too heavily on building leader Jack Layton's profile.

"Jack as a leader has developed a hell of a profile for himself, but I don't believe he's developed a profile for the party on the issues that are critical to Canadian families. He's assumed that if he built Jack, the party support would follow and, politics just doesn't work that way. People will vote for the people who are out front on the issues that are important to them and their families," said Mr. Hargrove, who was kicked out of the provincial Ontario and federal NDP parties after he called for tactical voting in the 2006 federal election, which included voting for Liberal candidates in ridings where they had the best chance of defeating the Conservative candidate. He also publicly criticized Mr. Layton in 2005 for voting with then opposition leader Stephen Harper (Calgary Southwest, Alta.), and Bloc Québécois Leader Gilles Duceppe (Laurier-Sainte-Marie, Que.) to bring down the Liberal minority government of prime minister Paul Martin.

A Nanos poll conducted between March 13 and March 18 had the NDP at 13 per cent support nationally, compared to 33 per cent for the governing Conservatives, and 36 per cent for the Official Opposition Liberals. The NDP were down three points from 16 per cent support in February, and from 18 per cent support on election day last October. And Toronto Star syndicated columnist Chantal Hébert recently wrote a column, published in this week's issue of The Hill Times,arguing that Mr. Layton (Toronto-Danforth, Ont.) was the big loser after the Liberal-NDP coalition agreement that the NDP leader had inked with former Liberal leader Stéphane Dion (Saint Laurent-Cartierville, Que.) fell apart earlier this year.

"The key is the steady decline in support for the NDP with those former NDP voters moving to the Liberals," said pollster Nik Nanos.

Five-term NDP MP Peter Stoffer (Sackville-Eastern Shore, N.S.) brushed off predictions of doom for his party's prospects in the next election.

"Polls go up and down all the time....The accurate measure is go talk to Canadian people. Go talk to them in Halifax, in St. John's, in Timmins, Ont., go talk to them in the Yukon," said Mr. Stoffer.

He disagreed that Mr. Layton has been focusing too much on building his own profile rather than the profile of the party.

"The reality is you can argue [the same] about Stephen Harper, Michael Ignatieff, and Gilles Duceppe. The reality is Mr. Layton's been our leader since 2003, everybody knows that, but he always says that it's his team, it's his efforts, he's always with other constituents and other candidates. Jack never says the word 'I', it's always the term 'we,' so I would disagree with that," said Mr. Stoffer.

Commenting on Ms. Hébert's column, Mr. Stoffer said that it would be a mistake to conclude that voters would abandon the NDP for the Liberals in the next election.

"What she's doing is reading the polls. There's no question that Iggy has some wind in his sails right now, that's understandable. Don't forget that when Stéphane Dion was the leader of the Liberal Party, he was at 42 per cent at one time and everyone said, 'Oh, he was a left leaning Liberal, he's going to steal votes from the NDP,' and look what happened. Stockwell Day became the leader of the Alliance Party, 'Oh, they're going to steal votes,' look what happened. So, only time will tell. The only poll that really counts is the one when the polls close on election day," Mr. Stoffer said.

Mr. Stoffer also denied that the NDP is looking for a new leader.

"To say that we're looking for a new leader is simply false, I haven't heard that on the ground, I haven't heard that in our caucus, I haven't heard that even privately from people who speak to me on a regular basis. I haven't heard that at all. So it's simply not on."

The NDP are holding a party convention in August in Halifax, N.S., where party delegates will vote on whether or not to have a leadership review. At the party's last convention, in 2006, Mr. Layton received a glowing 92 per cent support.

A top NDP source told The Hill Times that Mr. Layton will lead the party into the next election and his leadership will be questioned only if the party performs poorly in the next election.

"I don't think it's possible to draw that conclusion. You'd have to wait for the outcome of the campaign...I suppose, if it was a disastrous campaign and we lost a lot of seats, you can't rule that out as a possibility but he's a very good strategist, he has good people around who run our campaigns, who run the office, I'm not expecting any kind of a disastrous result."

The NDP has recently made breakthroughs in Newfoundland, Quebec, and Alberta, where they were previously shut out. The party's most significant victory came in a 2007 byelection when NDP MP Thomas Mulcair, a former Quebec provincial Liberal cabinet minister, defeated the Liberal candidate in the former Liberal Montreal stronghold of Outremont to become the only NDP MP from Quebec.

Mr. Mulcair, who is fluently bilingual and an adept performer in Question Period and in the media, was immediately made deputy leader of the party and many saw him as Mr. Layton's heir apparent. His brisk manner has put off some in the party, however, and the Liberals, who are surging in support in Quebec under new leader Michael Ignatieff (Etobicoke-Lakeshore, Ont.) have trained their sights on retaking Outremont.

The Liberals do not yet have a candidate in Outremont, but Liberal sources last week told The Hill Times that former Chrétien-era cabinet minister Martin Cauchon, who left federal politics in 2004, could be looking to make a comeback by taking on Mr. Mulcair.

"I hear that they're courting a few big names and that it could be a big surprise," said the source, who spoke on condition of anonymity, of the search for a star candidate. "It's important to remember that Outremont is a pretty strongly Liberal area and I think the fact that Mulcair was a Liberal minister combined with the fact that our candidate there was announced at the last minute and was not high-profile, along with our low party fortunes at the time allowed the NDP to snag it."

Mr. Hargrove said that Mr. Layton erred in focusing his attacks on the Liberals both in the last election, and in 2006, and that attacking Prime Minister Stephen Harper would have better reflected the thinking of NDP supporters. He added that he doesn't think the party did enough to differentiate themselves from the Liberals.

"I think going after the Liberals was a major mistake...They felt more comfortable attacking the Liberals when the people I talked to were concerned about Harper. He would have got more mileage and more support in the country if he had of went after Harper. I also didn't think he differentiated himself and his party much from the Liberal platform either, there wasn't very much to attack, it was more about personalities than major issues."

Mr. Hargrove said he was surprised that after the last election, which was the third the NDP fought under Mr. Layton who replaced former NDP MP Alexa McDonough as leader in 2003, that people in the party were not calling for a change in leadership because though the NDP gained some seats, their results were seen to be disappointing.

"I would have thought after the election when they didn't improve their lot to any degree that someone might have surfaced saying, 'We've got to do something different with somebody else,' but that didn't happen, so it's not clear that people are pushing," he said.

NDP National Director Brad Lavigne, who Mr. Layton has charged with "modernizing" the party, noted that former leader Ed Broadbent reached the height of his public support fully 12 years after becoming leader. He said the NDP has consistently made gains in each election, and that the party's convention in August will be largely devoted to analyzing where they could do better in the next election.

"Jack Layton has been the leader for six years, and if you were to look at Ed Broadbent, for example, Ed Broadbent became leader in 1975 and he became the most popular leader in 1987, a full 12 years after he became leader. So we're only half way there. Our party has gone from 13 seats to 37, from 900,000 votes to 2.5 million votes, we've made breakthroughs in Quebec, Newfoundland and Labrador, and Alberta. Those are very exceptional results, we're very proud of those, but we know that that's not all we can do."

news@hilltimes.com

The Hill Times

BCE continues its political ways, by applauding Flaherty's HST


Forget about Flaherty’s HST tax ( “The tax on everything”, including payments to Bell from its already gouged customers) and how it may benefit BCE. The better question for Ontario residents who are ill-effected by the HST to be asking of BCE, is how many of the 2,500 people that Bell fired at the sole directive of Ontario Teachers’ reside and (used to?) pay taxes in Ontario?

These Ontario layoffs at BCE at the direction of Ontario's own bloody pension fund were a direct result of Flaherty’s preventing BCE from becoming a tax maximizing income trust and arose because BCE was then the target of a foreign private equity led LBO. One thing has remained constant......BCE continues to be a political animal speaking in support of tax measures, like the HST, and working hand in glove with Jim Flaherty. To borrow an inane phrase from Eric Reguly....”they should be ignored”. Better yet, the whole record should be examined, since BCE’s Board, by pretending they wanted to convert to a trust, when in fact their ulterior motive was to kill the trust structure and frustrate Telus', were in fact, acting against the interests of their shareholders.

Furthermore, the board of BCE were acting counter to their fiduciary duty, which is to maximize shareholder value. BCE, of all companies should now that best, as “maximizing shareholder value” was the very case that BCE took to the Supreme Court, for the sole purpose of being allowed to oppress their bondholders. Too bad BCE’s actions in killing income trusts ended up causing them to destroy shareholder value, that was never recaptured under their preferred (albeit non-viable) alternative of an LBO. The net effect was that the Directors of BCE who approved the conversion of BCE to a trust, as a ruse to cause the overall trust market’s demise, were acting against the interests of their shareholders. Now they are back to their old ways of issuing press releases in support of government tax measures.

Why anyone would have phone, television, or internet service with Bell is beyond me? Isn’t being a phone company bad enough, without BCE becoming a surrogate tax collector, Conservative government sympathizer and backroom fixer on governments’ behalf?


Ontario tax harmonization will enable Bell to further accelerate service and network investment in the province


By: PR Newswire
Mar. 30, 2009 07:00 AM


MONTREAL, Quebec, March 30 /PRNewswire-FirstCall/ - Bell announced today that expected tax savings resulting from the Ontariogovernment's implementation of a single sales tax structure in 2010 mean Bell can accelerate its investment in the province next year - in addition to the$1.5 billion the company will spend in Ontario this year alone.

"BCE has already committed to invest approximately $3 billionacross Canada in 2009, and about $1.5 billion of that total will be spent in Ontario. Even in the midst of current economic conditions, we're making these multi-billion investments in our team, our broadband networks and our service operations in order to deliver a better Bell customer experience at every level," said George Cope, President and CEO of Bell and BCE.

"As has been the experience in other provinces in which Bell operates, savings from a single sales tax structure will accelerate our investment in Ontario. Fewer dollars going toward taxes in 2010 mean more dollars that Bell will reinvest in our networks and service in the province next year," said Mr. Cope.

The harmonization of the PST and GST on July 1, 2010 will result in the elimination of sales tax on the network and other equipment Bell uses to deliver services to customers in the province. Considering other Ontario industries have long benefited from retail sales tax exemptions on equipment investments, harmonization is welcome recognition of the contribution communications companies like Bell make to the province's economy. Of BCE's 50,000 employees across Canada, approximately 24,000 work in Ontario.

Bell is focused on a clear new goal - to be recognized by customers as Canada's leading communications company - and is executing on 5 Strategic Imperatives in order to achieve it: Improve Customer Service, Accelerate Wireless, Leverage Wireline Momentum, Invest in Broadband Networks and Services, and Achieve a Competitive Cost Structure.

Bell has announced multiple service and network investment initiatives in recent months, including the rollout of a new next-generation wireless network; expanded high-speed fibre optic network capabilities; new service programs such as Same Day Next Day service, Express Install and Internet Full Install; and the purchase of 2,000 new Field Services vehicles.

On March 2, Bell announced it would acquire consumer electronics retailer The Source, adding more than 750 stores to Bell's national distribution network and approximately 3,000 employees to the Bell national team. The transaction is expected to close this summer.



Headquartered in Montreal, BCE (TSX, NYSE: BCE) is Canada's largest communications company, providing the most comprehensive and innovative suite of communication services to residential and business customers. Operating under the Bell and Bell Aliant brands, the Company's services include Bell Home phone local and long distance services, Bell Mobility and Solo Mobile wireless, high-speed Bell Internet, Bell TV direct-to-home satellite and VDSL television, IP-broadband services and information and communications technology (ICT) services. For corporate information on BCE, please visit www.bce.ca . For Bell product and service information, please visit www.bell.ca .

Torstar Revealed


Re: Buying Dual-Class Share Structure (article below)
By: Thicken my Wallet

Re: “You are a fool if you buy the short-end of dual-class share structure company”

Torstar Inc.'s dual-class share structure is why the Toronto Star speaks against income trusts so vociferously and with no facts whatsoever to support their position.

The Toronto Star is owned by Torstar Inc., that employs this corporate abuse known as the Voting/Non Voting Share dual-class share structure, as discussed in the article below by Thicken my Wallet.

Torstar were being pressured by the market (read: their Non-voting shareholders/owners) into converting to a trust to maximize shareholder value. Doing so would have also maximized Ottawa's tax collection of Torstar's earnings. However such a conversion by Torstar would have meant giving up the corporate abuse known as Voting/Non-voting shares and the benefits under that dual-share structure that accrue to the benefit of one class of shareholder (Voting) at the expense of the other (Non-Voting). Conversion to a trust would have eliminated this dual-class shareholder inequity.

As a result, the Voting shareholders of Torstar opted to place their economic interests ahead of their Non-voting shareholders’ interests by rejecting this value maximizing alternative. Worse still, is that Torstar then used its newspaper’s editorial pages, as their instrument, to advance this narrow corporate objective of its closely held Voting shareholders by speaking out against income trusts at the expense of honest reporting and to the overall detriment of its Non-Voting shareholders, of Canadians taxpayers and efficient capital markets. Again, the Toronto Star took this editorial position with no facts to back up its many spurious claims about income trusts and actually reported falsehoods to make its case against income trusts. Some newspaper?

The Toronto Star and its Editorial Board are complete journalistic sell outs. They are a disgrace to their profession.....evidently that of prostitution.

The comparison to fellow media baron Conrad Black in the article below is appropriate, another disgraced devotee of Voting/ Non-voting shares.



Buying Dual-Class Share Structure
By: Thicken my Wallet
Friday, March 07, 2008 10:14 AM

You are a fool if you buy the short-end of dual-class share structure company. Ask anyone who invested in Hollinger during the Conrad Black era. Dual-class shares refer to publicly traded companies that have multiple classes of shares: one class of shares are not publicly traded but entitle the shareholders to a controlling vote; they are typically held by the founding family, the founders of the corporation or loyal executives. The other class of shares, which you and I buy, have no entitlement to vote or, even if all of us voted en masse, we would still be out-voted by the founders. For example, the Class B shareholders of Google (held by the founders and top executives) have 10 votes for 1 vote a Class A share would have (the class of shares which are traded publicly).

The primary disadvantage of a company with a dual-class share structure is there are no effective checks and balances to management excesses such as excessive executive compensation .

My trader friend made an interesting observation during the Conrad Black criminal trial- the shareholders got what they deserved. You invested in a company where Black, a notorious egomaniac and over-spender, held 73% of the voting shares with only 30% of the issued equity and shareholders were shocked when he did not behave in the best interests of the company? Who was going to stop him? In these types of companies, the vote is stacked against the average investor. The larger issue is that companies with dual-class structures tend to be poorer performing stocks than their single-class structure counterparts (ask someone who invested in shares of Ford).

The notable exception being Berkshire Hathaway; the company run by Warren Buffet (but there are questions how well the company will perform after Buffet). Part of this is human nature; there is a Chinese saying that wealth never survives three generations.

In dual-class companies founded by a family, the first generation may have the drive to build the company but that talent and drive may not translate to subsequent generations (trust fund kids don’t necessarily make good management material). The other part is there isn’t any real incentive to listen to shareholders. The company could go sideways for years and the founders can never be voted out.

Finally, the founders tend not to like issuing more equity to fuel expansion since they do not want to be diluted so the company tends to borrow a lot more which makes the company very debt heavy. You can usually tell if a stock has a dual-class structure if the stock has an “A” and a “B” ending to it. For example, Rogers Communications Inc. has a stock symbol of RCI.A and RCI.B. The class of shares which have little to no trading activity is the founder shares and shares with a lot of trading activity is the one that you and I buy.

I like avoiding dual-class structure stock. Obviously, there are good stock which have dual-stock structures but, by in large, I am uncomfortable with the fact the shareholders cannot throw out management even if it tried. As always, do your due diligence before buying anything.

Sunday, March 29, 2009

Harper displays his hypocrisy on Fox News



Harper on Fox News today: “As a Conservative, I oppose raising taxes at the best of times, but we have not got the structural budgetary deficit that exists in the United States, that obviously limits the [Obama] administration’s options."

This is in obvious reference to Obama’s roll back of Bush’s tax cuts for those earning more than $250,000.

Evidently Harper has forgotten that he rolled backed Paul Martin’s tax cuts immediately upon taking office…..for the lowest wage earners in Canada.

What a hypocrite, this Harper is. Complete revisionist historian and deceitful to his very shallow core.

Meanwhile Harper's claim that he hasn't created a structural deficit is bit hard to reconcile with the fact that our $85 billion of budgetary deficit will only buy us $40 billion of stimulus. What is the other $45 billion shortfall, if not structural deficit?

HST: Flaherty's tax on everything



With a 13% tax on everything in Ontario, courtesy of Jim Flaherty, does this mean that Ontario has now become the last place in Canada to consume, raise a family, purchase a new home?

Saturday, March 28, 2009

Derek: You forget to mention how Dominic lied before Parliament



Derek: In your piece today entitled “Manulife, the millions and moral hazard”, you neglected to mention how Dominic D’Alessandro lobbied the government to kill income trusts and how he basically lied to Parliament to defend those measures. That story would have been titled: “Manulife, the Billions and moral sinkhole”, since Dominic’s actions caused innocent income trust investors to lose $35 billion of their retirement savings in order to permit Manulife to shovel more of their variable annuity product down the throats of now-captive Canadians seeking retirement income, and in the process almost destroy Manulife’s balance sheet. But that’s a separate story about Dominic’s managerial incompetence and river boat gambling.

The moral sinkhole part arises from the fact that Dominic D’Alessandro, who you have correctly labeled as the conscience of Bay Street (since Bay Street has no conscience), went before Parliament and basically lied. This has been my beef with Dominic D’Alessandro from the outset. I expect people in his position to do everything they can to feather their own nests by extracting bespoke tax policies from compliant and incompetent governments like Stephen Harper’s that favour Manulife and screw the average investor saving for retirement, but to succumb to lying before Parliament is beyond the pale. That lie occurred when Dominic testified the following.(in response to a set-up question from CON MP Rick Dykstra):

“The notion and the implication that somehow the government on this [income trust tax] file is responding to initiatives that originated with corporations is not based on reality.”

We all know, even you Derek, that this is absolute BS and that Dominic was simply trying to mislead Parliament and all Canadians about the fact that this income trust tax was the sole result of “initiatives that originated with corporations”, or your paper would not have written the following account about what the origins of this tax were, in a piece entitled: “Income-trust crackdown: The inside story” , on November 2, 2006

“High-profile directors and CEOs, meanwhile, had approached Mr. Flaherty personally to express their concerns: Many felt they were being pressed into trusts because of their duty to maximize shareholder value, despite their misgivings about the structure. Paul Desmarais Jr., the well-connected chairman of Power Corp. of Canada, even railed against trusts in a conversation with Prime Minister Stephen Harper during a trip to Mexico, and told him he should act quickly to stop the raft of conversions, according to sources.”

That sure sounds like "the government responding to initiatives that originated with corporations" that are "based on reality" to me?


Manulife, the millions and moral hazard
DEREK DeCLOET
Globe and Mail
March 28, 2009

Friday, March 27, 2009

Burning bridges with Canadians, such as betrayed trust investors, isn’t proving successful for Harper.



The Canadian Press/Harris-Decima survey indicates the two men have similar levels of support, but Mr. Harper's negative ratings are much higher.

It found that 44 per cent of respondents had a favourable view of Mr. Harper, while 45 per cent were negative.

Mr. Ignatieff got a favourable rating from 45 per cent, but only 26 per cent held a negative view.

Maybe the role of CEO of Caisse should be auctioned on Ebay?



Some of the brave comments that were made at the time of Michael Sabia’s appointment as CEO of the Caisse aren’t ringing so true today. One, from Michael Sabia himself, was that he had other job offers from overseas that he turned down to take this job at the Caisse. Another was that Michael Sabia was the perfect person to head of the Caisse, since he could play hard ball with the private equity firms he would be going up against. Mind you, that argument never made any sense, in light of Michael Sabia’s fiasco at taking BCE private, after the backroom role he played with Ottawa in killing the more viable alternative of converting BCE into an income trust.

Today we learn that Micahel Sabia is so desperate to hang on to this new job appointment, that he is willing to waive the first two years of bonuses at the Caisse and forego any pension entitlement. (beyond the rich pensions he will already receive from the Government of Canada and BCE).

Questions: Were his alternative job offers that bad? Or did they even exist? Is this considered hard ball negotiations or desperation? Meanwhile how do any of these concessions being offered up by Michael Sabia deal with the fact that he is singularly unqualified to run a $100 billion pension, given that this is $100 billion more in pensions assets than he has ever managed in the past. How do these concessions address the fact that the process by which he was selected was a complete farce, with only two people interviewed for the job?

The simple answer is that it does not. These concessions being offered up by Michael Sabia are simply an admission by him, that he is neither qualified for this role and nor was the process by which he came by it legitimate. Both aspects are an insult to the professionals who work at the Caisse or the people whose money is being managed by the Caisse.

Perhaps, in making these monetary concessions, Michael Sabia is telling us that he is willing to engage in a reverse auction for this job. The lowest comp package wins. Qualifications mean nothing. If that’s the case, then at least the process itself can be enhanced this time around, and the bidding should be moved over to Ebay, where any number of unqualified persons can be given a shot to bid for this most important role?

Sabia surrenders Caisse pension, bonuses
Quebec pension fund chief tells chairman he'll relinquish rights as controversy grows over the speed of his appointment
BERTRAND MAROTTE AND RHÉAL SÉGUIN
Globe and Mail
March 27, 2009

Bedfellows can often make for strange politics


It is frequently observed that politics can often make for strange bedfellows. Then there’s the case of Jim Flaherty and Christine Elliott. This political duo, who came into existence when Jim Flaherty’s spouse, Christine Elliott filled the vacant chair that Jim Flaherty left in the Ontario Legislature when he pursued his higher calling in Canada’s Parliament.

These two are experiencing political disharmony over, of all things, Dalton McGuinty’s plans to harmonize Ontario’s PST with the federal government's more all encompassing GST. This disharmony probably has nothing to do with any difference between Jim and Christine on ideological fronts insofar as reducing corporate taxes, but rather everything to do with Christine’s versus Jim’s re-elect ability. That’s because the move to harmonize consumer sales taxes was nothing more than the means by which to cut corporate taxes in Ontario by some $2.5 billion a year by shifting that entire burden onto Ontario consumers. Nice.

Good luck Christine on defending that outcome to the constituents of Whitby-Oshawa. And good luck to Jim Flaherty as well, but then again, the people of Whitby-Oshawa have only ever been to you, the means by which you become empowered to act in the interests of Bay Street, Wall Street and the monied elite, anyway.

Jim Flaherty can lay claim to his true constituency that he was successful in bringing his will to bear on Dalton McGuinty by making changes to Ontario’s corporate tax regime as a result of Flaherty’s crude campaign of “Ontario is the last place to invest”. Meanwhile Christine will be stuck with the impossible task of defending these actions which come at the expense of individuals who now have the privilege of paying 13% sales tax on everything.....including luxuries like heating your home in the depths of cold Whitby-Oshawa winters or calling 911 to let them know that your water pipes have burst.

I think voters in Whitby-Oshawa will learn from this experience that there are reverse synergies to be experienced, when they are represented at both the provincial and federal governments by two bedfellows, and instead of receiving better representation, the voters themselves become completely politically neutered in the process and pawns in the greater ambitions of Jim Flaherty.

Manulife's Board redefines the concept of "pay for performance"



You may have read in today’s paper that: “Manulife CEO to get $12.5-million in 2009” or that
“Manulife CEO awarded more than $25M”

That prompted the following question I received from Robert Milmine, who asked:

“Where does one sign up for a job that will pay me $12.5 million for losing $1.9 billion and have that called extraordinary performance?

To which I responded:

The Chair of Manulife’s Board explained this occurred because Dominic’s so called performance bonus was locked in stone before the performance period in question had even elapsed. Their hands were tied, so to speak. Doesn’t that kind of contradict the concept of performance-based? Better fits the definition of “freebie”, “gift”, or perhaps even “ransom” to me?

Not to worry, they only care about this kind of corporate abuse in the US with the bonuses that were paid to AIG executives.

Multiple personality disorders at the Globe and Mail


In the aftermath of the Jon Stewart wake up call to journalists about the complicit role they played in the financial meltdown through their lax standards and often completely superficial knowledge of the subject matter they were covering, there appeared two articles in the Globe and Mail. One was written by Lawrence Martin entitled "To save journalism, bring on that Jon Stewart outrage" and the other was written a few days later by Jeffrey Simpson entitled "With Wall Street exposed, will Bay Street get the message?"

I am beginning to think that most journalists at the Globe and Mail suffer from multiple personality disorders, as there is the image of themselves that they project in their columns, which is the more revealing image and then there is the more flattering image they see of themselves in the mirror. Both of these recent columns by Lawrence Martin and Jeffrey Simpson were written based on the image they see of themselves in the mirror.

However, the Jeffrey Simpson column contained a very revealing deception when he spoke disdainfully about the role of the “plutocracy” in our society, i.e. Bay Street.

Plutocracy is defined as “ an elite or ruling class of people who derive their power from wealth”. Jeffrey Simpson had the audacity to write “But no one should wait for this to happen because the Canadian plutocracy, although much less extravagant than the U.S. one, still seems removed from the preoccupations of ordinary people.” Audacious on Jeffrey Simpson’s part, because the Globe and Mail is nothing more than an instrument of Canada’s plutocracy. What could better define Canada’s plutocracy than the holding company known as CTVGlobeMedia which owns the Globe and Mail and which is owned by the billionaire Thomson family, BCE, Ontario Teachers’ and Torstar? It doesn’t get more plutocratic than that, apart from perhaps the other plutocracy held media empires in Canada.

The plutocracy in Canada are the very group of people in Canada who brought about the income trust tax that caused the group of people that Jeffrey Simpson has conveniently glommed onto, namely “ordinary people”, to lose $35 billion of their hard earned savings, based on the mistake of having placed their faith in Stephen Harper’s promise to NEVER tax income trusts. They were told that “A Conservative government will NEVER let this happen. Evidently in Harper’s vernacular, NEVER means nine months, because nine months later, with ZERO public consultation and with even less evidence to support the canard argument that income trusts cause tax leakage (a total falsehood), Harper completely reversed himself. That would not have been possible without the coordinated support of Canada’s plutocracy held media, including what passes for journalism at the Globe and Mail.

The reasons for Harper’s income trust reversal/betrayal can be found in the very pages of the Globe and Mail itself on November 2, 2006. Tell me what part of the following doesn’t read like a definition of “plutocracy”:

“High-profile directors and CEOs, meanwhile, had approached Mr. Flaherty personally to express their concerns: Many felt they were being pressed into trusts because of their duty to maximize shareholder value, despite their misgivings about the structure. Paul Desmarais Jr., the well-connected chairman of Power Corp. of Canada, even railed against trusts in a conversation with Prime Minister Stephen Harper during a trip to Mexico, and told him he should act quickly to stop the raft of conversions, according to sources.”

So what do you think these peoples’ “concerns” over income trusts were? Reasons that served their interests or the broad based interests of Canadians? Meanwhile, the Conservative government’s backroom process was such that the broad based interests of Canadians were never canvassed or represented. That’s how true plutocracies work. Those with wealth have the power. In this case quite literally in was those in Power, who were in power.

Meanwhile Jeffrey Simpson talks in lofty and disjointed terms about the plutocracy in Canada, as if to suspend in disbelief the fact that he works for a plutocracy, and retains his ongoing employment by espousing the wishes and beliefs of the plutocracy that he works for. Why else would Jeffrey Simpson’s view on income trust be summed up by his facile comment that it was the “right policy”, without lowering himself to even explain why or question the patent falsehoods on which the policy was based. The answer to that can be found in the fact that Jeffrey Simpson is a dutiful organ of Canada’s plutocracy, since the income trust tax is a double taxation imposed only on “ordinary people”, and a tax that can easily be avoided in ways that are uniquely available to and uniquely beneficial to Globe’s very owners, Ontario Teachers’, and BCE (in its failed leverage buyout which was nothing more than the equivalent of a private income trust) and which are protective of Torstar’s wishes to retain its voting/non-voting share ownership structure and which have been exploited by the Thomson family it its purchase of undervalued income trusts, that upon taking private it has exempted itself from paying any such 31.5% tax. But then, the Thomson family’s private holding company. Woodbridge, pays no taxes in Canada whatsoever.

That’s because taxes are for ordinary people to pay and for plutocracies to avoid, and it’s the role of modern day journalists to obscure the existence any such distinctions in the minds of their readers. Why else would the plutocracy own the media, if not to “miseducate and misinform”?

Thursday, March 26, 2009

Hey Dalton: Harmonize this



Apparently the corporate sector is applauding Dalton McGuinty’s tax grab to harmonize Ontario’s 8% PST with the 5% GST, such that consumers will pay 13% on everything under the sun. This is because the harmonization favours the corporate sector with lower taxes at the expense of the consumer.

Well, here’s a tax that I would like to see harmonized for a whole host of good policy reasons, namely the harmonization of employment taxes for CEOs with that of the average working stiff. What policy objective is served by having employee stock option gains taxed at half the rate of the employment income it represents? What greater social good is served by employee stock options that justifies this massive tax break? Unlike people who have real money at risk in the marketplace, and whose gains are taxed at half the rate of income, the holders of employee stock options have ZERO money at risk, so why are they taxed as if they had capital at risk? Makes absolutely no sense whatsoever.

Furthermore, stock options are not aligned with the interests of shareholders, as their payoff structure encourages undue risk taking. No where was this more evident than with the CEO of Manulife, who exercised over 1 million stock options in the last three years at a personal gain of some $24 million, that were taxed at the same rate as a Canadian making $24,000 a year. Does that sound fair to you? Does that sound to you like the "progressive" tax system we are supposed to have? Meanwhile we learn, that during the time that Manulife’s CEO was busily engaged in exercising these options, he was engaging in pivotal and foolhardy decisions to arbitrarily (some would say artificially) inflate Manulife’s earnings per share (ergo Manulife’s stock price and ergo his stock option gains) by not hedging the risks that were being assumed on Manulife’s balance sheet and its shareholders by his decision to NOT HEDGE Manulife's new variable rate annuity business that guaranteed investors with market based returns and a protection of their downside.

This foolhardy decision that placed Manulife's solvency at risk was driven by Manulife's executive compensation system. The decision to NOT HEDGE amounted to a calculated gamble on the part of the CEO of Manulife, equivalent to: “Heads I win, tails you lose”, with Manulife shareholders assuming the opposite side of that trade, i.e. a no win proposition.

Manulife and its CEO are but one example. The world around us is rife with others. What do you suppose drove the sub prime behaviour of Wall Street, the executives at AIG and Fannie Mae and Freddie Mac , if it wasn’t how these people are compensated? Why the government is engaged in the tax subsidy of this kind of improper compensation is a rip off of both taxpayers, but also an abuse of good regulatory practices and having sound foundations for our economy.

Perhaps Dalton McGuinty should turn his mind to tax policy that serve goals that affect society in positive ways, rather than simply policies that are the manifestation of more endless corporate lobbying. The capital gains treatment of employee stock options, that treats these employment based gains at half the rate of the employment income they represent needs to be abolished....in the name of fairness....and in the name of appropriate incentives for the corporate sector, who have proven themselves to be in urgent need of some adult supervision and tax harmonization with the real world of sweat and toil. We have been left holding the bag on two fronts: making up for their absence of taxes, and living with the consequences of the behaviour these unfair tax regimes have encouraged.

On the world stage, it's the Regressive Conservatives


That’s the title of today’s piece by Lawrence Martin of the Globe: "On the world stage, it's the Regressive Conservatives"

Regressive is defined as “opposing progress; returning to a former less advanced state”. Given this definition, then Harper also certainly represents the Regressive Conservatives on the domestic stage as well the world stage.

Does it not strike most intelligent Canadians, including those working for the Globe and Mail, that it is a trifle regressive to have a situation where politicians promise one thing and then do the exact opposite? And when the politician attempts to justify his reversal, his evidence takes the form of 18 pages of blacked out documents? Does this not strike you as slightly regressive in an era where the electorate demands transparency and accountability from their government, and especially given the fact that people lost $35 billion of their retirement savings as a consequence of this (regressive) act? Does it not strike you as slightly regressive for Harper to have argued in Parliament that he never made any such promise (even though the promise appears in print in their election platform and Harper uttered such a promise far and wide and for political advantage), or that the Finance Minister attempted to disown the consequences of his decision by stating “It’s not my fault”?

This is the second article in a week where Lawrence Martin has attempted to position himself on the right (i.e. proper) side of history. Last week, it was his piece entitled: “To save journalism, bring on that Jon Stewart outrage”

The following is representative of the comments I received to that piece, since it appears that our journalists in Canada are just as regressive as the Harper Conservatives, in the minds of many, myself included:

Brent

This is an obvious case of a long-time journalistic whore trying to have it both ways. After years of profiting professionally from being an obeisant stenographer to those in power, he now attempts to cleanse away a lifetime of sins by this mea culpa. A mea culpa which is way too little, way too limited ( and, of course, way too late ) and is purely the latest attempt to position himself expediently in the prevailing political climate of outrage against corporate greed and corruption and government lies and malfeasance.

P.S. And, by all means, contact/confront Martin and ask him to start making good on his so-called epiphany by, finally, exposing the Conservatives' lies regarding Income Trusts.

Best,
Bob


On the world stage, it's the Regressive Conservatives
LAWRENCE MARTIN
Globe and Mail
March 26, 2009

Tuesday, March 24, 2009

Shouldn't Canadian Champions have Canadian names?



OTTAWA, March 24 (Reuters) - Canada's main opposition Liberal Party says it will support Suncor Energy Inc's (SU.TO) plan to buy rival Petro-Canada because it will create a dominant player in Canada's oil sands.

Michael Ignatieff, the Liberal leader, told reporters on Tuesday he will back Suncor's plan to create Canada's biggest oil company following briefings held by the chairmen of the two firms.

"We want a Canadian champion in this industry," he said. "That is the justification for this merger."

Query:
If the Liberals want a Canadian champion, then why isn't the resultant company being named Petro-Canada as opposed to Suncor........as in Sun Oil Company of Pennsylvania?

This is especially the case, if the resultant company will live by the 20% ownership restriction that previously governed Petro-Canada, and that must be temporarily stayed/waived by the Canadian government to permit this acquisition to proceed?

Stated another way, if the surviving corporate entity will be governed by the 20% ownership limit of the Petro-Canada Public Participation Act , then why would the surviving entity be called anything other than Petro-Canada, and since when are Canadian champions called names that are anything but Canadian in origin?

Flaherty's comments on Suncor deal reveal his hypocrisy and incompetence




OTTAWA (Reuters) - Flaherty, speaking to CTV television, said it was a "good thing" that regulators were reviewing the [Suncor/Petro-Canada] deal l to ensure fair competition in the oil industry, but added that, "We believe in investment as well in this country. We want to grow this economy."

How does a share for share takeover of Petro-Canada by Suncor amount to "investment"?

Meanwhile Flaherty conveniently avoids speaking about the resultant job losses?

Nor does Flaherty talk about how he decimated investment in the energy sector with his income trust tax that killed the 20% of Canada's energy sector held in royalty trusts?

Apart form the 31.5% tax itself, how does imposing growth constraints on income trusts, as Flaherty did, help to "grow this economy"?

Flaherty also conveniently ignores that his income trust tax was the sole cause for Prime West Energy being acquired by middle eastern Abu Dhabi Energy and TransAlta Power being acquired by Hong Kong billionaire Li Ka Shing.

Why are Canadian investors penalized when it come to investing in Canada and foreign investors are not? Is this the kind of investment that Flaherty prefers in our energy patch? Foreigners over domestic investors?

Meanwhile where is Flaherty’s proof of tax leakage? Does Flaherty not believe in transparency or government accountability?

Friday, March 20, 2009

David Dodge: A self acclaimed expert at torquing in Technicolor


I am getting confused. Was it David Dodge who said that Stephen Harper’s and Mark Carney’s economic predictions amount to dreaming in Technicolor, and the Bank of Montreal’s David Porter who said that Stephen Harper is torquing his economic predictions, or was it the other way around? Either way, I guess it doesn’t really matter.

I do know that former Bank of Canada Governor David Dodge has been guilty of some pretty egregious torquing of his own, as he dreamed in Technicolor before the Public Hearings on Income Trusts back on February 1, 2007.

That was back when David Dodge was seeking another term as Bank Governor and was attempting to extract himself from some very untimely and favorable statements he had made about the importance of income trusts to both business and retirement savers, in the days immediately leading up to Flaherty’s Halloween surprise. No doubt, those statements by David Dodge were most unwelcome in certain quarters and constituted somewhat of a career limiting move for David Dodge. So faced with this moral dilemma, as between wanting another term as Governor of the Bank of Canada and speaking the truth about income trusts, what did David Dodge do? Well, he simply torqued his testimony to curry favour with his masters. All of a sudden, his views on income trusts took on a new hue, drawn from David Dodge’s Technicolor palette of opinion.

In so doing, the supposed plain spoken David Dodge opted to “piss our money down a rat hole”, to borrow a phrase of his from his exclusiive Globe interview this week. In fact, David Dodge pissed precisely $35 billion of our money down a rat hole, in his unsuccessful attempt to curry favour with his bosses and secure another term as Governor of the Bank of Canada. Instead, Mark Carney was awarded with that prize, since he had done vastly more to execute Flaherty’s income trust policy of deceit, than David Dodge could ever hoped to have done.

One thing that David Dodge was successful at securing, at least in the minds of millions of Canadians, was his reputation of being gifted at torquing his testimony and ruining their retirement futures in a bid to hang onto his job. David Dodge was able to glide effortlessly from comments that supported income trusts made days before, to comments that condemned income trusts, and he achieved this transition by invoking the utter falsehood known as tax leakage. Like Jim Flaherty and Mark Carney, David Dodge had no evidence to support these patently false claims of tax leakage. His testimony was merely naked torquing of the truth into something that was a callous lie. A callous lie, the intent of which was to preserve himself another term as Governor of the Bank of Canada.

Meanwhile all of David Dodge’s testimony about income trusts, both favourable and unfavourable, should be rejected as invalid, since all of these observations were accompanied by David Dodge’s constant enjoinder of “limited evidence suggests”. Neither David Dodge, nor the Bank of Canada, had done the requisite homework to qualify them to speak on the matter of income trusts in an authoritative manner. But that didn’t stop David Dodge from making his ill informed pronouncements, did it? Meanwhile those who had done the requisite work, such as PricewaterhouseCoopers and HLB Decision Economics were relegated to the sidelines during the Public Hearings on Income Trusts, which proved to be nothing more than an exercise in opinion shopping, where people’s opinions, like those of David Dodge could be bought and sold in the open market in order to proffer up justification for the pre-ordained outcome, which was to deprive Canadians of investment choices that didn’t maximize the fee streams of Canada’s large life insurers or that didn’t maximize foreign private equity’s ability to rape Canadian businesses through debt leverage buyouts, such as the LBO of BCE that ensued immediately in the aftermath of Flaherty preventing BCE from converting to a tax maximizing, value maximizing income trust.

Could David Dodge have predicted the future any worse than he did of have been more hypocritical in their actions? That’s what happens when you listen to people who base their views on limited evidence or who prove themselves so adept and so willing to torque the truth to achieve nefarious ends. David Dodge, Mark Carney, Jim Flaherty, Stephen Harper are all guilty of the same sin, torquing the truth and dreaming in Technicolor, as the situation calls for and for the sole purpose of maximizing their personal lot in life.

They should all be told to go torque themselves and piss their retirement savings down a rat hole next time. Their usefulness to society has long since expired, along with their ability to ever redeem themselves, especially since David Dodge now works for that tax flow through entity, the income trust known as Bennett Jones LLP.

Given his great public policy concern over the alleged "tax leakage" from income trusts, perhaps David Dodge could let all Canadians know how much in taxes that Bennett Jones LLP remits every year to the Canada Revenue Agency? To make things easier for David Dodge and to prevent evasive responses, this is a multiple choice question:

(a) Nadda
(b) Squat
(c) Zilch

Thursday, March 19, 2009

My creationist experience with Gary Goodgrief, Minister of Science


Gary Goodyear is attracting considerable criticism these days. All of it well deserved, I'd say.

I had the occasion/misfortune to encounter Gary Goodyear back on March 5, 2007 in St. Catharines Ontario at the announcement of the Seniors Council. This was quite the creationist experience on several fronts. None of them good. It was this experience more than any other single event that motivated me to run for the Liberal Party in the 2008 election, as I knew something had to be done to rid this country of the Conservative Party in general and MPs like Gary Goodyear in particular. It was on the way home from this event that I phoned Liberal MP Paul Szabo to inquire whether the Liberal Party had a candidate to run against Jim Flaherty in Whitby-Oshawa.

The Seniors Council was the creation of the Harper government and was designed to take the place of the 27 year old group known as the Council on Aging, which was obviously proving itself to be an obstacle to Harper, so it had to go. This Seniors Council announcement was a complete farce, as the Council was nothing more than a concept on a piece of paper. None of its members of the Board had even been identified or announced. And yet this merited a big PR production complete with a custom lectern and Seniors Council logo and back drop and no less than five Cabinet Ministers in attendance, including Senator Marjorie Lebreton (Minister for Seniors) and a gaggle of lesser light Conservative MPs, including someone who I later learned was Gary Goodyear, MP for Cambridge.

After the Council had been announced along with a statement of all the great things that Harper had done for seniors, there was an opportunity for the press to ask questions. In the end, mine was the only questioned asked. My question was why did the speaker (MP Rick Dykstra) only mention that the Tax Fairness Plan had introduced pension income splitting for seniors and not mention that pension income splitting only benefited 14% of seniors and why did the mention of the Tax Fairness Plan not include the fact that this was the tax measure that destroyed seniors’ investments in income trusts at a cost of $35 billion of their life savings?

This was recorded in the Candian Press’ news account of the day’s affair, as being the “one discordant” voice at the event.

After I had the chance to ask my question and didn’t receive any meaningful answer, the event ended abruptly. After which I approached Marjorie LeBreton to speak with her, when I found my path intersected by this Gary Goodyear person. I remember it quite vividly, extreme bad breath and all. Without any provocation or justification, this total stranger, Gary Goodyear, stands in my way, leans into my face and says: “If you touch her, I am going to call the cops”. What a complete thug! “If you touch her, I am going to call the cops”. Good grief, what a creationist comment if ever there were one. This guy is threatening to call the cops even before there is even a semblance of reason for doing so. He had himself all worked up into some creation worthy of calling the cops? I thought this guy was some kind of low end rent a cop. Imagine my amazement when I learned that this thug was a Member of Parliament? That increased my disgust tenfold. Here I am participating in a taxpayer funded public event, and I ask a simple question and it begets this kind of thuggish response.....from a sitting member of Parliament? That was it for me.

It was on the drive home that I was inspired to run for office, in my personal attempt to rid this country of low life thug MPs like Gary Goodyear. Only to fail in my attempt to do so, and only to see his kind of thug behaviour rewarded by Harper with Gary Goodyear’s elevation to Cabinet, as Minister of Science. Those events alone, make the Theory of Evolution, hard to fathom. More like devolution, I’d say.

The Globe’s Lawrence Martin acknowledges what I have been saying for 2 years



I guess it’s only when the Main Stream Media is threatened with their own sorry existence, do they take measure of their own failings and inherent biases. It guess it also took Jon Stewart to awaken the MSM to their own profound professional failures and corporate bias. At least Lawrence Martin has the conviction to state the obvious in his article today (below). The income trust policy was advanced on a premise that was demonstrably false. Few in the media, with the exception of Diane Francis, called this fraud what is was in real time. That is for the very reasons contained in today’s article by Lawrence Martin, namely:

-"journalism got corporate and soft"
-"journalism has now been abetting easy routes to war and market chaos"
-"as media ownership became concentrated in the hands of a few corporate giants. Journalism came to reflect the ethos of those corporate giants"
-"More courage and daring and Jon Stewart-type outrage is in order" (what do you think I have been doing for two years exposing the lies propagated by Canadian media on their corporate owners behalf?)
-"From these corporate owners who sought to impose their bias the media need regain its independence"

If that’s the case, then I can think of no better topic on which Lawrence Martin can impose his new journalistic call to arms, than the $35 billion income trust fraud that was perpetrated on the complete policy lie that income trusts cause tax leakage. These are senior Canadians whose life savings were destroyed at the behest of the large LifeCos and whose standard of living during their golden years was devastated, while a rash of foreign takeovers (that caused real tax leakage) ensued. Are you up to the challenge Lawrence Martin?


To save journalism, bring on that Jon Stewart outrage

LAWRENCE MARTIN
Globe and Mail

March 19, 2009

Has Big Media ever had it so bad? CanWest Global begs for survival. The CBC begs for survival. CTV is losing a bundle. Newspapers are bleeding and cutting to the bone; the online invasion threatens their survival.

Along with the new technologies, journalism is being pummelled by the great global economic nosedive. The crisis was brought on by excesses of the corporate class. Journalism, chiefly south of the border, didn't put up much of a challenge to the moneyed men before they climbed aboard their golden runaway trains - just like it didn't put up much of a challenge to the pap trotted out to justify the Iraq war.

So, while the fourth estate is in dire straits, sympathy isn't exactly washing over the walls. Nor should it be. Journalism got corporate and soft. If, in the post-Watergate era, it leaned too much to the anti-establishment side, abetting welfare-state excesses, it has now been much the opposite, abetting easy routes to war and market chaos.

As media ownership became concentrated in the hands of a few corporate giants, journalists too often came to reflect the ethos of those corporate giants. Counterculture voices of the left, traditional sources of opposition to corporate rule and war, were marginalized. In the Watergate era, they held prime place. But the boomers got old and tired and, in the past decade or so, the neo-cons blew them off the map.

Canadian journalism moved to the right of the population. In the United States, Fox News and the like-minded encouraged a climate in which Wall Street and the Pentagon ran rampant. And now, after the Bush nightmare and Iraq, there's the market convulsions and AIG that should have the Fox breed running away from every mirror in sight. We could be at the tipping point wherein a counterculture wave rolls in. More courage and daring and Jon Stewart-type outrage is in order - new rogues of journalism to set us straight. From those corporate owners who sought to impose their bias, the media need regain its independence.

Canadian journalism hasn't been caught off guard to the American degree. But through much of the Republican wreckage of the past eight years, we were well short of impressive. As George W. Bush brought down his country and, by extension, damaged this country's interests, our journalistic voices were tame in charting his folly. Those who tried to hit hard had to listen to sophomoric garbage about being "anti-American." Of course, telling the truth about the Bush administration was about the most pro-American thing anyone could do.

No better moment summed up our wimpishness than when a cabinet minister had the courage to suggest that Mr. Bush was a failed statesman. Our media practically had a colonial conniption. The minister was pilloried. How dare he say that about George?

In many cases, our media are more comprehensive, more balanced, more professional than in the past. But the resolve to stand up to vested interests isn't what it should be. There needs to be more independence and a hardening of the challenge function. We buckle too easily. When the Governor-General made her decision to sustain the Conservative government in office, she gave no explanation. Instead of demanding one, our media folded like deck chairs.

There's a dismaying conformity to our journalism, and little thinking outside the box. Notice the front pages of newspapers: They're almost all the same. In today's world, you'd think there'd be 10 news stories on the front page. Our papers have about three, and sometimes only one of them is a news story. The online invasion means there are a thousand more opinions out there. It means there is more need for solid news coverage, not less. But the tabloidization of the business runs amuck. In the Internet world, where every picture imaginable is available, newspapers still blow valuable space running 400 hockey photos when a fraction of that amount would do.

As for television's conformity, we all know about that - those news delivery panels of chuckleheads who kibitz with one another instead of just telling the story.

Times are hard for the media. The shakedown is coming. Let it bring a new spirit - a journalism that's tougher, less knee-jerk, less beholden to elites, more beholden to the truth.

lmartin@globeandmail.com

Tuesday, March 17, 2009

Tax leakage is nothing more than creationism, religiously advanced by the backwater Globe and Mail



Minister won't confirm belief in evolution

Researchers aghast that key figure in funding controversy invokes religion in science discussion

ANNE MCILROY

From Tuesday's Globe and Mail

March 17, 2009 at 2:00 AM EDT

Canada's science minister, the man at the centre of the controversy over federal funding cuts to researchers, won't say if he believes in evolution.

“I'm not going to answer that question. I am a Christian, and I don't think anybody asking a question about my religion is appropriate,” Gary Goodyear, the federal Minister of State for Science and Technology, said in an interview with The Globe and Mail.

A funding crunch, exacerbated by cuts in the January budget, has left many senior researchers across the county scrambling to find the money to continue their experiments.

Some have expressed concern that Mr. Goodyear, a chiropractor from Cambridge, Ont., is suspicious of science, perhaps because he is a creationist.

When asked about those rumours, Mr. Goodyear said such conversations are not worth having.

Monday, March 16, 2009

Today's Hill Times: Income trust issue rages on



Letters to the Editor:


■ Re: “Income trust tax needs to be repealed,” (By Brent Fullard, The Hill Times, March 9, p. 12). It has been a long time since Finance Minister Jim Flaherty made his announcement about taxing income trusts. At this time, the lack of any actual news coverage about this huge deceit shows how incompetent the vast majority of Canada’s reporters are. It seems that the bigger the lie the more gullible the media are and if the lie is told enough times it becomes the truth.

Rick Drysdale
Sidney, B.C.


■ It has been more than two years since the income trust tax was proffered up under the false moniker of the “Tax Fairness Plan.” It seemed innocuous enough, after all , what could be wrong with anything with “fairness” in the title? Unfortunately , for small investors and seniors it was the beginning of a devastation not ever forgotten, as our savings and incomes began to shrink immediately before our eyes and have never recovered. At present , immediate economic stimulus is required to bring the economy out of it death throws. What better way than by removing the unfair burden of the tax “fairness” plan from the throats of businesses and investors everywhere and make available an immediate infusion of discretionary dollars into the market place at no cost to the taxpayer? It would be a win-win-win outcome, for both the short, intermediate and long-term benefit of Canada, and to the benefit of investors, enterprise and taxpayers at large.

Michael Popovich
Rodney, Ont.


■ I will forever be amazed at how quickly the Canadian media abandoned the seniors in this great country who represented the entrepreneurial spirit we keep praising. These folks, for the most part, ran independent businesses and took care to set aside what they thought would be suffi cient to see them through their “golden years.” These were the same people who voted for Prime Minister Stephen Harper when he vowed never to touch the savings of Canadian seniors. Then came that fateful day when the government did a complete turnabout and quite literally devalued the investments of these people by billions of dollars, by declaring war on income trusts, based on a complete fabrication known as “tax leakage.”

John Fallows
Toronto, Ont.


■ Please let me express my deepest gratitude for publishing the column on March 9 entitled, “Income trust tax needs to be repealed.” Unfortunately our esteemed leaders, Prime Minister Stephen Harper and Finance Minister Jim Flaherty are too incompetent to understand.
As a senior, the day their reign comes to an end, will be a day of rejoicing, and celebration, it cannot come soon enough. This has to be the most incompetent government that Canadians have ever elected. As for fabricating the truth “income trusts cause tax leakage,” we won’t even go there.

David Marshall
Cornwall, Ont.

Saturday, March 14, 2009

The man who lied to Canadians about tax leakage, sings a new tune



Central bank ditches economic rebound prediction

Globe and Mail
March 14, 2009

HORSHAM, England — The Bank of Canada seems to have ditched its prediction for a made-in-Canada economic rebound next year.

Speaking to reporters at the Group of 20 finance ministers meeting in Horsham, Bank of Canada Governor Mark Carney hinted strongly that his last forecast for 3.8 per cent growth in 2010 is no longer valid. “Clearly the risks are breaking to the downside,” he said, referring to the string of grim Canadian and international growth data in recent weeks.

Will Michael Sabia complete the vicious circle, he helped create?



Any one who actually thinks Michael Sabia pursued the conversion of BCE into an income trust for any reason other than to assist the Harper government in shutting down income trusts is either naïve or delusional. If I am wrong about that, then Michael Sabia in failing to get permission for BCE to convert to an income trust, will have to go down as one the world’s worst lobbyists, since this is a person who was extremely tied into Ottawa on both the political and bureaucratic fronts, having served in senior capacities in the civil service and having been appointed as one of 10 appointees to the NACC.

These connections, together with the easily demonstrated policy argument that income trusts DO NOT cause tax leakage, should have easily allowed the gifted Michael Sabia to have gained the requisite permission from the Department of Finance, where he worked a Director General of Tax Policy, for BCE to have converted to a tax maximizing income trust........assuming however that was his real goal, as opposed to playing some game with the public and his shareholders to kill income trusts through the faux crisis he allowed to ensue, and be falsely reported upon by the news empire at his disposal, namely BellGlobeMedia, now CTVGlobeMedia.

Now we have Michael Sabia becoming the CEO of Caisse, which is one of the largest pension funds in the country, which is a most unwelcome development for income trust investors.

These large pensions funds, like Caisse, were extended an exclusive carve out by Flaherty from the draconian 31.5% tax on income trusts and the growth constraints imposed on income trusts. Why? Because they got a separate deal from the deal that governs RRSPs. Why? Because they have clout with Ottawa and average Canadians do not. Thanks to Flaherty’s corrupt thinking, these pension funds are able to acquire the undervalued and devalued income trusts from average Canadians and through the mere act of taking these trusts private, the pension funds are absolved of paying the 31.5% tax or abiding by the growth constraints. This is Flaherty’s corrupt idea of leveling the playing field. Affording unfair economic advantage to the 25% of Canadians with pensions, that are being denied the 75% without pensions.

How does the mere act of taking an income trust private, deal with all the alleged evils of income trusts? By definition it does not, but then these alleged evils are all phantom evils in the first place and have zero basis in fact.

Flaherty created a situation where these pension funds are incentivised to act in a PREDATORY way, much like the incentivised predatory lending practices in the US subprime market, where the pension funds can pick up these devalued trusts and own them free of the 31.5% tax and the growth constraints.

Michael Sabia played a pivotal role in creating the false circumstances, or faux crisis, that provided the Harper government with the excuse it needed to renege on its election promise concerning income trusts. Now, as the head of the Caisse it will be interesting. and most hypocritical to see to what extent Michael Sabia exploits this enormous loophole in tax legislation that he helped create, as his predecessors at the Caisse have and as OMERs, PSP and many other advantaged pension funds have done so and continue to do so, as recently as the purchase of Teranet Income Fund by OMERS in December 2008.

Where are the Opposition parties, like the Liberals, when in comes to protecting Canadians from these grossly unfair tax policies and the obvious predatory practices that they have resulted in, and which were obvious from the outset were going to occur? Who is on first?