Friday, October 5, 2007

Confessions of a Carpetbagger

Dick Schmeelk of CAI a private equity fund was a real shooter in his day, You could even say he was the Dick Schmeelk of his day. I was introduced to him back in 1987 by Ed Clark shortly after Ed had joined Merrill Lynch from his failed foray in Ottawa as the architect of the NEP (National Energy Policy). Ed Clark was the Mark Carney of his day. NEP has since become the TFP.

Ed introduced Dick Schmeelk to me by joking about Dick having a virtual lock on all Ottawa’s big deals. Ed would know. Dick was with Salomon Brothers then. He has since moved on to the even more fertile pastures afforded him by Canada’s New Private Equity Government in the world of, you guessed it, Private Equity. He helped found CAI Private Equity in New York in 1989 and his private wealth probably rivals that of his best client: Canada.

Here are his gleeful comments on the enormity of the opportunity for private equity created by the Conservative government's slaughter of Income Trusts. This event-driven buying situation was created by Harper and Flaherty, either knowingly or unknowingly. They have handed Schmeelk and his peers in Private Equity the opportunity of a lifetime, as result of artificially devaluing and crippling Canadian income trusts for some yet unproven reason. Apart that is from displacing average Canadian investors in favour of the Schmeelk’s of the world and tranfering $35 billion of Canadians wealth in the process. Try to read between the lines when viewing his video confession.

Oh by the way, the government agrees with Dick’s bottom line assessment. If you were wondering whether our government knew this outcome would occur, just get a load of this internal Finance Department Memo of October 2006. The circle of guilt in tightening like a noose. Soon we hope to be well worn by these most deserving uncivil servants and their masters.


Anonymous said...

Are there or could there be "Halloween Protest Events"all across Canada,other than just Ottawa?I think this could really make a big statement,considering there may be an election!

Anonymous said...

Yes there is an event in Ottawa being arranged by retired trust investor David Marshall of Cornwall. The details are here

Anonymous said...

Yes there is an event in Ottawa being arranged by retired trust investor David Marshall of Cornwall. The details are here

Anonymous said...

Things happen because they can happen. When the Finance Minister writes laws that make it difficult for Canadians to finance and own businesses, or laws that make it easier for foreigners to buy Canadian assets, even to the extent of lowering the foreigners’ after-tax cost of capital (hint: the foreign investor pays no tax), what do you think will happen?

Good answer! Yes! Foreign investors will buy-up Canada.

But in this is the greatest mystery. Why would a Canadian political party favor foreign investors over Canadian voters? Is this possible?

Yes, a Canadian’s vote has a limited time value. Kinda like a one-night stand—love ‘em, then leave ‘em. The Republicans have perfected the style. The style is: appeal to the voter’s values, including the fear of losing the values, and get the voter to vote against his or her own economic interests. For example, (1) vote for the War on Terrorism and Keep America Strong, (2) make Halliburton and selected other Texan companies super-rich, (3) run up the American national debt to trillions high, (4) cut back on the nation’s infra-structure, (5) cut back on transfers for education… Oops! Not suppose to mention the things after (1).

The governing Canadian political party is not anywhere near as masterful as the American Republicans. In fact, indications are that the governing Canadian political party is a bunch of bumblers. Well, actually better to say “The governing Canadian political party is a bumbler.”

But why would a Canadian political party favor foreign investors over Canadian voters?

Dr Mike said...

It burns my butt that here in Canada there is very little , if any , consultation when tax laws are changed--why do they feel it completely necessary to keep the public in the dark when it comes to taxes.

The government , especially our " new" government , thinks that as members of the public , we must be as "dumb as a bag of hammers"--that we need to be coddled & protected from out ignorance on all issues "financial".

The problem is , who is protecting us from their incompetence--the level of poor judgement illustrated around their mishandling of the "Tax Fairness Plan" leads us to wonder who the real "hammers" in the bag are.

If it is not a problem of incompetence , then this should be even more troubling to us all--in this case , we were manipulated & shafted at the same time all for their greater good & their master design over which we have no control.

Why are things here becoming so complicated--why didn`t this government just consult with the public on this issue & come up with a compromise plan which could have helped everyone while hurting no one.

I will leave you with this article from Singapore--we always look upon such countries as being not as forward thinking as ourselves--after you read this article , I am sure you will have a different idea of which country is facing the wrong direction.


MOF accepts most of the suggestions on Income Tax Amendment Bill

By Dominique Loh, Channel NewsAsia | Posted: 07 October 2007 1748 hr

SINGAPORE: The Finance Ministry has accepted most of the 29 suggestions it received from its public consultation exercise on the 2007 Income Tax Amendment Bill.

21 of the suggestions will be incorporated into the Bill's final draft.

This is the fifth time the draft income tax legislation has been published for consultation.

Several comments relate to how the Bill will be drafted.

These include tax deduction for borrowing costs, changes to the one-tier corporate tax system, tax treatment of qualifying debt securities and real estate investment trusts or REITs.

The Ministry said most of the suggestions came from professional bodies and companies.

It found them constructive and said all will be carefully considered. - CNA/ir


Kephalos said...

Why is the Harper Conservative Party (HCP) doing this? On the long-term, it makes no sense. In fact, on the long-term, it will be very harmful to Canadian sovereignty—the right and the ability to own and enjoy the benefits of Nationhood. It is very odd for a country to have senior officials are bent on weakening the country.

But where are the knowledgeable people in the federal and provincial finance departments? The provincial finance ministers all sent letters to FINA saying that income trusts cause them tax leakage. But only because of foreign investors. Foreign investors own 10% of the business trusts and 30% of the energy trusts. But trust investors pay 2.2 times more in personal tax. So overall, the Canadian governments are ahead. There is no tax leakage. When Canadians are the trust investors, what AB or ON loses, the other provinces gain. How can that be bad?

Flaherty has made it much worse for Canada and the provinces. Because of other legislation that was passed with the last budget, where a minnow foreign investor had to pay 15% federal withholding, now a Great White Shark foreign investor will pay 0% in corporate tax. What will the provinces get? What rhymes with ‘hero’ and feels like a hole in your pocket?

This is so weird. So weird I’m going to take a bag of nails and hammer those nails into a concrete wall—with my head. (Thanks for the tip, Doc.)

Anonymous said...

To answer your question” why this happens in Canada”. First it doesn’t happen only in Canada it happens every where the political class “the establishment” has a great disconnect from the realities.
It seems more obvious in Canada because Canadians are not a nation yet it is just a political system, and the political class knows very well they can operate without punity.

We moved to Canada from USA 1996, after a week in there I asked my wife “where are the real Canadians in here ? ” Almost every one we met had a heavier accent than us and the first question they asked was “where are you from…” That never happened to us before and we lived in USA and in UK were people had a very strong sense of belonging.

Words are no substitute for actions (RBS-commercial) Until Canadians stand up and organize to defend their interest, (this might take generations) and make their elected officials sweet on their town Hall Meetings, this is going to continue……………………..