Saturday, August 9, 2008

NDP Leader Jack Layoff. Cause and effect

Jack Layton, better known as Jack Layoff, should take some of his righteous indignation, normally reserved for trivial undertakings like ATM fees , text messaging fees and pay day loans and direct it towards himself. The reason for this is simple, Jack Layton is as responsible for the 2,500 layoffs at BCE as its new owners, Ontario Teachers’ Pension Plan, Providence Capital, Madison Dearborn Capital and Merrill Lynch Capital Partners, are.

The cause and effect of Jack Layton’s role in these 2,500 layoffs is irrefutable. You see Jack Layton and his party are the champions of the income trust double tax. The income trust double tax that prevented BCE from converting to an income trust to satisfy its need to maximize shareholder value. What naive Jack falls to understand is that BCE is worth more when it distributes it earnings to its shareholders rather than blowing $8 billion on another Teleglobe, hence the value bump from an income trust. Meanwhile tax revenue to Ottawa would have been maximized since BCE's shareholders used to be taxable Canadians. Now they are not.

Jack Layton also fails to understand cause and effect.

You see, Jack Layton’s blind support of Stephen Harper’s Halloween massacre, resulted in BCE becoming a highly desirable and highly vulnerable target for foreign private equity, Sure enough, three days later BCE’s CEO Michael Sabia was on the phone with New York based private equity powerhouse KKR discussing that very alternative......taking BCE private by way of a leveraged buyout. That was November 3, 2006.

Now it's August 9, 2008. Not only was the leveraged buyout of BCE a highly predictable, cause and effect, outcome of Jack Layton’s blind support of the income trust tax, so too were the many adverse outcomes. In the case of BCE alone, here were the predictable outcome

Job losses (2,500 to date)
Tax losses ($800 million less per year in taxes from BCE as a private LBO as opposed to a public LBO
Foreign takeover (BCE used to be Canada’s most widely held public company with 600,000 shareholders, versus 4, three of whom are US)
Debt binging (BCE will now have $44 billion of debt and $8 billion of equity, instead of the near reverse)
Debt binging will lead to higher service costs (what does Jack think the text messaging fee increase is for, if not to service BCE’s new mountain of debt)
Breaking of pension rules (how can Teachers’ own 50% of BCE when pension rules restrict it to 30%, what scheme is being used to circumvent federal legislation?)
Creating a two tiered pension system (why can pension funds own trusts privately and not be subject to the trust tax, when the 75% of Canadian without pensions have to pay a 31.5% tax? In their RRSPs?)

When it comes to his blind support of this policy to double tax businesses as trusts held in RRSPs, Jack Layoff has a lot of supporters. Normal NDP folk like Paul Desmarais Jr., Gwyn Morgan, Dominic D'Allesandro and John Manley. Also Jack has a lot of support from the blind media in Canada who feel, like Jack Layoff, that 18 pages of blacked out documents is ample “proof” of this policy’s central rationale, namely alleged tax leakage. Jack Layton along with Canada’s media are taking this country into the dark ages, which suits Bay Street just fine. Blacked out documents are Jack Layoff idea of transparency. Ditto the Toronto Stock Exchange and TD Bank.

And here’s the cause and effect of that:

Permanent job layoffs
Massive losses in tax revenues
Foreign takeovers
Two tiered pension system
Pension funds gone wild
Zero withholding tax paid by foreigners on leveraged buyout loans
Lessened competition in key sectors like telecom
Higher cost of capital for Canadian businesses
Less choice for investors

Goldman Sachs would be proud of Jack Layton. I know Manulife’s CEO is. He said as much, at the public hearings on Income Trusts. Go Jack Layoff, go. You are destined for greatness, as enumerated above.

PS: Did I mention the other 44 trust takeovers that have resulted in an additional $1.2 billion in annual tax losses. I wonder how many layoffs? Maybe Jack Layoff can tell us?


Dr Mike said...

Happy Jack--that master of the parliamentary sneer---the sneer that scares!!

Unfortunately , that is about all that he has going for him.

He gets himself so wound-up in absolutely useless issues over which he has no control & which mean very little in the overall scheme of things anyway.

Canada loses over 55,000 jobs & he is worrying about text message fees--these Job losses were called "extremely ugly" & "stunningly bad" by leading Canadian economists.

So what does jack do , sneers at the numbers & little else.

If all Jack has on his plate is ATM fees & text message fees , then Jack you are in the wrong restaurant--time to "move on" as Dan Miles would say.

Dr Mike Popovich.

Transcanada said...

Jack knows he made the mistake.

His main income trust cheerleader Judy Wasylycia-Leis was quietly removed from her NDP Finance critic position after the NDP support of a CONservative position became unsupportable.

Jack you were CONNed and you are too dumb to admit it. Not even a master of Gimmick politics.

Robert Gibbs said...

Disappointed By Layton, Former MPP Likes `Pretty Solid' Dion

The NDP is becoming a "non sequitur" federally.

The Toronto Star

Susan Delacourt
Ottawa Bureau

Jul 12, 2008 04:30 AM (EDIT)

OTTAWA-Reid Scott, a former judge, Toronto city councillor and one of the first people in Canada to be elected under the NDP banner, is abandoning his six-decade long attachment to the party and joining the federal Liberals.

Impressed by Liberal Leader Stéphane Dion's carbon tax plan and disaffected by Jack Layton's leadership of the NDP, Scott sent a letter this week to the federal Liberals, saying he would like to take out a membership.

"He's got great integrity and courage," Scott said. "I spent 20 years on the bench and I can tell a genuine person from a phony and I think Dion is basically pretty solid."
Now, he thinks the NDP is becoming a "non sequitur" federally. He confesses he doesn't understand what Layton is doing.

"I've sort of given up on them. I think Layton is not the leader I expected ... He's no Tommy Douglas. He's sort of in bed with Harper half the time, and only interested in his own advancement."

Mitch said...
This comment has been removed by the author.
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