Friday, October 31, 2008

Happy Halloween: How BCE successfully gamed Jim Flaherty....

such that Ottawa will now collect $800 million less a year in taxes from BCE

Below is the Globe and Mail article from November 2, 2006 entitled “Income Trust Crackdown: The Inside story.” Obviously those involved in gaming Ottawa to bring about Stephen Harper’s Halloween income trust betrayal of two years ago today, were intent on “crowing” about their personal accomplishments. We have their hubris and vanity to thank for the insights afforded by this article.

We have also subsequently learned from Theresa Tedesco of the Financial Post that BCE’s announced conversion was actually an elaborate exercise in “gaming” Ottawa, since her article of September 27, 2008 quotes the following BCE insider that: “”We weren't particularly interested in doing an income trust but we thought if we announced we were doing one, it would force the government into a decision," said the source close to the company who asked not to be named.They were right. Two weeks later, on Halloween, Finance Minister Jim Flaherty announced Ottawa would tax companies converting to income trusts to curb tax avoidance.”

Tax avoidance? The facts are otherwise.

Flaherty’s rationale for destroying $35 billion of Canadians’ savings two years ago today was that ‘“We were going to see the two largest telecommunications companies in the country not pay corporate taxes”. Unfortunately we have a Finance Minister who apparently is incapable of reading an income statement. Had Jim Flaherty been able to read an income statement, he would have realized that BCE wasn’t even paying at the time, and that denying BCE the ability to become an income trust taxed in the hands of its taxable Canadian investors, simply meant that he was leaving BCE vulnerable to takeover by way of a leveraged buyout. This LBO outcome was predicted by many at the time, myself included.

The leveraged buyout of BCE which indeed did result, will mean Ottawa will collect $800 million less a year in taxes vis-a-vis what Ottawa would have collected from BCE under an income trust. This is a fact. Strange that the media in Canada was up in arms over the false notion that income trusts cause tax leakage in the fall of 2006, at a time when Canada was gushing in surpluses, however now that we are entering deficits, not a word is said about the tax losses from the LBO of BCE, not to mention the 2500 job losses caused by BCE’s LBO or the massive debt that is being incurred by BCE ( at the ultimate expense of consumers) at the least opportune time in the economic cycle.

Could that have something to do with the fact that BCE and Teachers’ control a large swath of Canada’s media known as CTVglobemedia with cross-ownership involving Torstar?

In the absence of scrutiny by Canada’s corporately owned media, the question becomes: Where are the politicians?..... Out trick or treating? Or doesn’t the loss of $800 million a year in taxes matter?

Income-trust crackdown: The inside story

When the telephone rang, Flaherty knew he had to act


From Thursday's Globe and Mail

November 2, 2006 at 1:00 AM EDT

Three weeks ago, almost to the day, Michael Sabia dropped an early-morning bombshell on Canadian investors: His company, BCE Inc., was planning to follow the lead of archrival Telus Corp. and transform its storied telephone operations into a $27-billion income trust.

It was a surprise to almost everybody. Everybody, that is, except Jim Flaherty. The night before, Mr. Sabia had tracked down the federal Finance Minister in Vancouver, where he was giving a speech on money laundering, and politely informed him of his intentions.

In most circumstances, this would have been regarded as a courtesy call. But for the burgeoning income-trust sector, it was the coup de grâce.

For several months, Mr. Flaherty and his team had been fretting about the rampaging advance of trusts. They had caught wind of rumours that Suncor Energy Inc. and EnCana Corp. were each modelling trust conversions that could be valued at close to $40-billion, opening the door to mass conversions in the oil patch.

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.

Amid this escalating tension, Mr. Sabia's phone call became a flashpoint, prompting the federal government to accelerate its crackdown on the sector. Mr. Flaherty was convinced the twin conversions of icons such as Telus and BCE would incite other corporate titans to follow in their wake.

Faced with this prospect, a select group of a dozen people in the Department of Finance and the Prime Minister's Office, sworn to secrecy, redoubled their efforts to stem the rising tide. By Tuesday, they had come up with plans for a new tax on trust distributions, among other measures, and Mr. Flaherty unveiled them in a surprise Halloween announcement.

While his officials worked frantically behind the scenes, Mr. Flaherty remained characteristically reserved in public.

“We do remain concerned about the issue and continue to monitor the situation,” he told reporters after the BCE announcement, the same answer he had provided a month earlier, when Telus informed the markets it would convert.

Privately, however, his mind was all but made up. He knew that virtually every major company in Canada, from the banks to the insurers to the big oil and gas plays, had begun modelling the trust structure. Some had even informally approached Ottawa about the possibilities for their business, further spooking the Conservative government.

“It was clear from the BCE people that they felt compelled to follow Telus, and that taught us a lesson — quite clearly and dramatically — that if other sectors imitate that sector, we'll see a domino effect,” Mr. Flaherty told The Globe and Mail's editorial board Wednesday.

He declined to identify which companies he expected to embark on a trust conversion, although he acknowledged he had heard of “one or two” in the league of BCE and Telus, and that he had concerns in other sectors such as financial services and energy.

Only last winter, in their campaign platform, the Tories promised to preserve the trust market and not impose any new taxes. Yet as the spate of conversions hurtled toward the $70-billion mark, that resolve began to fade.

The problem, however, was more than merely reversing a campaign pledge: It was avoiding the pitfalls of the former Liberal government, whose handling of the file was besieged by accusations of leaks that are now the subject of an RCMP investigation.

Mr. Flaherty kept the circle of insiders very small in an effort to maintain absolute secrecy, yet there were some hints of what was coming.

A week after BCE announced its planned conversion, the Prime Minister was feted in the oak-panelled dining room of the Toronto Club by deal-maker Tony Fell of RBC Dominion Securities Inc.

As three dozen CEOs sipped their after-dinner coffee, Mr. Harper gave a brief speech on foreign policy. Then Ira Gluskin, a money manager who holds $802-million of trusts, stood up and pointedly asked what the government planned to do with the sector, considering BCE's decision.

“Harper hummed and hawed and basically avoided answering,” said one CEO in the room. “I took it as a sign that this was something the government was worried about.”

The market never caught on. Indeed, Mr. Flaherty's decision was made several weeks ago, with the intervening time spent hammering out last-minute details.

Ottawa felt it could not risk another major conversion and decided to announce its new rules Tuesday — an easy night, as it turns out, to have a caucus meeting and prepare MPs for a possible voter backlash.

In the final hour before markets closed, a group of bureaucrats were glued to their computer screens, scanning stocks for any telltale signs that word had leaked out. They were prepared to take extraordinary steps and pull their announcement if trust units staged suspicious dives, but nothing happened; the markets never suspected a thing, something that was clearly evident when Mr. Flaherty announced the trust crackdown on live television about 5:30 p.m.

For at least an hour, as the information trickled out, confusion reigned. In Toronto, most bankers and CEOs had already left the office and were on their way home to take their children trick-or-treating.

At Telus headquarters in Vancouver, where it was still midafternoon, the reaction was disbelief.

In Montreal, the mood was decidedly more upbeat. Sources said BCE's Mr. Sabia was a reluctant convert to the trust model, and “there was dancing in hallways at Bell” after Ottawa's announcement.

Reaction among foreign investors, who have enjoyed feasting on the uniquely Canadian income-trust offerings, was decidedly negative. Wednesday morning, some U.S. clients of one Canadian trader were describing Mr. Flaherty as the “Chavez of Canada” in reference to the Venezuelan President with a penchant for nationalizing oil plays.

Mr. Flaherty knew it wouldn't be a popular decision in some quarters, but he was hardly exercised. After his announcement, he went straight into a meeting with the Tory caucus and, along with Mr. Harper, informed the group of the new rules.

There was some concern about irate investors, but the reaction was mostly positive, according to people at the meeting.

Afterward, Mr. Flaherty phoned provincial finance ministers in Quebec, Alberta and Ontario to discuss his rationale. The first two were clearly on board, while Ontario was more lukewarm.

“You have to either leave it alone or fix it,” Mr. Flaherty shrugged Wednesday. “We were going to see the two largest telecommunications companies in the country not pay corporate taxes. That's a clear and present danger to fairness in the Canadian tax system. I thought we had to act.”

Thursday, October 30, 2008

The Globe and Mail would know. They’re the experts at putting lipstick on pigs

Today we have the selectively sanctimonious Derek DeCloet writing about hedge funds in a Globe article entitled “No amount of lipstick can save these pigs”.

The Globe would know, as they are the experts at dressing up pigs with lipstick.

Take for example Jim Flaherty’s income trust tax that the Globe and Mail has been championing at every opportunity like the good Mary Kay cosmeticians that they are. The Globe and Mail has been the non-stop cheerleader for a policy that benefits its owners (BCE, Teachers’, Torstar and Woodbridge) but no on else, unless the idea of having Ottawa tax subsidize the foreign takeover of Canadian business and treating Canadian investors at a distinct disadvantage to foreign investors is your idea of good public policy. The Globe’s lipstick would have you believe that this pig of policy that has resulted in $108 billion of takeovers of Canadian companies which has caused the ongoing loss of $2 billion in tax revenue per year is a good thing?

The Globe was more than happy to promulgate the government’s lies that income trusts cause tax leakage and yet has yet to report on a single occasion that the LBO of BCE will cause the loss of $800 million a year in taxes to Ottawa? Doesn’t this strike you as a little one-sided and/or biased in their coverage? Tax leakage was the be all and end all for the Globe and Mail when it came to opining on the policy’s original merit, however tax leakage is not even worth acknowledging when is comes to the policy’s actual outcome? No amount of lipstick will hide the fact that the Globe is simply an instrument for its owners and an instrument that opposes equal and balanced coverage of a topic that has seen Canadians lose $35 billion on a complete falsehood. A falsehood advanced with glee by the Globe and Mail, whose mandate is to put lipstick on the many pig in the poke policies of the Stephen Harper government.

Pension relief or relieved of pensions? Flaherty is expert at both.

It's now two years since Flaherty blew a $35 billion hole into the retirement savings of Canadians who are not blessed with pensions. Jack Layton was the one who made that possible. Meanwhile, where is the government's proof of tax leakage? Jack Layton's? Why do pensioners get income splitting and 75% of retired Canadians do not? Why can pension funds like OMERs and Teachers' own income trusts and not pay the 31.5% tax and 75% of Canadians can not?

Who's on first? Flaherty is a charlatan crook. Jack Layton is just as bad.

Pension relief in works

Ottawa reviewing rules for company plans hit by market crisis, finance minister says

October 30, 2008
Ann Perry
Brett Popplewell]
Business Reporters
Toronto Star

The company pension plans of millions of Canadians, battered and bloodied by weeks of stock market turmoil, will likely receive some form of relief from the federal government, federal Finance Minister Jim Flaherty indicated yesterday.
Flaherty said the government is considering easing rules that require companies to top up plans that fall below levels required to meet pension commitments.
"We're reviewing (the rules) now in the Department of Finance with a view to seeing what can be done to help the pension funds at this particular time given the global circumstance."
He hinted that one of the options on the table may include extending the five-year time period companies have to make up shortfalls.
Pension consultants Mercer Human Resource Consulting told the Star in late September that the stock market slide to that point had sliced about $10 billion from the pension assets of the 125 major employers it tracks. Since then, things have worsened dramatically and Toronto's S&P/TSX composite index has lost 31 per cent of its value from the beginning of the year.
Industry insiders say a number of large Canadian companies began organizing recently to lobby the federal finance department to extend the window to make up shortfalls to 10 or 15 years.
The situation is most difficult for firms facing a year-end assessment of pension fund assets to determine their funding requirements. Some firms could be forced to divert cash into pension funds rather than operations, insiders say.

Wednesday, October 29, 2008

Jim, now that we're in a recession....

Are you still paying Hugh MacPhie $25,000 a pop to write your speeches?

Flaherty warns against balancing budget 'at any price'
Paul Vieira , Canwest News Service
Published: Wednesday, October 29, 2008

OTTAWA - Finance Minister Jim Flaherty warned Wednesday of "misguided" attempts of balancing the books during a period of global economic uncertainty - the clearest sign yet his Conservative government may be forced to post a deficit.

However, he said the government would "redouble" efforts to keep spending under control and find internal savings. Also, he hinted Ottawa might consider the sale or shut down of Crown assets if they are no longer relevant in today's world.

"We will do what we can, despite challenging economic circumstances, to keep the budget balanced," Flaherty told a luncheon business crowd in Toronto. "But we recognize that we work for Canadian families, not fiscal forecasters. What we will never do is engineer a surplus at any price, because that price would ultimately be paid by Canadian families."

He said that Canadians "quite rightly" find deficits "unacceptable," and his government would not return to the days of annual deficits in the tens of billions of dollar, as was the case in the 1970s and 1980s.

"But also unacceptable," he added, "is a devotion to surpluses simply for the sake of saying you achieved them. That view refuses to take into account the long-term damage that can result from misguided attempts to balance the books during a historic global downturn."

This could be a pre-emptive defence against the Liberal party, which will likely make political hay if the Conservatives record a deficit.

Flaherty has been under pressure over the state of government finances. The Conservatives campaigned on a platform of prudent and responsible economic measures, while warning that their political opponents would run up deficits.

But there is a growing consensus among economists that Ottawa is on pace to record a deficit for 2009-10, ranging from $5 billion to $10 billion. Also, analysts suggest there is a risk of a deficit this fiscal year after Ottawa posted a $1.75-billion deficit in August - the last month before turmoil in financial markets emerged. Also, the August results indicated Ottawa's revenue from taxes on an annualized basis dropped for the first time since 2002, when the country had narrowly avoided a recession and a series of significant tax cuts were making their way through the system.

Flaherty said financial projections are now tougher than ever for Ottawa to make, and Canadians had better get used to uncertain forecasts.

"Without question, these are uncertain economic times, and after the extraordinary developments that have taken place in a matter of weeks, no one can reliably predict what will happen next. This is the new reality Canada faces today."

To combat what is now expected to be lower-than-expected tax revenue, Flaherty said his government is prepared to "redouble" efforts to find internal savings within the federal public sector.

"Departments will have what they need to fund essential programs and services - and no more," he vowed.

Moreover, he said a review of government spending would also extend to Crown corporations and agencies, which indicates the Conservatives are toying with the idea of selling assets such as Atomic Energy Canada Ltd.

"We will ensure that original purpose for setting up each corporate entity is still relevant in today's world, and that dollars are being spent wisely," Flaherty said of the Crown agency review.

© Financial Post 2008

Jack Layton, the opportunist hypocrite wrapped inside of an enigma

I just caught a CBC clip of Jack Layton jumping on the pension fund bandwagon. He says something needs to be done to protect retirees income and allow these people to sleep at night! Meanwhile Jack Layton does his best sleeping during the parliament....approving measures that are without any factual evidence...that cost Canadians saving for retirement a mere $35 billion...with a B, as in billion.

Jack Layton must think all Canadians have pensions like himself, when in fact only 25% do. Meanwhile Jack Layton has supported Harper’s measures for a two tiered pension system in Canada, where 25% of Canadians get pension income splitting, and the other 75% do not, and 25% can own income trusts free of the 31.5% tax and the other 75% can not.

Jack Layton, the opportunist hypocrite wrapped inside of an enigma.

Tuesday, October 28, 2008

Mark Carney’s bucket shop mentality

Image: Raid on a bucket shop

Bucket shop is an old Wall Street term that was coined at the turn of the century and used to describe operations where speculators made blind bets on the market. The term is a defined term under the criminal law of many states in the United States which make it a crime to operate a bucket shop. Typically the criminal law definition refers to an operation in which the customer is sold what is supposed to be a derivative interest in a security or commodity future, but there is no transaction made on any exchange. The transaction goes 'in the bucket' and is never executed. Without an actual underlying transaction, the customer is betting against the bucket shop operator, not participating in the market. Operating a bucket shop would also likely involve violations of several provisions of US federal securities or commodity futures laws.

Changes were made to US laws in 2000 that exempted credit default swaps from the definition of “bucket shop” trades, and thereafter credit default swaps flourished, and providers of credit default swaps like AIG were doing nothing to hedge themselves against these potential liabilities that they had exposed themselves to. This is what brought AIG to its knees and what required the US government (read:taxpayers) to bail AIG out.

We are now learning that a number of Canadian insurers made similar unhedged bets against fancy financial derivative products that they had sold over recent years. Manulife Financial was one of those who thought they could underwrite new liabilities and not hedge the risks that were being incurred. It was reported today that “Manulife's executives are paying the price for a decision they made nearly five years ago, when they chose to stop hedging the exposure to stocks that the company has as a part of its large variable annuity and segregated funds business.”

And now they want the government to bail them out, as the Financial Post reported yesterday that “The most radical proposal being advanced by executives is for a new form of government guarantee to backstop losses on high-return investment products known as variable annuities and segregated funds.Executives and industry lobbyists argue these types of private retirement plans have become vital to meet the needs of an ageing population at a time when companies and governments have curbed pension schemes.”

Well isn’t that choice?

The Canadian capital market HAD developed a product that had “become vital to meet the needs of an ageing population at a time when companies and governments have curbed pension schemes.” It was called income trusts. Income trusts were the market’s response to fulfilling this growing investment need for retirement income on the part of Canadians. Income Trusts were a direct investment in the real economy, in which investors received a share of a company’s earnings stream. A totally straight up deal. No derivatives, no hedges, no so-called “guarantees”. Nothing to fall apart. Nothing contrived. Just a straight investment, whose fortunes were dictated by the business itself and not some intermediary that might go bust, like an insolvent life insurance company.

So what becomes of income trusts as the preferred means to provide investors with retirement income? They are destroyed by Stephen Harper and Jim Flaherty in direct response to the lobbying efforts of Canada’s life insurance industry, so that Canada’s life insurance industry can sell more of what are now proving to be some bucket shop version of a retirement investment scheme. These life companies wanted the retirement savings market to themselves, so they successfully lobbied Ottawa to destroy the competition, known as income trusts.

No one had a greater role on the government side of the table in falling for this line of nonsense than today’s Bank of Canada Governor, Mark Carney. Mark Carney preferred a world where Canadians’ retirement futures were defined by the bucket shop mentality products of Canada’s life insurers, rather than through real investments in Canadians businesses and Canada’s economy. Mark Carney lamented that we didn’t want Canada to become “a nation of coupon clippers.” Better , in Mark’s conniving mind that we become a “nation of bucket shop investors”, buying the bucket shop products of Canada’s life insurers, or “a nation of stock speculators”, speculating wildly on the prevailing Price/Earnings multiple on which Canadian stocks may be trading on any given day, arbitrary and totally subjective measure of value, if ever there were one.

Below is testimony by Mark Carney before the Finance Committee of December 7, 2007, less than a year ago, in which Mark Carney is extolling the virtues of investing in Canada’s stock market whose yield is less than 2%, versus owning income trusts that typically yielded 8- 12% and whose investment returns were dependent on the real world and not the speculative nature of Canada’s TSX, whose value has declined precipitously since Mark Carney made these pandering comments, consistent with the Bucket Shop operator that he is.

By the way, the Stephen Harper government has never provided the proof for its policy, namely the allegation that income trusts cause tax leakage. That’s because that allegation is an outright lie. Meanwhile the loss of $35 billion in Canadians’ life savings is nothing short of a fraud. A fraud that Mark Carney is at the centre of and needs to be held to accountable to:

Hon. Garth Turner:
Mr. Carney, you've been called the architect of the Conservative government's income trust strategy and I'm wondering if that's a fair characterization.

Mr. Mark Carney:
I was a senior civil servant, as you know, in the Department of Finance. Quite frankly, I was a senior civil servant under the previous Liberal government, and under the current Conservative government. I ran the last five budgets and all tax decisions that were put forth by both governments I think it's safe to say I was involved in, yes.

Hon. Garth Turner
: In terms of income trusts you basically gave the same advice to Finance Minister Goodale as you gave to Finance Minister Flaherty.

Mr. Mark Carney:
I gave the best advice I could to both finance ministers.

Hon. Garth Turner:
Was it similar?

Mr. Mark Carney:
The advice of civil servants to their ministers is covered by Cabinet confidence. That's the way the system works and I gave the best advice that I could to those ministers.

Hon. Garth Turner:
A year after the decision more than $40 billion in Canadian trusts have basically been sold and it would appear that the better part of a billion dollars worth of tax revenue is not flowing into government treasury that was before.

Given that, I have two questions. One, did you anticipate the consequences of the advice that you gave the minister? Secondly, how can you consider to be anything other than a failure?

Mr. Mark Carney:
I'll refer to my previous answer, which is that I'm not going to go into the details of advice given to any minister of finance or any minister of the Crown that I gave as a civil servant. I will point out though, as a macro fact, that over the course of the last year-and-a-half, as I'm sure you're aware, the TSX, the largest market, is up substantially. We have a $1.6 trillion market cap on the TSX. It's important to keep context--

Hon. Garth Turner:
I know that and I'm not interested in the TSX--

Monday, October 27, 2008

Irony of all ironies

Now we learn that Canada’s life insurers want Ottawa’s help to deal with their portfolio losses? This is the irony of all ironies. Manulife and Power Financial successfully lobbied Stephen Harper to kill income trusts so that they could sell more of their products, like Income Plus and principal protected notes. They successfully lobbied Ottawa to kill a real investment vehicle, to enable more sales of their derivative investment vehicles. Huh? Ottawa complied.

Having played a central role in destroying a defensive investment vehicle that was perfectly suited for down markets, these insurers are now looking to be bailed out by Ottawa in terms of their commitments under their derivative products. Where is the justice? Where is Flaherty’s proof of tax leakage? Income trust investors want our losses ($35 billion) to be fully compensated or the income trust tax rescinded.

We haven’t gone away.

Battered insurers look to Ottawa for help

Eoin Callan, Financial Post Published: Monday, October 27, 2008

Canada's top insurers are being hammered by one of the worst financial crises in history.

As the Canadian stock market saw its worst fall in more than two decades Monday, the country's top insurers looked to Ottawa for relief from the unrelenting damage being inflicted by one of the worst financial crises in history.

Leading industry executives said federal authorities had a key role to play in mitigating the impact of investment losses at insurers like Manulife Financial, which has lost half its value following a record fall in its share price Monday.

After escaping much of the first-round effects of the U.S. mortgage meltdown, Canada's insurers are being hammered by knock-on effects that are putting pressure on their capital reserves.

As insurance companies' own in-house portfolios of stocks and bonds lose value, executives are warning Ottawa that many of the guaranteed investment products they sold to Canadians will be pulled from shelves unless the government acts to backstop future losses.

After getting carried away in recent years making pledges to customers of guaranteed retirement income that seemed too good to be true, insurers are now losing money on the investments they made to back up these promises. This is forcing insurers to set aside cash to meet these commitments, pushing their backs against the wall and triggering a loss of investor confidence.

Manulife was under growing pressure Monday to reveal more about its capital position after its shares fell 15% and rival Sun Life slid 13%, amid a broad market sell-off that saw the S&P/TSX composite index drop more than 8%. It was the worst fall since Black Monday 21 years ago.

Many of the stocks that have been leading the decline since the beginning September continued their march downward Monday -- Canadian Natural Resources Ltd. and Petro-Canada have now lost almost half of their value since the end of August while Suncor has lost 61% and Teck-Cominco has dumped 75% over the same period of time -- but is has been the insurers that have suddenly seen the more staggering losses over the past few weeks. Manulife was once the most valuable company in Canada and coasted through September unscathed but has now lost 45% of its value in October alone.

And while there was significant resistance to any suggestion Ottawa should allow Manulife to buy one of its smaller rivals, there were increasingly strident warnings from executives about the consequences for Canadians of the downward spiral in the sector.

"We have never seen anything quite like this," said a senior industry figure.

The most radical proposal being advanced by executives is for a new form of government guarantee to backstop losses on high-return investment products known as variable annuities and segregated funds.

Executives and industry lobbyists argue these types of private retirement plans have become vital to meet the needs of an ageing population at a time when companies and governments have curbed pension schemes.

These industry officials see scope for an emergency scheme that would function like the state-backed insurance Ottawa provides on mortgages, and evolve to give government an expanded role in guaranteeing investment products sold by insurance companies.

This is seen as one indirect route for easing pressure on the capital reserves of insurers by reducing the need for reserves to be set aside, and is viewed as more politically feasible than tinkering directly with sensitive federal regulations in the midst of a crisis.

But the industry is not unanimous in its support of this proposal, with a stronger consensus behind much more modest steps to ensure the sector shares some of the benefits of liquidity provisions targeted primarily at banks.

A former official in the Department of Finance said that while government staff were developing contingencies to meet the needs of the insurance sector, the recent focus has been on widening schemes targeted at other sectors.

There is also an alternate more long-range proposal being developed that would include government incentives for Canadians to make investments with insurance companies to cover extra health care costs in old age.

An insurance industry executive said Monday that for many Canadians, stock market-related losses meant they would struggle to pay for health costs associated with old age.

"If an individual has lost half of their retirement savings, the issue is not: how am I going to pay for that second vacation. The issue is: how am I going to pay for the long-term care of me or my relative," said the executive.

This proposal reflects a growing acceptance that the sun is setting on the all-in-one investment products pushed in recent years by insurance companies as a way to provide both retirement income and life insurance.

But this was not seen as a way to provide immediate relief for insurers like Manulife, which will likely consider ways to strengthen its capital base, according to Andre-Philippe Hardy at RBC Capital Markets.

"The short term moves in equity markets have been nothing short of stunning this year and the direction of equity markets will determine whether Manulife needs to take action to bolster its capital ratios," according to the analyst.

Industry leaders say the Canadian insurance sector was not as exposed as U.S. rivals to risky products like subprime mortgages because of more prudent investment practices, but is now unable to escape the worldwide downturn in markets that continued to wreak havoc across the financial system Monday.

Financial Post with files from Jonathan Ratner

Friday, October 24, 2008

Flaherty’s idea of a "steady hand" is to pick Canadians' pockets

Let's face it, Flaherty is a crook and/or a total incompetent. What other civilized nation would allow their government to implement a tax policy that would cost its taxpayers $35 billion of their life savings and offer ZERO proof for the policy's main rationale. i.e. the allegation that income trusts cause tax leakage, which is total horsefeathers.

Flaherty was lobbied by the life insurance industry to kill a competing product that they were unable to successfully compete against. That's the sole rationale for the income trust policy. Meanwhile the pension funds were given a special carve out, such that only average Canadians got screwed. The ones without a voice.

Now Flaherty is on the verge of bailing out the very people who lobbied him to kill Canadian income CEOs and LifeCo CEO's. This is Flaherty's idea of a steady hand......pick pocketing the average Joe to give to the rich, twice now. First with income trusts. Next with bail outs.

Canadians worried but want steady hand - Flaherty

Fri Oct 24, 2008 12:50pm EDT

NIAGARA FALLS, Ontario, Oct 24 (Reuters) - Canadians are worried about jobs and savings during the current economic crisis but are not interested in grand government spending plans, Finance Minister Jim Flaherty said on Friday.
"This has been and this is a difficult time for Canadian families, for Canadian businesses. People are worried about their jobs and their savings," Flaherty said in a speech.
He said Canadians want the government to stay the course economically. He reiterated that Canada's banks are sound and well capitalized, and he said the mortgage system was also sound with only a small subprime component. (Reporting by Frank Pingue, writing by Randall Palmer; Editing by Peter Galloway)

As with income trusts, Flaherty and Bay Street game Canadians once again

During the election, Flaherty was adamant that he wouldn't be bailing out the banks, at which point, we now learn that he was in discussions to do that very thing immediately after the election. Again demonstrating Flaherty's inherently deceitful self.

Politics factored into bank aid deal

Dialogue between Ottawa, Bay St. behind the scenes

Eoin Callan in Toronto and Paul Vieira in Ottawa, National Post Published: Friday, October 24, 2008

When the BlackBerrys started buzzing early yesterday morning over breakfast in executive dining suites on Bay Street, even the most senior figures in Canada's banking industry interrupted their table conversations to confirm the fix was in.

The announcement from the Conservatives that the federal government will intervene in financial markets was the culmination of weeks of behind-the-scenes dialogue leading to the sovereign pledge to repay money the country's banks borrow from other banks over the next six months, up to an estimated $218-billion.

The impetus to act originated primarily from events outside Canada's borders that put pressure on banks' own cost of capital and the liquidity needed for day-to-day operation of the financial system. While international diplomatic considerations played a role, the timing and substance of the government's actions were driven in large part by domestic political calculations, according to senior figures directly involved in a high-level dialogue between Ottawa and Bay Street.

Because of these acute political and commercial sensitivities, normal lobbying channels fell silent as chief executives engaged in direct talks with Ottawa, which was represented in key discussions by a senior, unelected, advisor to Jim Flaherty, the Finance Minister. Only a tiny circle of the banks' most trusted lobbyists were at the table and on conference calls. Other veterans of government relations were excluded, while regulators participated in some meetings.

Several of the people involved in the process said that even while pillars of Wall Street were crumbling and world leaders were invoking the spectre of financial armageddon, a central consideration for the Prime Minister's Office seemed to be Jack Layton and the New Democratic Party.

The Conservatives and key allies on Bay Street feared both the immediate and lasting consequences of giving political adversaries an opening to turn the banking industry and its ties with Ottawa into a matter of public scorn. This concern reached a peak immediately before the election with the meltdown in markets, co-ordinated global interventions and the approach of polling day.

Amid late-night phone calls to the homes of senior officials in Ottawa, a loose strategy emerged to split the federal government's response into two stages, with a decision to delay until after the election the explicit commitment to insure interbank lending that was finally unveiled yesterday.

But bank executives insisted on a long-sought move to shift mortgages off their books and supply them with cash before the election, because they feared the uncertainty of polling day and the possibility Mr. Flaherty might not return as finance minister, according to participants in the process and observers. This first stage was held back until the last possible moment, the eve of the Thanksgiving weekend, the last day of market trading before polling day, when a $25-billion scheme to aid banks was announced by Mr. Flaherty. "The strategy [was] trying to low-key it, [unveiling it] when people were running away to the cottage to pull the dock out of the water and making their pumpkin pies," said one person involved in the discussions.

This was the point when the Conservatives' concern about the political reaction was most apparent, according to a former member of the party now on Bay Street. "Managing the NDP is not easy," said another person involved in the joint strategizing, adding the heightened profile of the social democrats in the midst of election season was a worry for negotiators, "because you are constrained in how much you can put your head up and whack them."

Stephane Dion, the lame-duck Liberal leader, was seen as onside, according to one person, who added: "but look where that got him."

This concern about a political backlash was still a major concern for the government going into yesterday's announcement, which came long after a dozen other countries including the United States, U. K., France and Ireland had acted.

"[The backlash] only matters if it becomes a 'grassroots issue', " said a person involved in the strategizing.

To head off the possibility of public outcry over assistance to banks that are increasingly squeezing customers, the government is thought to have held back the lending guarantee because it wanted to see if banks would pass on to customers the rate cut by the Bank of Canada that came earlier this week.

While these machinations almost certainly played little or no part in the central bank's own deliberations, it put pressure on the big five banks to announce they were all cutting their prime lending rate for consumers to 4%, which they did. More than one bank executive said this reduction in the benchmark for consumer lending was not so much a normal business decision, and more one made with national interest in mind as Canada's economic outlook darkens. This mid-week cut in the prime rate set the stage for yesterday's announcement of the guarantee from Mr. Flaherty, who will meet fellow finance ministers in two weeks before travelling to Washington for an international crisis summit after the U. S. presidential election.

The minister also acknowledged a key Bay Street demand to raise the initial $25-billion limit on mortgages they can transfer to public books, saying he was "prepared to extend the program if necessary."

This scheme had by yesterday already seen $12-billion snapped up by Bay Street, where bankers were continuing to work their BlackBerrys in a campaign of "quiet diplomacy" to have this limit raised closer to $200-billion.

FP Letters to the Editor: Terry Corcoran’s ‘non-mea culpa’

October 23, 2008

It was nice to see your mea culpa in Tuesday’s paper. It takes a big person to admit a mistake. I think though that you should add the blunder of all blunders: Your support of the double taxing of income trusts, and, along with it, your vilification of Brent Fullard.
We now know without any doubt that this failed policy is costing the Canadian government (read: taxpayers) more than $2-billion per year in lost taxes — going to north of $7-billion per year when the sector is fully destroyed. With all the talk of the Canadian government running a deficit, that lost tax revenue would certainly help the Conservatives from breaking yet another promise of “no deficits.”
I hope to see you add this mistake the next time you publish your list.

Randy Meyer, Calgary.

Mark Carney’s bold-faced lie

Evidently in Ottawa’s bureaucracy, the bigger the lie, the bigger the promotion.

Take Mark Carney for example. This is the guy who Jim Flaherty installed as the Governor of the Bank of Canada, against the recommendation of the Bank’s Board of Directors.

Why? Because Mark Carney was the one who stick handled the lie that income trusts cause tax leakage, on behalf of those CEOs who wanted the popular investment model destroyed. Successfully promoting and advancing the lie that income trusts cause tax leakage was central to getting the public to support Harper’s broken promise to 2.5 million Canadians that he wouldn’t raid their “nest eggs”.

Reversal of such a solemn promise and the attendant damage it was sure to cause, namely $35 billion loss of savings and the deprivation of retirement income, required a really good “argument”. So let’s manufacture one.

This manufactured argument took two forms. Mark Carney orchestrated the whole charade. First Mark Carney advanced the falsehood that income trusts cause tax leakage, He had never provided any proof whatsoever for that assertion, whereas there is an abundance of credible studies and evidence to reveal this policy lie for what it is. Second. Mark Carney and his fellow schemers knew that the policy needed to be launched under the heightened anxiety of a “faux crisis”. This is where BCE came into play. BCE had no desire to become an income trust, after Telus had announced its intention to do so. BCE then realized that it could “game” Ottawa, by simply going through the false pretense of converting to a trust as well, No doubt this charade was orchestrated in collaboration with the folks in Ottawa at the political and bureaucratic level. There were many reported conversations that took place between BCE and Ottawa during this “planning stage”. The fact that BCE was simply “gaming” Ottawa for BCE’s desired policy outcome was revealed in a recent article by Theresa Tedesco in the Financial Post, from which I quote:

“In the end, BCE opted to convert itself into an income trust in mid-October, 2006.

Inside BCE's boardroom, the blue-ribbon directors weren't enthusiastic about the plan, but gave it their blessing, betting the measure was destined for doom because Ottawa would never allow it.

"Income trusts didn't have much appeal. We weren't particularly interested in doing an income trust but we thought if we announced we were doing one, it would force the government into a decision," said the source close to the company who asked not to be named.

They were right. Two weeks later, on Halloween, Finance Minister Jim Flaherty announced Ottawa would tax companies converting to income trusts to curb tax avoidance.”

Curb tax avoidance? Once again we have the press repeating Carney’s manufactured argument that income trusts cause tax leakage. What kind of investigative reporting is this? How could income trusts cause tax leakage? If that is in fact the case, them why can oension funds own income trusts and not pay the new 31.5% tax? If BCE were to have caused tax leakage, how could that even be possible, since BCE wasn’t even paying corporate taxes at the time, and hadn’t paid taxes for 10 years. It wasn’t anticipated to pay Ccorporate taxes for another 4 years? As an LBO, BCE won’t pay taxes for decades to come.

Where is the outrage over the LBO of BCE, much like the outrage over the conversion of BCE into an income trust? Does Ottawa only implement policies to address manufactured tax leakage (income trust tax policy) and not policies to address real tax leakage (LBO’s by private equity)?

We have the intellectually corrupt Mark Carney and his side-kick Jim Flaherty to thank for that. And the gullible press, who continue to fawn over Mark Carney in these troubled economic times, as if the man were to be trusted? Yes, trusted to sell Canada down the river.

Thursday, October 23, 2008

This doesn't change the fact that the LBO of BCE will cost taxpayers $800 million a year in lost tax revenue

Sinking loonie boosts BCE takeover

Andrew Willis, October 22, 2008
Globe and Mail

The lame duck loonie is providing a boost to U.S. lenders and backers of the BCE buyout and other cross-border takeovers.
With the Canadian dollar nosediving to 79.7 cents (U.S.) on Wednesday after hitting a high of $1.10 last November, three U.S. private equity funds investing in BCE and three global banks lending on the $35-billion (Canadian) buyout are seeing a material decline in the cost of their financing commitment. Sources working on the takeover say the recent currency move makes it more likely that the long-awaited transaction will close, as scheduled, by Dec. 11.
There are no currency hedges in place at the three equity funds backing the Ontario Teachers Pension Plan bid for Canada's largest telecom company, according to sources close to BCE. So, Providence Equity Partners, Madison Dearborn Partners and an arm of Merrill Lynch are all getting a boost from the weak Canadian dollar.
The same benefits could exist at Citigroup, Royal Bank of Scotland and Deutsche Bank, three of the four lenders to BCE. All of these banks would fund the transaction in U.S. dollars. However, sources say these banks may have hedged their currency exposure at some point since the deal was consummated, back in June, 2007. The fourth lender is Toronto-Dominion Bank, which does business in Canadian dollars. Earlier this week, U.K. websites quoted Royal Bank of Scotland officals reaffirming their intention to lend to the BCE buyout group.
The planned $361-milion takeover of tech play Q9 Networks by Boston-based private equity firm ABRY Partners also gets a boost from the currency move, though again, the benefit is lost on ABRY's major lender, TD Bank.

Wednesday, October 22, 2008

Question from a Liberal delegate: Dear Mr. McKenna

Mr. McKenna:

I am very intrigued by the possibility that you may be considering running for leadership of the Liberal Party. I would strongly encourage you to do so.

I have one major reservation, however. What is your position on income trusts?

Is your position consistent with that of your present employer TD Bank, or is it one consistent with the fact that income trusts do not cause tax leakage and that the argument of alleged tax leakage is a contrived argument that is manufactured by excluding the taxes paid on the 38% of income trusts that are held in RRSPs? These devalued trusts are now being taken over by pension funds and foreign private equity (eg the present takeover of Teranet by OMERs), who are able to avoid paying the 31.5% tax by the mere act of taking “public” trusts private or sheltering their taxable income under an LBO structure. This would only serve to exacerbate tax leakage, if indeed it even existed in the first place.

I look forward to your response, as I will only be supporting a leadership candidate who is interested in the truth behind far reaching tax policies, such as the highly destructive income trust policy that was based on a policy lie and whose outcome has proven it to be a disaster, from all possible vantage points.

Yours truly,

Brent Fullard
505 647-2224

Question for Jim Travers:

Where's your evidence of tax leakage? Why can pension funds exempt themselves from Harper's 31.5% income trust tax, but RRSPs can not?

A year later, PM's promises not worth much
January 18, 2007

James Travers
Toronto Star

OTTAWA - For most of us, ethics begins with doing what's right and telling the truth. For Stephen Harper, they often end in a conundrum.
Even before wisely dropping the "Promise made, promise kept" mantra foolishly borrowed from Paul Martin, the Prime Minister misplaced his moral compass in a question. Stripped of particulars, Harper routinely, if indirectly, asks voters: Is it acceptable to break a promise to do what's needed?
In the Conservative universe of situational ethics, every breach of trust comes with an explanation.
Luring Liberal David Emerson to switch parties and putting Michael Fortier in the unaccountable Senate as well as in charge of historically corrupt public works was justified by the need to add big city cabinet representation.
Converting Wajid Khan into a Conservative is positioned as selflessly putting country ahead of partisan interest, even if his report on the Middle East is too sensitive to share with that country.
Those decisions are bookends on an ever-lengthening shelf.
An Accountability Act that in opposition promised dozens of specific measures shrunk precipitously in power. A trumpeted victory of merit over patronage was made hollow by more than 100 appointments.
Once an anathema, governing from the centre at the expense of an empowered Parliament is now the operational method of a singularly controlling administration.
If those examples are too arcane for citizens to storm the metaphorical barricades, two others are not.
One is the Halloween income trust reversal and the other is the still unfolding flip-flop on excluding non-renewable natural resources from the equation that keep taxes and services in rough national equilibrium.
Like accountability, merit and the democratic deficit, income trusts and equalization are all in the large print of the Conservative campaign manifesto. But unlike the first three, the last two are measured with money.
Along with being intensely personal, that makes them politically toxic.
Quarterly statements chart losses and counting the cost of including resources in the equalization formula is, for premiers, elementary math.
There are reasons for every course change. Too much accountability strangles efficient program delivery, some appointments can't wait for construction of a meritocracy and somewhere between being a party and becoming the government Harper's inner circle recognized that power is best held tightly.
If anything, the rationales for the income-trust backtrack and for this week's equalization trial balloon are even stronger.
Letting corporations off the tax hook is better for stakeholders than for the country and for the party in power, even one that at least theoretically believes that government becomes more beautiful as it shrinks.
Removing oil from the formula for, say, Saskatchewan, makes about as much sense as excluding vehicle manufacturing from the calculation of Ontario's prosperity.
So what's the problem? Understanding souls say there isn't one.
A neophyte Prime Minister is simply being shaped by the discipline of power. New realities, new information and new priorities – most of all the urgent need to cement and build on Conservative Quebec gains – render null and void good-faith projections made in the campaign hurly-burly.
That might be a fair assessment even without the issue of caveat emptor. After all, only the most naïve voters and taxpayers expect truth in advertising from politicians, parties or governments who flourish in the bait-and-switch environment of spin, fibs and small print.
Except this "new" government won the last election by rejecting old ways. It was going to be different and set out to prove it with an easy five-piece agenda designed to let Conservatives criss-cross the country in the next campaign saying, We did what we said we would.
That worked for fomer Ontario Premier Mike Harris and his neo-conservative revolution. But it's now beggar bowl empty for the Prime Minister.
A year into this government's life, Harper can't credibly claim take-it-to-the-bank honesty as a Conservative virtue.
Instead of "promise kept," it would be more candid to laugh off the record as "Just kidding."
Perversely, it's in the national interest to take this Prime Minister with a lump of salt.
What the last 12 months show is that Harper is an ideologue willing to make almost any short-term compromise to reach long-term objectives.
That's good to know.
Come the next campaign, voters can safely dismiss what Conservatives say to concentrate instead on what the Prime Minister wants to do.
The difference between the two is the distance separating truth from consequences.

Tuesday, October 21, 2008

Why can OMERs own Teranet Income Fund and not pay Harper's 31.5% tax?

Teranet board opens door for OMERS
Market turmoil means better bid for electronic land registry unlikely to appear


October 16, 2008

Turmoil in the financial markets has reduced what might have been a crowded race to buy Teranet Income Fund down to a single horse.

With little hope of a rival bidder emerging, Teranet's board of directors withdrew its recommendation that investors reject a $1.7-billion takeover offer from Borealis Infrastructure Management Inc.

Borealis, an investment arm of the Ontario Municipal Employees Retirement System pension fund, will extend its bid by two weeks to Oct. 31. At this time all other terms and conditions of the offer remain unchanged, Borealis said in a news release yesterday.

On Sept. 26, the board of Teranet, which holds the exclusive licence for Ontario's electronic land registry system until 2017, unanimously recommended unitholders reject Borealis's "inadequate" $11-a-unit cash bid.

Monday, October 20, 2008

Governor General provided Harper with needed cover.

Harper lost all 4 Byelections that the Queen's representative conveniently terminated on the eve of the By-election vote, by calling a general election in advance of Harper’s own fixed election date broken promise.


Liberal: 32.2%
Conservative: 29.2%


Liberal: 46.5%
Conservative: 15.8%


Bloc Quebecois: 37.6%
Liberal: 28.5%
Conservative: 15.8%

Don Valley West:

Liberal 44.4%
Conservative: 38.8%

Question for Mark Carney and Jim Flaherty:

According to your flawed methodology, what will the tax leakage from OMERs’ purchase of Teranet be?

Teranet Income Trust is presently owned 38% by individuals in their RRSPs and by pension funds like Hospitals of Ontario Pension Plan (HOOPP). The remaining 62% is held by “taxable” investors.

According to Mark Carney’s grossly flawed methodology, this means the government collects zero taxes from Teranet’s distributions paid into RRSPs and pension funds like HOOPP. This flawed assumption is how Mark Carney MANUFACTURED his tax leakage claims, by ignoring 38% of the taxes collected from income trust investors by the government. This was Carney’s intellectually corrupt rationale for imposing a new SECOND tax at the rate of 31.5%, simply because the government (Mark Carney) ignored the first taxes that they are collecting (on a deferred basis) and which are the economic equivalent of taxes being paid as cash taxes today.

Now, in the irony of all ironies, Teranet is being acquired 100% by a pension fund, namely OMERs. By definition, using Carney’s flawed logic for his income trust tax, this will only make tax leakage much worse that it was before, since:

(1) The RRSP/Pension Fund ownership of Teranet will soon go from 38% to 100%, increasing tax leakage by 260%;

(2) Since Jim Flaherty was (to use his own words) a wimp, he carved out an exemption for pension funds from his draconian 31.5% tax, by the mere act of pension funds owning these income trusts “privately” instead of “publicly”. This is Flaherty’s idea of “leveling the playing field” and a “tax fairness plan”. PUHLEASE. Even the Toronto Star should have a problem with that twisted logic. Where is the media on this matter? Isn’t the media interested in good public policy and true tax fairness? Or is the media part of the problem and as intellectually corrupt as the politicians and the bureaucrats themselves?

Saturday, October 18, 2008

Bay Street Brokerages failed to protect investors in ABCP fiasco: regulator.

These are the same "brokerages" who did squat for their income trust issuers and investors, in the face of the blatant government lie that income trusts cause tax leakage. Maybe it’s time to bail out the morally bankrupt Bay Street? Who would ever invest money in their corrupt marketplace?

Brokerages failed to protect investors in ABCP fiasco: regulator

October 17, 2008
CBC News

Canadian brokerage firms did not provide proper oversight when they sold now-worthless asset-backed commercial paper, said the organization that regulates Canada's investment industry on Friday.

In a 93-page report, the Investment Industry Regulatory Organization of Canada (IIROC) said that none of the 21 Canadian investment dealers surveyed who were flogging third-party asset-backed commercial paper actually knew whether the financial instruments they were selling were risky.

Instead, those dealers believed the products — similar to the U.S. mortgage-backed securities for which financial institutions are now writing off billions in losses — already had the highest possible credit rating and did not need more scrutiny, the report said.

So, the investment houses, which sold ABCP paper to both companies and individuals, decided not to spend the time doing their own assessment of the value of the underlying debt securities.

"Some dealer members indicated that they relied in part upon the carrying broker... presuming that the carrying broker had done due diligence on the product," IIROC said.

Instead, in 2007, the $35 billion ABCP market in Canada seized up when large corporations stopped buying the securities.

At that time, retail investors, including many retirees, complained that they did not understand the risks in buying these securities.
Soaring market

In the past decade, Canadian brokerage firms, in a manner similar to their American and British cousins, had become enthralled with the sale of derivatives.

(Derivatives are complex financial products that offer a higher rate of return but usually with a coincident higher risk.)

In 1996, the global market in these exotic financial products was worth an estimated $180 billion US. By 2006, that market had mushroomed to $20 trillion.

The report said, in Canada, 2,542 retail clients held ABCP worth about $372 million Cdn from IIROC member firms before the market collapse last year. That represented just one per cent of the total non-bank ABCP market.

In 2007, however, the American mortgage-backed market collapsed as the underlying mortgage fell into default.

Since this September, financial companies have lost value and been taken over as those firms with large holdings of these derivatives have been writing down the value of these assets.

IIROC said the industry must improve its due diligence of the products it sells and boost the transparency of these types of instrument so purchasers know what they are buying.

Friday, October 17, 2008

Dominic D'Alessandro: "It's absolutely nuts.''

Canadian Banks and Insurance companies will benefit from changing the accounting rules that govern whether their assets are subject to writedowns under fair-value accounting. Here’s what Dominic D'Alessandro had to say

`I think these kind of [fair value] accounting practices are wrong theoretically, they're wrong operationally, they make no sense for anybody,'' D'Alessandro told investors. ``It's absolutely nuts.''

I wonder what Dominic D'Alessandro’s view would be on the methodology cooked up by Jim Flaherty and Mark Carney that creates “tax leakage” by ignoring the 38% of taxes paid by income trusts held in RRRPs, for which the government’s “solution” was to tax them a second time at 31.5%? Would Dominic consider that phony accounting practice which cost investors $35 billion of their savings to be “absolutely nuts”, or simply beneficial to Manulife selling more life annuities and Income Plus?

Please share with us your thoughts, Dominic.....and your logic.

Joy. Paul Desmarais takes a $764 million hit.

Today the groupies at the Globe and Mail have a real heartbreaker of an article about all the losses sustained by Canada’s so called captains of business. Here we learn that Paul Desmarais has taken a $764 million hit to his net worth. Maybe Paul Desmarais can have some understanding now how it feels to be at the receiving end of such a loss, except in Pual Desmarais’ case, his loss wasn’t caused by the act of Stephen Harper who was acting on the self interested advice of Canada’s captains of business.

No doubt, Jim Flaherty would comfort Paul Desmarais with wise (?) words to the effect that “It is isn’t a loss unless you sell”. That was the same nonsense argument that Flaherty gave to income trust investors, except in the case of income trust investors they don’t have the luxury of deciding when they sell, as the 2011 deadline for “selling” looms large and losses will be forced on these people by Stephen Harper whether they like it or not.

As for Paul Desmarais, he was the one (or was it Junior?) who put Harper up to the fraud known as double taxing income trusts, in the false belief that taxing income trusts once, but not acknowledging those taxes, makes for honest government and good public policy, so then let’s tax income trusts twice. Let’s face it Paul Desmarais was solely thinking of Paul Desmarais and selling more life annuities through Great West Life and London Life and not having to contend with the competition for seniors savings known as income trusts. Paul Desmarais was also the one whose Investors Group had salesman canvassing door to door in Whitby-Oshawa on behalf of Jim Flaherty in the recent election

It was almost two years ago that we learned from the Globe and Mail groupies that:

“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.”

Just like Stephen Harper, CTV’s word is worthless

Below is an article in which CTV attempts to justify saying one thing and doing another, namely playing an out-take of a flubbed interview with Stephen Dion it promised it would not. What does that tell you about CTV’s journalistic ethics?

I had a similar experience with CTV on the campaign trail, albeit on a different scale, but every bit as revealing about CTV’s ethics.

CTV had arranged to have a televised Virtual Town Hall meeting with all the candidates in Whitby-Oshawa. It had been confirmed and agreed to. About one hour after the first debate in Whitby Oshawa at Sinclair Secondary School had not gone too well for Jim Flaherty, my campaign manager received a phone call saying that the arrangedVirtual Town Hall meeting was being cancelled because “ a couple of the candidates weren’t able to make it”. Never being one to accept things at face value, I then phoned the other candidates to confirm whether this was in fact true. Whereupon O learne that what CTV had said, was not true.

I then called CTV and had them repeat their original lie, for why they said the event was being cancelled, at which point I caught them in their bold faced lie. I should have recorded the conversation. It would have made great gotcha journalism.....just like CTV seems to favour in the case of breaking their word with Stephane Dion.

Perhaps CTV’s total lack of ethics and breaking of promises is an organizational thing that derives from its owners, BCE and Teachers’, who seem to have no problem about concealing bids that they received from Catalyst Asset Management as part of their so-called "public auction process" or reneging on some $1 billion of dividends that had been promised to BCE shareholders as an integral part of the “winning bid” in the LBO of BCE.

BTW how is that “winning bid” doing these days?

I have been slightly out of touch doing that past five weeks, trying to bring some honesty to Canadian politics, only to find that CTV is in bed with the Harper government, just like BCE and Teachers’ themselves. If not, what government in their right mind would ever have approved a deal that turned its major telecommunications carrier into a junk bond basket case or would have allowed a pension fund to brazenly break its own Federal Pension Regulations by acquiring 50% of a company when its regulations are very clear that it can not exceed 30% ownership of such a company? Only takes a corrupt government in Ottawa to make possible the impossible, or to brazenly say one thing and to do the exact opposite?

CTV airs defence of its decision to broadcast Dion's fumbling interview

Canadian Press
9 hours ago

HALIFAX — CTV News broadcast a defence Thursday of its decision to air the stuttering start of an interview it did last week with Liberal Leader Stephane Dion.

Three executives at CTV News told Thursday's 6 p.m. newscast in the Maritimes that it had a responsibility to show the public the pre-recorded interview with Dion on Oct. 9, five days before election day.

"We decided that it was important that CTV News not hide anything during an election campaign," said Robert Hurst, president of CTV News.

The interview, which was restarted four times because Dion didn't understand a question about the economy from anchor Steve Murphy, was originally broadcast in the Maritimes, although it was later seen across the country.

On the news that night, Murphy said the network had indicated to the Liberals that it would not broadcast the fumbling start of the English-language interview.

Thursday, October 16, 2008

Harper promises to protect our earnings?

So why did he tax pensioners' earnings at an additional 31.5%?

Harper scrambles as economy fades

Stephen Harper, appearing at a news conference in Calgary on Oct. 15, 2008, says his priority as Prime Minister will be to protect Canada's economy, "our earnings, our savings and our jobs."

Harper promises to protect our jobs?

So why did he approve BCE's LBO and the firing of 2500 workers?

Harper scrambles as economy fades

Stephen Harper, appearing at a news conference in Calgary on Oct. 15, 2008, says his priority as Prime Minister will be to protect Canada's economy, "our earnings, our savings and our jobs."

Harper promises to protect our savings?

This from the crook who stole $35 billion of our savings with no proof.

Harper scrambles as economy fades

Stephen Harper, appearing at a news conference in Calgary on Oct. 15, 2008, says his priority as Prime Minister will be to protect Canada's economy, "our earnings, our savings and our jobs."

Wednesday, October 15, 2008

Don Martin: Now that the coast is clear...

.....would you like to finally share with Canadians, Harper's 200 page manual on how to make Parliament dysfunctional?

Lest we have yet another dysfunctional Parliament, I think it is incumbent on Don Martin to spill the beans on Harper’s tactics of yore. Or will there be a newly issued edition of how to make Parliament Dysfunctional (and the complicit Canadian press at the same time)?

The only thing more incompetent and corrupt than Jim Flaherty, is Canada’s media

I have Canada’s media to thank for presenting me with the opportunity to run for Parliament. This opportunity for me to play a role in public life, arose solely as a result of the incompetent and corrupt nature of Canada’s media. This void in truth created by Canada’s media was gladly filled by me. Today that void remains, along with a void of justice. No doubt, this pleases Canada’s media, or why else would they conduct themselves in such a manner as they do?

Canada’s media is expected to perform its role to society in the following manner:

- Politicians/bureaucrats make false representations of a factual nature as the justification for a policy causes great harm to all Canadians
- Media investigates these representations of a factual nature and reveal them to be lies and falsehoods perpetrated for ulterior reasons by the politicians/bureaucrats
- Policy is rescinded and/or politicians and bureaucrats are fired

In actual fact, Canada’s media performs its role in the following manner:

- Politicians/Bureaucrats make false representations of a factual nature as the justification for a policy causes great harm to all Canadians
- Media fails to investigate, incapable of understanding the issues, others in media “pile on” and “blame the victims”. Canada is diminished

- Politicians/Bureaucrats make false representations of a factual nature as the justification for yet another policy causes great harm to all Canadians
- Media fails to investigate, incapable of understanding the issues, others in media “pile on” and “blame the victims”. Canada is diminished

- Politicians/Bureaucrats make further false representations of a factual nature as the justification for more policies which causes great harm to all Canadians
- Media fails to investigate, incapable of understanding the issues, others in media “pile on” and “blame the victims”. Canada is diminished

- Politicians/Bureaucrats have become immunized in their ability to make false representations of a factual nature as the justification for any and all policies that causes great harm to all Canadians
- Media fails to investigate, incapable of understanding the issues, others in media “pile on” and “blame the victims”. Canada is diminished

-etc etc etc, until we have no government for the people to speak of or Canada to be proud of. Thanks media, you are the only thing more incompetent and corrupt than Jim Flaherty. Without you, there would be no Jim Flaherty or those of his ilk in public office.

Meanwhile I have my supporters like Michael and thousands others like him in Whitby-Oshawa and across this (once?) great country:

Brent, thank you thank you, thank you for all your efforts; no one can say that you didn't give it your all, I think you would have given your blood to right the wrong perpetrated on the Canadian populace.
Sadly however, they are too blind, too cowardly to help themselves... and for that, my heart weeps for the Canada I once knew. I can only hope that the truth will become apparent before more damage is done.
The saddest words in the world, "Too Late", come to mind...

With fondest regards,
Your friend,

Friday, October 10, 2008

Hey Jim: When is a Canadian bank bailout, not a Canadian bank bailout?

“The banks aren’t seeking to be bailed out, the government won’t be bailing them out. That isn’t going to happen.” Jim Flaherty

Today: Ottawa takes $25 billion in mortgages off banks' books to loose credit

1 hour ago

OTTAWA — The federal government is buying up $25 billion in residential mortgages to give the chartered banks additional cash to issue loans, Finance Minister Jim Flaherty announced Friday.

Flaherty's gross hypocrisy and incompetence

Flaherty reveals his enormous financial hypocrisy and gross deception of all Canadian taxpayers.

Today Jim Flaherty approved the purchase of $25 billion of mortgages from Canada’s banks as a form of bailout. Flaherty justified this by saying:

“In fact, he said the government stands to make a small profit from the mortgages because government borrowing costs are lower than what the assets will yield in interest.”

Meanwhile Flaherty, the intellectually corrupt person that he is, caused Canadian taxpayers and seniors to lose $35 billion in their life savings by saying income trusts cause tax losses to Ottawa. He falsifies that argument by ignoring the taxes paid by the 38% of income trusts held in RRSPs. These are deferred taxes. Deferred taxes that grow at the rate of income trust yields. Income trust yields are (by definition) higher than the government’s cost of borrowing. As Flaherty acknowledges in today’s’ bank bailout, this means that $1.00 of deferred taxes on income trusts held in RRSPs is actually worth more than $1.00 in present value terms since:

“In fact, he said the government stands to make a small profit from the deferred taxes paid on income trusts held in RRSPs, because government borrowing costs are lower than what the assets will yield in interest.”

So why dies Jim Flaherty assign ZERO valie to these deferred taxes paid on income trusts? Who put Jim Flaherty up to that scam analysis?

Jim Flaherty had defrauded all Canadians. Those who lost $35 billion of their life savings.....and all taxpayers who are losing $2 billion a year in taxes as a result of the $108 billion of trust tax related takeovers, where Flaherty displaces Canadian taxpayers as owners of Canadian businesses in favour of Middle Eastern oil companies, Hong Kong billionaires and US private equity firms.

This man is dangerous and deceitful in the extreme.

Thursday, October 9, 2008

Tim Horton's - Whitby

To: Jim Flaherty Campaign
Subject: Coffee shop

Just thought I would let you know I had a great time at the local Tim's shop just down the street from your campaign HQ's this morning discussing your popularity dropping in sync with the stock market. Complete strangers overhearing our discussions are agreeing that you don't have a clue regarding the economy. No problem convincing most of these strangers to NOT vote for you or your CON-servative party.

This thing is really getting interesting now. What sweet justice to have your party brought down by the stock market - just as you brought down many, many ordinary Canadians with your income trust lie. We certainly don't trust your stock market tips!!!


Wednesday, October 8, 2008

Liberal Candidate Brent Fullard's opening comments at tonight's Whitby Chamber of Commerce Debate

These are some of the most challenging economic times that we will face at any point in our lives.

Neither Stephen Harper nor Jack Layton are capable of providing strong economic leadership at a time when Canadians need it most.

Stephen Harper demeans the intelligence of all Canadians as well as our electoral system by releasing his so called plan in the final week of a five week election.

An election that he called opportunistically at a time of his choosing, representing yet another example of the ease with which he breaks his trust with Canadians.

As such, Stephen Harper word is worthless. Worse yet, is that he is dangerously out of touch.

On September 16th, roughly three weeks ago, Stephen Harper said:

“My own belief is if we were going to have some kind of crash or recession, we probably would have had it by now,"

How much more wrong could Stephen Harper have been? The stock market has sunk in value by more than 25% since Stephen Harper uttered those empty words of false assurance?

Meanwhile the Liberal Party has a 5 point action plan that we will implement in the first 30 days of office.

Stephen Harper attempted to portray this 5 point Liberal action plan as an exercise in panicking.

It is anything but,. It is a thoughtful and prudent response to the current economic situation.

Meanwhile Stephen Harper is indeed the expert in panicking in the face of complex economic situations. No better example exists than his panicked reaction to income trusts . Another broken promise.

Stephen Harper allowed himself to be lobbied by narrow special interests on Bay Street and Wall Street that were threatened by the democratization of the Canadian capital markets which , for the first time, allowed average Canadians to own the earnings of Canadian companies, rather that just owning mere share certificates.

As Financer Minister, Jim Flaherty fell hook line and sinker for the lies that were being advanced by these special interests and turned around and told these same lies to Canadians. He claimed income trusts were causing the loss of taxes to Ottawa. If that’s the case, then where’s the proof?

If Jim Flaherty’s concerns were valid, then why didn’t he also start taxing his law firm that pays zero taxes? Jim Flaherty’s law firm is nothing more than an income trust. It pays zero taxes to the government.

As for Jack Layton, he stands for anything but democracy.

Jack Layton was blindly supportive of Jim Flaherty’s panic attack income trust policy that has lead to $108 billion of Canadians companies being taken over by middle eastern oil companies, Hong Kong billionaires and US private equity.

A policy that has caused 2,500 people to be fired from Bell Canada.

As a result, all Canadians are paying for this reckless policy. It is costing all taxpayers $2 billion a year in lost taxes

So what’s Jim Flaherty’s proof for his destructive policy?

18 pages of blacked out documents.

Meanwhile Jack Layton’s NDP were writing letters to their concerned constituents that read:

“We are confident that the government’s estimates of future tax losses are solid.”

Confident? On the strength of what? Totally blacked out documents?

The citizens of Whitby-Oshawa need an honest, intelligent and dedicated individual representing them in Ottawa. I am that person.

Please make your vote count in this important election by voting for me. I am dedicated to the task of working for you and for the interests of this riding where I first lived and worked upon graduation from Queens University 29 years ago.

Saturday, October 4, 2008

The Harper illusion: Can it last another 10 days?

Sat. Oct 4 - 5:41 AM
Halifax Chronicle Herald

IN THE DEBATES, with a couple of brief exceptions, whenever Stephen Harper spoke, the sound level dropped a couple of octaves – the attacking voices of the opposition leaders brought down to a calm and measured tone. In tenor and body language, he was the reasonable one as he fended off the assaults.

To what extent did this cool image, this projected air of everything being under control (and he’s good at it, in French as in English – he reminds me a bit of Pierre Trudeau in that sense) trump the fact that he was mostly defending the indefensible?

In reality, the ground is giving out from under him, which is plain to see for anyone who wants to look – the only question being whether he can drag out the pretense that nothing is happening for another week and a half, and whether a plurality, unimpressed by a fractured opposition, will continue to buy the illusion right into the polling booth.

It’s not just the economy, although that’s the main thing. Even if the fundamentals of the Canadian economy are strong, as Harper claims, who actually believes they’ll still be strong much beyond election day with both the U.S. and Europe melting down?

The broader issue is that pigeons are coming home to roost on the whole policy front, all for the same reasons – as consequences of a failed ideology of free enterprise extremism, militarism, social reactionism and so on.

For example, the question of our failed foreign policy hit the news this week, although it took a weird kink – the now-famous plagiarized speech – to get it out. The point is that Harper was dogmatically certain that our holy duty was to follow George W. Bush into the Iraqi disaster.

Keep in mind that Australia’s John Howard, from whom the speech was cribbed, Britain’s Tony Blair, Spain’s José Maria Aznar, plus the leaders of Poland, Slovakia, Ukraine, Norway and Hungary have all been given the bum’s rush mainly for that one reason: their support of Bush in Iraq. With a victory, Harper will be the lone survivor of this dead-wrong gang, although he finally did admit in the English debate that he indeed had been wrong. And Canada will look even sillier if the Democrats win in the U.S. and change course, which it looks as though they will.

Just as bad, under Harper, Canada’s reputation in the world has been trashed, along with that of the U.S. The assault on Kyoto, our unco-operative mood at the UN, our abandonment of peacekeeping in favour of a red-clawed militarism, support for U.S. torture policies (which no other government did), the abandonment of an even-handed approach in the Israeli-Palestinian conflict and a string of other things have left our erstwhile allies bewildered. This screams out for a reversal.

On domestic policy, the issue of poverty is suddenly up as well, as is the question of day care and childhood development – with the figures showing Canada lagging increasingly behind in literacy and education. And we haven’t even mentioned the environment. The Harper Conservatives have basically nothing to say about social policy, except to cut taxes. Give people an extra hundred bucks off their taxes, as the ideology prescribes, and they’ll work it out for themselves.

Alas, with deficits looming, perhaps catastrophically so, not to mention other mayhem, the era of tax cuts is over, no matter what the parties promise, either here or in the U.S. Furthermore, the utopian right-wing presumption that private action alone solves everything is also over – the U.S. bailout of the failed money creed putting paid to that. The fact is that we will now need wise government action to guide us through the shoals ahead.

The Harper government doesn’t believe in public action, wise or not. That’s a problem, but we may not know how much of a problem until after the election when government action is increasingly called for, but the Harper government, virtually alone in the world, is ideologically opposed to it.


Wednesday, October 1, 2008

Hypocrite Jim

Jim Flaherty preaches financial literacy. Yet issues 18 pages of blacked out documents as ”proof” of tax leakage. Meanwhile Canadians lose $35 billion?

Conduct befitting a snake oil salesman:

Speech by the Honourable Jim Flaherty, Minister of Finance, at the International Conference on Financial Education

Washington, D.C.

Check against delivery

Good morning.

I am delighted to be here to discuss financial literacy and its growing importance in an ever-changing world of financial services.

As you know, we are in a period of economic uncertainty. The global economy is slowing and we are seeing increased volatility in our financial markets.

Clearly, some of the flaws of our financial system have bubbled to the surface. Blah blah blah.....why does Jim Flaherty issue blacked out documents to prove the existence of alleged tax leakage from income trusts? Is it because he is shy? Or because he is lying about tax leakage? How is financial literacy advanced by blacked out analysis. That’s like asking a person to learn to read, by providing them no books to read. Jim is making no sense whatsoever. He is not credible.

By the way, did I mention Hypocrite Jack, as in Jack Layton? He thinks blacked out documents is the way to go as the latest thing in government accountability Way to go Jack!