Not all coupon clippers are treated alike. Not all fraud artists are treated alike

Back during the 2006 election, when Stephen Heartless was campaigning for the votes of Canada’s 2.5 million income trusts investors, he said some very nice things about us, as a group. Talk about how he was going to protect our nest eggs from the rabid pillaging of the Liberals and the NDP. What a nice guy.

Having secured the votes of this enormous block of voters. Stephen decided that there was new girl in town. Her name was Dominic. Dominic was friends with Grin Morgan and the band of thugs that he represented from the oil patch. Together they were able to cast their magic on Stephen Hapless, and this Economonster bought into all their BS arguments about tax leakage and the like.

At that point in time, Stephen did his Dr. Jekyll and Mr. Hyde number on the former love of his life, namely income trust investors and called them every name under the sun and told them that they were at the root cause of everything bad that could happen to Canada. The term that struck me as most derogatory, was when these investors in Canada, representing some 10% of the TSX and some 50% of new capital raising activity in Canada’s public markets, were called “COUPON CLIPPERS”.

Coupon clippers. Evidently to be one had now become the worst thing imaginable. Shills in the press like Terry Corcoran and Eric Reguly, who subsequently called for anyone who questioned their “wisdom” to be either vaporized and/or encased in concrete and thrown into Lake Ontario. These two and their chorus of sycophants in the wings were fear mongering about some nonsense about tax leakage (that was non existent) and some lame argument that Canadians saving for retirement were about to turn Canada into a “nation of coupon clippers”! Better I suppose that we turn Canada into a “nation of stick speculators.” These two were implicitly and explicitly touting the wares of Manulife and the banks as the better places to put one’s hard earned savings. Right this way folks, have I got a deal for you.

Just look were that bad advice would have landed you two years later.

So here we are 2 years later and the economy has stalled because there isn’t enough investor capital. Banks are bolstering their balance sheet with billions in new capital, that is nothing more than tax deductible equity. Take a look for yourself. Ottawa treats this new bank capital as “equity” and yet allows the banks to write off the interest as if it were “debt”.

HEY! THAT SOUNDS LIKE INCOME TRUSTS! What hypocrisy on the part of the Department of Finance. Does the DoF even have a clue what they do from one day to the next?

And who is coming to the rescue of these banks at the time of their greatest need......those now, not so low life, COUPON CLIPPERS

The other completely arbitrary and hypocritical distinction that Harper and Flaherty have divined amongst the group of Coupon Clippers, is that once subset, gets clobbered and the other gets bailed out? One losses billions due the government, And the other gets billion from that same goofy government.

One of the other terms used to denigrate income trusts investors was the false accusation that income trusts were ponzi schemes. The media (BNN, Globe, Natinal Post) gave all sorts of free air time to the lunatics out there who were trying to foster this completely false notion, meanwhile missing three of the largest Ponzi schemes the planet has ecer seen.

As such, all of these spurious and patently false arguments, including Ponzi scheme, resulted in the faux justification to tax income trusts and inflict $35 billion of investor losses,

Contrast this to the treatment by the Harper regime of Asset Backed Commercial Paper. ABCP is not a ponzi scheme (techically speaking) but it sure comes close. The better description would be that ABCP is a croos between financial alchemy (trying to convert fixed interest payment stream into floating interest rate schemes, and a large elaborate cheque kiting scheme.

So who gets punitive tax treatment and who gets a bailout. You guessed it. In Harper’s topsy turvy world of He knows best, that knows least. He taxes the day lights outs out of income trusts that are a real investment in Canada’s economy and he bails out the latest synthetic piece of nonsense? The real irony is that both of these investments came about in response to the fundamental need on the part of investors for income.

So Harper destroys the good product that addresses that need and bailout the bad product that attempted to address that need. So now that they are both gone, what do you thing the odds are that the next brain storm to come out of Bat Street will be. Good or bad. I shudder to think.

As for fraud artistsm why did Madoof get thrown intp jail for his investor fraud, but to date Flaherty has not. Flaherty’s $35 billion fraud was the sole cause of his phoney tax leakage argument. An argument he knew to be false and knew would inflcit huge permamnet losses on investors. Don’t blame me if that meets the definition of fraud. Go talk to Flaherty. Maybe he can do something to drop the tax.....or change my Funk & Wagnalls.