Exigenomicon

A Real Life Get Out of Jail Free Card

This week has been a literal gold minefield for Canadian politics. Incredible juicy exploding nuggets of scandal and intrigue, uncovered under every nook and behind every cranny.

I encourage you to explore all the scandal eviscerating the senate right now, but I want to focus on one particular angle from this article: Damning Findings Removed from Sen. Mike Duffy's Audit Report.

Sources say the whitewash was part of a backroom deal with Prime Minister Stephen Harper’s chief of staff, Nigel Wright.

Fife revealed earlier this week that Wright helped Duffy pay back a $90,172 debt to the Senate for improperly claimed living expenses.

The PMO then confirmed that Wright, a former Bay Street executive, wrote a personal cheque to Duffy as a gift to an old friend, although sources say the two men are not close.

To put this into context, Nigel Wright has stuck his neck out not once, but twice, for Mike Duffy, and in both cases the circumstances are dubious at best and may prove yet to be criminal. And many people want to know the answer to a very simple question: Why?

In the absence of any coherent or believable communications from the Senate, the CPC or the PMO, all we're left with as an electorate are insidious conspiracies and anti-elitist fantasies.

Let's approach it logically

What would it take for Person A (Duffy) to get Person B (Wright) to whitewash damning reports and give A, under a cloak of secrecy, $90,000 in order to repay possibly fraudulently claimed expenses? These are the possible scenarios:

• B is so honourable that he will fall on his sword protecting A
• C is making B fall on his sword protecting A
• B owes A a previous debt
• A has made promises to B
• A has control over B

B is so honourable that he will fall on his sword protecting A

While this is possible, it isn't really plausible. Wright is an extremely competent person, from what I've read about him - smart and driven. These are rookie mistakes, if they are mistakes at all.

C is making B fall on his sword protecting A

Andrew Coyne also wonders why and suggests that a Fear of Audits led Conservatives to cover for Mike Duffy:

The question is why? Why go to such lengths to protect him? Why risk so much for so little? The revelations of recent days suggest one reason: because of the sorts of things the auditors were likely to uncover, had they been allowed to do their work.and to this possibility - that powers greater than Wright are pulling his purse strings.

There is only one person in the whole country that could make Wright risk so much for so little.

The PMO has been uncategorically supportive of Wright but has cut Duffy adrift, a flusterpated zeppelin about to be engulfed in a fantastical fireball.

B owes A a previous debt

It is possible and plausible that Duffy did something in the past for which he received a real life Get Out of Jail Free card, if it were to come to that.

He is a vociferous fundraiser and, against the rules, an influential campaigner.

B has made promises to A

We can't legitimately believe that snow-white altruism led to the gift of $90K. That there were no strings attached to either the whitewash or the money is not plausible. No one risks this type of exposure without some expectation of patronage, especially Wright, who seems to have broken the cardinal rule about being PM CofS:  "never become the story".

It is possible and plausible that Duffy has promised some future mark to be called in on a whim, no questions asked, or perhaps he's already fulfilling those promises in his hermitage.

A has control over B

It might be that whenever Duffy comes calling Wright must answer for reasons entirely unknown. It may not even involve Wright directly. While this is possible, it does not seem plausible.

Conclusion

This story is moving too fast - Nigel Wright resigned this morning, but there will be more to come and more and more it appears that a mysterious Person C is making Wright fall on his sword for Duffy, but we'll have to watch and see.

 

The Leaders of Canada, Ladies and Gentlemen

Recently a co-worker of mine asked me whether I was concerned about the heaping of attention poured upon Justin Trudeau and what it might mean for 2015.

It is true that the current Conservative-Liberal war certainly takes up a lot of the limelight. It appears that the Conservatives will stop at nothing, not even wasting taxpayer money on partisan "10-percenters", to attempt to grind the Liberals into the dust. This is an ongoing vendetta that sometimes plays out in public, sometimes in the House and always on social media.

On the one side that sort of blind partisanship, that singularity of focus, makes me question all that 'focusing on the economy' rhetoric, but that is another story altogether.

So in my opinion it makes the Conservatives appear vengeful and spiteful, it probably has an effect on Trudeau's ratings (or else they wouldn't do it), which is actually pretty good for Mulcair, since he can focus on things that actually matter to Canadians.

And lo and behold, here is Tom Mulcair making a lot of sense, in the midst of this hyper-partisan war of attrition.

 

So here we have three leaders:

1. Harper is attacking Trudeau on all fronts with his entire arsenal
2. Trudeau is trying to deflect the barrage
3. Mulcair is talking evidence-based policy, jobs and manufacturing

Why Tariffs are Taxes Twice

Tariff: A tax or duty to be paid on a particular class of imports or exports.

Tariffs on imports from 72 countries have increased in the 2013 Federal Budget. But what does that mean? Well, for retailers, it means an increase in the cost of goods that will be passed onto the consumer.

For instance, tariffs on leather jackets from China would increase by five percentage points, costing retailer Danier Leather Inc. an estimated $1.2-million a year, with the price of its leather jackets rising between $10 and $20, chief executive officer Jeffrey Wortsman said.

U.S. duties on leather jackets are just 6 per cent compared with Canada’s proposed 13-per-cent duty. The gap “will put us at a real disadvantage compared to our U.S. competitors,” Mr. Wortsman said.

The Finance Minister isn't much help in predicting the impacts all this tariff/tax stuff:

Flaherty said he had not calculated the effects of the increased tariffs on retail goods, but defended the government’s decision.

“I haven’t costed retail goods. We know that they’ll [sic] be some consequence to the change in who gets the preferential tariff compared to others,” he said.

Let's Do The Math

Right now let's say that a retailer purchases bikes for $1000 each and sells with a 20% markup. Currently the tariff is 8.5% for bikes, so acquisition cost is $1085 for the bike, assuming it is from abroad, and so the markup is $1302. As the end consumer I am paying GST on the bike as well, which equates to $65.10. Total tax to the feds: $85 + $65.10 = $150.10

Tariff is going up to 13%. Now the bike is $1130, so the markup is $1356. Consumers now pay $67.80, for a total tax dividend to the government of $197.80.

• Original tax: $150.10
• New tax: $197.80
• Increase: $47.70 (32% increase)

So it appears safe to say the following:

An increase in tariffs leads to an increase in acquisition costs, which leads to a higher retail price, which leads to a greater absolute dividend of GST.

The Spin

Chris Alexander went on Power and Politics and said that these increased tariffs will create competition and actually lower prices. While this is possible, it is not probable. It is even less probable when Alexander proclaims that lower tariffs lower prices, but higher tariffs will also lower prices.

He refers to mathematics as an 'opinion'. He believes that these tariffs will affect 'less than one percent of trade'.

Tariffs are going up on bicycles, leather goods, umbrellas, table fans, tableware and potato starch, to name a few things, which hardly seem like less than one percent of trade.

 

Conclusion

Don't believe the hype. Believe the math.

Gnashing of Teeth Puts The Banks In Line

For those of you that don't remember, in the recent past Jim Flaherty, through the Bank of Canada, chastised Canadian corporations for sitting on piles of dead cash ($600B). Flaherty thought that if he gave them lower corporate taxes, that the offset would be used to create jobs. It wasn't used that way - instead it was squirrelled away into rainy day funds, never to be seen again.

For more information about this see my blog post Why Corporate Canada Should Voluntarily Follow Mark Carney's Imperatives.

Flaherty Learns a Lesson

Flaherty has realized that direct action is more effective than second-hand 'through the Bank of Canada' action:

On Tuesday, Flaherty admitted he asked a member of his staff to phone Manulife Financial Corp. (TSX:MFC) after it had cut its posted rate for five-year fixed mortgages to 2.89 per cent from 3.09 per cent.

It’s the second time in a few weeks that Flaherty interfered in the mortgage market. Earlier in the month, he called the Bank of Montreal (TSX:BMO) after it had dropped its posted five-year rate to 2.99 per cent, but on that occasion BMO did not reverse itself.

“As I said before, we encourage prudent lending practices, we don’t want a race to the bottom on mortgage rates by our financial institutions so I’m pleased at their response,” he said.

“I had one of my staff call them and indicate my displeasure, which is the same thing I did with the BMO except I called myself.”

Flaherty blasted for pressuring Manulife to reverse mortgage rate cut

Good Idea, Bad Tactics

I understand that Flaherty does not want a 'race to the bottom'. No one wants a mortgage crisis in Canada. But that is not up to Flaherty. It is up to all Canadians, including Flaherty. And we, apparently, are not to be trusted. Flaherty needs to operate within his purview and use the tools available at his disposal, which I am assuming are myriad. This is not one of them.

He needs to come up with a better solution that bullying banks into homogeneous mortgage rates.

Father Finance Minister Knows Best

By exploiting his position, Flaherty does us no favours.

It's not like after this happened I was like 'oh, I guess I trust the government and banks more now and their independence is further proven'.

From the Conservative Party of Canada website:

Now is not the time for instability, or for reckless, opportunistic experiments. (quote unattributed)

I think that all Canadians, regardless of partisan stripe, would agree that reckless, opportunistic experiments are bad. Can directly influencing competitive free market bank rates through a phone call be considered reckless? Possibly. I leave it to you to decide. You can also consider whether it is opportunistic, just before the budget is announced.

Investors Should Be Furious

If I were an investor at one of these banks and had products that included mortgages, and I found out the government politely forced my bank to not maximize my dividend according to a business plan, I would be livid.

It Must Be Serious

For Flaherty to try and bully banks twice in the last couple of weeks and try to force them to change their rates, the situation must be dire.

It doesn't give me much confidence in the economy or the upcoming budget either. When the Finance Minister goes rogue to protect Canadians from themselves in the 'greatest economy in the world', you know things are going south.

It also makes me think that maybe interest rates are going to go up. Soon. And often.

Conclusion

The housing market is crashing. The government is desperate to fend off a housing crisis and it seems all but inevitable when Ministers gnash their teeth at banks in reaction to market pricing adjustments.

Related articles

Flaherty says 'concern for Canadians' prompted mortgage move

Flaherty blasted for pressuring Manulife to reverse mortgage rate cut

Why Liberal and NDP Cooperation Won't Work in Saskatchewan

Much has been said recently of an NDP/Liberal cooperative slate in the next election, allowing all disenfranchised voters to voice their dissatisfaction with the Harper government through a single conduit candidate.

This cooperative government would then implement electoral reform to replace the first-past-the-post method to some other method by which each vote truly counts, such as proportional representation.

Then the government would call another election and proceed under the new system as if no collusion had taken place to oust the current government.

I do not believe that this cooperative agreement will come to fruition, using Saskatchewan as my example.

Saskatchewan is Mostly Blue with a Little Red

Federally, Saskatchewan is represented by one Liberal and thirteen Conservative MPs.

It is an easy decision to let Ralph Goodale stand for re-election in his riding. Ralph understands that he is supported by many in the NDP who do not want to see a Conservative sweep of the province.

Liberals Would Essentially Vapourize

However, the NDP came in second in all Conservative ridings. So would the Liberals be content to remove thirteen candidates from their federal slate? I doubt it. And this would need to be established at least a year in advance in order to begin effective messaging.

And if Goodale chose not to run, the NDP would challenge the right to represent that riding in any cooperative agreement, thus wiping the federal Liberals off the map, quite literally, for one election.

For the federal Liberals, cooperation is political suicide any way you slice it here in Saskatchewan.

 

Rooftop Snow Removal Done Wrong

I live in a neighbourhood that has traditionally had problems with flooding. As such, most of the houses have taken to having the snow 'removed' from their roofs. I have a snow rake myself, but others have hired 'snow removal' companies.

Removal or Moval?

In the case of my neighbour's house, snow 'moval'.

As you can see by this photo, the snow 'removal' crew piled the snow up on the side of the house with the fence (our shared fence) so high that it was falling into my yard and is actually higher than the roof at one point.

Not to mention the strain that hundreds of pounds of snow put on a 50 year old fence.

There is actually a window behind that snow pile as well.

When did it become a bad idea?

At what point did this become a bad idea you ask? When I pointed it out to the guys that snow was coming over into my yard (I've cleared all the snow on that side of the house for fear of flooding).

That's when they started pushing snow off the back of the house.

And here's their back door. Probably won't be using it much for a few months.

So I asked the two guys doing the snow removal what they were going to do with all this snow.

Q: "What are you doing with that snow?" A: "Let it melt."

"Let it melt," was the answer I received.

I've since contacted the property management company and they have assured me that they will rectify the situation 'immediately'.

I'll keep everyone posted.

Erin Weir and Elegant Solutions

Erin Weir has dropped out of the NDP Leadership Race and has supported fellow progressive, Dr. Ryan Meili.

This is a bold, principled move, and one rarely seen in the political sphere.

An Elegant Solution

Weir had an elegant solution - progressive ideas and policies with a known price tag and the wherewithal to pay for them. And it framed the context of the debates and the race itself:

How were each of the candidates going to pay for their platforms?

Without money to pay for policies, the policies lose their potency and become more like platitudes.

It was this emphasis that forced the candidates to get specific with ideas and then how they would be funded. And this is critical to success in the next provincial election.

Weir Ran for Leader and Dropped Out For the Same Reason

Weir is committed to the NDP, to its resolutions, its grassroots base and to progressive policy. He ran for leader to help transform the NDP and win government through a compelling alternative vision to the Sask Party platform.

So you're wondering why, with such an elegant solution, did Weir drop out of the leadership race? He did it for the party and for Saskatchewan. This was the same reason he ran for leader.

The best way for Weir to support the NDP and the people of Saskatchewan was to put his support to Meili and draft a joint policy paper based on shared progressive ideas. This is the definition of 'principled approach', and proves that Weir was in it to make Saskatchewan a better place for everyone.

Weir and Meili are both progressives, and Meili has a great chance (made greater still by this development) to win the leadership and usher in a progressive platform for the next election.

Still an Elegant Solution

And so if Weir's platform was an elegant solution, then so is the Weir-infused Meili platform, since it includes the economic policies required to enable a progressive vision of Saskatchewan to come to fruition.

 

Toadies Cheer Death of Bill They Would Have Voted For

The headline reads: Conservatives cheer demise of Bill C-30

The unprecedented death of the government's oft-criticized Internet surveillance bill was met with mixed emotions Tuesday, but perhaps most telling was the reaction from members of the Conservative caucus, some of whom joined the opposition and thousands of Canadians coast-to-coast in welcoming its demise.

I disagree. The reaction from the members of the Conservative caucus was not the 'most telling'. Their reaction is, for the most part, superfluous (I hesitate to use the phrase 'least telling'). And here's why.

Toews Made It Clear Which Way To Vote

Toews basically hamstrung the government side with his comment, which meant that no Conservative MPs were voting against the Bill.

"Either stand with us or with the child pornographers." - Vic Toews

I mean, it's not like it's a secret or anything. Your vote is not your vote, we get that. 'Us' is crystal-clear in my mind: Us=Strong Stable Majority

You can say anything you want about the Bill, in public and in private, but YOUR VOTE is all that matters on Bills before the House of Commons when it comes to your position on a particular issue.

But you know you were going to vote for the Bill. It's not like it was a secret, as I've mentioned before.

There Was No Vote

To be clear, there was no vote on this Bill, because there is no longer any Bill. It is gone. Which is a good thing. It was named The Protecting Children From Internet Predators Act, and it allowed for warrant-less online intrusions into every single Canadian's cyber-presence. It is a good thing that it is gone. But I digress.

Conclusion

All Conservative MPs would have voted for Bill C-30 so any individual CPC MPs opinion on the bill is irrelevant. I'll get it from the PMO if I need it. Otherwise, please keep quiet as your words are meaningless in the face of your actions.

Erin Weir at the SK NDP leadership debate

Well, it was a packed house on Saturday at the Queensbury Centre, with estimates of attendance ranging form 400 to 700.

As you may or may not know, I'm supporting Erin Weir in his bid to become NDP leader.

Really Friendly Debate

It was far friendlier than I had expected. At this point in the game I was hoping to see insightful critiques of platforms rather than some what I would term 'softball' questions lobbed up for some big runs, although perhaps those questions were meant to 'trip up' the other candidates or to emphasize a weakness. Erin attempted a direct policy comparison with Trent but was rebuffed twice. Erin also sparred with Meili on an energy/environmental issue that was probably for me the best Q and A of the afternoon. I didn't get it on film though. Dagnabit.

Here are some of the highlights, IMHO, of Erin in the debate.

Weir on Resource Royalties

Weir on Representative Democracy

Weir Closing Statement

Related articles

I am endorsing Erin Weir for Saskatchewan NDP Leader

I am endorsing Erin Weir for Saskatchewan NDP Leader

Let me begin by saying I've really enjoyed the SaskNDP Leadership Campaigns.

And one of the things I've enjoyed is making up my mind to support a candidate. I've chosen Erin because he has economic vision that will make the people of Saskatchewan stand up and take notice in the next election and even before that.

Expert in Economics

I truly believe that the next leader of the NDP in Saskatchewan must be able to provide a credible alternative economic vision for Saskatchewan. Like it or not, the Saskatchewan Party has made the economy their ongoing campaign tool, and so the NDP must be razor sharp on the economy.

If you haven't heard Erin speak about economics, you should. He is razor sharp.

I believe that the NDP can provide a strong vision of the province with progressive ideas within the framework of an economic narrative. And I feel that this vision can be best presented by Erin.

$7/Day Early Learning System

It is this type of bold policy that will set the NDP apart from the Sask Party in the next election. If you've got young children or want to start a family, this could save your family thousands of dollars a year.

• Universal Childcare

But I invite you to examine Erin's platform for yourself.

• www.erinweir.ca/

I recommend reading this blog post first:

• From Opposition to Proposition: Fiscal Politics Versus Fiscal Policy

 And finally, a tongue-in-cheek video:

• The Sask Party Can't Stop  Talking About Erin Weir