How Harper's Message Control Has Hurt the Canadian People

John Ibbitson's column this week had a rather odd headline: Is Jim Flaherty the first great Conservative finance minister? Ibbitson does point out that it was actually Liberal governments that put the safeguards in place that protected us during the latest "economic crisis". But he says of Flaherty:

There has not been a great Conservative finance minister in modern times. All the great finance ministers, from Walter Gordon to Paul Martin, have been Liberal. But Jim Flaherty, who has been in charge of the purse strings for five years, through good times and bad, can lay fair claim to at least being a successful Conservative finance minister.

I think it may be fitting that in the same week of Ibbitson's misguided column, another headline appeared: Study ranks Canada’s freedom-of-information laws dead last

A new study ranks Canada dead last in an international comparison of freedom-of-information laws — a hard fall after many years being judged a global model in openness. The study by a pair of British academics looked at the effectiveness of freedom-of-information laws in five parliamentary democracies: Australia, New Zealand, Ireland, the United Kingdom and Canada.New Zealand placed first and Canada last.

“Canada used to be in the vanguard on this issue,” said Alasdair Roberts, a professor at Boston’s Suffolk University Law School and an expert in freedom-of-information ... Other countries “don’t look to Canada for an example of how to do business anymore,” Roberts said in an interview.

Other countries don't look to Canada for much these days. It's sad that the only place we lead now is in secrecy. Daniel LeBlanc confirms that: Access-to-information woes grow ever more absurd

And there is a far reaching problem with that.

For five years Stephen Harper has been systematically tearing down our access to information. First controlling the media, by not allowing them to ask questions, unless presented well in advance, so that answers could be scripted. Then by taking his own photographs released to media, and even preparing his own videos, that are often presented as "news".

We're not told that the videos were created by a Harper staffer and paid for by taxpayers.

Communication in the "Harper government" is now a strategic function, shifting from information to promotion, and from substance to image, which continues to fuel our "democratic deficit."

When this unprecedented message control can fool a seasoned journalist like John Ibbitson, it shows how successful it has been for Stephen Harper, but how devastating it has been to the Canadian people.

The "Harper Government" Steered by George Bush

... his hard-right agenda strikes out in so many directions simultaneously that it's nearly impossible for the average citizen to keep up. In his first term as president, Bush has sought to explode precedents in almost every area of governance, whether the policy in question be foreign or domestic, popular or unpopular, old or new, effective or not. He has done so in contempt of the opinions of not only his opponents but also many of the corps of professional experts who are charged with nonpartisan evaluation of government programs purely from a standpoint of efficacy. (1)

Controlling the message to keep citizens forever in the dark, is not new. Nazi Germany is certainly the best example, but Stephen Harper didn't have to go back that far. He just had to tap into the "success" of George Bush.

"By the fall of his third year, the father Bush had held sixty-one press conferences; his son by the same time, nine." (1) How often does Stephen Harper hold a press conference? And remember a photo-op is not a press conference.

And what this message control does is obscure the facts. For example when Stephen Harper announced that his government was creating a sanctuary for Beluga whales, it was at the same time that he agreed to allow oil drilling in that same "sanctuary". The headlines were about the preservation of Belugas, not the potential disaster of offshore drilling. (Gulf oil spill anyone?)

When he announced in his Accountability Act that citizens would be given more access to information, at the same time we learn that an important website, making it easier to access information, was shut down.

When the Conservative bluster was about championing women's rights, his government cut funding to women's support groups and removed the word "equality" from the Status for Women.

You see how the game is played? Karl Rove 101.

So now for a little reality check, comparing headlines to what is really happening with our economy.

Ottawa triples bailout cash. But I thought our banks hadn't been bailed out?

The fact is that they were indeed bailed out to the tune of $125 billion in Canada, and another $111 billion courtesy of the American taxpayer. But Flaherty's office controlled the message creating the myth of our "good banks".

What this means for Canadian taxpayers is that we are now the largest lender of sub-prime mortgages in the world, since Jim Flaherty bought on our behalf, all of their toxic paper.

You could argue in reading the piece that this "false" good news encouraged stimulation in the economy. But what it really stimulated was household debt. We bought into the myth and Canadians now also have the highest income to debt ratio in the world.

Pension plan board must use its new power of derivatives cautiously. Stern words coming from our finance minister. He's on top of things.

But wait a minute. Derivatives? Isn't that what caused the "global economic crisis"? Too much gambling with something Warren Buffet calls "financial weapons of mass destruction"?

Why is Jim Flaherty allowing our CPP funds to be invested in something that could result in a financial weapon of mass destruction, in the first place? And why did he stack his office with Goldman Sachs' employees. The same Goldman Sachs that initiated the "Global economic crisis"?

Flaherty preaches prudence to banks. Really? Are you kidding me?

It was Flaherty who allowed the risky sub-prime mortgages to escalate in this country in the first place. Is that prudent? Which also brings us to this headline: Jim Flaherty tightens mortgage rules. Too little too late.

Flaherty has also signed on to new accounting rules that allow corporations to lie about their financial position to lure prospective investors. This would include investors like your company pension plan. And he and Stephen Harper have heavily deregulated our banking system, making the survival of another economic crisis less likely.

So pardon me Mr. Ibbitson, but if it's all the same to you, I'll hold off my applause for now. I'm far too busy waiting for the axe to fall.

Sources:

1. The Book on Bush: How George W. (mis) Leads America, By Eric Alterman and Mark Green, Penguin Books, 2004, ISBN: 0-670-03273-5, Pg. 67

Corporations Line Up to be the First to Tap Into New Legal Cheating

"It's amazing I won. I was running against peace, prosperity, and incumbency." - George W. Bush, June 14, 2001 (speaking to Swedish Prime Minister Goran Perrson, unaware that a live television camera was still rolling)

When the story was sent to me about the new accounting rules, that allow corporations to legally misrepresent their financial picture to lure unsuspecting investors, I've been reading everything I could find on the subject, even going out and buying forensic auditor Al Rosen's new bookSwindlers. And the story is an alarming one. Rosen starts out by saying:

Judging from the stories that run in the newspaper, you probably think that Canada is a pretty safe place to invest your money. After all, we just survived one of the worst economic downturns since the Great Depression. Some of the biggest names in the world of banking and finance have disappeared, but not a single Canadian bank collapsed*. Canada must be doing something right, right?

If you believe that, we have some bad news. The risks you take by investing in Canada have never been greater. And the so-called protection that Canadians think they receive from regulators, lawmakers, and auditors has never been weaker.

The bluster over tackling white collar crime with stiffer sentences, was all for show. Stephen Harper and Jim Flaherty have removed all stumbling blocks that prevented corporations from playing fast and loose in the market place. And this is not simply about wealthy people risking some of their bags of gold, but it effects anyone whose savings or pensions are tied up in mutual funds.

Jim Flaherty has always been a gambler. He gambled with sub-prime mortgages and AIG. He's gambling with derivatives, something Warren Buffet refers to as "Weapons of Mass Destruction". And he's using a Goldman-Sachs employee to handle the impending disaster.

Now he's gambling with allowing the falsification of documents to help the corporate sector potentially destroy our once sound financial system.

Flaherty and Harper are Canada's answer to George W. Bush. According to Rosen:

Corporate lobbying power and the absence of an organized investor voice in Canada means that most regulatory actions favour corporate interests. Canada is the only major country in the world that allows the same people who audit public companies to financially control the process that sets the auditing rules. This basic and fundamental conflict of interest means that auditors can set rules that cater to their paying corporate clients over the needs of investors.

There's a lot of money involved in these financial cons. Based on our extensive experience with auditor negligence and executive dishonesty, we estimate that investors have lost hundreds of billions of dollars to scams in Canadian financial markets. Even if you haven't invested a penny in the stock market yourself, these losses affect you. Anyone who collects a pension, saves for his children's education, or simply pays her taxes like an honest citizen suffers from the disinterest of our regulators and lawmakers in prosecuting dishonest corporate executives, aided by acquiescent auditors. (1)

When Enron collapsed under the weight of it's own corruption, 85,000 people lost their jobs and any avenue to collect severance or pensions they had paid into. And instead of toughening the laws, the Harper government has broken down the barriers to more corruption.

Thanks to our self-regulated auditors, Canada will soon adopt** new accounting and auditing standards called International Financial Reporting Standards (IFRS). Under IFRS, corporate managers will have even more freedom to distort and manipulate their financial reports to make themselves look better than they really are. Despite the devastating impact it will have on investors and the utility of financial statements in general, auditors succeeded in pushing through the change because of complete disinterest from lawmakers and a lack of recognition by investors that auditors have no interest in upholding their needs. Canadians simply assume that a self-regulatory body like the auditors would look after public interests, not just their self-interests. (1)

Being Honest Costs too Much

The fact that Enron was able to commit fraud on such a level was through having friends in the White House. Not only George Bush, who received millions in campaign contributions from them, but also his appointed Secretary of the Army, Thomas White.

The indiscretions of former army secretary Thomas White (2001-03), the vice president of Enron Energy Services before his appointment by President Bush, include actions he took after joining the administration—such as conducting eighty-four meetings and phone calls with Enron while in office, many taking place before he divested himself of Enron stock and in the weeks after September 11, when one would have thought him busy with other matters. .... According to the Washington Monthly, Enron booked profits up-front from multiyear deals made during White's tenure as vice president over Enron's Energy Services, which allowed executives like White, "whose bonuses were tied to performance, to collect millions of dollars before the company had realized any profit."

Jeff Skilling, succeeding to the CEO position after Ken Lay, was most proud of convincing the SEC to allow Enron to count projected earnings from long-term energy contracts as current earnings, despite the possibility that the money wouldn't be collected for as long as twenty years, if ever. This enabled Enron to meet analysts' estimates at will by claiming future revenue as current revenue whenever the company needed it. (2)

And this is exactly the kind of practice that the Harper government has now made legal. And Canadian auditors and corporations are lining up, hoping to cash in at the expense of the vulnerable. They claim that being honest is far too expensive.

The main reason that auditors pushed through the change was for money. They are in the process of raking in untold millions for switching all public companies over to the new accounting rules. And the auditors do not bother mincing words about it either. They plainly state that continuing to maintain Canadian accounting rules is "no longer cost effective" for them. After all, since they no longer have any incentive to act on behalf of investors, why take on the added cost to maintain and improve accounting standards at the annoyance of their paying corporate clients?

In a move that's the envy of capitalists everywhere, the auditors turned what was previously a cost centre into a very lucrative profit centre. And they now have their sights set on converting non-public companies and private enterprises to IFRS. Auditors just continue printing money at the expense of investors and business owners for no discernable benefits in return.

And though Harper and Flaherty are behind the changes, Rosen also lays some of the blame for this potential financial tsunami on an "uninterested and conflicted media." But then the corporations who own 99% of our media, are hardly going to risk losing such a gift.

Footnotes:

*Courtesy of 125 billion dollars from the Canadians taxpayer. Hush money so they didn't blow the whistle on Flaherty's sub-prime mortgage scheme.

**Came into effect on January 1, 2011　

Sources:

1. Swindlers: Cons and Cheats and How to Protect Your Investments From Them, By Al Rosen and Mark Rosen, Madison Commerce, 2010, ISBN: 978-1-897330-76-0, Introduction

2. The Book on Bush: How George W. (mis) Leads America, By Eric Alterman and Mark Green, Penguin Books, 2004, ISBN: 0-670-03273-5, Pg. 67

Swindlers Revisited: Why Canada's Occupy Wall (Bay) Steet Movement is Important

A friend left a comment on my blog yesterday, reminding me of a book I had read several months ago, Swindlers.  She was just in the process of reading it herself.  Timely, given the current protests against Wall Street greed.

Anyone questioning why citizens have taken to the streets, need to read this book.

In it, the Rosens (father and son), tell us of how Jim Flaherty and Stephen Harper have signed Canada on to a new set of rules governing corporations.

Thanks to our self-regulated auditors, Canada will soon adopt [Came into effect on January 1, 2011]  new accounting and auditing standards called International Financial Reporting Standards (IFRS). Under IFRS, corporate managers will have even more freedom to distort and manipulate their financial reports to make themselves look better than they really are. Despite the devastating impact it will have on investors and the utility of financial statements in general, auditors succeeded in pushing through the change because of complete disinterest from lawmakers and a lack of recognition by investors that auditors have no interest in upholding their needs. Canadians simply assume that a self-regulatory body like the auditors would look after public interests, not just their self-interests. (Swindlers: Cons and Cheats and How to Protect Your Investments From Them, By Al Rosen and Mark Rosen, Madison Commerce, 2010, ISBN: 978-1-897330-76-0)

They are now legally allowed to lie on their financial statements to lure potential investors.  When I wrote of this before, I received an email asking why it mattered.  After all, it was just rich people cheating other rich people.

However, this affects all of us, because it could mean company pension plans, RRSPs, mutual funds ... things we don't think about every day but they could have a serious affect on our future financial well being.  More from the book:

Judging from the stories that run in the newspaper, you probably think that Canada is a pretty safe place to invest your money. After all, we just survived one of the worst economic downturns since the Great Depression. Some of the biggest names in the world of banking and finance have disappeared, but not a single Canadian bank collapsed. Canada must be doing something right, right?

If you believe that, we have some bad news. The risks you take by investing in Canada have never been greater. And the so-called protection that Canadians think they receive from regulators, lawmakers, and auditors has never been weaker. (ibid)

Good PR (propaganda) at taxpayers expense, has led us to believe that we are financially sound.  We're not.  Since coming to office, the "Harper government" has been on a deregulation drunk.

During one binge, they flooded the market with sub-prime mortgages and the next day found themselves in bed with AIG.  Some morning after.

Another weekend of partying and they bailed out our banks to the tune of $125 billion.  The drunkenomic hangover.

More from the Rosens:

Corporate lobbying power and the absence of an organized investor voice in Canada means that most regulatory actions favour corporate interests. Canada is the only major country in the world that allows the same people who audit public companies to financially control the process that sets the auditing rules. This basic and fundamental conflict of interest means that auditors can set rules that cater to their paying corporate clients over the needs of investors.

There's a lot of money involved in these financial cons. Based on our extensive experience with auditor negligence and executive dishonesty, we estimate that investors have lost hundreds of billions of dollars to scams in Canadian financial markets. Even if you haven't invested a penny in the stock market yourself, these losses affect you. Anyone who collects a pension, saves for his children's education, or simply pays her taxes like an honest citizen suffers from the disinterest of our regulators and lawmakers in prosecuting dishonest corporate executives, aided by acquiescent auditors.

If power is intoxicating, unchecked power is inebriating. 

A few more brown-bagged calamities:

A former Goldman-Sachs employee is running the bank of Canada and has brought along a colleague to act as his assistant.  The same Goldman-Sachs who helped to create the last economic crisis, and the same Goldman-Sachs who warned their clients not to invest in Canada.

Another Goldman-Sachs employee has been signed on to handle Canada's foray into derivatives.  Investor Warren buffet calls derivatives "weapons of mass destruction", but that won't stop Flaherty.  He's even putting some of our Canada pension funds into this risky venture.

Stephen Harper's chief of staff came right off Bay Street to secure the purchase of the F-35s for one of his clients.

And yet Flaherty claims that Canadians have little to protest.

Chantel Hebert is suggesting that instead of protesting Canadians should vote.  Maybe if the media kept us better informed, we would.  Every time they refer to this government as "Tories", they are putting another nail in our coffin.

A Queens University political science professor was asked recently why people are protesting.  She said that the question should not be "why?" but what took them so long.

Will Canadians Finally Rise Up Against the Evils of Neoconservatism?

I mentioned the musician Tom Morello, who had appeared on Bill Maher recently, discussing social issues.  I was so impressed with his genuine concern for societal imbalance and dedication to several causes.

Morello spoke of the "occupation of Wall Street" by folks who had just had enough.  One member of the panel belittled the protesters, claiming there were only a handful, but clearly there are more than he would have liked us to believe.

In fact, at least 800 were arrested, and the numbers are rising, not only of arrests but of demonstrators.

The group, called Occupy Wall Street, has been protesting against the finance industry and other issues by camping out in Zuccotti park in New York.  During the afternoon a long line of protesters numbering several thousand snaked through the streets towards the landmark bridge across the East River with the aim of ending at a Brooklyn park.

However, during the march across the bridge groups of protesters sat down or strayed into the road from the pedestrian pathway. They were then arrested in large numbers, and held for several hours, by officers who were part of a heavy police presence shepherding the march along its path.  At one stage 500 protesters were blocked off by police on the bridge. At least one journalist, freelancer Natasha Lennard for the New York Times, was among those arrested.

The protesters then took their march to police headquarters.

Erin Larkins, a Columbia University graduate student who says she and her boyfriend have significant student loan debt, was among the thousands of protesters on the bridge. She said a friend persuaded her to join the march and she's glad she did.  "I don't think we're asking for much, just to wake up every morning not worrying whether we can pay the rent, or whether our next meal will be rice and beans again".

400 of America's wealthiest citizens, have more money than the bottom 155 million combined.  Yet when Wall Street gambled and lost, they were bailed out, while thousands at the bottom were thrown out.

Thrown out of their jobs, out their homes and out of the government's concern.

I'm pleased to learn that a similar protest is planned for Canada.

Inspired by protesters along Wall Street and in other U.S. cities, hundreds are expected to occupy Toronto's Bay Street in two weeks to air their various grievances against the financial system and its wealthiest companies.  The protest near Wall Street in New York is entering its third week, and doesn't appear to be slowing down. In fact, a police crackdown has only emboldened protesters and some are now expecting the "occupation" to continue into the winter.

The organizers of Occupy Toronto plan to descend on King and Bay Streets on the morning of Saturday, Oct. 15 to set a base of operation to prepare for a march on that Monday. Organizers hope the occupation will last into the following week.

It's all we have now. 

Michael Moore was also a guest on the program and his discussion with Morello turned toward citizen activism.  They agreed that it would just take one person.  One "last" person.

The last person to be thrown out of their home.  The last person to lose their job to outsourcing or downsizing.  The last person to be refused medical treatment because their insurance didn't cover it.

Rosa Parks was the last person, symbolically speaking, to move to the back of the bus, simply because she was black, and she sparked the Civil Rights movement.

In Canada, wonderful little Brigette Depape, stood alone against Stephen Harper and the Senate.  She took a beating from the media and a dressing down from Senator David Tkachuk, one of the sorriest excuses for a human being who ever lived.
 
Yet Tkachuk prevailed.  We chose corrupt not courageous.
 
In July Kai Nagata quit his job as CTV's Quebec City Bureau Chief, over the state of the Canadian media, and their refusal to sound the alarm over the Harper Doctrine, a rehash of the Bush Doctrine.

But the media is still spinning themselves silly, afraid to stop, fearing they might land on a real political news story.  There are exceptions, but sadly, too few.

So if you're tired of corporate tax breaks, deregulation that threatens our environment, and the constant pandering to the rich, join the protest on October 15.

For heaven sake, a former Goldman-Sachs employee is now running the Bank of Canada.  Jim Flaherty and Stephen Harper have signed us on to new accounting rules that allow corporations to lie and cheat, without penalty, while toughening laws against far weaker, and less damaging, criminal acts.

When are we going to say enough is enough?  Who will be our "last"?

I Stand Corrected on Tony Clement

I'm still unable to leave comments on my blog, or even respond to them, but several of my readers provided some vital insight into Clement's spending orgy.

One dealt with bicycle racks, which are indeed part of infrastructure spending. However, they should have been receipted as such, not funded from a border security/congestion, G-8 summit account. And of course, they should have been "receipted".

Another legitimate dispute was my comment that Clement's riding is one of the richest in the country. I was basing that on the resorts and the cottages of the rich and famous. But Sara said: "Parry Sound-Muskoka is actually one of the poorest ridings in the country. When you look at the people who live here year round (like me) 40% of the families here earn less than $30,000 per year."

Just imagine how $50 million could have helped those people. But now Clement has "used up" all federal funding, putting them at the back of the line ... again!

A third comment that needs is addressing, is my suggestion that if this happened in the in the private sector, Clement could be facing jail time for embezzlement.

But Leslie reminded me of something I should have known, because I've written on it before.

A friend suggested that I read the book Swindlers: Cons and Cheats and How to Protect Your Investments From Them, By Al Rosen and Mark Rosen.

So I did, and what an eye opener.

Something that is getting little (as in NO) media coverage is the fact that Jim Flaherty and Stephen Harper have signed onto a new set of accounting rules, known as the International Financial Reporting Standards, which according to Al Rosen, a forensic accountant who, for 15 years acted as a technical advisor to three Auditor's General of Canada, allows corporations to legally misrepresent their financial picture, to lure unsuspecting investors.

A recent survey revealed that just 42% of Canadian portfolio managers know that Canada is preparing to switch to International Financial Reporting Standards starting in 2011. It’s a good bet that even fewer retail investors are aware of the change, despite the significant impact it will have on investment values. The transition to IFRS represents the biggest upheaval in financial reporting the country has ever seen ....

And for those who feel that this will only affect those with money to invest in stocks, guess again.

This could mean your pension funds being invested in corporations who can now legally lie about the state of their finances and potential growth.

So Leslie is right. Clement would not be facing jail time, because his cohorts have made lying and cheating legal. Just don't lie while holding a single marijuana plant. That will put you behind bars.

I'm doing a separate posting on France's hosting of the summit, another important point.

Thanks guys. My readers are so smart.