White Collar Crime and Punishment:
In the last two decades of last century Philips Environmental was a high flying public company listed on Toronto Stock Exchange. It was in the business of disposing garbage. It made money by separating marketable items, especially metals from what it collected. The stock price fluctuated based on the price of metals in a short time frame but the general trend was upwards and investors were rubbing their hands in glee. However, the bottom fell outwithout any warning in 1998 when it was discovered that the management was siphoning off company funds for their personal use on a massive scale. The company declared bankruptcy in 1999 and gullible fools like me lost all their investment in the company.
Two top executives of the company were prosecuted. Twelve years later, on October 24, 2011 one of them was sentenced to a long jail term and fined several million dollars. However, the punishment was suspended pending appeal to a higher court. It is anyone’s guess how many years it will be before The High Court and then the Supreme Court have had their say. The possibility that the accused would still be alive then is not very high. This case is an example of many other similar cases. The case of Livent CEO Garth Drabinski was in the courts for thirteen years and it is still waiting for an appeal to be heard by the Supreme Court although Mr. Drabinski is now in jail.
Compare these cases to those of the media mogul Conrad Black and billionaire hedge fund operator Raj Rajaratnam south of the border. Within a couple of years of the crime being discovered the cases were heard, appeals dealt with, sentences passed and guilty put behind bars. The justice was done and seen to be done. For a severe punishment to be deterrence, it has to be prompt. Canadian laxity where it takes several years for a case to be brought to court, another few years for the judge to hear it, and after all that the culprits are almost certain to spend their days out on appeal unless they are blessed with exceptionally long lives. And here is the rub. Even when they are in jail, they have almost all the comforts of their home including television, computers with internet connections and email privileges. If this pampering was not enough, the sentence is generally reduced to as little as one sixth of the original as a reward for ‘good behaviour’ whatever that means. Given a system like this, one wonders why white collar crimes are not present everywhere. I suspect that they are much more prevalent than we naively think; just that the regulatory bodies are not interested in uncovering them and it is only by accident that the most blatant ones come to light and are reported in the media.
Another example of white collar crime which no one cares to investigate and report is in the city halls, particularly in planning and development departments. One small example: mansions have been and are being built in my till recently upscale neighbourhood in Calgary which violate all building codes of the city, leave alone looking like a London (England) W.C. from the street. I do not believe for one moment that the officers in the city hall who approved the structural plans were not motivated by some extraneous considerations. Corruption in construction industry is not limited to Quebec and not to blue collar workers alone; it takes two to tango. Moreover, municipal corruption is a world wide phenomenon; there is no reason for Canadian cities to be immune from it.
Thought of the Week:
Does Sarah Palin’s withdrawal from the race for Republican nomination together with the drop in support of Perry-Bachman duo show that an iota of sense is returning to the Republicans and the pendulum is swinging against the Tea Party extremists? Or I am dreaming in Technicolor.
Friday, October 28, 2011
Friday, October 21, 2011
Wall Street Protests:
Two items of news about our southern neighbour should worry us here in Canada. First, the protests against the excesses of Wall Street have gained strength in New York and spread to other centres in North America and Europe. Second, the median income in the U.S. has dropped nine percent over last ten years in real value of money. There can be no doubt that the two events are connected. Young men and women who were brought up in relative comfort in middle class families with an assurance that college education was a guarantee of good jobs are now working at minimum wage in fast food outlets or stacking shelves in aptly named Target stores, if they are working at all. Older men have been laid off because the factories can not compete with cheap overseas products and can’t find other jobs. These people have good reasons to be unhappy with the financial system as much as with the government. They expressed their anger with the government by supporting the TEA party candidates in the last election which has brought Washington to a halt. Now it is the system’s turn. Wall Street is a symbol of banks, insurance companies and stock traders where incompetent young punks make millions in bonuses while having fun with other people’s money and indulging in unethical and often illegal business activities. The senior executives walk away with tens of millions after being terminated for incompetence and short term profits are all that matter with no concern for long term. Bosses get big raises for ‘making companies more efficient’ by lowering wages and firing workers even if such actions on an industry wide basis reduce demand for their products by reducing the buying power of consumers.
Human nature is to blame for some of our economic problems. Capitalism thrives on selfishness and greed and those in power do all they can to feather their nest. Another reason for our troubles is that the theoretically wonderful idea of Globalization seems to have misfired badly so far. The expectation was that worldwide free trade will increase the prosperity everywhere by lowering prices and increasing production and trade. It is possible that in the long term this will happen and the developed countries are going through a period of adjustment pains. However, in the first decade of Globalization, trade has been mostly a one-way street. China has monopolized the production and supply of goods helped by its currency fixed at an artificially low level while manufacturing has shrunk in most of America and Europe. This has eliminated a large number of high paying jobs and reduced the wages of remaining industrial workers. Contrary to expectations, there are few new industries to hire the newly unemployed or young people joining the labour force. Even in China and India, increased production levels helped some to get out of poverty but caused many of the poor to become poorer because unskilled labour is no longer much in demand. This is where the promoters of Globalization went wrong – they had a long term vision but no idea of how the transition will pan out.
The protesters do not know what can be done to help them except that they are angry for banks having been bailed out at their expense in 2008 with no visible constraints placed on their operations and on payments to failed executives. And they are afraid of this happening again. They also believe, correctly it turns out, that instead of paying old debts and building the reserves in good times the governments have accumulated large debts by cutting taxes on business and wealthy and thus helping the rich get richer. Now that these debt levels have reached the stratosphere and must be reduced to keep the same rich happy by repaying the bonds as they come due, it is the workers who are losing their jobs and pensions. Their grievances are genuine and must be addressed if the system is to survive.
To save the system we need to create new well paying industrial jobs in the West. These must come from revival of traditional manufacturing as well as newly invented products. Revaluation of Chinese currency will help. But it would be more important if there were a general realization in the West that buying locally produced goods helps us keep our jobs. Buying the cheapest saves money now but it may be the root cause of someone dear to us losing his job when a factory shuts it doors. Bankers have to take a long term view when lending or calling the loans and businesses have to look beyond the profit in the current quarter and work for long term viability. The governments have to save – not reduce revenues by cutting taxes – in good times and spend the savings to create jobs in hard times. Even if the worldwide protests do nothing more than focus light on these fundamentals, future generations will thank them for it.
Two items of news about our southern neighbour should worry us here in Canada. First, the protests against the excesses of Wall Street have gained strength in New York and spread to other centres in North America and Europe. Second, the median income in the U.S. has dropped nine percent over last ten years in real value of money. There can be no doubt that the two events are connected. Young men and women who were brought up in relative comfort in middle class families with an assurance that college education was a guarantee of good jobs are now working at minimum wage in fast food outlets or stacking shelves in aptly named Target stores, if they are working at all. Older men have been laid off because the factories can not compete with cheap overseas products and can’t find other jobs. These people have good reasons to be unhappy with the financial system as much as with the government. They expressed their anger with the government by supporting the TEA party candidates in the last election which has brought Washington to a halt. Now it is the system’s turn. Wall Street is a symbol of banks, insurance companies and stock traders where incompetent young punks make millions in bonuses while having fun with other people’s money and indulging in unethical and often illegal business activities. The senior executives walk away with tens of millions after being terminated for incompetence and short term profits are all that matter with no concern for long term. Bosses get big raises for ‘making companies more efficient’ by lowering wages and firing workers even if such actions on an industry wide basis reduce demand for their products by reducing the buying power of consumers.
Human nature is to blame for some of our economic problems. Capitalism thrives on selfishness and greed and those in power do all they can to feather their nest. Another reason for our troubles is that the theoretically wonderful idea of Globalization seems to have misfired badly so far. The expectation was that worldwide free trade will increase the prosperity everywhere by lowering prices and increasing production and trade. It is possible that in the long term this will happen and the developed countries are going through a period of adjustment pains. However, in the first decade of Globalization, trade has been mostly a one-way street. China has monopolized the production and supply of goods helped by its currency fixed at an artificially low level while manufacturing has shrunk in most of America and Europe. This has eliminated a large number of high paying jobs and reduced the wages of remaining industrial workers. Contrary to expectations, there are few new industries to hire the newly unemployed or young people joining the labour force. Even in China and India, increased production levels helped some to get out of poverty but caused many of the poor to become poorer because unskilled labour is no longer much in demand. This is where the promoters of Globalization went wrong – they had a long term vision but no idea of how the transition will pan out.
The protesters do not know what can be done to help them except that they are angry for banks having been bailed out at their expense in 2008 with no visible constraints placed on their operations and on payments to failed executives. And they are afraid of this happening again. They also believe, correctly it turns out, that instead of paying old debts and building the reserves in good times the governments have accumulated large debts by cutting taxes on business and wealthy and thus helping the rich get richer. Now that these debt levels have reached the stratosphere and must be reduced to keep the same rich happy by repaying the bonds as they come due, it is the workers who are losing their jobs and pensions. Their grievances are genuine and must be addressed if the system is to survive.
To save the system we need to create new well paying industrial jobs in the West. These must come from revival of traditional manufacturing as well as newly invented products. Revaluation of Chinese currency will help. But it would be more important if there were a general realization in the West that buying locally produced goods helps us keep our jobs. Buying the cheapest saves money now but it may be the root cause of someone dear to us losing his job when a factory shuts it doors. Bankers have to take a long term view when lending or calling the loans and businesses have to look beyond the profit in the current quarter and work for long term viability. The governments have to save – not reduce revenues by cutting taxes – in good times and spend the savings to create jobs in hard times. Even if the worldwide protests do nothing more than focus light on these fundamentals, future generations will thank them for it.
Friday, October 14, 2011
Appraisal of Life
Mr. Layton penned a message to his followers two days before his untimely death at the age of sixty one and a few months after achieving an incredible success as the dynamic leader of a perennial also ran National Democratic Party. It captivated the nation, even those who opposed what he stood for in his life.
For an average citizen to attempt the composition of a message which will inspire a community would be a folly. If it were in him to lead and inspire he would have transcended mediocrity long ago. All such an individual can hope for is to lay bare his soul to those near and dear to him in the hope that he would be forgiven for the sins he has committed and his accidental good deeds would not be given undue credit. It stands to reason that the individual should review the misdeeds and the temperamental, intellectual and moral deficiencies which were at their root. If he were fortunate to have lived a long life, the list of such deeds would be long and it might be better to group them to keep this memorandum reasonably short. The circumstances that prompted them and the consequences for all concerned should be analysed, albeit briefly, so that the survivors may benefit from the ‘wisdom of age’ if there is indeed such a thing. Obviously, this should be done before the senility sets in. For this reason alone it is too late for me to do so. Apart from that, all those who had the misfortune of coming in contact with me know all my follies much too well and reminding them of these only makes their wounds fresh, something they would wish to avoid at all costs. They know very well that the veneer of gentility only created a good first impression but did not eliminate wickedness deep in the soul.
If the belief of my forefathers is correct and there is reincarnation of souls based on actions in this life, I dread to think what form my next life would take. To make up for this indulgent life I could return as an ant that labours for the community every moment of its life without any thoughts of reward. However, my few good not altogether selfless deeds do not merit an inner satisfaction such selflessness bestows and I seek consolation in believing that death is the final curtain of the only show one is allowed to stage.
Dexia Bank Crisis
There were two lessons to be learnt from the 2008 economic crisis. First, the financial institutions should not be allowed to become so big that their failure endangers national economy. Second, they should not be allowed to invest (?) their capital in highly risky hedge funds and trading ventures where a downturn in the stock market, a bad bet or a crooked trader can risk their capital base and endanger their stability. Neither of the lessons was put into effect and now we have a crisis that puts whole of Euro zone under a hammer. This inability to learn coupled with greed for short term gains and total disregard for long term consequences will destroy the capitalist economies unless we control the greedy and put stringent regulations in place. But the banks are too big to control even when they are failing and our leaders depend on their contributions for their reelection. Given this scenario our future is dark indeed.
Poor Americans
A study by learned professors from elite Universities concluded that as the literacy, gender equality and prosperity increase, the society becomes more peaceful. The study must have omitted the U.S. from its considerations where the level of homicides (18,000 deaths annually, 60 per million of population) is four times the rate in U.K. and Canada, twice that in Afghanistan and comparable to some developing countries going through a civil war. If the conclusions of the study are correct, Americans are generally either poor or illiterate or both. Wide support among the population, many of them at the bottom of the ladder, for the arguments presented by Tea Party leaders for receiving services only a government can provide without levying appropriate taxes on the rich or permitting the government to borrow funds for meeting its obligations certainly puts level of literacy in doubt. And if most Americans feel poor they have a justification. When media broadcasts almost every day the bonuses of tens, even hundreds of millions structured to minimize, even eliminate, the income tax and separation allowances of the same magnitudes for senior executives who are fired for poor performance, living on a hundred thousand does seem like barely scraping by.
Mr. Layton penned a message to his followers two days before his untimely death at the age of sixty one and a few months after achieving an incredible success as the dynamic leader of a perennial also ran National Democratic Party. It captivated the nation, even those who opposed what he stood for in his life.
For an average citizen to attempt the composition of a message which will inspire a community would be a folly. If it were in him to lead and inspire he would have transcended mediocrity long ago. All such an individual can hope for is to lay bare his soul to those near and dear to him in the hope that he would be forgiven for the sins he has committed and his accidental good deeds would not be given undue credit. It stands to reason that the individual should review the misdeeds and the temperamental, intellectual and moral deficiencies which were at their root. If he were fortunate to have lived a long life, the list of such deeds would be long and it might be better to group them to keep this memorandum reasonably short. The circumstances that prompted them and the consequences for all concerned should be analysed, albeit briefly, so that the survivors may benefit from the ‘wisdom of age’ if there is indeed such a thing. Obviously, this should be done before the senility sets in. For this reason alone it is too late for me to do so. Apart from that, all those who had the misfortune of coming in contact with me know all my follies much too well and reminding them of these only makes their wounds fresh, something they would wish to avoid at all costs. They know very well that the veneer of gentility only created a good first impression but did not eliminate wickedness deep in the soul.
If the belief of my forefathers is correct and there is reincarnation of souls based on actions in this life, I dread to think what form my next life would take. To make up for this indulgent life I could return as an ant that labours for the community every moment of its life without any thoughts of reward. However, my few good not altogether selfless deeds do not merit an inner satisfaction such selflessness bestows and I seek consolation in believing that death is the final curtain of the only show one is allowed to stage.
Dexia Bank Crisis
There were two lessons to be learnt from the 2008 economic crisis. First, the financial institutions should not be allowed to become so big that their failure endangers national economy. Second, they should not be allowed to invest (?) their capital in highly risky hedge funds and trading ventures where a downturn in the stock market, a bad bet or a crooked trader can risk their capital base and endanger their stability. Neither of the lessons was put into effect and now we have a crisis that puts whole of Euro zone under a hammer. This inability to learn coupled with greed for short term gains and total disregard for long term consequences will destroy the capitalist economies unless we control the greedy and put stringent regulations in place. But the banks are too big to control even when they are failing and our leaders depend on their contributions for their reelection. Given this scenario our future is dark indeed.
Poor Americans
A study by learned professors from elite Universities concluded that as the literacy, gender equality and prosperity increase, the society becomes more peaceful. The study must have omitted the U.S. from its considerations where the level of homicides (18,000 deaths annually, 60 per million of population) is four times the rate in U.K. and Canada, twice that in Afghanistan and comparable to some developing countries going through a civil war. If the conclusions of the study are correct, Americans are generally either poor or illiterate or both. Wide support among the population, many of them at the bottom of the ladder, for the arguments presented by Tea Party leaders for receiving services only a government can provide without levying appropriate taxes on the rich or permitting the government to borrow funds for meeting its obligations certainly puts level of literacy in doubt. And if most Americans feel poor they have a justification. When media broadcasts almost every day the bonuses of tens, even hundreds of millions structured to minimize, even eliminate, the income tax and separation allowances of the same magnitudes for senior executives who are fired for poor performance, living on a hundred thousand does seem like barely scraping by.
Friday, October 7, 2011
Two Addresses
The Gettysburg’s Address, 1863
Four score and seven years ago our fathers brought forth on this continent a new nation, conceived in liberty, and dedicated to the proposition that all men are created equal.
Now we are engaged in a great civil war, testing whether that nation, or any nation, so conceived and so dedicated, can long endure. We are met on a great battle-field of that war. We have come to dedicate a portion of that field, as a final resting place for those who here gave their lives that that nation might live. It is altogether fitting and proper that we should do this.
But, in a larger sense, we can not dedicate, we can not consecrate, we can not hallow this ground. The brave men, living and dead, who struggled here, have consecrated it, far above our poor power to add or detract. The world will little note, nor long remember what we say here, but it can never forget what they did here. It is for us the living, rather, to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us—that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion—that we here highly resolve that these dead shall not have died in vain—that this nation, under God, shall have a new birth of freedom—and that government of the people, by the people, for the people, shall not perish from the earth.
The Washington Address, 2011
Two centuries, three decades and five years ago our fathers brought forth on this continent a new nation, conceived in liberty for landowners, and dedicated to the proposition that all white men are created equal.
Now we are engaged in a great economic war, testing whether that nation, or any nation so conceived yet so divided, can long endure. We are met on a great battle field of Washington, D.C. We have come to contribute a minute portion of our wealth, as a last resort for those who have lost everything they owned that the rich of the nation might get richer. It is altogether fitting and proper that we should do this but no more.
Yes, in a larger sense, we will not contribute more. We can not support, we can not encourage, this group. The foolish men, living and dead, who lived on credit, have maintained economic level, far above our poor power to sustain or destroy. The world will little note, nor long remember what little we do for them here, but it can never forget how they consumed here. It is for us the thriving, rather, to be dedicated here to the unfinished work which they who withered here have thus far so naively advanced. It is rather for us to be here dedicated to the great task remaining before us-that, from these misguided heroes we take increased devotion to that cause for which they gave their last borrowed cent-that we here highly resolve that these impoverished souls shall not have lost their all in vain- that this nation, under God, shall have a new birth of freedom for the wealthy- and that government of the corporations, by the corporations, for the corporations, shall not perish from the earth.
Thoughts of the week:
The election of Ms. Redford, a Red Tory in the Joe Clarke mold and a single mother to boot, confirms the movement of Albertans from far right to the centre of the political spectrum. No doubt it will send the disaffected red necks to the Wildrose Alliance but there numbers are not as large as many party stalwarts may fear. As the poor showing of Ted Morton in leadership campaign and the election of liberal mayors in Calgary and Edmonton show, Albertans are not the lookalikes of TEA party advocates south of the border. They want a government for all Albertans rather than only for those who are in a fortunate position not to need a helping hand. Last but not the least, it also sends a note to Mr. Harper and gives him ammunition to control his rabid former Reformers.
Makes sense:
Every person above a certain age should have married someone younger – by ten years for those above seventy and by twenty years for those in eighties.
The Gettysburg’s Address, 1863
Four score and seven years ago our fathers brought forth on this continent a new nation, conceived in liberty, and dedicated to the proposition that all men are created equal.
Now we are engaged in a great civil war, testing whether that nation, or any nation, so conceived and so dedicated, can long endure. We are met on a great battle-field of that war. We have come to dedicate a portion of that field, as a final resting place for those who here gave their lives that that nation might live. It is altogether fitting and proper that we should do this.
But, in a larger sense, we can not dedicate, we can not consecrate, we can not hallow this ground. The brave men, living and dead, who struggled here, have consecrated it, far above our poor power to add or detract. The world will little note, nor long remember what we say here, but it can never forget what they did here. It is for us the living, rather, to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us—that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion—that we here highly resolve that these dead shall not have died in vain—that this nation, under God, shall have a new birth of freedom—and that government of the people, by the people, for the people, shall not perish from the earth.
The Washington Address, 2011
Two centuries, three decades and five years ago our fathers brought forth on this continent a new nation, conceived in liberty for landowners, and dedicated to the proposition that all white men are created equal.
Now we are engaged in a great economic war, testing whether that nation, or any nation so conceived yet so divided, can long endure. We are met on a great battle field of Washington, D.C. We have come to contribute a minute portion of our wealth, as a last resort for those who have lost everything they owned that the rich of the nation might get richer. It is altogether fitting and proper that we should do this but no more.
Yes, in a larger sense, we will not contribute more. We can not support, we can not encourage, this group. The foolish men, living and dead, who lived on credit, have maintained economic level, far above our poor power to sustain or destroy. The world will little note, nor long remember what little we do for them here, but it can never forget how they consumed here. It is for us the thriving, rather, to be dedicated here to the unfinished work which they who withered here have thus far so naively advanced. It is rather for us to be here dedicated to the great task remaining before us-that, from these misguided heroes we take increased devotion to that cause for which they gave their last borrowed cent-that we here highly resolve that these impoverished souls shall not have lost their all in vain- that this nation, under God, shall have a new birth of freedom for the wealthy- and that government of the corporations, by the corporations, for the corporations, shall not perish from the earth.
Thoughts of the week:
The election of Ms. Redford, a Red Tory in the Joe Clarke mold and a single mother to boot, confirms the movement of Albertans from far right to the centre of the political spectrum. No doubt it will send the disaffected red necks to the Wildrose Alliance but there numbers are not as large as many party stalwarts may fear. As the poor showing of Ted Morton in leadership campaign and the election of liberal mayors in Calgary and Edmonton show, Albertans are not the lookalikes of TEA party advocates south of the border. They want a government for all Albertans rather than only for those who are in a fortunate position not to need a helping hand. Last but not the least, it also sends a note to Mr. Harper and gives him ammunition to control his rabid former Reformers.
Makes sense:
Every person above a certain age should have married someone younger – by ten years for those above seventy and by twenty years for those in eighties.
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