Wednesday Night Salon #1294

Last week‘s fascinating discussion served to remind us that Microcredit is a major tool for social change and Climate Change is real and affecting our lives and the world around us.

The green grass, incipient buds on trees and rose bushes, tender shoots of bulbs just hidden below the damp(!) earth have conspired to delay our usual Christmas greetings with pictures of 33 under drifting snow.
Rather than writing to Santa, some are writing blogs (and thereby hangs a tale).
Instead of sugar plums, visions of cabinet shuffles and elections dance in our heads.
Rudolph and the familiar reindeer are considered in the light of environmentally-friendly transportation.
Frosty the Snowman may soon be an extinct species, replaced by pesky black squirrels – an invasive species
The assorted 12 Days of Christmas gifts are increasingly politically incorrect, as well as threatened by multiple by-laws.
The angels heard on high doubtless contravene a decibel count.
Good King Wenceslaus could not find any snow, let alone the ‘deep and crisp and even’ kind.
And those shepherds hanging about watching their sheep will likely be picked up as loiterers.
Today, the Star of Bethlehem is missing, but you can find an inn on the Bethlehem City Website

With all that in mind, we bid you welcome to a smog-free, star-studded evening complete with the requisite seasonal jollity and mirth, along with sage counsel, prophecy and morsels of wisdom on topics ranging as far and wide as Santa’s sleigh. Canadian and U.S. politics, cabinet shuffle and election rumors, the Iraq Report, the Middle East, the victory in the courts of the San in Botswana, the schism in the Anglican Church – a timely religious topic – . Gold, frankincense and myrrh may not figure largely in your gift list, but at least one of them is a favorite amongst the stock market gurus who will be with us. Or, perhaps you would prefer carbon emissions?
Whatever your pleasure, we can offer stocking stuffers of wisdom from such wise elves as Kimon Valaskakis, Peter Perkins, Glenn Goucher, Lyda Letacq, Linda Julien, Désirée McGraw, special guests from New York (Tevia Abrams) and Berlin (Marion Canute). No matter what delights they bring to the table, however, none will match our favorite gift from Santa, the news that Julius Grey will defend Parc Avenue before the Toponomy Commission.
We look forward to having you with us and to those of you who have fled early to holiday destinations or home (maybe they are one and the same), we send our fondest wishes for a very happy Chanukkah, Christmas, Winter solstice or whatever your preference.

The Report

Introduction
Tonight was a festive, pre-Christmas event, recalling the earliest Wednesday Nights when late supper was served to a hungry few. It would be ungrateful and certainly inaccurate if we were not to report on the brief appearance of Catherine Gillbert’s wonderful mince tarts,- brief, because they were consumed in seconds-, and other seasonal tidbits contributed by generous guests.
John Mavridis, Chairman of Infinitheatre announced that the company is launching a new play “Prescription for Murder”, a spoof on Agatha Christie murder mysteries, as a fundraiser, in which Diana will appear in a cameo role as Mayor of Westmount.
Heward Grafftey has just published his tenth book, Portraits from the past, a charming and informative series of vignettes, essays and portraits of people and events that have influenced his life and activities. His chapter on his long-standing friendship with Pierre Trudeau is both insightful and a good read.
Desirée McGraw was welcomed after a long absence during which she chaired the Liberal Party’s task force on the Environment for the Liberal Party Renewal Commission , an excellent document that rivals Stéphane Dion’s policy papers in length.
Linda Julien was congratulated on her recent appointment by Stéphane Dion as Women’s Candidate Search Director (WCSD) to recruit prominent and successful women to run as Liberal candidates in the next federal election

Scribe’s Comments
This week, Wednesday Nighters were treated to analyses of a limited number of topics by a group of incredibly intelligent, informed, eloquent guests. For this reason, the format of this report consists mainly of quotations representing the thrust of the debates.
On the Change in Legislation Relating to Income Trusts:
Although it was on Hallowe’en that the Minister of Finance introduced proposals to change the manner in which income trusts are taxed, thus removing much of the incentive for companies to convert from a corporation to an income trust , the subject remains topical and highly emotional. [See also]
… Piecemeal legislation presented in a slap-bang manner after the markets closed on Friday… a wonderful way of doing politicking. One of the most interesting aspects is a tax-free rollover, which requires opening of the Tax Act – a dangerous proposal for a minority government. The fight is definitely not over.
Why are you not sympathetic when these tactics are applied to environmental policy?
My issue with income trusts was how they were being sold … how they were being portrayed, but that has been largely corrected. My issue is that it is a tax strategy versus a fundamental investment strategy
The reason is that Canada has no access to high-yield capital for small and medium size cap companies. This is one of the reasons that income trusts were created
At the beginning there was virtually an obligation to pay out 100% of cash flow, but that was reduced to around 80%, so there was money to reinvest. Some of the most innovative developments and world-class inventions came out of the oil and gas income trusts
My understanding is that the structure (of Income trusts) was invented by tax lawyers and accountants – not a government policy – to make it easier for small and medium cap size business to exploit a tax advantage; there was no fiscal or business game plan at the beginning
On Inflation
The Consumer Price Index is a valuable tool in fiscal planning. In order to accomplish this, Canada excludes nine items from the calculation of its core inflation. The U. S. excludes volatile food and energy and has not done as well as Canada in using this tool for projections. Neither the U.S. nor Canada is expected to ease policy in the near future. Inflation is under control and tightening is over. Toronto and New York stock markets have reached records. Liquidity has risen by 40% and so they are at a record in buyback and mergers. (See Jacques Clément’s report on the economy)
The dilemma is that if what counts normally [were included] inflation would be higher. Imports from the East have kept prices down and Canadian money has gone up. Also, due to very good management of monetary policy in Canada and the U.S., slowing down the economy, and crude oil has come down from $70+
Fundamentally, inflation is too much money chasing too few goods. We have the opposite because with the exception of oil, et cetera; I would argue that low inflation can be expected in the medium and long term. In real estate (however), the bubble might just burst
Some asset inflation is good, but why real estate? Why should high-tech equipments costs drop and stones become more expensive? There is only so much land, and construction labour is becoming more expensive
What is the cost of ‘off-shoring’ the knowledge industries? It’s inevitable and it’s a function of available talent. We’re not cranking out in North America enough CFAs and MBAs and we don’t have enough people willing to work 20 hours a day
Use globalization to increase global prosperity

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