If there is aright way and a wrong way, you can confidently guess which one Wynne will choose...

By: Keith M. Summers Published on Thu May 28 2015 - Toronto Star Newspaper

As a convicted white-collar criminal, Queen’s Park proposed sale of a majority stake in Hydro One has sparked my interest. The proposal on the table is a con job of astronomical magnitude.

Why is this a bad deal?

Because it is a bad price.

Investment people — like the people who have agreed to help Queen’s Park unload its majority stake in Hydro One — value companies based upon a couple of different factors. Sometimes the value of a company is based on the value of its assets: land, factories, intellectual property, and brand name recognition. The thinking being that better management of those assets might generate higher profits. Sometimes the value of a company is based on its profitability. A stable stream of income is worth paying good money for. Some companies are valued on their assets, others are valued on their earnings; sometimes it’s a little of both.

Hydro One is a stable generator of profits. It has been profitable since it was created out of the breakup of Ontario Hydro. Its profits have grown 6.3 per cent per year for the last 14 years. It reported earnings of $749 million for 2014 — all of which belong to the people of Ontario. You and me.

Now, we all know that the province is in debt. $284 billion. That’s the bad news. The good news is that investors love to buy government bonds. Investors are so eager to buy Ontario bonds that they compete as to who will accept the lowest interest rate. In March, bond investors lent Ontario money for 10 years at a rate of 2.1 per cent. Our average interest rate on all our existing debt is only 3.8 per cent (and falling).

So, we have some numbers to work with: 1) Hydro One earns $749 million. 2) The province pays, on average, a 3.8-per-cent interest rate on its outstanding debt and 3) the province can borrow new money at rates as low as 2.1 per cent for 10 years. So here’s the question: how much should we, as Ontarians, receive for selling this $749-million income stream?

One way to calculate it is to say that $749 million pays all of the interest on $20 billion in existing government debt at a rate of 3.8 per cent. So, to accept anything less than $20 billion in cash is a bad deal.

Another way is to say that $749 million will pay all of the interest on $36 billion of new government debt at a rate of 2.1 per cent. So, to accept anything less than $36 billion in cash is a bad deal.

The number that doesn’t make sense is $15 billion. That’s the value that the premier has put on Hydro One. (If 60 per cent is worth $9 billion then 100 per cent is worth $15 billion). That is the number that Bay Street has convinced the Premier to accept for selling a profitable and growing business that earns $749 million with an earnings growth rate in excess of 6 per cent.

Why is she doing this?

I don’t know. But I can tell you why Bay Street is pushing this deal.

Greed. In addition to buying a blue-chip electricity monopoly at a rock-bottom price they hope to make money by “underwriting” the deal. They intend to charge us a fee for selling our Hydro One to themselves at a terrible price. And a deal of this size could be worth hundreds of millions of dollars in fees.

I have a lot of respect for investment bankers. They are the guys (mostly guys, anyway) who help companies “go public” by convincing ordinary Main Street investors to buy shares in newly public companies. That takes a lot of work and is not without some risk.

What will not take a lot of work for them and involves no risk is selling Hydro One at a ridiculous, giveaway price.

I am not an expert on whether or not Hydro One needs new management or if we would all be better served if Hydro One were not 100 per cent owned by the people of Ontario. But I do know that for $9 billion, the new shareholders should get somewhere around 30 per cent of the company, not 60 per cent.

This deal is the biggest con I’ve ever seen.

Keith M. Summers is a former hedge fund manager and was convicted of fraud in 2014. He is currently serving a three-year sentence. His book, Conned: How Wall Street Rips You Off and How to Fight Back will be published this fall.

Kathleen Wynne's job creation strategy ...

For New York and Michigan States.

It's true. Energy producers have a guaranteed production capacity, and when it exceeds demand OPG sells off the surplus to New York and Michigan at very often below the cost of producution.

This is what Chiarelli calls the "Walmart solution."

Does this make sense to you?

Harper is now a PM fleeing his own past

By Michael Harris | May 14, 2015

Rn a political campaign without ever leaving the hose.

My congratulations to Prime Minister Stephen Harper and the Conservative party; they’ve found an even better form of voter suppression than robocalls. They have refused to participate in the TV debates put on for every general election by Canada’s network television consortium since 1968 — back when voter turnout was north of 75 per cent.

For the life of me, I don’t know why the PM blessed Maclean’s with the task of conducting the debate, when party spokesperson Kory Teneycke and the elite journalists of 24/7 were standing at the ready, fully funded by the taxpayers, to get the job done.

I guess Steve didn’t want the 10 million viewers that CTV, Global and the CBC have to offer. After all, a mass audience would only give his opponents a bigger opening to track for the entire nation the death spiral of democracy and the rule of law in Canada — to say nothing of the parody of Conservative ethical values the Harper regime now represents.

Maybe that’s why Harper wanted a change of moderators. Steve Paikin earned a reputation as a fair and impartial moderator in the 2008 and 2011 debates. Maybe that was a problem. Or maybe it was the fact that his son, Zach, tried to run for the Liberals.

The real reason for Harper’s sudden attack of cold feet is probably the Alberta election — which offered an object lesson in how a strong debate performance can change everything. Jim Prentice didn’t have enough spinners and fear-merchants to scupper the radiant sincerity of Rachel Notley.

There are a lot of things Steve might not want to be confronted with in a well-watched, well-researched television debate. Despite balanced budgets, low unemployment and a booming commodity export market under the Liberals, corruption and accountability dominated the 2006 election. The defining moment of the 2006 debate came when Stephen Harper said: “Will you tell us Mr. Martin, how many criminal investigations are going on in your government?”

Martin was defeated by the Ad Sponsorship scandal, an elaborate kickback scheme that saw public money directed back to the Liberal party. Martin wore it even though he wasn’t involved. To his credit, and for all the right reasons, he assembled his own firing squad in the form of the Gomery Commission.

For all the wrong reasons, Steve never called an inquiry into the robocalls scandal. Trust me — you will never see a boomerang leave Steve’s hands if he can help it.

At the time Steve asked Martin that question about criminal investigations in 2006, the correct answer would have been “two”. If someone were to ask Steve the same question during the 2015 debate, he wouldn’t have enough fingers on both hands to compute the response. By my count, the Harper team has been the subject of at least 15 investigations. The stable which he was supposed to muck out has become a pigsty on his watch.

The Conservatives cheated in the 2006 election. Criminal charges of improper election spending were dropped in March 2012 as part of a plea deal. The CPC pleaded guilty to exceeding election spending limits and submitting fraudulent election records. They chequebooked their way out of the slime — paying a $52,000 fine and then repaying a further $230,198.

The PM’s former parliamentary secretary, Dean Del Mastro, has been convicted on three counts of election fraud arising out of the 2008 election. He is now facing the possibility of jail time. His cousin, David Del Mastro, is also facing charges related to the 2008 election.

What about the conviction of Guelph Conservative party worker Michael Sona? Although the robocall case has faded from view, it remains an unsolved crime — because although the existence of a conspiracy was acknowledged by two judges, theconspirators themselves remain unknown. Now that Elections Canada has beencastrated by the ‘Fair Elections Act’, their identities probably will never be known ... More