Saturday, October 4, 2008
Why do Canadian Judges keep silent?
Canadian judges would not (indeed are banned from) doing such a show.
This is something that should be reconsidered -- Canadian judges, if allowed to speak publically, in a measured way, could do much towards clearing up the many misconceptions the public has of Canadian law.
O.J. Guilty
I wonder if he was convicted for the robbery or for being found not guilty 13 years ago? I suppose in a sense it doesn't matter -- it's pretty clear he took part in an armed action, even if he said he had a colour of right to the stuff he took. And it's the armed part that is really troubling -- my guess is O.J. will end up behind bars for a long time.
O.J. Simpson found guilty, faces life sentence
Exactly 13 years after being acquitted on charges he killed his ex-wife and another man, a jury in Las Vegas has found O.J. Simpson guilty of robbing two sports-memorabilia dealers.
The former football and Hollywood star was convicted of all 12 counts he faced after prosecutors alleged he robbed the dealers at gunpoint.
Simpson was found guilty of kidnapping and robbery, along with 10 other charges. Prosecutors said Simpson and his cohorts stormed a hotel room and seized several sports artifacts. One of the men had said Simpson was carrying a gun, but the former football star had maintained his innocence. His lawyers had claimed the sports items belonged to their client.
Simpson could face the rest of his life in prison, but his attorney said he will appeal the conviction.
CNN's Ted Rowlands told CTV Newsnet on Saturday morning that Simpson was taken into custody immediately after the verdict and will likely remain in a city jail until sentencing, which is expected Dec. 5.
"The bottom line is that with the kidnapping charge, it is very likely he will spend the rest of his life in jail," he said.
Two Bears

Harper plagiarizes Harris Speech?
Harper accused of plagiarizing Harris speech
For the second time in five days, Liberals are accusing Conservative Leader Stephen Harper of plagiarism.
In a press release issued by the Liberals, Ottawa-South candidate David McGuinty accuses Harper of copying a speech given by former Ontario Premier Mike Harris in 2002.
The press release compares the speaking notes used by Harris on December 4, 2002, which are posted on the website of the Montreal Economic Institute:
"Thinking about things from a new and different perspective is never easy. It takes courage, conviction and the strength to know that in taking a new and innovative course, you are making change for the better. Genuine leaders are the ones who do the right thing."
Two months later, on February 19, 2003, Harper gave a similar address in the House of Commons in response to the Liberal budget:
"Thinking about things from a new and different perspective is not about reading the polls and having focus group tests. It is never easy because it takes courage, conviction and the strength to know that taking a new and innovative course is going to make change for the better. Genuine leaders are the ones who do the right thing."
The new allegations come just days after a campaign worker for the Conservatives resigned after admitting he used parts of a speech from then-Australian prime minister John Howard in a 2003 speech for then-opposition leader Stephen Harper.
Friday, October 3, 2008
Exporting Cash
In Vito v. Canada (Public Works and Government Services), 2008 ONCA 670 the Court of Appeal considered a situation where an individual entrusted another the move $5,000 in cash out of Canada. The individual moving the cash had other money that took the amount exported over the $10,000 limit. The entire amount was seized.
The person who lost the money sought relief and the court of first instance granted relief. The Court of Appeal overturned that ruling saying that where money is exported in cash the person giving the money must take active steps to ensure currency regulations are complied with.
The Court held:
[30] McCain gave a non-family member thousands of dollars to take to a relatively unstable part of the world. As the application judge observed in relation to the other applicants, common sense and prudence dictated that an inquiry be made as to any applicable legal restrictions or steps taken to ensure that the courier would comply with all regulations relating to the export of currency.
James Morton
1100 - 5255 Yonge Street
Toronto, Ontario
M2N 6P4
Separated at Birth? Susan Kadis M.P. and Sarah Palin?

Local Candidate Bears Uncanny Resemblance To Sarah Palin
Friday October 3, 2008
CityNews.ca Staff
Forget about Tina Fey. It appears there's more than one Sarah Palin clone out there.
Here's the real strange coincidence in the tale of two elections - one here, the other in the U.S.
There's no getting away from the uncanny resemblance between one local GTA incumbent and the woman who wants to be the next U.S. Vice-President.
It's hard to ignore the apparent resemblance between Susan Kadis (at right), the longtime Liberal in the riding of Thornhill and the Alaska Governor (at left).
The glasses are similar.
So is the shape of their faces.
And even their hair style is uncannily alike, although Kadis is blonde and Palin sports a darker shade - which her opponents contend extends to her political views, as well.
Full story here:
http://www.citynews.ca/SendToAFriend/MTY0MzcxLzE0MDUxOA==/Pickup.aspx
Gas Prices
In Ottawa and Toronto gasoline is down about 1.1 cents and diesel is down approximately 1.5 cents.
In Calgary and Kamloops gasoline is down 1.7 cents.
Knut liked cheesy buns, Flocke likes bananas -- so why not a fastfood black bear?

VANCOUVER (CBC) - It can be hard to resist popping into a fast food restaurant for a quick bite to eat, including it seems, for at least one black bear in B.C.
Last Thursday morning, Rebecca Branton had just opened up a Subway restaurant in the north coast town of Kitimat, when her first visitor began sniffing around the front door.
"I was just back there making soup ... but I saw the door open and it was a bear," she told CBC News.
The young bear's every move was captured by nine video cameras in the shop, including how it managed to grab the handle of the front door and pull it open.
"I thought he'd used the handicap button, but instead he opened it just like a human," said Branton.
It is what it is ... .
MONTREAL (AFP) - Canadian Prime Minister Stephen Harper won this week's second televised election debate despite coming under fierce fire from his opponents, a poll showed Friday.
The Ipsos Reid survey for Canwest said 31 percent believed Harper won the second debate on Thursday ahead of October 14 elections.
The poll of 2,512 people gave a second-place finish to New Democratic Party leader Jack Layton who was on the attack, while Green Party chief Elizabeth May trailed in third place.
Where is the Conservative Platform?
James Morton
1100 - 5255 Yonge Street
Toronto, Ontario
M2N 6P4
Penguins in Rio
Full story here:
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/02/AR2008100204225.html?referrer=emailarticle
Leader's debate -- a question from a criminal lawyer -- not me
If gang members are already consciously willing to undertake substantially heightened risks of becoming victims of severe beatings, stabbings and shootings at the hands of rival and fellow gang members, and accept these consequences as simply the costs of doing business, why on earth do you think that the prospect of a longer period in jail will be a more effective deterrent than the threat of being crippled or killed?
James Morton
1100 - 5255 Yonge Street
Toronto, Ontario
M2N 6P4
Thursday, October 2, 2008
Charles de Gaulle
Gasoline Prices
In Ottawa and Toronto gasoline is down approximately 2 cents and diesel is down 1.5 cents.
In Calgary and Kamloops gasoline is down 1.4 cents
James Morton
1100 - 5255 Yonge Street
Toronto, Ontario
M2N 6P4
Pembroke's Cheryl Gallant ...
(By the way Cheryl Gallant is not representative of folks from the Ottawa Valley -- they are, as a group, honest, decent and good people, albeit folks who talk funny (people who know me will realize I have no accent al all!!!))
Cheryl Gallant resorts to dishonest editing
OTTAWA - A Conservative MP who is well known for her past ridiculous statements has crossed the line from creativity to intellectual dishonesty by repeating her claim that the Liberal Green Shift plan would tax the use of firewood.
As reported in Barry's Bay This Week:
"Gallant has sailed into the foray once again, albeit on a different tack. In a letter sent to media outlets this week, she no longer mentions a firewood tax; instead she alleges the Liberal Green Shift would - not might, or possibly, but would - tax emissions from wood burning [.] But it is not true. The Green Shift plan does not provide for a tax on wood burning, and Gallant's letter uses a partial quotation from the Liberal document in which words that would appear to rule out such a tax have not been included."
In this letter, Cheryl Gallant claims to quote from the Green Shift:
"A carbon tax will apply at the wholesale level, across the country, to the full range of [.] fuels [.] based on their level of carbon emissions. The price will begin immediately at $10 per tonne of greenhouse gas emissions and steadily rise by an additional $10 per year, reaching $40 per tonne within four years. Further into the future, the price on carbon will continue its [.] rise [.]
The actual text from the Green Shift, without the ellipses, states:
"A carbon tax will apply at the wholesale level, across the country, to the full range of fossil fuels including coal, propane, natural gas, oil and diesel -- based on their level of carbon emissions. The price will begin immediately at $10 per tonne of greenhouse gas emissions and steadily rise by an additional $10 per year, reaching $40 per tonne within four years. Further into the future the price on carbon will continue its gradual rise to reflect the true social costs of pollution."
As Barrys Bay This Week notes:
"The Canadian Oxford Dictionary defines a fossil fuel as 'a natural fuel such as oil or gas formed in the geological past from the remains of living organisms.' Wood does not qualify. Nowhere is firewood mentioned in the Green Shift document. Despite this, not only does Gallant conclude that the Liberals plan to tax wood burning, she also does the costing."
John Howard/Stephen Harper Side By Side
http://news.bbc.co.uk/2/hi/americas/7645738.stm
Supreme Court of Canada Makes Clear There Is Only One Standard Of Proof In Civil Cases
For some time there has been a debate as to whether there is a standard of enhanced proof required for civil claims involving acts of moral turpitude.
The Supreme Court of Canada today made it clear there is but one standard for all civil matters – balance of probabilities. In all civil cases, the trial judge must scrutinize the relevant evidence with care to determine whether it is more likely than not that an alleged event occurred.
The Court holds, in F.H. v. McDougall, 2008 SCC 53, as follows:
[40] Like the House of Lords, I think it is time to say, once and for all in
[41] Since Hanes v. Wawanesa Mutual Insurance Co., [1963] S.C.R. 154, at pp. 158-64, it has been clear that the criminal standard is not to be applied to civil cases in Canada. The criminal standard of proof beyond a reasonable doubt is linked to the presumption of innocence in criminal trials. The burden of proof always remains with the prosecution. As explained by Cory J. in R. v. Lifchus, [1997] 3 S.C.R. 320, at para. 27:
First, it must be made clear to the jury that the standard of proof beyond a reasonable doubt is vitally important since it is inextricably linked to that basic premise which is fundamental to all criminal trials: the presumption of innocence. The two concepts are forever as closely linked as Romeo with Juliet or Oberon with Titania and they must be presented together as a unit. If the presumption of innocence is the golden thread of criminal justice, then proof beyond a reasonable doubt is the silver and these two threads are forever intertwined in the fabric of criminal law. Jurors must be reminded that the burden of proving beyond a reasonable doubt that the accused committed the crime rests with the prosecution throughout the trial and never shifts to the accused.
[42] By contrast, in civil cases, there is no presumption of innocence. As explained by J. Sopinka, S. N. Lederman and A. W. Bryant, The Law of Evidence (2nd ed. 1999), at p. 154:
. . . Since society is indifferent to whether the plaintiff or the defendant wins a particular civil suit, it is unnecessary to protect against an erroneous result by requiring a standard of proof higher than a balance of probabilities.
It is true that there may be serious consequences to a finding of liability in a civil case that continue past the end of the case. However, the civil case does not involve the government’s power to penalize or take away the liberty of the individual.
[43] An intermediate standard of proof presents practical problems. As expressed by L. Rothstein et al., at p. 466:
As well, suggesting that the standard of proof is “higher” than the “mere balance of probabilities” leads one inevitably to inquire what percentage of probability must be met? This is unhelpful because while the concept of “51% probability”, or “more likely than not” can be understood by decision-makers, the concept of 60% or 70% probability cannot.
[44] Put another way, it would seem incongruous for a judge to conclude that it was more likely than not that an event occurred, but not sufficiently likely to some unspecified standard and therefore that it did not occur. As Lord Hoffman explained in In re B at para. 2:
If a legal rule requires a fact to be proved (a “fact in issue”), a judge or jury must decide whether or not it happened. There is no room for a finding that it might have happened. The law operates a binary system in which the only values are zero and one. The fact either happened or it did not. If the tribunal is left in doubt, the doubt is resolved by a rule that one party or the other carries the burden of proof. If the party who bears the burden of proof fails to discharge it, a value of zero is returned and the fact is treated as not having happened. If he does discharge it, a value of one is returned and the fact is treated as having happened.
In my view, the only practical way in which to reach a factual conclusion in a civil case is to decide whether it is more likely than not that the event occurred.
[45] To suggest that depending upon the seriousness, the evidence in the civil case must be scrutinized with greater care implies that in less serious cases the evidence need not be scrutinized with such care. I think it is inappropriate to say that there are legally recognized different levels of scrutiny of the evidence depending upon the seriousness of the case. There is only one legal rule and that is that in all cases, evidence must be scrutinized with care by the trial judge.
[46] Similarly, evidence must always be sufficiently clear, convincing and cogent to satisfy the balance of probabilities test. But again, there is no objective standard to measure sufficiency. In serious cases, like the present, judges may be faced with evidence of events that are alleged to have occurred many years before, where there is little other evidence than that of the plaintiff and defendant. As difficult as the task may be, the judge must make a decision. If a responsible judge finds for the plaintiff, it must be accepted that the evidence was sufficiently clear, convincing and cogent to that judge that the plaintiff satisfied the balance of probabilities test.
[47] Finally there may be cases in which there is an inherent improbability that an event occurred. Inherent improbability will always depend upon the circumstances. As Baroness Hale stated in In re B at para. 72:
. . . Consider the famous example of the animal seen in Regent’s Park. If it is seen outside the zoo on a stretch of greensward regularly used for walking dogs, then of course it is more likely to be a dog than a lion. If it is seen in the zoo next to the lions’ enclosure when the door is open, then it may well be more likely to be a lion than a dog.
[48] Some alleged events may be highly improbable. Others less so. There can be no rule as to when and to what extent inherent improbability must be taken into account by a trial judge. As Lord Hoffman observed at para. 15 of In re B:
. . . Common sense, not law, requires that in deciding this question, regard should be had, to whatever extent appropriate, to inherent probabilities.
It will be for the trial judge to decide to what extent, if any, the circumstances suggest that an allegation is inherently improbable and where appropriate, that may be taken into account in the assessment of whether the evidence establishes that it is more likely than not that the event occurred. However, there can be no rule of law imposing such a formula
Mount Pleasant Racing Case Released -- No Jail Time Imposed
R. v. Ryazanov, 2008 ONCA 667 was released today from the Court of Appeal.
The case has two interesting points.
First, a Crown undertaking not to appeal is not binding on the A.G.
Second, a conditional sentence should, in general, be house arrest and should be a uniform house arrest throughout its term.
See below:
[40] The respondents contend that the Crown undertaking should act as an absolute bar to this appeal and that this court should refuse to grant leave. It is argued that to permit the Crown’s repudiation from the express assurance that the sentences would not be appealed would amount to an abuse of process in violation of s. 7 of the Canadian Charter of Rights and Freedoms and would undermine the integrity of the judicial pre-trial and resolution process.
[41] The appellant acknowledges that this appeal was advanced notwithstanding that, prior to sentencing, the Crown Attorney’s office undertook that no appeal would be pursued. The appellant submits, however, that the undertaking does not preclude the Attorney General from appealing.
[42] In my view, the sentence appeal is within the Attorney General’s statutory power. The Crown Attorney’s office cannot divest the Attorney General of this power, for the following reasons:
(i) The power of the Attorney General to appeal is statutory in nature;
(ii) Case law establishes that Crown counsel cannot divest the Attorney General of this statutory power of appeal; and
(iii) The respondents failed to establish that granting leave to appeal would amount to an abuse of process in violation of s. 7 of the Charter.
…
[75] Conditional sentences should be punitive. As the Supreme Court of Canada stated in R. v. Proulx, at para. 117: “[P]unitive conditions such as house arrest should be the norm, not the exception.” In my view, that comment applies throughout the duration of a conditional sentence. Therefore, the house arrest conditions should be extended to the full term of the respondents’ conditional sentences.
Today's poll
OTTAWA - A new poll suggests the Liberals are still losing support while the Tories are holding steady and have a 13-point edge.
The Canadian Press Harris-Decima survey indicates the Tories remain at 36 per cent, while the Liberals have slipped to 23. The poll suggests the NDP has crept up to 18 per cent, the Greens have gained a point to 12 and the Bloc is off a point at nine.
The changes are within the poll's margin of error, however.
Harper government funneled money to second Conservative candidate
In January of 2008, Ms. Young was acclaimed as the Conservative candidate in the
Ms. Young's campaign manager, Lois Johnson, said the money came in the form of a contract that Ms. Young had bid for through a request-for-proposal, a process used in government tendering. The Citizenship and Immigration department, however, lists it as a federal grant, which unlike a contract, is not subject to a tendering process.
Ms. Johnson also said Ms. Young consulted with the Ethics Commissioner to ensure she was not in a conflict of interest. However, the Ethics Commissioner has the responsibility to administer the Conflict of Interest Code for Members of the House of Commons and the Conflict of Interest Act for public office holders. The Ethics Commissioner has no mandate to provide advice to candidates.
This is the second time in this election that revelations have surfaced about a Conservative candidate receiving funding from the Harper government right after winning their nomination.
Last month, Rosamond Luke was dumped as the Conservative candidate in
Martin Campaigns
Former prime minister Paul Martin, has been fronting the Liberal campaign across the country, attacking both the Conservatives and the federal New Democrats on their economic agendas.
About 300 enthusiastic supporters chanted Martin's name as he gave a speech at a Liberal fundraising luncheon on Wednesday in the riding of Vancouver-Kingsway.
He talked about lessons learned during his time as Canada's finance minister and criticized the Conservative government for depleting the surplus, putting the country at risk economically.
He also said Jack Layton's platform lacked an economic focus at the federal level.
"It's not exactly strange that I would be talking about the economy given my own time in government," Martin said.
Dion wins debate?
James Morton
1100 - 5255 Yonge Street
Toronto, Ontario
M2N 6P4
Wednesday, October 1, 2008
Middle East: Bahrain calls for new regional organisation with Israel
The highly unusual call which is likely to provoke controversy came from Sheikh Khalid bin Ahmed al-Khalifa, the country's foreign minister.
"Why don't we all sit together even if we have differences and even if we don't recognise each other?" he told the London-based daily newspaper al-Hayat. "Why not become one organisation?"
"Aren't we all members of a global organisation called the United Nations? Why not [come together] on a regional basis? This is the only way to solve our problems. There's no other way to solve them, now or in 200 years."
Asked if that should include Israel, he replied: "With Israel, Turkey, Iran and Arab countries. Let them all sit together in one group."
This was clearly more than a throwaway remark. The day before the al-Hayat interview, Sheikh Khalid made the same point in a speech to the UN general assembly in New York, calling for such a body to include countries "without exception".
James Morton
1100 - 5255 Yonge Street
Toronto, Ontario
M2N 6P4
Wrongful prosecutions from faulty pathology
Some quotes from and about the Goudge report:
-"I simply cannot accept such a sweeping attempt to escape moral responsibility." - Goudge on Smith's claims his errors were unintentional.
- "When he finally did act, it was to protect the reputation of the office and not out of concern that individuals and the public interest may already have been harmed." - Goudge on Dr. James Young, Ontario's former chief coroner.
- "They invented a crime. They pulled it out of their head and said, 'This guy is guilty of this."' - William Mullins-Johnson on those responsible for his wrongful conviction.
- "For those who live in the shadow of suspicion, we will move as expeditiously as we can ... to make sure that the necessary reviews are undertaken." - Attorney General Chris Bentley on re-examining other prosecutions based on pathology.
- "I sincerely apologize on behalf of governments of Ontario both past and present to each and every individual who has suffered as a result of Dr. Charles Smith's work." - Community Safety Minister Rick Bartolucci.
- "A tragedy has unfolded here in Ontario and we're looking for ways to move beyond that and to redress the wrongs." - Premier Dalton McGuinty.
- "The report will go a long way to preventing future miscarriages of justice, not just in pediatric pathology cases but in all cases." - Lawyer James Lockyer.
James Morton
1100 - 5255 Yonge Street
Toronto, Ontario
M2N 6P4
Gasoline Prices
In Calgary and Kamloops prices gasoline prices will not change.
James Morton
1100 - 5255 Yonge Street
Toronto, Ontario
M2N 6P4
Keays and Wallace -- Court of Appeal does not clarify the law ... yet
Today's decision in Clark v. BMO Nesbitt Burns Inc., 2008 ONCA 663 was yet another opportunity to clarify what Keays means.
But as in every case before the Court chose not to decide the issue.
The meaning of Keays is unclear (does it expand Wallace damages or end them completely?) and will have to be resolved soon -- but not yet.
James Morton
1100 - 5255 Yonge Street
Toronto, Ontario
M2N 6P4
Julie Couillard Strikes Back

The book is being released in Quebec next Monday amid a big publicity campaign that is likely to draw voter attention.
Bernier was forced to resign in May after admitting he had left secret briefing documents in the apartment of girlfriend, Julie Couillard, who had once had ties to organized crime. The pair have since split up.
Bernier was supposed to have returned the documents to the foreign ministry but Couillard writes that he simply asked her to throw them away.
"I'd rather you waited until garbage collection day to do so. They are secret documents, after all," she quotes him as saying. Couillard later returned the documents to the foreign ministry in an act that prompted Bernier to resign.
"That doesn't scare me at all. It's clear we're heading in that direction. I don't have any problems with that. I'm ready. I'm expecting it," she quotes him as saying.
«Il a alors commencé à m'expliquer qu'en raison de sa position d'homme public il ne pouvait pas se permettre de changer de blonde comme il changeait de chemise.»
«Ã€ partir de la mi-décembre, même si nous avions cessé d'être des amoureux, j'ai continué de jouer mon rôle officiel de conjointe de Maxime Bernier.»
«Une dizaine de jours avant l'éclatement de ce qu'il est maintenant convenu d'appeler l'affaire Bernier-Couillard, j'avais clairement signifié à Maxime que non seulement mon mandat de petite amie officielle était terminé, mais aussi que je ne voulais plus avoir de relations intimes avec lui.»
Sur la robe portée à la prestation de serment au Conseil des ministres
«C'était la première fois que j'assistais à un tel événement et je n'avais aucune idée du code vestimentaire qui s'appliquait. C'est une des premières questions que j'ai posées à Maxime: comment tu veux que je me m'habille pour aller là ? Qu'est-ce que je me mets sur le dos?»
Sur Maxime Bernier
«Maxime Bernier se voyait beaucoup plus comme une vedette que comme un homme politique. Sa coupe de cheveux, l'éclat de son teint, la forme de son noeud de cravate et le pli de son pantalon - autrement dit l'image qu'il projetait - figuraient beaucoup plus haut dans sa liste de priorités que le sort du Darfour ou la guerre en Irak. Il était plus vaniteux que 10 vedettes de cinéma réunies.»
«Je me souviens même qu'à un certain moment, un quotidien ou un magazine d'Ottawa avait dressé une liste des ministres fédéraux les mieux habillés et c'était Peter MacKay qui avait remporté le titre. Maxime en avait été extrêmement perturbé.»
Sur les confidences de Maxime Bernier
«Pour lui, la politique se résumait essentiellement à une affaire de charme. Je l'ai entendu me dire tellement de fois, juste avant une assemblée, une rencontre ou un événement quelconque: ça va bien aller, tu vas voir! Je me mets sur l'opération charme.»
« () il était contre l'envoi de troupes canadiennes dans ce pays. Pour lui, le confit en Afghanistan n'était pas un combat pour la démocratie contre la dictature, ni une lutte pour la liberté contre l'obscurantisme religieux; dans son esprit, il s'agissait strictement d'une guerre pour le contrôle du commerce mondial de l'héroïne.»
«Duceppe. Ce câlisse-là , il va au même salon de coiffure que moi et ça fait des mois qu'il se bat la gueule devant tout le monde pour dire qu'il va anéantir Maxime Bernier parce que sa blonde est une fille de la mafia. C'est lui le responsable.»
«On va tous les actionner, m'a dit Maxime. Ce qu'ils ont mis dans les journaux, ils n'ont pas le droit de faire ça. On va actionner le Bloc québécois, on va s'arranger pour que la date du procès tombe pendant les élections et Duceppe va perdre sa job. On va les jeter à terre!»
Smith Inquiry and Wrongful Allegations of Child Murder
Inquiry report slams child forensic pathology
A final inquiry report on child forensic pathology in Ontario concludes the system is deeply flawed and has led to several wrongful prosecutions, the Canadian Press has learned.
Justice Stephen Goudge compiled a 1,000 page report after presiding over an inquiry into Dr. Charles Smith, the former chief pediatric forensic pathologist in Ontario.
Smith, who has been linked to several flawed assessments, also faces harsh criticism in the report, a source told the news agency.
Goudge's report was formally handed to the Ontario government on Tuesday. The report contains more than 160 recommendations meant to reform the system and ensure accountability and credibility into a coroner's conclusions.
The source said Goudge uses individual cases to exemplify his recommendations.
"His reforms are extensive and are aimed squarely at the accountability and oversight," said the source.
Those recommendations include:
setting up a committee to oversee the chief coroner's office
ensuring pathologists take better care in how they form their opinions about wrongdoing
addressing staff shortages by increasing a pathologist's salary and setting up university programs to train them
Peter Wardle, a lawyer representing five families, said the victims of erroneous child forensic pathology findings will be scrutinizing the report and keeping a close eye on what comes out of it.
Full story here:
http://news.sympatico.msn.ctv.ca/abc/home/contentposting.aspx?isfa=1&feedname=CTV-TOPSTORIES_V3&showbyline=True&newsitemid=CTVNews%2f20081001%2fpathologist_report_081001
A man or a team?
For a while the election was a battle between Dion and Harper. And that's fair -- they are the leaders who hope to be Prime Minister.
But the Liberal team has a depth the Conservatives lack and the recent campaign appearances of Bob Rae, Michael Ignatieff and Paul Martin show that depth.
Harper does have traction as a leader -- Canadians are not going to reject Harper as Harper. But his policies are exposed to attack and, with a very few exceptions, Harper is the Conservative Party.
The Liberals, by contrast, offer true Cabinet government with a very strong front bench. Put otherwise, if Harper (G-d forbid) died tomorrow who would be able to take over? By contrast the Liberal team has an abundance of competent potential leaders.
For Immediate Release
October 1, 2008
Stephen Harper's visionless agenda
FREDERICTON, New Brunswick- On October 14, Canadians will choose between Stephen Harper's fend-for-yourself, visionless agenda for the country and Stéphane Dion's plan to build a richer, fairer, greener Canada, Liberal Candidate for York Centre Ken Dryden said today.
"In uncertain economic and global times, Canadians need more than just a Prime Minister who can make a decision. Real leadership is knowing what's important - then focusing on it, sharing it, and determinedly, relentlessly, together, getting there," he said.
Hua Mei

Tough on crime? Yes but let's realise the full costs
I said, quite truthfully, from referrals. Clients who are in jail refer others in jail to me.
Which got me thinking about jails and deterrence and rehabilitation.
What happens in jails? People sit around, in often grossly overcrowded conditions and talk. They have little else to do. They discuss law, lawyers, life and, of course crime. People with a limited criminal background meet other, more seasoned, criminals and learn about their experience.
Toss into the mix the availability of street drugs and alcohol and you have a breeding ground for crime.
I'm not sure any prison can rehabilitate an offender but I am sure that the prisons we have cannot. Sending more people to prison now just creates more crime.
Canadian prisons are pretty awful -- triple bunking for those on remand (three men in a cell rather small for one) is common enough -- so there may be an element of deterrence (assuming criminals act rationally which is a big assumption) but beyond that prisons are counter productive.
So why don't we have prisons that forbid crime talk and block drugs?
Cost is a factor -- a prison where prisoners were kept apart from each other except under close scrutiny, where security was sufficient to keep out drugs, where prisoners had actual training and treatment would be very very costly.
Institutional inertia is a factor too -- our prison system is pretty well unchanged from the late 1930's. Changing a well established system that few realise is broken is hard.
That said, is putting people in jail is costly now the cost of a jail that might work would at least double current costs. And you can bet the changes needed would be opposed by those with institutional status to protect.
This may be money and effort well spent -- if prisons become places of punishment for crime, and not schools for criminals, then sending people to jail might make sense.
But before we start to 'get tough on crime' we better think about what getting tough means.
Tuesday, September 30, 2008
Brazil's loss of Amazon rain forest escalating
The Amazon is being deforested more than twice as fast as last year, Brazilian officials said yesterday, acknowledging a sharp reversal after three years of declines in the deforestation rate.
Environment Minister Carlos Minc said coming nationwide elections are partly to blame, with mayors in the rain forest region turning a blind eye to illegal logging, hoping to gain local votes.
Minc also said the six largest deforested areas since 2005 all belong to the Institute of Colonization and Agrarian Reform (Incra), a government agency that distributes land to the poor. Together 223,000 hectares of rain forest were destroyed as settlers chopped down trees to sell and plant crops.
Non-government environmentalists blame the global spike in food prices for encouraging soy farmers and cattle ranchers to clear land for crops and grazing.
Elections play a part but "the tendency of deforestation rising is deeply related to the fact that food prices are going up," said Paulo Adario, who co-ordinates Greenpeace's Amazon campaign.
Amazon destruction jumped 228 per cent in August when compared with the same month a year ago, according to Brazil's National Institute for Space Research, which uses satellites to track illegal logging.
Some 756 square kilometres of Amazon was destroyed last month, compared with 230 square kilometres in August 2007.
I was right!
Gasoline Prices
In Toronto gasoline is up 3.8 cents and diesel is up 5.9 cents.
In Ottawa gasoline is up 2.9 cents and diesel is up 5.7 cents.
In Calgary and Kamloops gasoline is up .9 cent.
Statement by Liberal Leader Stéphane Dion on Eid al-Fitr
This joyous occasion, marking the end of the period of fasting, is a time for Muslims to thank Allah for his many gifts, but especially for the strength to practice self-control through the previous month of Ramadan. It is also a time to celebrate renewed dedication to faith, family, and community and the spirit of unity that this commitment carries with it.
As you gather with friends and family to take part in the prayers and festivities in mosques and homes across Canada, please accept my best wishes for a joyful celebration.
Eid Mubarak!
National Do Not Call List for Canada starts today -- here's how to sign up
You can sign up online at www.LNNTE-DNCL.gc.ca or by calling the toll-free numbers 1-866-580-DNCL (1-866-580-3625) or 1-888-DNCL-TTY (1-888-362-5889).
Once you have signed up, many (not all -- charities and some others are exempt) telemarketers can no longer call you starting 31 days after your registration.
The Harper stolen speech story may have legs
Just admit it was a junior staffer who cribbed a speech and move on. Unless maybe my earlier post was wrong and it wasn't a junior staffer?
Anyway, there is no doubt the speech was largely borrowed -- taken without change -- from an Australian speech. See below:
Here is a side-by-side comparison of the near-identical sections of Mr. Howard and Mr. Harper's speeches:
http://www.liberal.ca/pdf/docs/080930_harper_howard_e.pdf
Link to Mr. Howard's speech on the Parliament of Australia's official website:
http://www.aph.gov.au/hansard/reps/dailys/dr180303.pdf
Link to Mr. Harper's speech on the official Parliament of Canada website:
http://www2.parl.gc.ca/HousePublications/Publication.aspx?DocId=771117&Language=E&Mode=1&Parl=37&Ses=2#Int-464588
James Morton
1100 - 5255 Yonge Street
Toronto, Ontario
M2N 6P4
Harper and plagiarism?
In case you have not heard the news, to quote a Liberal press release, "Mr. Harper had copied key portions of his speech urging Canada to participate in the U.S. military invasion of Iraq from former Australian Prime Minister John Howard's speech to the Australian Parliament two days earlier".
Now the Party goes on to suggest that (1) Harper is in Bush's pocket and (2) has no new ideas.
I'm not so sure either of these points are really on.
First, at this point no one is in Bush's pocket -- not even his own Party (look at the bail out). It is true both Bush and Harper come from the right but that's not saying much. Harper = Harris? perhaps but calling Harper Bush-lite, while amusing, trivialises their ideological links.
Second, Harper is no dummy -- he has lots of ideas (mostly to my mind misguided but that's another point). Harper doesn't need to steal text for his speeches. He is a competent bright guy and attacking him for being intellectually lazy just isn't credible.
So what did happen?
My sense is that Harper had an assistant who did a draft of a speech and cribbed it from a recent speech covering the same ground. Harper would never have known about the crib unless he saw the Howard speech himself. Harper wouldn't be so dense as to steal a speech knowing it was important, would be considered closely and would be transcribed. This is especially so as he could have done a better speech by himself anyway.
Harper is not to blame for the plagiarism.
But he did give a speech that parroted the lines of the rush to war guys. So, maybe we should ask why he was comfortable giving a speech supporting the Iraq war? It's that war, not the Afghan mission, that has led to the fiscal chaos.
Anyway, see the Liblink below for the actual details:
http://www.liberal.ca/video_e.aspx?guid=4666DC99-F70E-4FFD-A461-FF1B3A060706
James Morton
1100 - 5255 Yonge Street
Toronto, Ontario
M2N 6P4
Articling to stay
Articling is here to stay
By Jeffrey H. Waugh
For any of you who were hoping there might be a chance of bypassing the 10-month articling term and jumping straight into a job after you write the bar, it doesn’t look like it’s in the cards this time around. The Law Society of Upper Canada has spoken, and articling is here to stay in Ontario.
Late last week, Convocation made its decision on the future of the licensing process. Instead of getting rid of the articling period, there will be changes made that aim to enhance it — mainly by helping you to find a position.The major problem being faced by the profession is the limited number of articling placements and an increasing pool of applicants. Obviously, some people are going to be left out in the cold with nowhere to go.There were suggestions of getting rid of articling altogether; letting market forces dictate the future. Opposition to this strategy turned out to be very high. Several groups spoke out strongly against the idea, including the Ontario Bar Association. The licensing and accreditation task force charged with examining the situation received somewhere in the neighborhood of 100 submissions (60 from individuals and 40 from institutions). According to the task force, the majority of submissions “overwhelming rejected” the suggestion.In the report of the task force, they recognize that there will be challenges in the days ahead. Articling, though, was seen to be too critical of a component to simply abandon it. The report then goes on to state, “However, while the enthusiasm with which the profession supported articling in this consultation process is heartening, it will be of limited value if not accompanied by a commitment among those who have not traditionally hired students to now do so.”So how do they plan on making that a reality?First off, following in the footsteps of the Law Society of British Columbia, a new online articling registry is being implemented. The goal is to make it easier for students to find out about potential openings to make sure no open spot goes unfilled. In B.C., employers can post positions and students can post their resumés online, with useful and practical search criteria making it easy to narrow down your selections. All of this is offered for free, of course.
Secondly, an outreach position is being created at LSUC. The duties of the position will be “promoting and coordinating articling initiatives and additional job placements.” Having a full-time staff member dedicated to articling opportunities is another step toward bringing more awareness to positions and helping to encourage smaller firms to participate.Smaller firms and sole practitioners will be the main target for increasing the number of openings. The report seems to suggest that smaller firms aren’t doing their part in helping to train future professionals. One source of frustration they identified was the complexity of the process. “Respondents frequently cited the filing requirements as a major irritant, particularly for sole and small firm lawyers,” said the report.
Streamlining the process should make it easier. The task force found that they could decrease it from the current nine points of contact down to only two, which should help to ease some of the administrative burden that’s acting as a deterrent to firms.
All in all, the solutions aren’t radical but they should help to quell some of the fears over shortages, at least in the short term. With any luck, future graduates should find it a bit easier to secure their entry into the job market.
Tort liability of the government
The case dealt with breast implants and a federal duty, or not, to ensure the safety of the implants. The Court ruled against the duty existing.
The decision is very helpful in general dealing with when a government may be liable to an individual.
One issue (among many) discussed by the Court was when a statute creates a duty to individuals. The Court held that where legislation creates a duty to the public, as a whole, and not to individuals, generally there was not sufficient neighbourhood for a tort claim against the government by an individual.
The Court holds:
[59] Since an examination of the legislative scheme reveals that no duty is placed on Health Canada , and all obligations are on the industry, I conclude that the statute signals an intention that the government's duty is owed to the public as a whole, not to the individual consumer.
[60] I find support for this conclusion from two other decisions, both of which also considered circumstances that involved public safety regulation. Eliopoulos involved a claim against Ontario's Minister of Health for breach of an alleged private law duty of care to an individual plaintiff to control the spread of the West Nile Virus. Sharpe J.A., writing for this court, concluded that it was plain and obvious that there was no such duty because the Minister's powers under the Health Protection and Promotion Act, R.S.O. 1990, c. H.7 were discretionary and the Minister's duties were owed to the public at large, not to the individual. Hence, there was no proximate relationship.
James Morton
1100 - 5255 Yonge Street
Toronto, Ontario
M2N 6P4
PROTECTION MUST NOT BE A PRETEXT FOR AGGRESSION
This Pope has a firm hand and realises clearly the dangers posed by the duty to protect.
The duty to protect, while merely a sub set of the general duty to love one's neighbour, carries within it the risk that the power to fulfil the duty will be misused.
Humility is a prerequisite to action.
On another note, today is the first day of Rosh Hashanah; whether you accept the tradition or not, it is nice to think of the world having a birthday. Certainly the duty to protect extends to our G-d given duty to be good stewards.
VATICAN CITY, 30 SEP 2008 (VIS) - Archbishop Celestino Migliore, Holy See permanent observer at the United Nations in New York, yesterday participated in the general debate of the 63rd session of the U.N. General Assembly.
"By its nature and structure, the United Nations normally creates neither the events nor the trends, but rather, serves as a sounding board where events and trends are submitted for debate and a coherent, consensual and timely response", said the archbishop in his English-language remarks.
"This year has been dominated by a number of challenges and crises: natural and man-made calamities, staggering economies, financial turmoil and fuel prices, the impact of climate change, local wars and tensions. ... One of the clear facts recognised by all is that every crisis presents a mixture of natural factors and elements of human responsibility. However, these are
all too often compounded by tardy response, failures or reluctance of leaders to exercise their responsibility to protect their populations.
"When speaking within these walls of the responsibility to protect", the prelate added, "the common understanding of the term is found in the 2005 Outcome Document, which refers to the responsibility of the international community to intervene in situations where individual governments are not able or willing to assure the protection of their own citizens.
"In the past, the language of protection' was too often a pretext for expansion and aggression. In spite of the many advancements in international law, this same understanding and practice tragically continues today.
"However, during the past year", the archbishop continued, "there has been growing consensus and greater inclusion of this expression as a vital component of responsible leadership. The responsibility to protect has been invoked by some as an essential aspect of the exercise of sovereignty at the national and international levels, while others have re-launched the concept
of the exercise of responsible sovereignty".
"The 'we the peoples' who formed the United Nations conceived the responsibility to protect to serve as the core basis for the United Nations", the archbishop concluded. "The founding leaders believed that the responsibility to protect would consist not primarily in the use of force to restore peace and human rights, but above all, in States coming together to detect and denounce the early symptoms of every kind of crises and mobilise the attention of governments, civil society and public opinion to find the causes and offer solutions".
Two days two accidents
It's no news that alcohol plays a big role in traffic accidents -- just ask MADD.
But very drunk drivers at 4 or 5 am? Where are they coming from? Why were they drinking at, say, 3 am on a Monday night? And why now?
Some booze cans stay open late and it is an open secret that some restaurants start serving vodka in teacups after 1 am (I have prosecuted and defended such cases). But so far as I know there is no change in the status quo -- maybe it's just a tragic coincidence.
Still, this all ties in to my ongoing rant about drugs in society as a cause of much crime. And alcohol, though legal, is a drug (I do not advocate prohibition and I like my wine -- but not when driving).
Take alcohol related issues out of the justice system (drunk driving, much spousal assault, other assaults, some robberies) and our Ontario Court of Justice lists would decline by at least half. Take the other drugs out and the OCJ. would have almost no work.
Canada has to have a total overhaul of the way we deal with drugs and those addicted to them. This is not so much a matter of criminal law as public health and safety. It's not just property, it's lives that are being lost.
Debates Coming
If we are to succeed we need to show Canada that we are not the isolated eggheads as portrayed by the Conservatives.
As Michael Ignateiff pointed out yesterday, and on Sunday, the Liberal Part is not a party of the left or the right but rather a party of the centre (individuals are right or left -- so I am a right leaning Liberal -- but I am talking of the Party as a whole). And this must come across -- in tough economic times it is a party of people like Paul Martin who should be in power.
What needs to be shown is that we are still that party (and in that regard note former P.M. Martin was out campaigning this weekend).
Party leaders eye crucial campaign debates as economic woes mount
OTTAWA - The five national party leaders are hunkering down in Ottawa, getting ready for the televised debates that could play a pivotal role in their fortunes on voting day.
Prime Minister Stephen Harper, NDP Leader Jack Layton and Green Leader Elizabeth May have all cleared their schedules for Tuesday, planning to devote their time exclusively to debate preparation.
Liberal Leader Stephane Dion and Gilles Duceppe of the Bloc Quebecois will hold brief events across the river in Gatineau, Que., before buckling down to their own pre-debate studies.
The man with the most at stake may be Dion, whose campaign sputtered over the first three weeks. His fortunes have improved in recent days, with polls showing the Liberal vote edging up, but the Grits still have a long way to go to catch Harper's Conservatives.
Full story here:
http://news.sympatico.msn.ca/abc/Election_08/ContentPosting.aspx?isfa=1&feedname=CP_EN_ELECTION&showbyline=True&newsitemid=71189035
Monday, September 29, 2008
Emily Stauffer and the politics of murder
This monstrous crime appears to have been random and the murder weapon was a length of rope. No amount of policing could have prevented this crime -- at best the police will catch the murderer to avoid a future outrage.
The only hope for preventing this type of crime -- the occurrence of which is thankfully very rare -- is to watch for signs of mental instability. And that's not a policing role.
Alberta RCMP caution against vigilante justice
JOHN COTTER
The Canadian Press
RCMP were urging people in a tough energy town in western Alberta not to take the law into their own hands as more than 30 Mounties scoured the region for a man who killed the 14-year-old daughter of a pastor and left her body on a trail.
The slaying of Emily Stauffer in broad daylight on Saturday afternoon has filled many in the Edson area, 200 kilometres west of Edmonton, with grief and fear.
Mounties were searching Monday for a 30-year-old white man wearing a blue jacket and blue jeans who may have been driving an all-terrain vehicle — a description that could fit many people in rural Alberta.
"We don't know who this person is, we don't know where he is from and currently we don't know where they are," said RCMP Cpl. Wayne Oakes. "People who were near that trail area on Saturday should contact the Edson detachment."
Oakes added that because the description is so generic, the last thing police want to see is anybody engaging in vigilante justice."Mistakes are very likely to happen," he said. "It would be so tragic if somebody engaging in such an activity ends up on the wrong side of the law based on raw, emotional feelings."
Police released a composite sketch of a man whom they want to question, but said he is not a suspect.
Investigators have said Emily Stauffer was killed by a man who approached her as she strolled along a tree-lined walking trail. The girl was a nature buff who often walked in the woods to take photographs.
Police said two young boys riding their bikes witnessed the attack and pedalled home for help, but by the time emergency crews arrived, the girl was dead. A man has said he saw police performing CPR on the girl, who appeared to have been strangled with a rope.
Pastor Terry Stauffer paid tribute to his daughter on a website.
"Our precious 14-year-old daughter Emily was attacked and killed as she was out for a walk. We don't know a lot of details, but we know that two young men came upon the scene right away, but it was too late for Emily," he wrote."Please pray for us, for our church family who are meeting without us right now, and for family that is travelling."
People from across Canada and the world responded quickly to the tragedy, offering condolences and support on the website."We are praying for you. May God give you strength and courage to face this loss and the evil behind it," wrote Dave Groff, of Fort Frances, Ont.
A friend of Emily's from Edson also posted a tribute."I couldn't believe it. It left me windless and in shock. How could this be? Why would someone do such a thing, to such a little, innocent girl? She was such a wonderful, compassionate and sincere person who considered others before herself. Her refreshing sense of humour always lifted our moods. She would have been the next Mother Teresa, Clara Barton, or maybe the next Beethoven," wrote Taylor.
A prayer service was planned for Monday afternoon in Edson.
Stauffer's death came only weeks after RCMP charged a 42-year-old man in the kidnapping of a young girl and sexual assault of a woman in nearby Hinton, Alta., and with assaulting two people in Edson.
Robin Joseph Wingie, 42, of McBride, B.C., is in custody and is charged with kidnapping, abduction of a child under 14, dangerous driving and three counts of sexual assault.
Alberta Premier Ed Stelmach said Stauffer's killing shows that statistics that suggest crime rates are down don't mean very much to people. Stelmach pledged that crime — including hiring more police — is major issue for his government.
"This is one area that we are working on with the police chiefs to put additional resources into communities," Stelmach said. "We are going to work to see how we can further assist them so we can get rid of people who prey on young women."
Gasoline Prices -- National Details
In Mounties gasoline is down 7 cents and diesel is down 6.7 cents.
In Toronto and Ottawa gasoline and diesel are down just over 6 cents.
In Calgary and Kamloops gasoline will be dropping 4.3 cents.
James Morton
1100 - 5255 Yonge Street
Toronto, Ontario
M2N 6P4
Bailout defeated -- Are They Crazy???
House defeats bailout plan
The House on Monday defeated a $700 billion emergency rescue package, ignoring urgent pleas from President Bush and bipartisan congressional leaders to quickly bail out the staggering financial industry.
Stocks started plummeting on Wall Street even before 228-205 to reject the bill was announced on the House floor.
As the vote was shown on TV, stocks plunged, and investors fled to the safety of the credit markets on fears that the financial system would keep sinking under the weight of failed mortgage debt.
The Dow fell 705 points, then regained some ground to trade down 462 at 10,681.
Statement by Liberal Leader Stéphane Dion on Rosh Hashanah
On behalf of the Liberal Party of Canada, I would like to extend my warmest wishes to the Jewish community in Canada and around the world observing Rosh Hashanah.
The sound of the shofar signals the opening of a new year - a time to reflect on the year that has passed and look forward to the possibilities that lie ahead. It is also a time for Jews to gather with family and friends in prayer and celebration.
This occasion provides us with an excellent opportunity to celebrate the friendship between Canada and Israel - a friendship rooted in shared values that grows stronger every year.
During this High Holiday period, let this spirit of friendship fill our hearts with compassion for our fellow citizens.
I wish you Shana Tova.
It's not over till it's over
Now, it would be untrue to suggest I am a big sports fan – ok, I have a vague idea what a football looks like but that’s about it – but this game was telling.
First half Michigan was half asleep and Wisconsin, the favorite, walked all over Michigan. But the second half was a new game and Michigan triumphed.
The photo here – taken off a tv screen – doesn’t do justice to the game.
But the bigger point is that the game isn’t over till it’s over.
Q&A: The US financial meltdown
Several categories of individuals and institutions stand accused for the current financial crisis in the US. We examine the blame game and how it all got this bad.
What is happening in the financial sector of the United States?
The investment bank Bear Stearns was bailed out by the Federal Reserve (the central banking system) for $29 billion, and the US Government has since taken over the home mortgage titans Fannie Mae and Freddie Mac, at a potential total cost to the taxpayers of $200 billion. Yet, the turmoil in the financial markets continues.
The venerable Lehman Brothers, one of the largest and oldest investment banks, has filed for bankruptcy. The super-insurance company AIG, the largest in the US, was loaned $85 billion by the Fed and then taken over by the US government. The great brokerage company, Merrill Lynch, was acquired by Bank of America. Morgan Stanley, another blue-chip investment bank, is likely to be acquired by a commercial bank. Goldman Sachs, another blue-chip, has been beaten down by the stock market. Finally, the largest savings bank, Washington Mutual, is also teetering on the edge of collapse.
These are the headlines. Behind the headlines, there are 117 banks which are on the "in trouble" list of the Federal Deposit Insurance Corporation. In addition, for the first time, a money market fund has announced that the unit value of its assets is no longer $1 but only 97 cents.
At the time of this writing, the bailouts announced by the US government included an insurance fund of $50 billion to protect household deposits in money market funds.
What is causing such turmoil? Is there something new, or is it the same old mortgage crisis?
The same culprit as before: the housing market collapse. From 2002 until 2005, the mortgage lenders made bad mortgage loans, loans that homeowners could not pay after the initial "teasing" period.
Since then, there have been millions of defaults and the resulting foreclosures of homes. As far as the financial crisis is concerned, the US government has not done anything to stop this bleeding problem where it is really happening, and that is at the level of the homeowners -- right where the rubber meets the road.
The vicious cycle continues with falling housing prices. The defaults and foreclosures in recent months have spread much beyond the lower-middle class and middle-class home owners. The new defaulters are "prime" borrowers. These borrowers are financially savvy, because they are walking away from their houses as the price of the house falls below the outstanding mortgages. These well-off borrowers are foreclosing not on their first homes, but on their second or third or fourth properties. Hence, these foreclosures do not affect their credit ratings adversely and do not leave them homeless. Thus, mortgage defaults continue to proliferate.
Why are the investment banks in so much trouble?
They have overstepped their bounds. Investment banks used to be pure financial intermediaries. For example, firms like Lehman Brothers would underwrite a debt issue for a client like the US government, and then distribute the bonds to say, the California State Pension Fund, another client. Investment banks did not hold on to assets like US government bonds for the purposes of earnings.
Their earnings were based on capturing the difference between the price they would pay the US government and the price they would charge the California State Pension Fund, and the fees they would charge both those clients.
It is only recently that investment banks like Lehman Brothers and Morgan Stanley have been hoarding income earning assets. And guess what kind of assets? They bought mortgage securities galore for the purpose of investment for themselves!
Given that they were new to the residential mortgage business, they ended up with an inordinate share of the bad mortgages, when compared to old hands like Fannie Mae and Freddie Mac. More importantly, they paid for their mortgage securities by borrowing from the bond market.
By the end of 2007, Lehman Brothers had $700 billion in assets against a capital reserve of only $23 billion. In other words, they were "leveraged" 30 to 1 by borrowing, a number so high that it deserves to be called nothing short of reckless. When their assets stopped earning the expected income because of mortgage defaults, they started having difficulties paying back their liabilities. Finally, the "short-sellers", sensing that these institutions were in trouble, drove their stock prices down to ridiculously low levels.
It is now becoming clear that some hedge funds have been targeting the financial institutions we are talking about and selling their stocks short. Speculators "overshoot" both ways; they create bubbles on the boom side and drive companies, and even countries, down to the ground on the downside. The modus operandi of the short-sellers have led to highly destructive results. On Thursday, September 18, 2008 the London Stock Exchange banned short-selling of stocks of financial institutions, and on Friday, September 19, 2008, the New York Stock Exchange followed suit, but only for two weeks.
How are the authorities bailing out the financial institutions? And what do all these maneuverings mean to the tax payers?
The bailouts so far have been arranged by the Federal Reserve and the Treasury. Even though the Fed and the Treasury are working together during the crisis, they are very different institutions.
The Treasury is part of the US government but the Fed is not. The Fed can create money but the Treasury cannot; however the Treasury can issue debt and use tax payers' money, which the Fed cannot. We are very fortunate that Ben Bernanke, the chairman of the Fed, and Henry Paulson, the secretary of the Treasury, have been able to work well together and use their specific authorities in a coordinated way.
The first intervention of the authorities took place when they arranged for the troubled mortgage institution Countrywide -- the biggest creator of the notorious "sub-prime" mortgages -- to be taken over by Bank of America.
The next problem was Bear & Stearns, an investment bank with severe problems of the kind stated above. Investment banks have not been regulated much in the US because they do not take deposits from households, and hence they do not put the wealth of the vast middle class at risk.
The Fed took the lead to prevent Bear Stearns from failing even though they did not have to. The Fed created $29 billion of new money to fix the non-performing assets of Bear Stearns, and then arranged for that firm to be acquired by a commercial bank, JP Morgan Chase. At this time, the bailout looks like a nice gift for JP Morgan Chase, and it did not cost the US taxpayers anything.
Throughout this time, Fannie Mae and Freddie Mac were in trouble because the stock market (read the "short-sellers") had beaten their values down to very low levels. However, the assets of Fannie and Freddie, mortgages worth $5 trillion, were mostly sound.
It is the Treasury that bailed out Fannie and Freddie, not the Fed. The Treasury has authority to infuse $100 billion of taxpayer money to each of the mortgage titans, but at the same time the US government can take ownership of 80% of each of the two titans with stocks that guarantee a 10% return.
A possible scenario is that the US government will have to infuse very little cash into Fannie and Freddie, and yet earn a handsome income flow from the profits of the two titans. In that case, the US government would have demonstrated to China, India and Russia how to run state-owned enterprises profitably!
Why was AIG, which is an insurance company, bailed out? First of all, AIG is more like a commercial bank rather than an investment bank, in the sense that they are involved with households. AIG has supposedly sold insurance of one kind or the other to 70 million households worldwide. But that is not all, AIG, even though primarily an insurance company, had diversified into wide ranging activities like leasing aircraft, and, not surprisingly, mortgage securities.
AIG's trouble was not due to the fact that their own mortgage holdings were turning sour, but due to a type of insurance they sold widely, called Credit Default Swaps (CDS). When the mortgage holdings of other companies became “non-performing,” AIG had to make good if these other institutions held CDS issued by AIG. It would be as if AIG’s home insurance business had been hit by a hurricane.
The AIG bailout was a very unique combination of the involvements of the Fed and the Treasury. The Fed created $85 billion worth of money and "loaned" the sum to AIG. In return, 80% of AIG came under the ownership of the US government, just like Fannie and Freddie. But the AIG deal is even better for the US taxpayers, because they will be earning income from an enterprise which they did not have to pay for!
It pays to have Paulson, an investment banker formerly of Goldman Sachs, as the Secretary of Treasury.
What is the latest bailout plan, which was announced late afternoon of Thursday, September 18, 2008?
A comprehensive, not a case by case plan. The US government (not the Fed) will set up an institution just like the one that was used to take possession of the sick savings and loans in the late 1980s, called the Resolution Trust Corporation (RTC).
Let us call the new one, just for symmetry, Resolution Mortgage Corporation (RMC). The RMC will use the taxpayers' money to buy up all the bad mortgages from the private financial institutions. This will immediately make the financial institutions more profitable and their stock values will go up. They will be able to raise fresh capital, issue new credit, and the private market financial markets which are basically at a standstill, will start functioning again.
At the same time, let us be sure that the US government will be left with all the lemons while the private companies will keep all the peaches. No doubt this will bail out the private financial institutions, but how much will it cost the taxpayers?
RTC and the rescue of the savings and loans had cost the US government $120 billion in the late 1980s. The initial cost estimates for the RMC led rescue plan reported in the media range from $500 billion to $1 trillion. Very soon it will start costing the taxpayers real money! The Bush administration has already asked Congress for $700 billion in bailout money.
The author is a professor of economics at Georgetown University, School of Foreign Service in Qatar.






