Archive for the Blog Category

As some of you may be aware, TAO’s Mission Statement is to assemble and maintain the knowledge, skills and experience that will allow us to develop and pursue a strategy that optimizes our ability to be relevant to any and all North American enterprises that utilize or should utilize Structured Finance concepts and programs as part of their financing platform. In a rapidly evolving and fragmented marketplace for financial services, no firm can hope to remain at all times and in all respects at the cutting edge; seeking to be continually relevant is the winning long term strategy.
It wasn’t hard to identify maintaining relevance in an evolving business environment as TAO’s leading strategic challenge. The challenge on a personal level is pretty much the same. As I and all around me age, I am constantly reminded of the challenges of maintaining if not finding relevance as a son to aging parents, a father to adult children and a spouse to an empty nest partner. Individuals and institutions must evolve with changing circumstances or be doomed to irrelevance.

Which brings me to Christmas, a Western institution with a longer history than the Hudson’s Bay Company and an even greater cultural penetration than (dare I say it) Facebook. As a child in the Sixties, the reality of where Canadian society was and where it was heading was sufficiently ignored to allow us to believe that we could collectively share the Christmas tradition as a community builder in the context of its literal meaning, the celebration of the birth of Christ. “Merry Christmas” was a wonderful seasonal greeting through which we reassured ourselves and strangers of our common belief in the context of an increasingly complicated and alienating world.

Unfortunately, the requirement of relevance is now bearing down on the public celebration of Christmas. If you offer a “Merry Christmas” to everyone you meet on the street in the month of December, one of three of your recipients would feel no immediate common bond in your greeting. Faced with this challenge to its relevance, any institution, including Christmas, has only three choices. The first alternative is to drive on without accommodation, and painfully allow a touchstone of goodwill to all to become a ritual of division. The second alternative is to mandate the elimination of all public observance, following the model advocated in Quebec’s abandoned Secularism Charter, smothering rather than celebrating the diversity of expression of our common humanity.
The third alternative is by far the richest and most hopeful, and that is to allow the institution to evolve. We could recast the public face of Christmas in its universal essence, the celebration of the primacy of family and the miracle of birth as the kernels of hope for the world, all the while conceding room and respect for those whose observance is more literal. And if we can do that for Christmas, can we not do the same for Yom Kippur, Eid al-Fitr and the myriad other religious traditions that are now integral parts of the Canadian community? Sadly, if this challenge is beyond our collective will and tolerance, then the public celebration of religious traditions that are in their essence a reflection of our common humanity will be untenable in a multicultural and inclusive nation. And we will all be poorer for it.

Merry Christmas to ALL.

In our first TAO management meeting following the October 19th election, we were discussing the potential impact of the Liberal majority upon our business. One of my colleagues observed that, with the expectation of closer co-operation between the Liberals in Ottawa and Toronto, we were at least likely to be spared the payroll administration inefficiency of the recently announced Ontario Retirement Pension Plan operating independent of the existing Canada Pension Plan infrastructure. Fair enough; but before saluting this apparent “Win-Wynne”, it merits a moment to consider more thoughtfully the wisdom of this proposed expansion of our social safety net.

Government taking a leadership role in the socialization of risk among it citizenry is a laudable and appropriate exercise of legislative discretion. Notwithstanding all of its shortcomings and challenges, the universality of Canadian healthcare is a public policy distinction from the US that all Canadians should be thankful for and proud of. However, it remains equally axiomatic that public policy should never infantilize its constituents by doing for them that which they have the ability to do as well or better for themselves. Health challenges are cruelly random in the timing and severity of their impact upon individuals and families; collectivization of this risk is both prudent and moral. The timing and certainty of the need for retirement savings, on the other hand, are largely predictable, and accordingly merit a very different public policy prescription.

In times and jurisdictions in which the expectation of intergenerational transfers of wealth and care were the primary if not sole means of managing this risk, it is true that individual citizens assumed unacceptable levels of risk with respect to their lifestyle in retirement. However, the availability of products and tools for financial planning has radically transformed the management of this risk. Deferring consumption to accumulate appropriate savings is an individual responsibility that can be managed in a wide variety of ways. Some may defer the creation and funding of formal retirement savings to direct more available cash into increasing equity in appreciating residential real estate, others into businesses, still others in continuing advanced and/or specialized education. All of these represent reasonable approaches to wealth accumulation that may or may not be the optimal strategy in the circumstances of the particular individual, but it is in any event their choice to make.

No one can deny that a portion of the challenge to retirement planning for lower income Canadians is their inability to defer any portion of their earnings away from current spending needs for the necessities of life. Unfortunately, the proposed ORPP does not purport to redistribute funds among taxpayers to augment retirement savings, but merely redirect amounts from employers and employees that we can and should assume would otherwise have been paid as current period wages. Policy solutions to raise the level of earnings paid to Canadians to meet not only current needs but also permit a modest amount of wealth accumulation are urgently needed, but that is not the ORPP. Similarly, lower income-earning Canadians may be handicapped by the unavailability of the low cost, highly skilled discretionary fund managers that can be accessed by high net worth investors. The opportunity for Canadians to voluntarily direct a portion of their earnings into the CPP (even by source deduction) would seem an appropriate public policy response to this inequity, but, once again, that is not the ORPP.

The progress of modern capitalist democracies has been marked by a relentless and in most cases prudent expansion of the social safety net. We have not yet run out of devastating and random risks borne by our fellow citizens that can be socialized. Perhaps an ambitious national Pharmacare program is a more worthy complement to the success of our healthcare system than an expanded Government-mandated retirement savings program.

I was lucky enough to be among the 50,000 faithful at the Rogers Centre who witnessed Wednesday’s ALDS final game between the Rangers and the Blue Jays, a game that has already been unanimously dubbed “an instant classic”.  As dramatic and improbable as Wednesday’s game was, it is really just the apex of an epic season that can only be punctuated but not negated by the outcome of the ALCS and/or the World Series.

The sense of a looming epic was apparent from the outset of the season (after all, spring training saw the return to Canada of prodigal son Russell Martin, and the season was only three weeks old when we witnessed the destruction of Pompey).  From there, it was three months of scuffling before the youthful Alex Anthopoulos, a lad in distress if I ever saw one, rubbed the magic lamp and used his three wishes to conjure Ben Revere, Troy Tulowitzki and David Price to lead (dare I say it) an epic second half to the season to return the Jays to the playoffs for the first time in 22 years.

A similarly dramatic script was a foregone conclusion for the playoff run, but not before a couple of subplots worthy of Rosencrantz and Guildenstern were added to this Shakespearean (there it is again) epic.  In the last game of the regular season, the team put at risk a shot at the overall best record in the American League (and home field advantage in the ALCS) by nobly but perhaps unwisely offering their Lion in Winter, Mark Buehrle, the opportunity to start that game on short rest in order to reach the 200 inning mark for the 15^th time in what is almost certainly his final season.  For once, someone had forgotten to distribute the scripts, because two first inning infield errors led to six unearned runs and a first inning exit for Buerhle.

Undeterred by this failed attempt at orchestrated milestones, the Jays were back at it in Game 4 of the ALDS.  With starter R. A Dickey cruising with two outs in the fifth inning with a 7-1 lead, out came Manager John Gibbons and in came ace David Price.  With Dickey leaving before the end of five innings, Price needed only to hold on to the lead and pitch three innings to end his undistinguished 0-6 post season streak.  Set up so adroitly (and apparently there is no truth to the rumour that the Jays had also asked that the Ranger agree to blindfold their batters), Price did manage to get that monkey off his back, albeit with a mediocre performance that saw him give up three earned runs in his three innings of work.

So back to the epic march.  Game 5 saw the return to the mound of Marcus Stroman in the fifth start since his Lazarus-like return from what was called and should have been season ending knee surgery in the spring, sporting a Sideshow Bob haircut for those whose recognition of epic foreboding require a more contemporary reference.

And then came the “epic” seventh inning.  A 53 minute extravaganza that featured an unheard of sequence of events that culminated in the Rangers committing three consecutive infield errors under the influence of atomized alcohol from an earlier shower of flying beer cans and a three run, two out home run and bat flip by Jose Bautista that has been memorialized and universally decried on YouTube (apparently even ISIS has dismissed the bat flip as “unnecessarily provocative and unsportsmanlike”).

Epic.