Wednesday, February 16, 2011

Toronto Stock Exchange – Privately Owned, Politically Meddled

First Potash, then Encana's venture with PetroChina and now this.

I know that the Conservative Party are just as socialist as the Grits, but lately what I've been seeing and hearing from Industry Minister Tony Clement makes me wonder if the NDP are running this country.

The London Stock Exchange and the TMX Group Inc. (owner of the Toronto Stock Exchange) want to merge and become one giant stock exchange. Is it a good idea? In my opinion, it is not. Especially when you consider the person that will be running this too-big-to-fail-waiting-to-happen franchise is no other then Xavier Rolet of Lehman Brothers fame (and a former employee of Goldman Sachs).

But this is not my decision to make. And the TMX guys are free to merge with whomever they like.

However under the Investment Canada Act any foreign investments over $299 million allows the State to interfere with private transactions in order to ensure there is a “net-benefit” to Canada. What exactly is a “net-benefit” and how does one measure it? Well first off, you become Industry Minister of the federal government, then you impose your will on those incapable of stopping you. Consider,

Tony Clement: The investor must obtain my approval before implementing the investment.

This is the problem with giving a small group of people all the guns in the country. They come up with bullshit laws that allow them to “legally” meddle in what should be a private transaction between two groups of people.

The problem manifests itself even further when one considers the role the provincial States want to play. Obviously – being the moron that he is – Dwight Duncan, the Ontario Finance Minister, considers the TSX to be a “strategic asset” and points out that Ontario's securities law prohibits this kind of merger. Quebec too has reservations since they merged Montreal's exchange with Toronto a few years ago.

Both provinces have veto powers over this merger.

Will this merger be a “net-benefit” to Canada? Probably not – in my opinion at least. If our money wasn't a fiat debt based system and our economy wasn't based on Keynesian dribble that benefits the wealthiest and squeezes out the middle class – if those weren't issues, then I'd be all for the merger. But since we already live in a fascist system I can't see this merger benefiting Canadian investors. But this is not my decision to make, nor is it the State's.

This is a private transaction. The LSE and the TMX have shareholders who will decide if this route is worth taking.

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