Bank bail-outs to be kept secret
Dan Atkinson, Simon Watkins, Mail on Sunday
27 April 2008, 8:59am
The Bank of England has imposed a permanent news blackout on its £50bn-plus plan to ease the credit crunch.
Ferocious and unprecedented secrecy means taxpayers will never know the names of the banks that have been supported through the special liquidity scheme, which was unveiled by Bank Governor Mervyn King last week.
Requests under the Freedom of Information Act are to be denied. Details will be kept secret even after 30 years - the period after which all but the most sensitive state documents are released.
Any Bank of England employee leaking the names of institutions involved will face court action for breach of contract.
Even a figure for the overall amount advanced will not be published until October. Meanwhile the Bank is expected to issue at least £50bn of Treasury bills to banks in exchange for their mortgages - entirely in secret.
This hypersensitive official stance is thought to be a response to the events of last year when a huge stigma was attached to any lender suspected of going to the Bank for cash help.
The scheme is intended to steady the markets, but it is feared that reports of banks making widespread use of the facility could trigger further instability.
Barclays and HBoS have both confirmed they will use the Bank of England scheme. 'We welcome the Bank facility and we will participate in it,' confirmed Andy Hornby, chief executive of HBoS.
Other banks declined to comment, but it is expected that this week all of the leading banks, with the exception of Lloyds TSB, will tender some of their mortgages to the Bank of England.
HBoS confirmed last week it had packaged up £9bn of mortgages ready either for securitisation - in effect, selling them on in the wholesale financial markets - or to be offered to the Bank in return for Treasury bills.
The scheme, drawn up by King and approved by Chancellor Alistair Darling, aims to improve banks' liquidity by temporarily swapping bundles of mortgages and credit card debt for Treasury bills, which are short-dated Government debt that matures within nine months.
The scheme will run for three years so these bills will be replaced by new ones when required.
Under the plan, bills will be exchanged only for securities rated triple-A - the highest possible grade of security - by at least two of the three big ratings agencies, Fitch, Moody's and Standard & Poor's.
It would not normally be considered acceptable for big companies to arrange billions of pounds of financial support without telling their shareholders.
But one source close to major institutional investors said: 'I can see why there may be a case for secrecy.
'It may be the lesser of two evils.'
The £50bn or more of Treasury bills involved will dwarf the £17.6bn currently in issue, but the authorities are adamant this will not destabilise the Government debt market.
Wednesday, April 30, 2008
Tuesday, April 29, 2008
Monday, April 28, 2008
Raised in boom times, many Gen-X and Yers see their dreams go bust
Raised in boom times, many Gen-X and Yers see their dreams go bust
Few can remember a time when jobs weren't plentiful and life wasn't one big shopping trip. Now they are out of work and drowning in debt.
By Daniel Costello, Los Angeles Times Staff Writer
April 27, 2008
Jason Liebrecht used to write about his motorcycle adventures on his blog. But since early this month, the 36-year-old San Diego computer software engineer's daily musings have been about a less thrilling new experience: unemployment.
"Do I find a job, or do I head to Central and South America on the motorcycle?" he wrote on Day 4. By Day 7, he had become more realistic: "So far in the last week I've made $1,245 off of EBay sales. Mostly stuff I wasn't using, or don't need much. Nice way to clean the house up!"
After selling some stock and applying for unemployment, Liebrecht figures he can pay his $2,300-a-month mortgage and other bills for just two months. When his company health insurance runs out in a few weeks, he'll go uncovered because he can't afford the premiums.
"You have to just hope you land on your feet," Liebrecht said in an interview.
People everywhere are coping with rising credit card balances, falling home values and layoffs. But such worries are particularly jarring for a younger slice of the workforce that has known little but long-term financial prosperity and optimism.
After all, a large share of today's 20- and 30-somethings -- a nearly 80-million strong cohort -- were in college or high school (and some in grade school) the last time the country experienced a severe financial jolt. Some can barely remember the mild recession of 2001, which was followed by an extraordinary boom that coincided with their entry into the workforce.
Raised amid a long stretch of financial bounty and weaned on video games, cellphones, iPods and weekends at the mall, many Generation X and Y members have barely seen a time when they couldn't spend freely on the latest styles and gadgets.
In these tighter times, they're watching their spending and they're borrowing money from family members for the first time. To economize, some are moving in with friends and -- the horror -- even Mom and Dad.
And after years of being able to boast about promotions and climbing income, a growing number find themselves having to admit that they are out of a job. In the last year, the unemployment rate for 25- to 34-year-olds rose from 4.3% to 5.4% -- nearly twice the increase for age groups above them.
"This generation as a whole has not experienced any substantial kind of financial difficulty," said Leslie Winefield, director of the Portland, Maine-based Institute for Financial Literacy. "It could be a defining moment for them."
Jean Twenge, a San Diego State psychology professor and author of "Generation Me: Why Today's Young Americans Are More Confident, Assertive, Entitled -- and More Miserable Than Ever Before," said many are so far in debt that even a minor recession could be extremely challenging.
"Now they have to deal with losing their jobs, keeping their house and $4 gas," Twenge said.
Paradoxically, she said research shows that younger people have grown up in a time of great wealth but have more anxiety about their economic future than past generations.
"They seem to be looking into the future and understanding they may not have it as easy as their parents," she said.
Years of low unemployment may have masked the precarious finances of many young workers.
A study released last year by the Brookings Institution and the Pew Charitable Trust found that the median income of men in their 30s fell 12% from 1974 to 2004 when adjusted for inflation.
Charged up
Credit card debt for the average 25- to 34-year-old rose 52%, from $2,873 to $4,357, between 1989 and 2004, when adjusted for inflation, according to the research institute. The age group also experienced the largest increase in those making late payments during that period, up from 3% of all cardholders to 12%.
Nearly a quarter of all bankruptcies in 2006 were filed by people ages 25 to 34, up 40% in the last decade. But the age group makes up only 14% of the adult population.
The state of the economy has passed the Iraq war as the top concern for voters between ages 18 and 29, according to a poll this month by CBS News and MTV, raising the possibility that economic anxiety among younger workers could weigh heavily on the upcoming presidential election.
Kelly McAuliffe of Los Angeles can't believe how quickly she has gone from rushing to back-to-back business meetings to passing her days watching the Game Show Network and reruns of "Law & Order."
Since getting laid off from an online advertising company in February, the 34-year-old former sales director has stopped meeting friends for drinks and has pared her grocery list (less Whole Foods, more sales at Ralphs). She's scaling back her cellphone calls and where she drives because of rising gas prices.
To get by, she recently did the unthinkable: She borrowed money from her mother.
"It's hard to say it, but it's demeaning," said McAuliffe, who has had a handful of job interviews in the last month. "You work so long to make your parents proud, and this is the last thing you expect to be doing at my age."
Ray of hope
Few experts predict that younger workers face a dire long-term financial future, and not everyone is suffering. Some say younger workers may weather the uncertainty of economic downturns well because they're accustomed to changing jobs frequently.
The housing crisis might even open up opportunities.
"The bright spot is that younger people who didn't buy a house in the last few years and who have some cash can get into the housing and stock markets" for the first time in years, said Boston University economist Laurence Kotlikoff.
Although there are few reliable statistics on how many among younger home buyers are dealing with foreclosure, some economists believe they are bearing the brunt of the housing downturn. The explosion of sub-prime loans coincided with many first-time buyers with poorer credit histories entering the market.
Edward Wolff, an economist at New York University who studies generational wealth differences, worries that many younger people could accumulate even more debt in this downturn on top of outsize college loans, credit card balances and mortgage payments.
"It's not a doomsday scenario," Wolff said. But younger people "are stretched thin and don't have as much to fall back on."
Time running out
Dulce Maya is worried that she won't be able to squeeze by much longer. The 27-year-old restaurant manager bought a three-bedroom, two-bath house in Fontana for $350,000 two years ago with a $5,000 down payment and an adjustable-rate mortgage.
This year, her $2,300 monthly payment will probably rise to $3,300 and her work hours were recently cut because business is slow. Maya has asked her bank to lower her payments so she can keep her house, which is now valued at $200,000, and expects to hear back in the next few weeks. If it doesn't agree, she says, she may have no choice but to hand the bank the keys.
"I don't know what happens next," Maya said. "I may try and rent an apartment for around what I'm paying, but rents are going up too."
Few can remember a time when jobs weren't plentiful and life wasn't one big shopping trip. Now they are out of work and drowning in debt.
By Daniel Costello, Los Angeles Times Staff Writer
April 27, 2008
Jason Liebrecht used to write about his motorcycle adventures on his blog. But since early this month, the 36-year-old San Diego computer software engineer's daily musings have been about a less thrilling new experience: unemployment.
"Do I find a job, or do I head to Central and South America on the motorcycle?" he wrote on Day 4. By Day 7, he had become more realistic: "So far in the last week I've made $1,245 off of EBay sales. Mostly stuff I wasn't using, or don't need much. Nice way to clean the house up!"
After selling some stock and applying for unemployment, Liebrecht figures he can pay his $2,300-a-month mortgage and other bills for just two months. When his company health insurance runs out in a few weeks, he'll go uncovered because he can't afford the premiums.
"You have to just hope you land on your feet," Liebrecht said in an interview.
People everywhere are coping with rising credit card balances, falling home values and layoffs. But such worries are particularly jarring for a younger slice of the workforce that has known little but long-term financial prosperity and optimism.
After all, a large share of today's 20- and 30-somethings -- a nearly 80-million strong cohort -- were in college or high school (and some in grade school) the last time the country experienced a severe financial jolt. Some can barely remember the mild recession of 2001, which was followed by an extraordinary boom that coincided with their entry into the workforce.
Raised amid a long stretch of financial bounty and weaned on video games, cellphones, iPods and weekends at the mall, many Generation X and Y members have barely seen a time when they couldn't spend freely on the latest styles and gadgets.
In these tighter times, they're watching their spending and they're borrowing money from family members for the first time. To economize, some are moving in with friends and -- the horror -- even Mom and Dad.
And after years of being able to boast about promotions and climbing income, a growing number find themselves having to admit that they are out of a job. In the last year, the unemployment rate for 25- to 34-year-olds rose from 4.3% to 5.4% -- nearly twice the increase for age groups above them.
"This generation as a whole has not experienced any substantial kind of financial difficulty," said Leslie Winefield, director of the Portland, Maine-based Institute for Financial Literacy. "It could be a defining moment for them."
Jean Twenge, a San Diego State psychology professor and author of "Generation Me: Why Today's Young Americans Are More Confident, Assertive, Entitled -- and More Miserable Than Ever Before," said many are so far in debt that even a minor recession could be extremely challenging.
"Now they have to deal with losing their jobs, keeping their house and $4 gas," Twenge said.
Paradoxically, she said research shows that younger people have grown up in a time of great wealth but have more anxiety about their economic future than past generations.
"They seem to be looking into the future and understanding they may not have it as easy as their parents," she said.
Years of low unemployment may have masked the precarious finances of many young workers.
A study released last year by the Brookings Institution and the Pew Charitable Trust found that the median income of men in their 30s fell 12% from 1974 to 2004 when adjusted for inflation.
Charged up
Credit card debt for the average 25- to 34-year-old rose 52%, from $2,873 to $4,357, between 1989 and 2004, when adjusted for inflation, according to the research institute. The age group also experienced the largest increase in those making late payments during that period, up from 3% of all cardholders to 12%.
Nearly a quarter of all bankruptcies in 2006 were filed by people ages 25 to 34, up 40% in the last decade. But the age group makes up only 14% of the adult population.
The state of the economy has passed the Iraq war as the top concern for voters between ages 18 and 29, according to a poll this month by CBS News and MTV, raising the possibility that economic anxiety among younger workers could weigh heavily on the upcoming presidential election.
Kelly McAuliffe of Los Angeles can't believe how quickly she has gone from rushing to back-to-back business meetings to passing her days watching the Game Show Network and reruns of "Law & Order."
Since getting laid off from an online advertising company in February, the 34-year-old former sales director has stopped meeting friends for drinks and has pared her grocery list (less Whole Foods, more sales at Ralphs). She's scaling back her cellphone calls and where she drives because of rising gas prices.
To get by, she recently did the unthinkable: She borrowed money from her mother.
"It's hard to say it, but it's demeaning," said McAuliffe, who has had a handful of job interviews in the last month. "You work so long to make your parents proud, and this is the last thing you expect to be doing at my age."
Ray of hope
Few experts predict that younger workers face a dire long-term financial future, and not everyone is suffering. Some say younger workers may weather the uncertainty of economic downturns well because they're accustomed to changing jobs frequently.
The housing crisis might even open up opportunities.
"The bright spot is that younger people who didn't buy a house in the last few years and who have some cash can get into the housing and stock markets" for the first time in years, said Boston University economist Laurence Kotlikoff.
Although there are few reliable statistics on how many among younger home buyers are dealing with foreclosure, some economists believe they are bearing the brunt of the housing downturn. The explosion of sub-prime loans coincided with many first-time buyers with poorer credit histories entering the market.
Edward Wolff, an economist at New York University who studies generational wealth differences, worries that many younger people could accumulate even more debt in this downturn on top of outsize college loans, credit card balances and mortgage payments.
"It's not a doomsday scenario," Wolff said. But younger people "are stretched thin and don't have as much to fall back on."
Time running out
Dulce Maya is worried that she won't be able to squeeze by much longer. The 27-year-old restaurant manager bought a three-bedroom, two-bath house in Fontana for $350,000 two years ago with a $5,000 down payment and an adjustable-rate mortgage.
This year, her $2,300 monthly payment will probably rise to $3,300 and her work hours were recently cut because business is slow. Maya has asked her bank to lower her payments so she can keep her house, which is now valued at $200,000, and expects to hear back in the next few weeks. If it doesn't agree, she says, she may have no choice but to hand the bank the keys.
"I don't know what happens next," Maya said. "I may try and rent an apartment for around what I'm paying, but rents are going up too."
Wednesday, April 23, 2008
Rice Shortage Prompts Costco Calif. Rice Rationing
Costco is now posting signs limiting how much rice you can buy based on your previous purchases.
Wal-Mart Rations Rice, Warns of "Supply and Demand" Concerns -
Wal-Mart, the world’s largest retailer, said on Wednesday that it would ration the amount of rice each customer can purchase at its Sam's Club stores because of recent “supply and demand trends.”
“We are limiting the sale of Jasmine, Basmati and Long Grain White Rices to four bags per member visit,” the company said in a statement. “This is effective immediately in all of our U.S. clubs, where quantity restrictions are allowed by law.”
SEC rejects Congress' request, SEC refuses to allow Bear Stearns Investigation
SEC Rebuffs Lawmakers Over Bear
By Michael Siconolfi
Word Count: 361 | Companies Featured in This Article: Bear Stearns, J.P. Morgan Chase
Securities regulators refused a congressional request to disclose why they dropped an investigation into whether Bear Stearns Cos. harmed investors by improperly valuing complex debt securities.
The Securities and Exchange Commission cited confidentiality in its decision involving the late-stage probe of the Wall Street firm.
At issue is a move by the SEC to abort an enforcement case into activities at Bear Stearns several months before the firm imploded in March. The firm ...
Thursday, April 17, 2008
Forget About $5 Gas, What Happens At $10 Bread? Could Food Riots Come To America?
Forget About $5 Gas, What Happens At $10 Bread? Could Food Riots Come To America?
What's wrong with this picture: Go to Google News and do a quick search for the term food riots. You get (as of now) about 4,755 results. The stories that appear, while some concern dire predictions about near future events, a majority of the stories are talking about situations developing right now.
A side effect of the steadily increasing price of oil has led to the desire for readily available biofuel, i.e. growing your own fuel (a-la Brazil). This turns over land previously used to grow good old food to land used to grow food to be turned into fuel. What is debatable is exactly how much growing capacity the world has to meet demand of food or fuel. The inequalities in the world being as they are, there were starving people before this latest crisis began, but now their numbers being increased - driven by a sharp increase in the price of basic foods. Debatable is whether the price increase is real (in which case we are screwed), just another speculator-driven bubble (which may explain oil), or a symptom of the U.S. Dollar's death dive (which probably explains oil). What is not debatable is the effect that these increases are having on society in some third world nations, a crisis that is only threatening to spread. Some recent examples of trouble:
Hati saw riots during the latter half of March and early April:
Quote from: http://www.jamaica-gleaner.com/gleaner/20080413/focus/focus1.html
Since the start of April, Haiti has been experiencing protests over rising food prices. However, these protests became violent this past week. The protests have been triggered by rising food prices, both as a result of international factors such as oil price and grain price increases and the impact of bad weather on agriculture, creating shortages in production and consequently, an increase in agricultural and food prices.
The price of rice in Haiti has doubled from US$35 to US$70 for a 120-pound pack. Gasolene has risen three times in the last two months. Countries as diverse as Haiti, Cuba and Jamaica import most of their food. Food prices have risen around the world on average by 40 per cent since mid-2007 and the price of staples has risen by 80 per cent since 2005.
Rioting has also struck in Indonesia:
Quote from: http://www.theglobeandmail.com/servlet/story/LAC.20080412.FOODSIDE12/TPStory/TPInternational/Asia/
In Indonesia, the prices of some essentials have surged more than 50 per cent since January. Prices for tofu, soybeans and gasoline are now beyond the reach of the poorest families, rattling a government wary of social unrest. It responded by slashing import tariffs and subsidizing food in local markets, but that's not enough to ease the sting for many families in the developing world who must spend 50 to 60 per cent of their income on food, reports the United Nations Food and Agriculture Organization.
Rioting has led to general strikes which have led to more violence in Egypt:
Quote from: http://www.iht.com/articles/ap/2008/04/08/africa/ME-GEN-Egypt-Protest-Death.php
Ahmed Ali Hammad, 15, died from gun shot wounds Tuesday morning in the Mahalla hospital, said a security official on condition of anonymity because he was not authorized to speak to the press.
The gritty industrial city has been the scene of two days of violent clashes between police and residents angered over rising food prices. On Sunday, security prevented workers from going on strike.
In Ivory Coast, a three-day spike in food led to rioting in the capital:
Quote from: http://allafrica.com/stories/200803311850.html
At least a dozen protestors were wounded during several hours of clashes with police on 31 March as they demanded government action to curb food prices.
...
"A kilo of beef has increased from 700 CFA (US$1.68) to 900 CFA (US$2.16) in just three days," one of the protestors, Amйlie Koffi, told IRIN. "One litre of oil has increased from 600 CFA (US$1.44) to 850 CFA (US$2.04) in the same time."
"We only eat once during the day now," said another protestor, Alimata Camara. "If food prices increase more, what will we give our children to eat and how will they go to school?"
Cameroon...
Quote from: http://www.iht.com/articles/2008/02/27/africa/27cameroon.php
In the commercial capital of Douala, a police helicopter dropped tear gas on hundreds of protesters who marched to demand bigger cuts in fuel and food prices. As the marchers scattered in panic on Wouri Bridge, some fell into the river.
Witnesses saw police arrest dozens of protesters, taking them away in trucks. Some were beaten with rifle butts, the witnesses said. Anti-government protests were also reported in Bamenda in the northwest.
Cameroon is the world's fourth largest cocoa producer; no details were immediately available on disruption to shipments.
Other third world countries are relatively stable for the moment, but the pinch is getting worse. This from Venezuela:
Quote from: http://www.miamiherald.com/top_stories/story/494440.html
Jenny Dнaz pays a mark up for scarce eggs, sugar and cooking oil because she sometimes has to buy them from the back of a truck. Dayra Barreto gave up eating pricey asparagus, palm hearts, mushrooms and artichoke hearts. And Andrea Gonzбlez substitutes baloney for ham.
This snapshot of shoppers at a middle class grocery store in Caracas illustrates how rising food prices are hurting not just the poor in Latin America and the Caribbean, a region where some people spend more than half their income on food.
The Philippines...
Quote from: http://www.iht.com/articles/ap/2008/04/14/asia/AS-GEN-Philippines-Rice.php
Philippine officials dismissed fears of possible rioting over rising food prices and tight rice supplies, saying Monday that the unrest that toppled Haiti's government could not happen here.
Defense Secretary Gilberto Teodoro said the security situation in the country was stable and that skyrocketing rice prices were a global concern.
"I don't see any food riots in the Philippines," Teodoro said. "I think what this will do, on the contrary, is to give us more incentives and impetus to work together to solve the problem rather than fractionalizing the country."
Riots in Haiti at the weekend toppled its government after a wave of deadly looting because of rising food prices. Angry protests also erupted in Egypt over the cost of food.
The list goes on and on.
For anyone who has taken a trip to the grocery store recently, it's also obvious that the spike in food prices is not limited to the third world, and is having some very serious and real impacts in the West - thankfully limited to curtailed spending and an economic slowdown thusfar.
I have hit on the fact of rapidly rising prices before, but I'll highlight a couple more important facts to this discussion.
Quote
* Canola: up 133% in 2 years
* Cocoa: up 206% in 7 years
* Coffee: up 170% in 6 years
* Corn: up 150% in 2 years
* Oats: up 160% in 3.5 years
* Rice: up 239% in 6 years
* Soybeans: up 134% in 1.5 years
* Wheat: up 200% in 2 years
Here in America and the West, we can "take" those increases, at least for the moment. The belts are getting tighter and our lavish way of living is getting just a bit harder, but we can still "take" it. We can cut back on driving or that new computer or a video game or that satellite tv package, but we can still "take" the increases. (Take is in quotes because that is of course not 100% true and there are hungry people in this country, I'm just using it as a broad brush - when you compare the Haitian government collapsing because of food riots to the current situation in America, the Americans can at least be said that they are getting by.)
When you start out making a dollar or two per day and the cost of a bag of rice rises to three dollars, you suddenly have a serious problem. People go from poor to poorer, from poorer to impoverished, impoverished to starving, and soon - starving to dead.
Unfortunately for governments the world over, the average person isn't going to sit around and starve. Enough of their daily livelihood taken away and they are likely to protest, to riot, to demand change, to ask the questions and demand answers for why that loaf of bread was within their financial reach last Christmas but now would make an excellent Christmas gift. When governments can not provide the proper answers, they get toppled. At the moment the toppling movement appears to be of the peaceful kind - the desire to sweep out one party's rule or regime in favor of a supposedly better one. Despite the dreams revolutionaries may have, unless their trusted leaders have the gift of time machines and a means to transport a lot of food through them, they will not be able to end this crisis on their own, and may soon find their selves toppled as well.
A fed up public may turn its back on the elected system, seeking not change by the ballot box but the more quick, decisive, and satisfying-to-a-few-sick-people methods of revolt, guns, and civil war. How many months or years of hungry bellies and starving children would it take before a nation of people take up arms against their government?
Think of the average stability of an African nation. Now apply that sort of trouble to southeast Asian nations, Pacific Rim countries, middle eastern countries, and of course the big 800lb gorillas in the room - nuclear armed India and Pakistan. How far of a stretch is it really to go from a food riot in India to a toppled government to a new regime blaming it on the Pakistanis?
While the rest of the world stands on that precipice, the West sits back and watches. With military too strong to allow a successful armed rebellion, their governments can rest assured that despite what may be going on, they will presumably be able to stand and make it though this.
"Make it through" to what, exactly? Where is the light at the end of this tunnel? These countries have people too, and more people are going more hungry in these countries, leading to more anger against the government.
As far as America is concerned, right now the system is holding. Considering all the land that this nation has to grow things, I personally find it hard to believe our food prices are spiking as they are, but we'll leave that to conspiracy theories and traders looking to make a killing in the futures markets.
The signs of trouble are there, however. The number of people below the poverty line in America is growing. 28 million Americans - more than 10% of the available workforce - are now on food stamps, and their numbers are increasing as well. Food stamps being quoted in dollars and not in meals, the spike in prices means stamps aren't going as far as they used to go, either.
It is now becoming apparent that the idea to use biofuels like Brazil has is turning out to be a major mistake for countries like the United States. It turns out that more than driving, Americans also need food.
The penultimate question in all of this, still, is how do we get out of this mess? Rising fuel costs, land gradually becoming less usable because of global warming, converting food growing lands over to fuel growing lands, factory farms squeezing out the little guy which prevents supermarkets from being undercut by local growers who could do a better job at less transportation costs (which would use less fuel), growing populations, growing disparity between the top and the bottom of the economic ladder, the list goes on.
The 1990's were the decade of everything being great, relatively. This decade has been the decade of waking up to reality. The next decade will be a decade of decision. Whether the 2020's are marked by renewed prosperity or a world embroiled in worldwide resource wars and economic depression, well there's only a few more election cycles to put people into positions of power to figure out how that's all going to turn out.
Forget about five dollar gasoline, we should start asking ourselves if we are going to see ten dollar bread in our near future.
What's wrong with this picture: Go to Google News and do a quick search for the term food riots. You get (as of now) about 4,755 results. The stories that appear, while some concern dire predictions about near future events, a majority of the stories are talking about situations developing right now.
A side effect of the steadily increasing price of oil has led to the desire for readily available biofuel, i.e. growing your own fuel (a-la Brazil). This turns over land previously used to grow good old food to land used to grow food to be turned into fuel. What is debatable is exactly how much growing capacity the world has to meet demand of food or fuel. The inequalities in the world being as they are, there were starving people before this latest crisis began, but now their numbers being increased - driven by a sharp increase in the price of basic foods. Debatable is whether the price increase is real (in which case we are screwed), just another speculator-driven bubble (which may explain oil), or a symptom of the U.S. Dollar's death dive (which probably explains oil). What is not debatable is the effect that these increases are having on society in some third world nations, a crisis that is only threatening to spread. Some recent examples of trouble:
Hati saw riots during the latter half of March and early April:
Quote from: http://www.jamaica-gleaner.com/gleaner/20080413/focus/focus1.html
Since the start of April, Haiti has been experiencing protests over rising food prices. However, these protests became violent this past week. The protests have been triggered by rising food prices, both as a result of international factors such as oil price and grain price increases and the impact of bad weather on agriculture, creating shortages in production and consequently, an increase in agricultural and food prices.
The price of rice in Haiti has doubled from US$35 to US$70 for a 120-pound pack. Gasolene has risen three times in the last two months. Countries as diverse as Haiti, Cuba and Jamaica import most of their food. Food prices have risen around the world on average by 40 per cent since mid-2007 and the price of staples has risen by 80 per cent since 2005.
Rioting has also struck in Indonesia:
Quote from: http://www.theglobeandmail.com/servlet/story/LAC.20080412.FOODSIDE12/TPStory/TPInternational/Asia/
In Indonesia, the prices of some essentials have surged more than 50 per cent since January. Prices for tofu, soybeans and gasoline are now beyond the reach of the poorest families, rattling a government wary of social unrest. It responded by slashing import tariffs and subsidizing food in local markets, but that's not enough to ease the sting for many families in the developing world who must spend 50 to 60 per cent of their income on food, reports the United Nations Food and Agriculture Organization.
Rioting has led to general strikes which have led to more violence in Egypt:
Quote from: http://www.iht.com/articles/ap/2008/04/08/africa/ME-GEN-Egypt-Protest-Death.php
Ahmed Ali Hammad, 15, died from gun shot wounds Tuesday morning in the Mahalla hospital, said a security official on condition of anonymity because he was not authorized to speak to the press.
The gritty industrial city has been the scene of two days of violent clashes between police and residents angered over rising food prices. On Sunday, security prevented workers from going on strike.
In Ivory Coast, a three-day spike in food led to rioting in the capital:
Quote from: http://allafrica.com/stories/200803311850.html
At least a dozen protestors were wounded during several hours of clashes with police on 31 March as they demanded government action to curb food prices.
...
"A kilo of beef has increased from 700 CFA (US$1.68) to 900 CFA (US$2.16) in just three days," one of the protestors, Amйlie Koffi, told IRIN. "One litre of oil has increased from 600 CFA (US$1.44) to 850 CFA (US$2.04) in the same time."
"We only eat once during the day now," said another protestor, Alimata Camara. "If food prices increase more, what will we give our children to eat and how will they go to school?"
Cameroon...
Quote from: http://www.iht.com/articles/2008/02/27/africa/27cameroon.php
In the commercial capital of Douala, a police helicopter dropped tear gas on hundreds of protesters who marched to demand bigger cuts in fuel and food prices. As the marchers scattered in panic on Wouri Bridge, some fell into the river.
Witnesses saw police arrest dozens of protesters, taking them away in trucks. Some were beaten with rifle butts, the witnesses said. Anti-government protests were also reported in Bamenda in the northwest.
Cameroon is the world's fourth largest cocoa producer; no details were immediately available on disruption to shipments.
Other third world countries are relatively stable for the moment, but the pinch is getting worse. This from Venezuela:
Quote from: http://www.miamiherald.com/top_stories/story/494440.html
Jenny Dнaz pays a mark up for scarce eggs, sugar and cooking oil because she sometimes has to buy them from the back of a truck. Dayra Barreto gave up eating pricey asparagus, palm hearts, mushrooms and artichoke hearts. And Andrea Gonzбlez substitutes baloney for ham.
This snapshot of shoppers at a middle class grocery store in Caracas illustrates how rising food prices are hurting not just the poor in Latin America and the Caribbean, a region where some people spend more than half their income on food.
The Philippines...
Quote from: http://www.iht.com/articles/ap/2008/04/14/asia/AS-GEN-Philippines-Rice.php
Philippine officials dismissed fears of possible rioting over rising food prices and tight rice supplies, saying Monday that the unrest that toppled Haiti's government could not happen here.
Defense Secretary Gilberto Teodoro said the security situation in the country was stable and that skyrocketing rice prices were a global concern.
"I don't see any food riots in the Philippines," Teodoro said. "I think what this will do, on the contrary, is to give us more incentives and impetus to work together to solve the problem rather than fractionalizing the country."
Riots in Haiti at the weekend toppled its government after a wave of deadly looting because of rising food prices. Angry protests also erupted in Egypt over the cost of food.
The list goes on and on.
For anyone who has taken a trip to the grocery store recently, it's also obvious that the spike in food prices is not limited to the third world, and is having some very serious and real impacts in the West - thankfully limited to curtailed spending and an economic slowdown thusfar.
I have hit on the fact of rapidly rising prices before, but I'll highlight a couple more important facts to this discussion.
Quote
* Canola: up 133% in 2 years
* Cocoa: up 206% in 7 years
* Coffee: up 170% in 6 years
* Corn: up 150% in 2 years
* Oats: up 160% in 3.5 years
* Rice: up 239% in 6 years
* Soybeans: up 134% in 1.5 years
* Wheat: up 200% in 2 years
Here in America and the West, we can "take" those increases, at least for the moment. The belts are getting tighter and our lavish way of living is getting just a bit harder, but we can still "take" it. We can cut back on driving or that new computer or a video game or that satellite tv package, but we can still "take" the increases. (Take is in quotes because that is of course not 100% true and there are hungry people in this country, I'm just using it as a broad brush - when you compare the Haitian government collapsing because of food riots to the current situation in America, the Americans can at least be said that they are getting by.)
When you start out making a dollar or two per day and the cost of a bag of rice rises to three dollars, you suddenly have a serious problem. People go from poor to poorer, from poorer to impoverished, impoverished to starving, and soon - starving to dead.
Unfortunately for governments the world over, the average person isn't going to sit around and starve. Enough of their daily livelihood taken away and they are likely to protest, to riot, to demand change, to ask the questions and demand answers for why that loaf of bread was within their financial reach last Christmas but now would make an excellent Christmas gift. When governments can not provide the proper answers, they get toppled. At the moment the toppling movement appears to be of the peaceful kind - the desire to sweep out one party's rule or regime in favor of a supposedly better one. Despite the dreams revolutionaries may have, unless their trusted leaders have the gift of time machines and a means to transport a lot of food through them, they will not be able to end this crisis on their own, and may soon find their selves toppled as well.
A fed up public may turn its back on the elected system, seeking not change by the ballot box but the more quick, decisive, and satisfying-to-a-few-sick-people methods of revolt, guns, and civil war. How many months or years of hungry bellies and starving children would it take before a nation of people take up arms against their government?
Think of the average stability of an African nation. Now apply that sort of trouble to southeast Asian nations, Pacific Rim countries, middle eastern countries, and of course the big 800lb gorillas in the room - nuclear armed India and Pakistan. How far of a stretch is it really to go from a food riot in India to a toppled government to a new regime blaming it on the Pakistanis?
While the rest of the world stands on that precipice, the West sits back and watches. With military too strong to allow a successful armed rebellion, their governments can rest assured that despite what may be going on, they will presumably be able to stand and make it though this.
"Make it through" to what, exactly? Where is the light at the end of this tunnel? These countries have people too, and more people are going more hungry in these countries, leading to more anger against the government.
As far as America is concerned, right now the system is holding. Considering all the land that this nation has to grow things, I personally find it hard to believe our food prices are spiking as they are, but we'll leave that to conspiracy theories and traders looking to make a killing in the futures markets.
The signs of trouble are there, however. The number of people below the poverty line in America is growing. 28 million Americans - more than 10% of the available workforce - are now on food stamps, and their numbers are increasing as well. Food stamps being quoted in dollars and not in meals, the spike in prices means stamps aren't going as far as they used to go, either.
It is now becoming apparent that the idea to use biofuels like Brazil has is turning out to be a major mistake for countries like the United States. It turns out that more than driving, Americans also need food.
The penultimate question in all of this, still, is how do we get out of this mess? Rising fuel costs, land gradually becoming less usable because of global warming, converting food growing lands over to fuel growing lands, factory farms squeezing out the little guy which prevents supermarkets from being undercut by local growers who could do a better job at less transportation costs (which would use less fuel), growing populations, growing disparity between the top and the bottom of the economic ladder, the list goes on.
The 1990's were the decade of everything being great, relatively. This decade has been the decade of waking up to reality. The next decade will be a decade of decision. Whether the 2020's are marked by renewed prosperity or a world embroiled in worldwide resource wars and economic depression, well there's only a few more election cycles to put people into positions of power to figure out how that's all going to turn out.
Forget about five dollar gasoline, we should start asking ourselves if we are going to see ten dollar bread in our near future.
Friday, April 11, 2008
Making Government Immune From Law
NewsMax
By Paul Craig Roberts
January 14, 1999
If President Bill Clinton were being tried by the U.S. 10th Circuit Court of Appeals, he would be home free.
In a horrendous ruling devastating for justice, fair play and the rule of law, the 10th Circuit has ruled (9-to-3) that the laws of the United States do not apply to officers and agents of the government unless Congress specifically designates that the law applies to the government.
"Statutes of general purport do not apply to the United States unless Congress makes the application clear and indisputable," says the court, citing a 1873 case that "it is a familiar principle that the King is not bound by any act of Parliament unless he be named therein by special and particular words."
At dispute in the case, Singleton v. U.S., is the federal statute that specifies punishment for "whoever" promises anything of value to a witness in exchange for testimony for or against another person. Under the normal reading of the statute, prosecutors who promise defendants reduced sentences in exchange for testimony against others are violating the prohibition.
According to the majority opinion, federal prosecutors are not bound by the law against bribing witnesses, because they serve as alter ego for the government and "the word 'whoever' connotes a being," whereas "the U.S. is an inanimate entity, not a being. The word 'whatever' is used commonly to refer to an inanimate object. Therefore, construing 'whoever' to include the government is semantically anomalous."
In other words, "whoever" doesn't mean "whoever" if the "whoever" is an officer of the government. This Clintonesque word-play is necessary because, as the court acknowledges, "no practice is more ingrained in our criminal justice system" than convicting people with purchased testimony. Faced with an emptying of the prisons, the court ruled that the U.S. government is not a government accountable to law, but a "sovereign" above the law.
Prosecutors have found that it is far easier to purchase with leniency the testimony of accomplices against their confederates than to build a case against the confederates. When this practice began it was aimed at known criminals against whom evidence was lacking. But once the practice began, it has taken on a life of its own.
Today many innocents are ensnared by untrue accusations from criminal defendants seeking reduced charges by producing more fodder for prosecutors. Less and less does the criminal justice system work by police investigating a known crime and building a case. All too often, the first knowledge of the "crime" occurs when a defendant seeking reduced charges accuses others. In these cases, the accusation is the sole "evidence" of the crime, and prosecutors, who serve career instead of justice, are increasingly destroying innocents with purchased testimony.
A recent example is Khem Batra of Burke, Va. Mr. Batra, married with two children, came to the U.S. in 1974 from New Delhi, India. He has been a U.S. citizen since 1981 and was successfully operating his own travel agency. His troubles began when the husband of one of his employees approached him for loans to enable him to purchase distressed properties at auction. Soon Mr. Batra found himself in partnership, pooling money to bid on properties.
Unbeknownst to Mr. Batra, his sometime partner was illegally obtaining multiple mortgages on the same property. When the partner was apprehended, instead of being indicted, he was wired and promised leniency in exchange for implicating others. The partner managed to implicate some mortgage companies in technical infractions and apparently made an unsuccessful attempt to implicate the Burke and Herbert Bank in Alexandria, Va.
Mr. Batra was never implicated in the illegal financing schemes, but his partner, desperate to earn his leniency, testified that his money-pooling partnership with Mr. Batra was a conspiracy to under-bid the properties. On the basis of his partner's plea-bargained testimony, Mr. Batra was convicted in federal court of one count of violating the Sherman Anti-trust Act.
It is a definite sign of prosecutorial abuse when the Sherman Anti-trust Act, designed to bust up large monopolies, is applied to a small-time local partnership speculating in distressed properties sold at auctions where Mr. Batra and his partner comprised one of many bidders.
Such a dubious interpretation of the anti-trust statute shows an extraordinary determination to convict. But justice is forfeited when, in addition, the conviction is obtained solely through the purchased testimony of a defendant who committed a real crime and is seeking to reduce his charges.
Until the Glorious Revolution when Parliament established the supremacy of law over the sovereign, kings dealt with enemies by bribing or compelling witnesses to testify against them. Once law and not the king's government was supreme, Matthew Hale established the maxim that testimony purchased with reward has no standing in court.
It is an abomination that the 10th Circuit has enabled unscrupulous prosecutors to resurrect the ancient practice of convicting defendants with paid testimony.
COPYRIGHT 1999 PAUL CRAIG ROBERTS DISTRIBUTED BY CREATORS SYNDICATE, INC.
By Paul Craig Roberts
January 14, 1999
If President Bill Clinton were being tried by the U.S. 10th Circuit Court of Appeals, he would be home free.
In a horrendous ruling devastating for justice, fair play and the rule of law, the 10th Circuit has ruled (9-to-3) that the laws of the United States do not apply to officers and agents of the government unless Congress specifically designates that the law applies to the government.
"Statutes of general purport do not apply to the United States unless Congress makes the application clear and indisputable," says the court, citing a 1873 case that "it is a familiar principle that the King is not bound by any act of Parliament unless he be named therein by special and particular words."
At dispute in the case, Singleton v. U.S., is the federal statute that specifies punishment for "whoever" promises anything of value to a witness in exchange for testimony for or against another person. Under the normal reading of the statute, prosecutors who promise defendants reduced sentences in exchange for testimony against others are violating the prohibition.
According to the majority opinion, federal prosecutors are not bound by the law against bribing witnesses, because they serve as alter ego for the government and "the word 'whoever' connotes a being," whereas "the U.S. is an inanimate entity, not a being. The word 'whatever' is used commonly to refer to an inanimate object. Therefore, construing 'whoever' to include the government is semantically anomalous."
In other words, "whoever" doesn't mean "whoever" if the "whoever" is an officer of the government. This Clintonesque word-play is necessary because, as the court acknowledges, "no practice is more ingrained in our criminal justice system" than convicting people with purchased testimony. Faced with an emptying of the prisons, the court ruled that the U.S. government is not a government accountable to law, but a "sovereign" above the law.
Prosecutors have found that it is far easier to purchase with leniency the testimony of accomplices against their confederates than to build a case against the confederates. When this practice began it was aimed at known criminals against whom evidence was lacking. But once the practice began, it has taken on a life of its own.
Today many innocents are ensnared by untrue accusations from criminal defendants seeking reduced charges by producing more fodder for prosecutors. Less and less does the criminal justice system work by police investigating a known crime and building a case. All too often, the first knowledge of the "crime" occurs when a defendant seeking reduced charges accuses others. In these cases, the accusation is the sole "evidence" of the crime, and prosecutors, who serve career instead of justice, are increasingly destroying innocents with purchased testimony.
A recent example is Khem Batra of Burke, Va. Mr. Batra, married with two children, came to the U.S. in 1974 from New Delhi, India. He has been a U.S. citizen since 1981 and was successfully operating his own travel agency. His troubles began when the husband of one of his employees approached him for loans to enable him to purchase distressed properties at auction. Soon Mr. Batra found himself in partnership, pooling money to bid on properties.
Unbeknownst to Mr. Batra, his sometime partner was illegally obtaining multiple mortgages on the same property. When the partner was apprehended, instead of being indicted, he was wired and promised leniency in exchange for implicating others. The partner managed to implicate some mortgage companies in technical infractions and apparently made an unsuccessful attempt to implicate the Burke and Herbert Bank in Alexandria, Va.
Mr. Batra was never implicated in the illegal financing schemes, but his partner, desperate to earn his leniency, testified that his money-pooling partnership with Mr. Batra was a conspiracy to under-bid the properties. On the basis of his partner's plea-bargained testimony, Mr. Batra was convicted in federal court of one count of violating the Sherman Anti-trust Act.
It is a definite sign of prosecutorial abuse when the Sherman Anti-trust Act, designed to bust up large monopolies, is applied to a small-time local partnership speculating in distressed properties sold at auctions where Mr. Batra and his partner comprised one of many bidders.
Such a dubious interpretation of the anti-trust statute shows an extraordinary determination to convict. But justice is forfeited when, in addition, the conviction is obtained solely through the purchased testimony of a defendant who committed a real crime and is seeking to reduce his charges.
Until the Glorious Revolution when Parliament established the supremacy of law over the sovereign, kings dealt with enemies by bribing or compelling witnesses to testify against them. Once law and not the king's government was supreme, Matthew Hale established the maxim that testimony purchased with reward has no standing in court.
It is an abomination that the 10th Circuit has enabled unscrupulous prosecutors to resurrect the ancient practice of convicting defendants with paid testimony.
COPYRIGHT 1999 PAUL CRAIG ROBERTS DISTRIBUTED BY CREATORS SYNDICATE, INC.
IRS Flunks Audit
Widespread Problems at Tax-Collecting Agency
ABC News
ABCNEWS Correspondent Jackie Judd
March 1, 1999
W A S H I N G T O N, March 1 - Just as millions of Americans struggle to meet the strict reporting standards set by the Internal Revenue Service, the tax-collecting agency itself has failed a federal audit.
The General Accounting Office today slammed the IRS for poor bookkeeping, paying out fraudulent refunds and leaving holes in computer security that may let outsiders ``access, alter or abuse'' taxpayer information.
Most significantly, the amount of money the IRS has failed to collect has reached a whopping $222 billion dollars - the same amount of money we spend every year on Medicare.
Most of it will never be collected, because it is owed by either bankrupt companies, failed savings and loans, individuals who are missing, or dead - or just plain deadbeats.
Congressman Blasts IRS
The litany of IRS failures was aired at a hearing today on Capitol Hill, drawing sharp criticism from lawmakers.
"I think the stockholders, the taxpayers, have every reason to demand a dramatic and immediate change and that includes debt collection," said Rep. Steve Horn, R-Calif., chairman of the government management subcommittee.
Debt collection was not the only problem found by the GAO. The IRS essentially failed the same sort of audit it forces upon taxpayers.
"Think of this as not balancing your monthly checkbook to the monthly bank statement," said GAO auditor Gregory Kutz, "and at the same time having a record-keeping system that was prone to error."
Shoddy Filing System
In some cases, the GAO said, the IRS had no record- keeping system at all. The IRS could not provide a list of what it owed outside vendors - such as utility companies that supply power to field offices.
Also, the IRS lost track of its own property. While some items may have been lost to theft, others simply could not be accounted for.
"We noted a missing Chevy Blazer, laptop computer and $300,000 printer," Kutz told lawmakers. "At one IRS field office, 19 of 130 computer assets over $50,000 each could not be located."
The IRS blamed antiquated computer systems for many of the snafus and asked for the same thing that many anxious taxpayers want: more time to fix the problem.
ABC News
ABCNEWS Correspondent Jackie Judd
March 1, 1999
W A S H I N G T O N, March 1 - Just as millions of Americans struggle to meet the strict reporting standards set by the Internal Revenue Service, the tax-collecting agency itself has failed a federal audit.
The General Accounting Office today slammed the IRS for poor bookkeeping, paying out fraudulent refunds and leaving holes in computer security that may let outsiders ``access, alter or abuse'' taxpayer information.
Most significantly, the amount of money the IRS has failed to collect has reached a whopping $222 billion dollars - the same amount of money we spend every year on Medicare.
Most of it will never be collected, because it is owed by either bankrupt companies, failed savings and loans, individuals who are missing, or dead - or just plain deadbeats.
Congressman Blasts IRS
The litany of IRS failures was aired at a hearing today on Capitol Hill, drawing sharp criticism from lawmakers.
"I think the stockholders, the taxpayers, have every reason to demand a dramatic and immediate change and that includes debt collection," said Rep. Steve Horn, R-Calif., chairman of the government management subcommittee.
Debt collection was not the only problem found by the GAO. The IRS essentially failed the same sort of audit it forces upon taxpayers.
"Think of this as not balancing your monthly checkbook to the monthly bank statement," said GAO auditor Gregory Kutz, "and at the same time having a record-keeping system that was prone to error."
Shoddy Filing System
In some cases, the GAO said, the IRS had no record- keeping system at all. The IRS could not provide a list of what it owed outside vendors - such as utility companies that supply power to field offices.
Also, the IRS lost track of its own property. While some items may have been lost to theft, others simply could not be accounted for.
"We noted a missing Chevy Blazer, laptop computer and $300,000 printer," Kutz told lawmakers. "At one IRS field office, 19 of 130 computer assets over $50,000 each could not be located."
The IRS blamed antiquated computer systems for many of the snafus and asked for the same thing that many anxious taxpayers want: more time to fix the problem.
U.S. States Suffer as They Become Biggest Corporate Taxers in the World
March 18, 2008
New Study: U.S. States Suffer as They Become Biggest Corporate Taxers in the World
Combined with federal tax, corporate income tax in most states is world's highest
WASHINGTON, Mar 18, 2008 - A new study from the Tax Foundation, a nonpartisan tax research group in Washington, shows that most American states tax job providers at a higher rate than any other country in the developed world.
"This is startling news for America's businesses and workers," said Tax Foundation president Scott Hodge, the study's author. "Tax competition for jobs and investment is fierce, and the U.S. continues to fall further and further behind. Our states should be the world's leaders in many things, but high taxation should not be one of them. The high federal corporate tax rate is literally crushing states' competitive abilities. That means fewer jobs for American workers."
Counting the federal rate alone, the U.S. has the world's highest corporate tax rate, but including average sub-national rates (federal plus state in the U.S.), Japan edges out the U.S. for the highest-tax location (see table).
This new study breaks the tax down state-by-state, adding each state's corporate tax rate to the federal corporate tax rate. The results show that 24 states impose, when combined with the federal rate, a higher business tax rate than in any other nation. In fact:
24 states have a combined corporate tax rate higher than top-ranked Japan.
32 states have a combined corporate tax rate higher than third-ranked Germany.
46 states have a combined corporate tax rate higher than fourth-ranked Canada.
All 50 states have a combined corporate tax rate higher than fifth-ranked France.
"If federal lawmakers are serious about making the U.S. corporate tax system more competitive globally, they will have to partner with state officials to lower the nation's overall corporate tax burden," Hodge added. "Likewise, state officials should have a vested interest in cutting the federal corporate tax rate because there is only so much they can do to improve their own competitiveness. After all, even corporations in the three states that do not impose a major state-level corporate tax—Nevada, South Dakota, and Wyoming—still shoulder a higher corporate tax rate than France, and 25 other major countries, because of the 35 percent federal corporate rate."
The table below lists each state's combined corporate tax rate, and then compares them (bolded) with the rates of our major trading partners and competitors.
OECD Overall Rank
Country/State
Federal Rate Adjusted
Top State Corporate Tax Rate
Combined Federal and State Rate (Adjusted) (a)
....
Iceland
18
0
18
30
Ireland
12.5
0
12.5
.....
*Michigan, Texas and Washington have gross receipts taxes rather than traditional corporate income taxes. For comparison purposes, we converted the gross receipts taxes into an effective CIT rate. See footnote 2 for methodology.
(a) Combined rate adjusted for federal deduction of state taxes paid
Source: OECD, http://www.oecd.org/dataoecd/26/56/33717459.xls
For details: http://www.taxfoundation.org/publications/show/22917.html
The nonpartisan, nonprofit Tax Foundation has monitored tax policy at the federal, state and local levels since 1937. Best known for its annual calculation of Tax Freedom Day®, the Tax Foundation is a nonprofit, nonpartisan 501(c)(3) organization.
New Study: U.S. States Suffer as They Become Biggest Corporate Taxers in the World
Combined with federal tax, corporate income tax in most states is world's highest
WASHINGTON, Mar 18, 2008 - A new study from the Tax Foundation, a nonpartisan tax research group in Washington, shows that most American states tax job providers at a higher rate than any other country in the developed world.
"This is startling news for America's businesses and workers," said Tax Foundation president Scott Hodge, the study's author. "Tax competition for jobs and investment is fierce, and the U.S. continues to fall further and further behind. Our states should be the world's leaders in many things, but high taxation should not be one of them. The high federal corporate tax rate is literally crushing states' competitive abilities. That means fewer jobs for American workers."
Counting the federal rate alone, the U.S. has the world's highest corporate tax rate, but including average sub-national rates (federal plus state in the U.S.), Japan edges out the U.S. for the highest-tax location (see table).
This new study breaks the tax down state-by-state, adding each state's corporate tax rate to the federal corporate tax rate. The results show that 24 states impose, when combined with the federal rate, a higher business tax rate than in any other nation. In fact:
24 states have a combined corporate tax rate higher than top-ranked Japan.
32 states have a combined corporate tax rate higher than third-ranked Germany.
46 states have a combined corporate tax rate higher than fourth-ranked Canada.
All 50 states have a combined corporate tax rate higher than fifth-ranked France.
"If federal lawmakers are serious about making the U.S. corporate tax system more competitive globally, they will have to partner with state officials to lower the nation's overall corporate tax burden," Hodge added. "Likewise, state officials should have a vested interest in cutting the federal corporate tax rate because there is only so much they can do to improve their own competitiveness. After all, even corporations in the three states that do not impose a major state-level corporate tax—Nevada, South Dakota, and Wyoming—still shoulder a higher corporate tax rate than France, and 25 other major countries, because of the 35 percent federal corporate rate."
The table below lists each state's combined corporate tax rate, and then compares them (bolded) with the rates of our major trading partners and competitors.
OECD Overall Rank
Country/State
Federal Rate Adjusted
Top State Corporate Tax Rate
Combined Federal and State Rate (Adjusted) (a)
....
Iceland
18
0
18
30
Ireland
12.5
0
12.5
.....
*Michigan, Texas and Washington have gross receipts taxes rather than traditional corporate income taxes. For comparison purposes, we converted the gross receipts taxes into an effective CIT rate. See footnote 2 for methodology.
(a) Combined rate adjusted for federal deduction of state taxes paid
Source: OECD, http://www.oecd.org/dataoecd/26/56/33717459.xls
For details: http://www.taxfoundation.org/publications/show/22917.html
The nonpartisan, nonprofit Tax Foundation has monitored tax policy at the federal, state and local levels since 1937. Best known for its annual calculation of Tax Freedom Day®, the Tax Foundation is a nonprofit, nonpartisan 501(c)(3) organization.
Thursday, April 3, 2008
Judge admits mistake in kicking whites out of court
Judge admits mistake in kicking whites out of court
Story Highlights
Judge Marvin Arrington regrets decision to remove white lawyers from court
Arrington says he wanted to talk to black defendants, urging them to get lives together
Arrington plans to open court to everyone Thursday, deliver same speech
(CNN) -- An Atlanta, Georgia, judge who ordered white lawyers out of his courtroom so he could lecture African-American defendants called that decision a "mistake" Tuesday night.
"In retrospect, it was a mistake," Judge Marvin Arrington told CNN. "Because my sheriff said to me, 'Judge, that message should be given to everybody' -- 'Don't violate the law, make something out of yourself, go to school, find a role model, somebody that will help you advance your life.'"
Arrington, who is African-American, is a judge in Fulton County, Georgia, which includes the city of Atlanta.
He said he got fed up seeing a parade of young black defendants shuffle into his courtroom and decided to address them one day last week -- out of the earshot of white lawyers.
"I came out and saw the defendants, and it was about 99.9 percent Afro-Americans," Arrington told CNN affiliate WSB-TV of Atlanta, "and at some point in time, I excused some lawyers -- most of them white -- and said to the young people in here, 'What in the world are you doing with your lives?'"
The judge thought his message would make a greater impact if he delivered it to a black-only audience, he said. Watch judge talk about decision to lecture black defendants »
"I didn't want them to think I was talking down to them; trying to embarrass them or insult them; be derogatory toward them, and I was just saying, 'Please get yourself together,'" Arrington said.
In his Tuesday night appearance on CNN, Arrington told Anderson Cooper that that seeing the same faces walk in and out of his courtroom year after year takes its toll.
"I ask them all the the time, 'What progress are we making with you?' And sometime they cannot answer," he said.
He said he would open his court doors to everyone on Thursday and "I am going to give the same identical speech: 'You've got to do better.'"
Story Highlights
Judge Marvin Arrington regrets decision to remove white lawyers from court
Arrington says he wanted to talk to black defendants, urging them to get lives together
Arrington plans to open court to everyone Thursday, deliver same speech
(CNN) -- An Atlanta, Georgia, judge who ordered white lawyers out of his courtroom so he could lecture African-American defendants called that decision a "mistake" Tuesday night.
"In retrospect, it was a mistake," Judge Marvin Arrington told CNN. "Because my sheriff said to me, 'Judge, that message should be given to everybody' -- 'Don't violate the law, make something out of yourself, go to school, find a role model, somebody that will help you advance your life.'"
Arrington, who is African-American, is a judge in Fulton County, Georgia, which includes the city of Atlanta.
He said he got fed up seeing a parade of young black defendants shuffle into his courtroom and decided to address them one day last week -- out of the earshot of white lawyers.
"I came out and saw the defendants, and it was about 99.9 percent Afro-Americans," Arrington told CNN affiliate WSB-TV of Atlanta, "and at some point in time, I excused some lawyers -- most of them white -- and said to the young people in here, 'What in the world are you doing with your lives?'"
The judge thought his message would make a greater impact if he delivered it to a black-only audience, he said. Watch judge talk about decision to lecture black defendants »
"I didn't want them to think I was talking down to them; trying to embarrass them or insult them; be derogatory toward them, and I was just saying, 'Please get yourself together,'" Arrington said.
In his Tuesday night appearance on CNN, Arrington told Anderson Cooper that that seeing the same faces walk in and out of his courtroom year after year takes its toll.
"I ask them all the the time, 'What progress are we making with you?' And sometime they cannot answer," he said.
He said he would open his court doors to everyone on Thursday and "I am going to give the same identical speech: 'You've got to do better.'"
Wednesday, April 2, 2008
How Goldman Sachs Secretly Destroyed Bear Stearns
News that Wall Street powerhouse Goldman Sachs (GS) is taking the rest of Wall Street to the cleaners is nothing new, but now comes word that Goldman played a direct role in the destruction of competitor Bear Stearns (BSC). According to Fortune's Roddy Boyd, several days before the collapse, Goldman decided to stop backing up Bear Stearns derivatives deals--and it announced this decision to hedge-fund clients in an email that was then forwarded around an increasingly panicked Wall Street:
[On the morning of Tuesday, March 11], Goldman Sachs's credit derivatives group sent its hedge fund clients an e-mail announcing another blow. In previous weeks, banks such as Goldman had done a brisk business (for a handsome fee, of course) agreeing to stand in for institutions nervous, say, that Bear wouldn't be able to cough up its obligations on an interest rate swap. But on March 11, Goldman told clients it would no longer step in for them on Bear derivatives deals. (A Goldman spokesman asserts that the e-mail was not a categorical refusal.)
"I was astounded when I got the [Goldman] e-mail," says Kyle Bass of Hayman Capital. He had a colleague call Goldman to see if it was a mistake. "It wasn't," says Bass, who is a former Bear salesman. "Goldman told Wall Street that they were done with Bear, that there was [effectively] too much risk. That was the end for them"...
When word of the Goldman e-mail leaked out, the floodgates opened. Hedge funds and other clients, eventually running into the hundreds, began yanking their funds.
The next afternoon, Bear CEO Alan Schwartz announced on CNBC that everything was hunky-dory (which it wasn't). And two days later, Bear Stearns effectively went bankrupt.
Should Goldman be blamed for this? Absolutely not. Bear Stearns was under-capitalized, over-leveraged, and stuffed to the gills with crappy debt. Once again, Goldman seems to have outsmarted the rest of Wall Street, spotting a problem before everyone else did. But because "runs on the bank" are often started when smart players cut and run, Goldman's decision appears to have at least contributed to the stampede.
Goldman Sachs: Giving new meaning to "crushing the competition."
[On the morning of Tuesday, March 11], Goldman Sachs's credit derivatives group sent its hedge fund clients an e-mail announcing another blow. In previous weeks, banks such as Goldman had done a brisk business (for a handsome fee, of course) agreeing to stand in for institutions nervous, say, that Bear wouldn't be able to cough up its obligations on an interest rate swap. But on March 11, Goldman told clients it would no longer step in for them on Bear derivatives deals. (A Goldman spokesman asserts that the e-mail was not a categorical refusal.)
"I was astounded when I got the [Goldman] e-mail," says Kyle Bass of Hayman Capital. He had a colleague call Goldman to see if it was a mistake. "It wasn't," says Bass, who is a former Bear salesman. "Goldman told Wall Street that they were done with Bear, that there was [effectively] too much risk. That was the end for them"...
When word of the Goldman e-mail leaked out, the floodgates opened. Hedge funds and other clients, eventually running into the hundreds, began yanking their funds.
The next afternoon, Bear CEO Alan Schwartz announced on CNBC that everything was hunky-dory (which it wasn't). And two days later, Bear Stearns effectively went bankrupt.
Should Goldman be blamed for this? Absolutely not. Bear Stearns was under-capitalized, over-leveraged, and stuffed to the gills with crappy debt. Once again, Goldman seems to have outsmarted the rest of Wall Street, spotting a problem before everyone else did. But because "runs on the bank" are often started when smart players cut and run, Goldman's decision appears to have at least contributed to the stampede.
Goldman Sachs: Giving new meaning to "crushing the competition."
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