Archive for category Mixed Economy
Judge Decides Some Madoff Victims Are Out of Luck
Posted by admin in Mixed Economy on March 2nd, 2010
by Bruce Watson – Mar. 01, 2010 06:25 PM
Daily Finance
On Monday, some of Bernard Madoff’s former clients received bad news, as bankruptcy Judge Burton R. Lifland decided that many of them are not eligible to receive compensation for their losses. The ruling, which seems likely to be appealed, endorsed the methods established in April 2009 by Irving Picard, trustee for the case.
Picard decided to use a “cash in/cash out” measure to determine which of Madoff’s victims deserved compensation and which might be liable for some of the investment company’s losses. Under this system, Picard measured customers’ losses by weighing their withdrawals against their deposits; people who received less money than they deposited were net losers, while those who received more money than they deposited were net winners.
Other members of Madoff’s fund have received even worse news: In the last few years before Madoff’s scheme came to light, many of his customers withdrew their money under suspicious circumstances. This trend accelerated in the last three months of 2008, when Madoff’s friends and family withdrew $735 million from the fund. If these customers withdrew money because they knew or suspected that the Madoff fund was a fraud, they may be guilty of fraudulent conveyance, which could make them legally responsible for returning at least part of their money.
Madoff’s net winners have argued that Picard’s cash in/cash out method is unfair and that they should be compensated based on their account balances at the time of Madoff’s arrest. In his published opinion, Lifland’s noted that his decision was based on the fact that Madoff’s account statements were entirely fraudulent
Judge Lifland’s decision also limits the number of victims who can claim recompense from the government. While Madoff’s former clients are each eligible for up to $500,000 from the Securities Investor Protection Corporation (SIPC), if Lifland’s decision stands, Madoff’s net winners will not be able to claim SIPC compensation. Given that more than half of Madoff’s clients are net winners — Picard has identified 2,568 net winners and 2,335 net losers — this will have a major effect on the ultimate dispensation of the case. It will also have a major impact upon the ultimate cost to taxpayers.
But even Picard’s net losers are unlikely to get their money back: while Lifland’s decision drops the fund’s losses from $65 billion to $20 billion, investigators have only recovered $1.5 billion thus far, suggesting that some of Madoff’s biggest victims may still be left out in the cold.
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Green Tech Gone Fake
Posted by admin in Mixed Economy on March 2nd, 2010
by Rachael King – Mar. 1, 2010 10:02 PM est
Businessweek.com
Reused electronics may be good for the environment, but they are feeding the counterfeit tech industry and poisoning some foreign workers
Recycling used tech gear—a practice generally considered good for the environment—has a far less desirable, unintended consequence. It is contributing to a rise in fake computer chips and other products that make their way into everything from satellites to weapons systems, medical devices, and routers that connect corporate networks. “Electronic waste has turned into an abundance of electronic components and microcircuits for counterfeit parts,” according to a January 2010 report from the U.S. Commerce Dept.
A foremost destination for e-waste and source of resulting counterfeit parts is China, according to reports by the U.S. government and the United Nations. By 2020, electronic waste in China will have reached a level 200% to 400% over that of 2005, according to a UN Environment Programme report released on Feb. 22. That document cites the “alarming and increasing reports on the e-waste situation” in China and other nations.
Much of the waste comes from inside the country: China produces about 2.3 million tons of its own e-waste each year and has banned imports of it. Still, some electronic waste finds its way into China from developed countries via unscrupulous recyclers, according to environmental groups that include Greenpeace and the Basel Action Network.
Some developed countries, including the U.S., do not bar exports of electronic waste. An estimated 50% to 80% of the e-waste collected for recycling in the U.S. is exported to developing countries, according to Greenpeace.
Once at their destination, used electronics are mined for reusable parts and some are repurposed by counterfeiters. “The world is sending their e-waste to unregulated regions where e-waste is converted to counterfeits,” says Debra Eggeman, general manager of Independent Distributors of Electronics Assn., a trade organization of distributors striving to meet high quality standards.
At home, families dismantle e-waste
Tom Sharpe, vice-president at SMT, an independent distributor of electronic chips and other parts, watched the creation of counterfeit tech first hand as he traveled to Shantou, China, in July 2008. “Everything was being taken apart for chips and they were being sanded down and counterfeited while we were in Shantou,” Sharpe says of an area that lies near Guiyu, a town often called the electronic waste capital of the world. He watched scraps of computers growing into huge piles in the front and back yards of homes and saw women washing components in a river after they were sanded. “E-waste generates the feedstock for counterfeiters and as the e-waste problem grows, so does the counterfeiting problem,” he says.
The environmental and health risks of improper handling of e-waste have been well-documented. Workers—often parents and their children—dismantle these parts by hand, releasing toxic chemicals that contaminate the air, soil, rivers, and groundwater of Guiyu. In response, some corporations have banned the export of electronic waste. On Feb. 11, Hewlett-Packard (HPQ) said it would no longer permit its e-waste to be exported from developed countries to nondeveloped countries, either directly or through intermediaries. In May, Dell (DELL) became the first major computer manufacturer to ban the export of e-waste to developing countries.
It’s too early to tell how the moves by HP and Dell might ultimately affect counterfeiting activity. Meanwhile, distributors and companies are taking further steps to fight fakery by helping create standards and sharing knowledge about the detection of counterfeit parts. SMT is investing in sophisticated equipment to test and verify their authenticity of components, Sharpe says.
The tide of fake chips and other components bound for the U.S. is nevertheless rising, he says, driven in part by extreme poverty in developing nations. “There are areas of China or India where there’s poverty and nothing else,” he says. For some, producing fake tech is “a way of life and a means to feed a family,” he says. Still, Sharpe is confident that SMT and other distributors are better equipped to fight the tide. Says Sharpe: “The problem is worse, but more counterfeiters are being caught and identified.”
King is a writer for BusinessWeek.com in San Francisco.
The Bank Tax Is The First Tax Of Many
Posted by admin in Mixed Economy on January 15th, 2010
Jan. 15, 2010
24/7wallst.com
The Administration is proposing that large banks pay a tax based on .15% of total assets minus high-quality capital, such as common stock, and disclosed and retained earnings. Federal Deposit Insurance Corp.-covered deposits and insurance-policy reserves would be untaxed because such assets are already subject to federal fees. The burden of this tax would be on the 50 or so largest financial firms in the US including the subsidiaries of foreign banks. The target is firms assets over $50 billion. The White House calls the new levy the “Financial Crisis Responsibility Fee.” It could raise as much as $90 billion over the next ten years.
The idea of this bank tax comes as a new proposal in Congress to tax American bank executive bonuses much the way that the UK has is being considered. There will be more calls to take money from financial firms and their employees for two reasons. The first is the perception that the largest banks are most to blame for the credit crisis that did so much to damage the economy. The second is that the federal government desperately needs the money. It may as well use righteous indignation to get it.
Banks may have enough expert accountants to find a way around some of the tax, but eventually a diligent government is likely to squeeze most of the money out of Goldman Sachs (GS), JPMorgan (JPM) and their peers. The $90 billion won’t be enough to offset even a small part of the deficits the federal government will have over the next decade. The level of the 2009 portion of those deficits is about $1.4 trillion. The ten-year burden of deficits is almost unimaginable.
Several bank CEOs said that using the tax system as a means of punishment is a poor idea. Car companies lost money and needed government capital. They will not be forced to pay the tax. But, that misses the point. The Administration is clever enough to know that populism can seize on the nation’s negative reactions to a number of industries, trends, and national habits to raise taxes that it cannot increase by simply levying new burdens on the average American, or the average American business.
The attempt to raise tax dollars without an increase in the standard individual tax rates will probably take the form of levies on industries and “sin taxes”. The oil industry is a favorite target because of the costs of gasoline, heating oil, and petrochemicals. Exxon did make $4.7 billion in net income in the September quarter. The price of crude is back above $80 which means it have more than doubled in a year.
Another target for higher taxes is likely to be on the sale of cigarettes and liquor. They are easy targets. The Administration can make a strong case that smoking and drinking lead to higher healthcare costs which a reform of the system is not set up to directly address.
High deficits always make Washington scurry to find new sources of income. This time is no different except that the hole to fill is the largest ever.
Douglas A. McIntyre
Dollar Reaches Three-Month High as Fed Says Economy Improved
Posted by admin in Mixed Economy on December 19th, 2009
by By Ben Levisohn & Ye Xie
Bloomberg.com
Dec. 19 (Bloomberg) — The dollar touched a three-month high against the currencies of major U.S. trading partners as the Federal Reserve said the economy improved while reiterating it will keep borrowing costs low for an “extended period.”
The euro dropped against the pound as Greece’s credit rating was cut by Standard & Poor’s and the European Central Bank raised its estimate for writedowns in nations using the single currency by 13 percent. The dollar posted its biggest weekly rally since June before an economic report next week forecast to show an advance in U.S. durable goods.
“This positive outlook from the U.S., from the Fed and much better data we have been recently seeing are giving you the impetus to get the euro-dollar lower,” said Emma Lawson, a currency strategist at Morgan Stanley in London, in an interview on Bloomberg Television.
The Dollar Index, which the ICE futures exchange uses to track the greenback against the euro, yen, pound, franc, Canadian dollar and Swedish krona, rose 1.5 percent to 77.721 this week, from 76.573 on Dec. 11, the biggest rally since the five days ended June 5. The index touched 78.141 yesterday, the highest level since Sept. 4.
The gauge of the dollar has appreciated 4.8 percent from this year’s weakest level reached on Nov. 26 as government figures showed the U.S. unemployment rate fell last month to 10 percent and retail sales rose more than forecast.
Before the payrolls report on Dec. 4, the greenback had fallen 20 percent from the 2009 peak reached in March as evidence of a global economic rebound spurred investors to buy higher-yielding assets funded with dollars.
‘Better Outlook’
“With that better economic data and better outlook, the U.S. dollar stops being the funding currency of choice as it was in 2009,” Lawson said.
The dollar appreciated 1.9 percent to $1.4338 per euro, from $1.4615 last week. It strengthened yesterday beyond $1.43 for the first time since Sept. 4. The yen strengthened 0.4 percent to 129.75 per euro, from 130.24. The U.S. currency advanced 1.6 percent to 90.49 yen, from 89.10. The euro decreased 1.3 percent to 88.74 U.K. pence.
Deterioration in the labor market is “abating,” and household spending is increasing, the Fed said in its statement at the conclusion of its two-day meeting on Dec. 16. Policy makers held the target rate for overnight lending between banks at zero to 0.25 percent.
Orders for U.S. durable goods increased 0.5 percent in November after a 0.6 percent drop in the previous month, according to the median forecast of 59 economists in a Bloomberg survey. The report from the Commerce Department is due Dec. 24.
Weaker Aussie
The Australian dollar was the biggest loser this week against the greenback among major currencies tracked by Bloomberg, dropping 2.5 percent to 89.02 U.S. cents. Reserve Bank Deputy Governor Ric Battellino damped expectations for further rate boosts, saying this week monetary policy is back in “the normal range.” The bank raised borrowing costs for three straight months beginning in October.
America The Beautiful
Posted by admin in Mixed Economy on December 19th, 2009
California population growth slowest in more than a decade
Posted by admin in Mixed Economy on December 19th, 2009
Dec. 17, 2009
Los Angeles Times
California’s population grew less than 1% in the last year, the slowest growth rate in more than a decade as migration to the state barely kept up with the significant number of people leaving, according to state Department of Finance data released today.
Across the state, natural increases rather than migration accounted for the largest source of population growth. Los Angeles County, for instance, lost more people than it gained through migration but grew slightly to 10.4 million people from July 2008 to July 2009 because births outstripped deaths.
Los Angeles County gained 89,361 people through natural increases (147,319 births minus 57,958 deaths) but lost a net 21,736 people through migration.
Other Southern California counties also recorded slow rates of growth. Orange county’s population grew to 3.1 million, San Bernardino County to 2 million, Riverside County to 2.1 million and Ventura County to 841,000.
The state’s largest growth came in Imperial County, where both immigration and natural increases boosted the population by 2.2% to 181,772.
Overall, California’s population grew to 38,487,889, with 141,865 people leaving the state and 179,493 arriving. Los Angeles, San Diego, Orange, Riverside and Santa Clara counties posted the highest population gains and account for more than half of the state’s growth.
The state’s population estimates were based on birth and death counts and data on driver’s licenses, housing, school enrollment and federal income taxes.
– Teresa Watanabe
With bleak economic forecast, some states free prisoners early
Posted by admin in Mixed Economy on December 19th, 2009
By Stephanie Chen – Dec. 17, 2009
CNN.com
(CNN) — The thought of her convicted attacker getting out of prison early makes Gloria Warner feel sick.
He once threw her from a moving vehicle, she says. He also beat her until welts and bruises covered her body. He raped her, too, and she says she’s been in counseling since.
Her abuser, Filemon Arreola, now 31, was sentenced to prison in Oregon in 2007 on counts of rape, assault, coercion and tampering with a witness. His sentence ends November 2022, but under a law passed in Oregon this summer, with good prison behavior as much as 30 percent could be taken off his sentence for coercion and tampering with a witness.
Arreola could benefit from what some legislators call an “oversight” allowing violent offenders to get out early if they have a consecutive term that includes a non-violent crime. In the next few months, his case — and the victim’s objections — will go before a judge who will decide whether to reduce Arreola’s sentence.
“I don’t want him out early,” said Warner, 40, who was in an abusive relationship with Arreola. CNN usually does not identify victims of sexual assault, but Warner decided to reveal her name to voice her concerns with early release provisions. “Not just for me, but for any other person out there. He should have to do the time he was given.”
As budget deficits grow and the economy tumbles, governors and legislators are cutting costs by allowing inmates, mostly low-risk offenders, to leave prison earlier than laws previously permitted. Nationwide, more states are beginning to release thousands of inmates early by increasing “time off” provisions.
Last week, figures from the U.S. Department of Justice indicated that in 2008 the growth of the prison population was slower than in any year since 2000. Some experts say the slowdown confirms that states are reconsidering their sentencing policies.
Oregon now allows low-risk inmates to earn reductions of up to 30 percent off their original sentence instead of 20 percent. In November, Illinois began early release of inmates who committed non-violent crimes. The state plans to release 1,000 inmates, which could save $5 million a year, said Januari Smith, an Illinois Department of Corrections spokeswoman.
“We have been very thorough in selecting offenders,” Smith said.
Colorado loosened its corrections policies this year by letting non-violent offenders earn 12 days off their sentence for each month of good behavior. Previously, the limit was 10 days. Inmates who break the rules in prison — even once — are not eligible, according a spokesperson from the Colorado Department of Corrections.
In Mississippi, a state with one of the highest incarceration levels, officials abandoned a 180-day cap on the amount of time an inmate’s sentence can be shortened. This year, a panel of federal judges ordered California to reduce its prison population by 40,000 because of overcrowding. Governor Schwarzenegger proposed releasing 27,000 inmates.
It is often controversial to pass laws that shorten inmates’ sentences. Such a move seemed impossible at the height of tough-on-crime sentiment in the 1980s and 1990s.
“It’s a big shift, and I think it’s coming about because states and counties are having problems with finances,” said Doris MacKenzie, a criminologist who specializes in sentencing policy at Pennsylvania State University. “All of the sudden they are thinking: ‘Do we really need to lock up so many for such a long period of time?’
