Dutch government averts budget crisis with support of small parties - by Anthony Deutsch

The Dutch government on Friday won the support of several small opposition parties needed to push through a fresh round of austerity cuts, averting a budget crisis.

The centre-right coalition of Liberal Prime Minister Mark Rutte concluded several days of negotiations with an agreement to trim away an additional 6 billion euros ($ 8.12 billion)  in government spending in 2014.

Dutch news agency ANP said a deal was reached between the government, which lacks a majority in the Senate, and two small Christian parties - the Christian Union and the conservative SGP - as well as the right-of-centre Democrats 66.

The cuts are needed to bring the Netherlands in line with the European Union's 3 percent budget deficit target.

Dutch finance minister and Eurogroup head Jeroen Dijsselbloem cancelled a trip to the annual IMF meetings in Washington this week to focus on the negotiations.

Read more: Dutch government averts budget crisis with support of small parties - World | The Star Online

Lotteries: are they a hidden "scam" to make the lower income earners pay more tax?

The world lottery news reports that in the the first half of the year global lottery sales were up nearly 5% world-wide after a sluggish start with Latin American, Asia Pacific, and North American markets performing strongly in the second quarter.

Latin America showed a increase in sales of 24.6% for the first six months of 2013. Argentina’s Lotería Nacional Sociedad reported an increase in sales of 31% for the period January–June 2013 and Brazil’s Caixa Econômica Federal also enjoyed healthy sales growth, reporting an increase in sales of 12.5% for the first half of 2013.

The Asia Pacific region witnessed an increase in sales of 11.1% for H1 2013 over H1 2012, including the China Sports lottery increased by CNY 10.54 billion and the Chinese Welfare lottery increased by CNY 10.11 billion for the first six months of 2013.

European lotteries witnessed a relative decrease in sales of 1.7% but was still up a small percentage against the same time frame in 2012.

In the North American market, an increase of 9.4% on sales for the second quarter of 2013 was reported. 

The North American lottery system is a $70 billion-a-year business, an industry bigger than movie tickets, music, and porn combined. These tickets have a grand history: Lotteries were used to fund the American colonies and helped bankroll the young nation. In the 18th and 19th centuries, lotteries funded the expansion of Harvard and Yale and allowed the construction of railroads across the continent.

Since 1964, when New Hampshire introduced the first modern state lottery, governments have come to rely on gaming revenue. (Forty-three states and every Canadian province currently run lotteries.) In some states, the lottery accounts for more than 5 percent of education funding.

While approximately half of Americans buy at least one lottery ticket at some point, the vast majority of tickets are purchased by about 20 percent of the population. These high-frequency players tend to be poor and uneducated, which is why critics refer to lotteries as a regressive tax. (In a 2006 survey, 30 percent of people without a high school degree said that playing the lottery was a wealth-building strategy.) On average, households that make less than $12,400 a year spend 5 percent of their income on lotteries—a source of hope for just a few bucks a throw.

A 2008 Carnegie Mellon study found that "lotteries set off a vicious cycle that not only exploits low-income individuals' desires to escape poverty but also directly prevents them from improving upon their financial situations." As the study's lead author said: "The hope of getting out of poverty encourages people to continue to buy tickets, even though their chances of stumbling upon a life-changing windfall are nearly impossibly slim and buying lottery tickets in fact exacerbates the very poverty that purchasers are hoping to escape." (For what it's worth, the odds of winning the latest Powerball drawing were about one in 175 million.) A Duke University study found that the poorest third of households purchase more than half of the lottery tickets sold during a given week.

So let's acknowledge the lottery for what it is: a tax on those who can least afford it that is levied by preying on the very fact that they can't afford to buy the things they need. Sure, buying lottery tickets can be fun in the short term, but in the long run, lotteries are a truly cynical way for states to raise money.

As to the operational mechanics of lottery systems - investigators probably would have a field day looking into these structures. It is obvious that the super-computers which run these lotteries can easily be manipulated.

EU-Digest 

Dutch Government Planned Student Loan Program Could Fail Based On US Experience

As the costs of higher education continue to skyrocket across the USA and Europe, the student loan debt bubble in America is reaching unprecedented heights as more and more young adults are not able to repay their loans.

A new analysis from the Consumer Financial Protection Bureau in America  found that only half of the more than $1 trillion in student loan debt is being repaid. Specifically, only 42 percent of direct student loans are in repayment while 60 percent of Federal Family Education Loans are in repayment.

The CFPB also found that 13-14 percent of borrowers are defaulting on their loan, which will have secondary effects of making things like buying a home or a car that much more difficult. Experts have said this could create an entire generation of students who can’t achieve the American dream.

An additional 18 percent of former students are either in deferment, putting off paying the loan, or in forbearance because they don’t make enough money to be able to pay the loan and make payments on the rest of their bills.

The CFPB said there are several ways to reduce payments including a plan called Pay As You Earn where payments are equal to 10 percent of your income above the poverty line and after 20 years any remaining balance is forgiven.

The main issue with the government-backed student loans, however, is that these loans have created an education bubble. Both Stafford loans and private bank loans are given to essentially anyone who applies, and this has inflated the cost of education overall. On an individual level, even if a person was to declare bankruptcy later in life, his or her student loans will still stick.

Therefore, banks can make risky loans to students because they know that the government will still back those loans. In addition, with the ease of loan dispersal, students feel less of an incentive to choose degrees that will allow them to easily pay back their student loans and may instead choose programs with less job security.

Unlike 30-50 years ago, it’s nearly impossible for students today to graduate on time without the assistance of student loans or military grants. While scholarships can be a viable answer for some students—particularly those who are eligible for need-based financial aid—the majority of students can’t rely on scholarships and grants alone. So not only are loans necessary to achieve academic goals, but the costs of those goals are increasing as a result of government-backed loans. Like during the housing market crisis, prices are rapidly inflating, but people who aren’t particularly good loan candidates are still getting them because banks know that if borrowers default, then the government will bail them out.

Pursuing higher education is a valuable endeavor and can definitely result in a higher quality of life in the long run. For many, loans are the only way to afford an education. But the ease of receiving government loans is a double-edged sword that both expedites the process for people with solid career prospects and encourages risky behavior by making it easier for students to get degrees that won’t necessarily be valuable in the job market. While the increase in student loan rates is a hardship for most, what may be an even greater hardship is the difficulty of making ends meet later in life, when crippling student loan debt prevents individuals from getting what they want from their careers.

The Dutch government should take note of the above, given the very negative results achieved with the program in the US.

For more: EU-Digest