European cybercop - by Jonathan Ames

The EU believes strict regulation is the path to online security, and accountants are already lining up to seize the advice work

As action heroes go, the sombre-suited members of the European Commission and their hordes of faceless Eurocrats aren’t a patch on a pumped, bloodied Bruce Willis in his sweat-soaked vest.

But the commission’s president, plucky Portuguese José Barroso, and his band of 28 fellow commissioners have cast themselves in the roles of cyber policemen to rival the follicly challenged American and his bid to save humanity in Die Hard 4.0.

Film buffs will know that Willis has to do battle with a mastermind cyber criminal who first wants to hack into the US national security systems before doing all sorts of nasty things and then, of course, taking over the world. Winning the day involves two hours of shouting, gunfire, explosions and cheeky dialogue.

Typically, the European Commission’s version is somewhat more prosaic. It involves a directive – the draft Network and Information Security Directive, to be precise.

But from where they sit in Brussels, that 48 pages of prospective legislation is no less important or indeed less impressive than detective John McClane seeing off the hacker’s henchmen by launching a police cruiser at a looming helicopter. It’s just a matter of perspective and, Europe being Europe, taste.

Also, Europe being Europe, the directive is not exactly straightforward. Confusion reigns over what it will look like in final draft, which business sectors will be affected, whether it is necessary or is just another example of Brussels legislating simply because it can and, indeed, whether it will ever come to pass in light of the forthcoming European Parliament elections.

What is relatively certain is that cyber security is an area that ultimately will be legislated for in Europe. And some suggest the global accountancy practices are already aiming to steal a march on law firms to advise multinational corporations on how to cope.

Should the legal profession battle the accountants for market share in advising on the directive?
As one lawyer comments: “We don’t go through a single day without there being a headline about cyber security, so clearly something needs to happen.”

That suggests the directive, whether in present or subsequent form, represents an opportunity. But first, lawyers must get a grip on what the draft legislation will cover. And doing so requires patience.

Read more: European cybercop | Analysis | The Lawyer

Corporate Greed: 13 Mindblowing Facts About America’s Tax-Dodging Corporations

A judicious writer avoids adjectives like “mindblowing,” especially when covering political or economic issues.
But no other word seems to describe the stunning reality of corporate taxation in modern America, which cries out for the italics-heavy, exclamation-point-driven format made famous by Ripley’s Believe It or Not.

Stylistic overkill? Read these thirteen facts and you may change your mind.

1. We’re told we can’t “afford” full Social Security benefits, even though closing corporate tax-haven loopholes would pay for Obama’s “chained CPI” benefit cut more than ten times over!

Abusive offshore tax havens cost the US $150 billion in lost tax revenue every year (via FACT Coalition). That’s $1.5 trillion over the next ten years.

The “chained CPI” cut, proposed by President Obama and supported by Republicans, is projected to “save” a total of $122 billion to $130 billion over the same time period by denying benefits to seniors and disabled people.

It’s true. “Serious” politicians and pundits are demanding that ordinary people sacrifice earned benefits, while at the same time allowing corporations to avoid more than ten times as much in taxes.

2. Corporate tax rates are near their 60-year low, even though profits are at a 60-year high!

Need we say more?  (Source: Americans for Tax Fairness.)

3. Wells Fargo got $8 billion in tax breaks, even as executives at its subsidiary Wachovia avoided indictment for laundering money for the Mexican drug cartels!

 That’s right. Wells Fargo paid a negative tax rate of -1.4 percent between 2008 and 2010 while Wachovia, a Wells Fargo subsidiary, admitted to laundering more than $378 billion for Mexican drug gangs.

We’re talking about crazed killers like “El Loco” and gangs like “Los Zetas” – gangs who cut people’ heads off and toss them out onto disco dance floors or display them in the town square.

Wachovia bankers ignored repeated warnings from law enforcement officials, and continued to launder money for cartels that have murdered tens of thousands.

And yet no criminal indictments were handed down because, as a Senate investigator told Bloomberg News, “”There’s no capacity to regulate or punish them because they’re too big to be threatened with failure.”

4. Some other huge corporations paid less than nothing, too.

Pepco Holdings (-57.6% tax rate)
General Electric (-45.3%)
DuPont (-3.4%)
Verizon (-2.9%)
Boeing (-1.8%)
Honeywell (-0.7%)

(Source: Citizens for Tax Justice)

5. The amount of money US corporations are holding offshore is an estimated one trillion dollars!

Rather than tax these profits the way other countries do, corporate politicians are promoting a tax “repatriation” break that would let corporations “bring this money home” while paying even less than their currently low rates.

They tried that in 2004 and it didn’t create any jobs. In fact, corporations took the tax break and then fired thousands of people. What “repatriation” did do is line a lot of wealthy investors’ pockets. So, naturally, they want to do it again.

6. One building in the Cayman Islands is the official location of 18,857 corporations!

According to the Government Accountability Office, a five-story building called “Ugland House” is home to nearly twenty thousand corporations. That’s impressive, especially for such a small edifice. (Perhaps it has supernatural half-floors and space-time defying “mind tunnels” like the office in Being John Malkovich.)

While impressive, Ugland House’s distinction pales next to that of 1209 North Orange Street in Wilmington, Delaware. According to one investigation, that address is home to 217,000 corporations.

That’s because Delaware has very generous tax rules – and, as a result, is home to more than half of all the corporate subsidiaries in the United States.That’s startling, since only 1/342th of the nation’s population lives in that state (917,092 residents, out of a national total of 313,914,040, according to the latest( census results).

7. Conservatives complain about the “official” corporate tax rate in this country, but corporations actually pay roughly one-third of the official rate in actual taxes.

The official, or “statutory,” corporate tax rate is 35 percent. But the actual rate paid by American corporations is only 12 percent, less than that paid by many middle-class Americans.  (Source: The FACT Coalition.) 

In fact, US Corporations pay less tax as a percentage of the GDP than corporations in Canada. Or Japan …

… or South Korea. Or Norway. Or Luxembourg, New Zealand, Israel, the Czech Republic, Sweden, Belgium, Switzerland, the United Kingdom, Denmark, Finland, and Italy.  (Source: OECD StatsExtract interactive database.) 

8. Corporations used to pay 30 percent of Federal taxes, and now they pay less than 7 percent!

That’s because the corporate tax rate has plunged since Dwight D. Eisenhower was President and is now the lowest it’s been in modern history.

(Source: FACT Coalition.)

9. Big corporations paid $216 million to Congress and got $223 billion in tax breaks!

As Citizens for Tax Justice and USPIRG reported, 280 large and profitable corporations contributed $216 million to Congressional campaigns over four election cycles and got nearly a quarter of a trillion dollars in tax breaks.

That’s a terrific investment for them – a return of more than a thousand to one – but it’s a bad deal for the American people.

10. We don’t even know who owns some corporations, even though that makes it easier to evade taxes, dodge creditors, avoid paying alimony or child support, and even fund terrorism!

Here are some examples of investments that might represent a terror threat. Corporate interests are blocking disclosure rules that would help protect our national security.

11. Bank of America committed foreclosure fraud, was bailed out by the government, and then paid no taxes on $4.4 billion in profit!

That’s right. In 2010, while BofA was negotiating a sweet settlement deal for its foreclosure fraud, it paid nothing in taxes. (Source: FACT Coalition.) Zero, on $17.2 billion in offshore earnings. (Source: Americans for Tax Fairness.)

Its $4.1 billion tax break came on the heels of the bank’s taxpayer-funded bailout, immunity from prosecution for its criminal employees, and a cushy government settlement for its foreclosure fraud.

Now David Dayen reports that the bank has apparently continued to defraud customers in violation of its government settlement. Whistleblowers have stated in affidavits that they were “told to lie” to customers, continued to deceive homeowners before foreclosing on them, and flipped customers to new servicing companies to invalidate previous homeowner agreements.

12. What they call “tax reform” would actually prevent our elected representatives from giving businesses financial incentives to improve our lives!

The word “reform” is an honorable one that’s been put to some dishonorable uses lately. “Entitlement reform,” for example, is merely a euphemism for gutting Social Security and Medicare.

Similarly, corporate-backed politicians are pushing a formula for permanent corporate tax breaks and calling it “tax reform.” They insist their “reform” be “revenue neutral” and say it will “broaden the base while lowering the rate.”

Here’s an English translation: The current, unsustainably low rates for corporations would be made permanent, while eliminating many tax deductions in the name of “simplification.”

Here’s what that really means: The domestic tax credit for creating jobs? Gone. Tax breaks for protecting the environment with clean energy, rather than harming other people’s health and leaving a mess for the rest of us to clean up? Gone.

All in all we’d lose dozens of important policies that make our lives better, while permanently fixing corporate taxes at today’s cushy giveaway rates.

“Reform”? Ripoff is more like it.

13. Despite their greed, mismanagement, and freeloading, tax-dodging corporations are using shell organizations like “Fix the Debt” and “the Committee for a Responsible Federal Budget” to tell ordinary Americans they have to sacrifice even more to preserve corporate wealth!

These organizations are using the heads of failed banks – people like Chase’s Jamie Dimon and Lloyd Blankfein of Goldman Sachs – to dispense “advice on the economy.” That’s like getting navigation tips from the captain of the Exxon Valdez.

(Tax breaks for Exxon Mobil: $4.1 billion between 2008 and 2010. The company paid no taxes at all in 2009.)

These executives and their paid spokespeople tell the rest of us we need to “sacrifice” and “tighten our belts” so that their party can go on forever. And too often they’re treated as credible sources, rather than as corrupting influences on our public life.

It’s all true – and there are many more astonishing facts to be found in the world of corporate taxation. To fix the economy more people will need to learn about them – and demand that they be changed.

Read more: 13 Mindblowing Facts About America’s Tax-Dodging Corporations

Global Economy: DEBT MASQUERADING AS GROWTH!

The market Oracle reports: "The greatest economic, political and societal collapse in recorded history is unfolding and has been doing so ever since the final denouement of partially sound money occurred at Bretton Woods II in August 1971 – thereby allowing governments, the financial systems and elites to substitute money printed out of thin air and politically correct/corrupt legislation for sound economic policies.  This process has been unfolding for 40 years and is nearing its demise.  

Growth now is a function of expanding credit, financing government and consumer consumption and calling it GDP.  The developed world has become Something for nothing societies are like locusts they eat everything right down to its roots, including next year’s seed corn.  They will issue debt until it no longer can be sold. 

They will print money until it is no longer accepted.  This process is well established and underway (think Venezuela, Greece, Argentina, this is the future).  To illustrate the LACK of GROWTH, look at this chart of GDP from Chris Wood at CLSA and subtract the deficit:

Most economists are PREDICTING accelerating GDP growth in 2014; you sure wouldn’t come to that conclusion based upon median family incomes since 2008;  

Or the crash in PERSONAL incomes over the last year  

As you can see, the only period that compares to this CURRENT CRASH in disposable income in the last 20 years was the crash of 2007-2009.  Do you think this reflects a robust economy in 2014 as predicted by the MSM and Keynesians?  To grow the economy, we must borrow money to finance spending and report it as GDP.  DEBT MASQUERADING as GROWTH! 

Now, the developed world’s economies have been hollowed out (by runaway regulation, taxes and crony capitalism) and much of the wealth creation occurs in the emerging world.  Crony capitalists and their minions in government just attack the private sector where future growth and productivity must come from. 
 
They carve it up and destroy the future creative destruction (aka “Capitalism”) which must occur for growing middle classes and economies.  The powers that be are MINTING fire hoses of NEW money, creating at least 8000 million dollars/yen a DAY (2 million million a year or 2+ trillion per year) to support the global economy, bankrupt sovereigns and financial systems.   

Very little BAD can happen when they are printing and injecting this amount of money into the financial system and government coffers on a daily/yearly basis. “Currencies don’t float they just SINK at different rates”

Asset-backed economies provide the ILLUSION of growth in the developed world driven by currency depreciation (ASSET prices rise/reprice as the purchasing power of the currency they are denominated in sinks) and never-ending leverage to fund consumption and HIGHER ASSET prices.  This is insane behavior, but now is the last refuge of the powers that be.
 
Insanity in individuals is something rare - but in groups, parties, nations and epochs, it is the rule." 

EU-Digest

Sochi Olympics - the Netherlands: Dutch have it all to dominate the Olympic oval - by Raf Casert

Skating is in the Dutch blood

There is nothing more mythical in Dutch sports than an age-old 11-city race skating across lakes and canals in bone-numbing cold from dawn to dusk. No wonder the Netherlands is the greatest speedskating nation in the world.

And with Sven Kramer and Ireen Wust leading the way on the big Olympic oval in Sochi, they are bent on proving it again.

Time and again over the last half century, the Dutch have been top or near the top of the Olympic speedskating standings - a nation of 16.8 million defying giants like the United States, Russia or Germany. In Sochi too, the Dutch have a realistic chance of a half dozen gold medals on the big oval.

They won more long-track speedskating medals than any other nation in Vancouver, and federation sporting director Arie Koops said the only way forward is to become even more dominating.

"The goal is to improve on Vancouver. And considering our current level of form, that is a realistic goal," he told The Associated Press.

Read more: Dutch have it all to dominate the Olympic oval- by Raf Casert

Global Economy Turmoil: Nervous Markets Rattle in China, Turkey, USA, Mexico, Europe and Argentina - by Richard Barley

A trouble shared is a trouble halved, or so the saying goes. But the troubles are piling up quickly for emerging markets.

Jitters about China, the meltdown in the Turkish lira, violent protests in Ukraine and the plummeting Argentine peso—underlaid with continuing nerves about the withdrawal of U.S. monetary stimulus—have all combined to hit risk appetite. The problems aren't particularly new and don't have much in common, but the combination is proving toxic.

The biggest repercussions have been in the foreign-exchange markets, where even currencies of countries with relative fundamental strengths, such as the Polish zloty and the Mexican peso, have started to show signs of strain. Pressures have also emerged in asset classes that have so far remained resilient, such as U.S.-dollar-denominated emerging-market bonds. That will understandably make investors nervous.

But some of the concerns may ease. China is seeking to shift from an economy led by investment to one driven by consumption. This is such a vast and complex process that worries about how it is progressing will be with us for a long time yet. The small dip in China's manufacturing purchasing managers index that some cite as a key reason for the market turmoil seems just a pretext.

Ukraine and Argentina both look worrying, but their impact on global financial markets should be limited. If other Latin American or Eastern European currencies get hit, but are supported by relatively strong economies, that could make them look good value in time.

Turkey bears watching closely. The solution to the continuing selloff in the Turkish lira—which Friday hit a fresh record low of 2.33 to the dollar—seems clear: the Central Bank of Turkey needs to raise interest rates. But political turmoil means it is unwilling to do so; its interventions in support of the lira are inadequate in the meantime.

This could cause larger problems. Turkish companies have large foreign-debt exposures, and the lira's slide could cause balance-sheet strains. That suggests that the central bank will ultimately have to hike rates to avoid a bigger crisis. But the situation could get much more uncomfortable before that happens.

Meanwhile, the risk aversion in developed markets smacks of using the situation to exit some very popular and profitable bets. Southern European government bonds and stocks, hybrid securities that blend features of equity and debt and subordinated bank bonds have all had a strong start to the year; but they are also volatile. No wonder investors might take the chance to step back.

Read more: Heard on the Street: Emerging Mix Rattles Nervous Markets - WSJ.com

The Netherlands Try To Cure 'Dutch Disease': Welfare State - by Elise Hilton

Dutch River Scene

Far too few governments rein in their countries’ bloated welfare states before disaster strikes. As a result, some citizens eventually suffer the economic equivalent of a heart attack: wrenching declines in living standards as they are victimized by unsustainable programs’ endgame. Greece and the city of Detroit are only the most recent grim examples.

Many more suffer from the meager growth and barely rising incomes that result from the toxic combination of government overspending, burdensome regulations, and corrosive taxation. Much of Europe fits this category of economic stagnation.

Occasionally, however, governments stage successful retreats from welfare-state dysfunction. Canada reduced spending by over 8% of GDP in the 1990’s, and the United States reduced non-military spending by 5% of GDP beginning in the mid-1980’s – a trend sustained by center-right and center-left governments alike.

fare dependency and restore work incentives, it is worth noting – especially when that country is the Netherlands, which built one of the world’s most expansive welfare states in the 1960’s and 1970’s.

Recently, the Netherlands’ King Willem-Alexander, delivering his first annual address to Parliament, said, “Our labor market and system of public services no longer fully meet the demands of the twenty-first century….The classical welfare state is slowly but surely evolving into a participation society.”

That represents a genuinely remarkable shift. From the 1960’s and 1970’s on, those writing about the Netherlands often lamented the “Dutch disease.” There were so many generous subsidies, grants, and transfer payments – aimed at everyone from the truly needy to artists unable to sell their work – that after-tax wages were often barely higher than benefits. So people rarely returned to work after they lost or left a job, or did so in the underground economy, with its unreported cash payments.

Whether one considered the Dutch welfare state humane and generous, or bloated and foolhardy, its largesse took a heavy toll on the economy. But unlike, say, the French, the Dutch have responded to their past excesses with a series of policies designed to promote a return to work in the formal labor market. Indeed, they deserve an orange-hued salute for innovative reforms that governments worldwide might usefully emulate in the interest of maintaining a targeted, effective, and affordable safety net.

For example, disability insurance has become a huge, rapidly growing problem in many countries, despite the dramatic decline in the share of workers in physically demanding and dangerous jobs like construction and manufacturing. To stem the dramatic rise in disability payments, the Dutch now require firms with high claim rates to pay more for disability insurance, thereby creating a strong incentive to ensure greater workplace safety.

But reducing disability claims (and thus payments) is only half of the equation. The other half is returning those who can do so to gainful employment. (In America, fewer than 1% of the disabled return to work.) Early intervention and informational campaigns about return-to-work options are promising possibilities. Much economic research shows that job skills deteriorate the longer one is away from work; so retraining, information, and re-entry programs are very important.

Similarly, the Dutch have embraced welfare reform, much as the United States did in 1996, when a Democratic president, Bill Clinton, and a Republican Congress agreed on time limits, as well as work and training requirements. As a result, the Dutch welfare system now requires beneficiaries to show proof of an active job search prior to eligibility; to perform work or volunteer community service while receiving benefits; and to take a job even if it requires a long commute.

America’s 1996 welfare reform grew out of initiatives in the US state of Wisconsin. And, just as Wisconsin’s reform proved to be a model that was successfully adopted nationally, so reforms in one European Union country could spur policy innovations elsewhere in the EU and around the world. And contagious successful policy reforms are precisely what Europe and most of the world need.

To see why, consider the tax rate necessary to pay for social benefits, which equals the replacement rate (the average level of benefits relative to taxpayer incomes) multiplied by the dependency ratio (the share of the population receiving the benefits). The higher the replacement rate and/or dependency ratio, the higher the tax rate needed to pay for the benefits.

What is absolutely certain is that the dependency ratio will rise virtually everywhere, owing to inexorable demographic trends. The combination of rising life expectancy, lower fertility rates, and, in some countries (including the US), the retirement of the post-World War II baby-boom generation, implies a rapid increase in the old-age dependency ratio.

The US, for example, will go from one retiree for every three workers today to a 1:2 ratio in the next three decades. Italy and Germany will have a 1:1 ratio. And the share of China’s population that will be over 65 a generation from now will be larger than in the US.

Common-sense policy reforms that ought to be adopted for their own sake, like the Dutch disability and welfare reforms, will provide a second dividend by lowering the dependency ratio. That will not be enough to maintain sound public finances indefinitely. But, by demonstrating cures to the “Dutch disease,” the Netherlands is giving all of us an invaluable lesson.

Read more: The Netherlands Try To Cure 'Dutch Disease': Welfare State | Acton PowerBlog

Netherlands: Apple rumored to be planning new European data center in Eemshaven

Apple's infrastructure team is believed to have been focused on the region as a possible expansion location for some time, according to a report from iPhoneClub.nl. The project, code named "Saturn," could bring as many as 200 new jobs to the area.

Eemshaven is a seaport in the Netherlands' Groningen province which has recently become a popular destination for international technology companies seeking an infrastructural foothold in Europe. The port is home to numerous power generating stations, including a 156-megawatt wind farm, and is also the landing point for a high-capacity transatlantic fiber optic cable managed by India's Tata Communications.

Search giant Google currently operates a 10,000 square meter facility in Eemshaven, and Microsoft has begun construction on a similarly-sized datacenter of its own in the area. Microsoft's new datacenter, which is thought to be representative of the type of facility Apple would construct, is being built at a cost of €2 billion ($2.7 billion).

Apple has been on a datacenter construction spree of late. The company completed a $1 billion facility in Maiden, North Carolia in 2012, and is currently in the process of opening similar sites in Prineville, Oregon and Reno, Nevada.

Apple will reportedly make a final decision on whether to officially add the Eemshaven site to its roster by the end of the year.

For more go to Apple Insider