Category Archives: Finance

November 22, 2013 · 13:49

Protecting Consumers!

I am still on the Sony horse! It is interesting to see how consumers are do not seem to be protected and how little visibility some cases seem to get. I seem to have found what I consider to be severe consumer injustice!

This injustice is on two levels. The first level is on the side of ‘the small print approach’, the second side is on the consumer side through the shops. So as discussed in my previous blog (pricing a Sony game), where they changed the user agreement to make illegal the reselling of games and on the other side the TPP will allow them big companies to charge us more.

At the DPP, no one was willing to take any calls (they apparently do not take any calls ever). They referred me to the ASIC and the Law society of NSW. They were little help, however the Law Society did what it service minded does, and they would be able to refer me to private solicitors. This is what they do (and what they are supposed to do), so there is no case here, other that they were willing to give all the assistance they could. From there I ended up with the fair trades commission who listened and explained on how I had to go to the ACCC.

The ACCC logged the issue and it is now investigated internally.

I also talked to Channel 7, Channel 9 as well as the Sydney Morning Herald. They were all interested, but seemingly unaware to the issues that are going on at present. In my view I have always be loudly outspoken against this and I did so against the acts of Don Mattrick when he was with Microsoft. It seems hypocrite not to speak out against Sony when they try to hide in the weeds not quaking!

I am all for protecting gamers, if the little time I have left on this earth is to get some protection for them against injustice and greed, then this is a fight worth fighting. The gamers are now swiftly placed between the TPP (Trans Pacific Pact), raising the price of entertainment even further and the forces crushing the options of pre-owned games for those not being able to afford full priced games, something must clearly be done.

It is also interesting how the government and the Fair Trade commission remain silent on these matters. Shops rely on pre-owned games to survive after the margins of new games are reduced to an absolute minimum. The pre-owned games keep them into business. As large companies are paying less and less corporate tax as their offers go to downloaded revenue (which often goes via non-commonwealth tax shelters). We see that they are paying less and they are the cause of shutting down local shops with these new arrangements. I believe in fairness and at present there is no fairness in any of this.

Too squeeze a population already in hardship, to hurt them even further with these events is beyond acceptable!

In case you see some response on ‘generic’ or some party line response how this is not the intent of the Sony User agreement, then consider one other piece of information. PlayStation Home offered an amazing private space for sale. It was by loot and it is a graphic and technological highlight. You buy the private space where you can walk around. It is so amazing as this is a new form of private space. Not only is it graphically superior on many levels, it has a new level of interactivity. The private space allows you to monitor twitter via a light bar in your apartment. It offers LOOT™ Radios (music) and EOD TV (movies, TV shows). This is a new era in entertainment, yet not everywhere available. They were very clear in communicating that part. I get that part! Yet, consider that Loot is part of Sony, and that the TPP is about to limit retransmissions of broadcasts even further, how long until consumers ‘lose’ those options? In addition some places cost US$2.99, whilst in Australia the same places cost AU$4.99 and in the UK GBP 2.39. So, when we set this all to the same (US) currency we see:

United States $2.99, Australia $4.61 (+54%), United Kingdom $4.19 (+40%). So not only do we pay on average a lot more, we get less for the overall package. Interesting how this lacks the visibility it deserves!

I wonder how much visibility the press and the news casts will give all this in the coming days. In my eyes it might be an interesting stretch to see how much power they have over the press, in case of the UK we should look at how much visibility they give all this. They claim that they could regulate themselves? Well, if this is true, how come that NO ONE (of the big newspapers in the UK) has had any visibly outspoken view on these matters by Sony? I saw a few sources like ‘reddit’ and other bloggers pick this up, but that is about it. If you are wondering on the size of these matters, I am not a journalist, I am not some high powered media mogul, I am just a blogger who knows games. The gaming industry encompasses a market in extent of 20 billion dollars a year. That is a market big enough for ALL newspapers to keep one eagle eye on any news that impacts it. No visibility seems to have been given at present. A questionable turn of events!

Who is looking out for the consumers, especially those who do not have that much to spend?

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November 16, 2013 · 23:17

A changing console war

We are 12 days from the beginning of a new war, an all-out war, it is the war of the consoles and this war will start now and will go on until past Christmas. Yes, Christmas is the new center of these war efforts.

On the left side we have the one, and on the right side, the other. It is Sony versus Microsoft and it does not matter who you choose or support, you the gamer will make at some point a choice. Some with get neither and some will get both, 4 groups! From my view, I choose the Sony side, as the PlayStation 4 is stated by them as a system for gamers! Yet, both sides made the same mistake, even though Sony had an optional alternative, both systems come with a 500 Gb drive. The PS4 allows for the system to be upgraded with a bigger drive. What I do not understand is why they did not install a 1Tb drive for a mere $20 more. There is a lot more to this, but about that part more a little later.

I will mention at this point, right now, that part of the view that follows has bias. I want to be completely impartial, but to claim impartiality when a person’s passion is attacked is at times way to ludicrous!

My issue with the Xbox One, the Microsoft (aka Micro$oft) product had issues from the very beginning. First, they (Microsoft via Don Mattrick) announced on the need for a once a day login to the Microsoft system. I discussed that in my blog called ‘Discrimination or Segmentation in gaming? (UPDATED!)‘ In June 2013, that part was later recalled, which is why I updated the blog. I do believe in keeping people abreast of the correct information. Microsoft made the blog again in August 2013 in my blog called ‘Tax evasion, copyrighted by Vodafone?‘ This was all about ‘pay as little as taxation as possible‘, which will link to this later. Then in September 2013 we get the blog ‘The marks of trade‘ which again links Microsoft. So, why are these linked to the console war?

The last article has the mayor link to what the consumers of their choice in the console wars are not getting informed about.  “When the digital world is entering the field where more and more possible ‘new’ consumers are updated through the net, it seems that their marketing and party lines need to get a massive overhaul and it should all get a much better mentor system then it currently seems to have.” There is a side that had been hidden, even from me. This side is not on the up and up and even game sites like Gamespot have until now been silent about it. The latter one is silent about it as they might not be aware at all, which would be fair enough.

So what is going on?

The next generation of consoles will evolve into a new world that is all about DRM (Digital Rights Management). Even though you think that this was off the table, certain changes are now becoming visible doubting that all no matter what some executives claim to be the case. In case of Microsoft, for their system, as this is not a gaming system, but it has been labelled as an ‘entertainment system’ this all will become a much bigger issue. Do not think that Sony is off the hook here, they will be part of all this down the road too!

The issue came to light when I was made aware to an article called “TPP ‘A Substantial Threat To Australian Sovereignty’” (at https://newmatilda.com/2013/11/14/tpp-serious-threat-australian-sovereignty). If we ignore mentions like ‘secret law‘ for now and concentrate on “a law that will override the High Court of Australia” as quoted, then we see that our attention was pulled away from lawmaking that will have a massive influence on global users of all forms of entertainment.

Suelette Dreyfus a research fellow from the University of Melbourne states “At its heart the TPP is basically a grab for money. It will take money out of the pockets of average Australians and give it to large corporations in the US“. She also makes a mention on how illegal movies will now have to be policed by the ISP’s, even though the high Court of Australia had already ruled in ‘Roadshow Films Pty Ltd v iiNet Ltd [2012] HCA 16‘ in this matter. The law changes would influence future events. I dealt with the initial issues of illegal downloads somewhere during the year, but the change might, if enforced mean that, should illegal downloads stop (I am not against that), that the economic fallout would be enormous. Consider that Telco’s would see a bandwidth drop of two marks, which would mean that the consumer bill would lower an average of $30 a month, with over 7 million users this amounts to 210 million revenue per month less (spread over several providers), this would have a massive consequence, but the effect would soon be global if this path continues. To be frank, it does not affect me, I never download movies. I prefer the quality of a DVD/Blu-Ray on my TV screen, whenever I want it.

Brendan Molloy, the Information freedom activist and Councillor for Pirate Party Australia has an interesting view on other changes. “Perhaps the most shocking inclusion in the TPP IP chapter is criminalisation of non-commercial copyright infringement.” The Australian patent law changes, discussed in what is referred to as the ‘raising the bar act 2013‘, is all about promoting innovation. These events change everything. His quote “The text even attempts to consider temporary copies to be copyright infringement!” is an interesting (read dangerous) change. It implies that personal owned transfers (like CD to MP3) could be affected. A final quote is “There is language that would lower global standards on medical patents and potentially extend patents beyond 20 years, all supported by the United States.” This means that there steps in place to thwart innovation and strangle hold commerce. This means that only the big boys will be able to dictate progress for the next few decades, which means innovation goes out the window for a long time to come.

Angela Mitropoulos, Researcher at the University of Sydney has the following to say “The biggest winners in the TPP are the largest global corporations and, with the proliferation of mechanisms proposed, they intend to fully harness the infrastructures of the internet and the full force of the law in order to capture and extract even larger profits and a wider share of the world market.”

Basically, the new world terrorists will be the large corporations, if these reported events are true. So how does this strike back to the console war of Sony and Microsoft?

First of all, games and consoles are ALL about innovation. A console is only as good as its games and without innovation a console dies fast. Sometimes reverse engineering is the only way to get true progress. Consider the parts mentioned earlier, and if you have a console (either Wii, Xbox 360 or PS3), look at all the parts you have and how many of these parts were not an official Sony, Nintendo or Microsoft product. Items like recharge-able batteries, controllers and head sets. All that could stop! The issue goes a lot further, if we consider the quote from Brendan Molloy “article QQ.G.10 reinforces one of the worst parts of our current IP regime, which consists of legal protections for technical protection measures. Why should it be illegal to jailbreak your iPhone?”

So products like Blu-Ray’s and DVD regions and Smartphones. All of it treated under scrutiny of big business! Consider that due to these changes the new iPhone 6 could then only be there for the Telstra (or Vodafone) customers (presumption). These changes would make these events possible. Smaller firms would quickly be pushed out of existence, giving even more power to big Telco’s. This could also have an effect on consoles. If we consider the implications, then the danger becomes ever more apparent that the innovation that we desire to see gaming go forward is also in danger as a sizeable part of the indie developers are in the Czech Republic, Finland, Germany and a few others, who are not part of this agreement. So, if Sony and Microsoft set their IP stranglehold to such an extent to drive these developers away, then what happens to innovation?

The TPP seems to be about segregation not about innovation (as far as I saw the information pass by), which means that whatever happens will be under complete control for Sony and Microsoft for their respective consoles. Is this bad or is this good?

I think it is a bad thing, if we consider innovation in gaming. I am not against Activision protecting themselves against a reverse engineered version of Skylanders on one side, but to strangle hold a market will never lead to innovation, which translates in our case to better and new original games.

The next part is on Microsoft specifically. This is because they ‘wanted’ to label their system as an ‘entertainment system’ as such; the changes that the TPP is trying to push through will have additional consequences for the Xbox One.

The initial TPP article made the following mention, which came from Brendan Molloy “The United States has proposed several provisions that are anti-innovation. One such provision is a blanket ban on the retransmission of TV signals over the Internet in Article QQ.H.12, regardless of purpose, without permission of the rights holder.” This is where I get back to that small drive in the Xbox One. There are two sides. If we cannot store too much on the Xbox One, then we must either park it on the cloud (where we can be monitored), or we download it again and again (costing us bandwidth). That was ‘yesterday’, when the TPP comes into play, the retransmission of a movie from the cloud might come with additional limitations where any additional ‘replay’ could be charged. I am not stating that it will, yet the changes are ALL about economic control, so it could happen. This reflects back to the part in ‘Tax evasion, copyrighted by Vodafone?‘, because even though we are all charged, the provider is likely to pay a lot less taxation on these services, so not only will local commerce get hurt, those local governments will collect a lot less corporate taxation because of this all. We saw that in cases of Apple, Amazon, Google and a few others.

That means that the digital movie and TV options from Microsoft would go through very specific bans and very tight rules. This means that picking up the Swedish or the Dutch newscasts online might not be possible. You see, QQ.H.12 is one step away from WHICH stations your entertainment system will receive, all set in a nice package pushed through by a nation that is one step away from bankruptcy, desperately in need of money! You still feel safe with your Xbox One?

So, as we see the interaction of QQ.G.10 (jail breaking) and QQ.H.12 (retransmission) we see that in the broadest sense of the word that Microsoft could decide what we see and when we see it. Is this the global, shared world we were supposed to move forward to?

The site ‘Business Spectator’ quoted the following in regards to the TPP. “Besides the United States, the pact would include 11 other nations, among them Australia, Japan, Malaysia and Mexico, though it excludes regional powerhouse China as well as Indonesia, Southeast Asia’s largest economy.” So, it seems that the IP world is no longer about making a global effort in moving forward, with these different trade pacts we will get a new war, not on resources, but on who gets to play with what, when and how and the new consoles are smack in the middle of this changing landscape.

So if your console does more then play games, the question will soon become ‘at what price‘ will it do what it does?

Philip Dorling from the Sydney Morning Herald reported this 2 days ago “Australians could pay more for drugs and medicines, movies, computer games and software” so even though we get to pay 30%-60% more on games at present and 60% more for movies, we might end up paying even more then that? I am not even touching medication, which is a hot iron on several levels. To read that Tony Abbott is quoted in the article with “Prime Minister Tony Abbott has indicated he is keen to see the trade talks pushed to a successful conclusion next month” gives us further pause for concern. The man just got elected and it looks like he sold us out to the Americans within 80 days of his election, this must be a new world record!

So the choice of your new console could come with an additional price tag, one that the politicians will happily leave to big business to decide. I have not known ANY instance EVER, where greed driven entities EVER decided in favour of the consumer! It is an expensive lesson gamers might soon be forced to learn again soon.

Have a great holiday and don’t let that new console hit you too hard in the Credit Card on the way out of the shop.

 

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November 1, 2013 · 17:58

Crime still pays!

If the banks are any indication then there is plenty of indications that only amateurs become burglars, thieves or murderers. If you really want to move forward in strong financial ways, then one needs to become a banker. That is the message we read when we see the Dutch approach to their RABO bank in regards to the LIBOR scandal. The RABO received its 774 million euro fine. Part of the information is here at http://nos.nl/video/568494-rabobankbestuurder-schat-geschokt-door-renteschandaal.html

One of the issues is that they paid off the Dutch version of the CPS with a 70 million euro settlement.

The news mentioned that some got fired, some lost rank, and people lost commission (no explicit mention whether all lost it). This is part of the problem. Some got away and they can try again at some point. I personally found the mention that chairman of the board Piet Moerland’s departure to be a hollow one. Yes, this is just my personal view! He would have retired next year. Consider that the RABO puts a fine of three quarters of a billion in the books this month, which gives us that the next fiscal year the board is less likely to get any commission, which gives us the view that the RABO boss decides to retire and not work for free. Interesting is, that whilst the issues of LIBOR have been visible (for well over a year) that the final moment when the amount is known sends him to make a gesture resulting in his non-working near future. There is no evidence that the top knew what was going on. Yet another story by the NOS shows that even though traders got such lovely extras, no real internal investigation existed on how they got to these high commissions.

There is something to be said about Sipko Schat, who was in charge of the traders in that period and who remains with the RABO bank. That part is not negative. There was no indication of any sorts (or so it seems at present) that he had any idea what was going on. We can doubt that, yet considering the structures of the other involved banks, the viewpoint that Sipco Schat seems to be innocent and unconnected is a rational and acceptable one.

So why the issue on crime that pays?

It seems to me that if we consider the Dutch Banking law of 1998 that at present, there do not seem to be enough handles in place to successfully prosecute these transgressors and this issues goes vastly beyond the Dutch borders, which is the one part that truly bites the people of many nations (not just the Dutch). It is my conclusion that the Dutch prosecutions office was willing to settle for 70 million, for the realistic reason that the chance of getting true legal justice for the transgressors seems to have been unlikely and for those who got to feel the axe, the proceedings for the crown would have been a lot lower. Yet prosecuting them might have been a better option. This is because many are now seeing and feeling the same sting of the years of building frauds for the Amsterdam International tunnel (to name one of several events), where three constructors settled for 1 million each, even though the transgressions showed inaccuracies of well over 30 million. This was in November 2001. There were additional building fraud cases in 2002 and 2003. Isn’t it interesting how builders and banks seem to get to settle for the fraction of the transgressed amount?

Even though much of the actual damages will get returned, not all of it will and it seems to me that profit margins remain to be too good for people not to try a roll at the high yielding criminal slot machine.

I see the issue in several nations that non-violent crimes are not correctly weighted (so, not just in the Netherlands). Too many judges seem to remain oblivious on the consequences of non-violent crimes, often these events get trivialised in courts (not just the Dutch). Not enough power is placed on improved legislation and successful convictions against financial crimes and no one seems to be willing to rock the stable boat in these regards. Until the cutting knife of the law shows unreservedly that traders and bankers could lose their professional licences and qualifications for such transgressions too many remain willing to give the slot machine of ‘hefty returns’ a go, as $1 might give them $xn if they can roll the bars to F-RAU-D, because even if they get caught, there seems to be a decent chance for them to hold onto a fair share of the unfair gained amount.

 

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October 21, 2013 · 01:33

The reality that wasn’t one

Until we all realise that the edge of the abyss is on the Americans, we all need to realise that what will topple the Americans, will have a massive effect on us all. Partly because we are linked, partially because the events that are in effect there are also in effect in the Commonwealth and both are not willing to change their ways.

The issues all start with an article in the Guardian (at http://www.theguardian.com/world/2013/oct/19/barack-obama-address-shutdown-debt-ceiling).

The first quote is: “There’s been a lot of discussion lately of the politics of this shutdown. But the truth is, there were no winners in this.“

Actually, there are. The banks! They are making a bundle and as things go, the US will be (pardon my French) the Bank’s Bitch for a long time to come. $17,000 Billion has that effect on them. The article by the LA Times, which I personally call laughable, can be found at http://touch.latimes.com/#section/-1/article/p2p-77819148/

The four points should be looked at.

1. The U.S. debt burden is starting to decline. That’s right – it’s going down, not up.

Really? $17,000 Billion remains that. The economy is not even close to being on par, and as long as the government is spending over a trillion a year more than they earn, the debt is not going anywhere. If we go from the T-Bill path, then the payable cost of T-bills (basically the discount value), for the entire amount would be $453 billion. This is of course not realistic; the number that is closer is based upon the annual deficit increase. These numbers were discussed in my blog ‘A new third World continent‘. So, when they do start to mature, an annual amount no less than $1,000 billion a year for no less ten 5 years would be needed. So, that debt burden is going nowhere, it will be there waiting for the people and it will come with additional bills.

2. China holds only a relatively small fraction of U.S. debt.

That is actually true, yet roughly 14% of $17,000 billion is still a massive amount, it just seems little. By the way, if they suddenly cash in, the chances of the US being able to pay it becomes smaller and smaller by the day. The debt ceiling is there and it would be instantly crossed.

3. The U.S. has had a national debt for almost its entire history.

Again that is also true for the most, yet in 2000 it was only 5 trillion (roughly), so in 13 years it grew by 12 trillion dollars, it grew from 5 to 9 trillion up to 2007 and the rest grew in the last 6 years.

4. Debt crises have marked American politics from the beginning.

Well, that is not entirely incorrect. The article starts with General George Washington. The guy who ran the American defence forces before Patton, roughly about 140 years before Patton. The debt remained under 1 trillion until the 80’s, so basically the US went through Independence Day 1 (1776, not the one with the aliens), WW1, WW2, the Cold War and the Vietnam war. All these elements involving massive amounts of politics, (except the Cold war, which was a contemporary event where Ivan Aleksandrovich Serov and Allen Dulles had a bit of fun, as well as their successors (boys will be boys).

The moral here is not about the marking of American politics, it is about Politics not doing what they were supposed to be doing. From my point of view, the right questions were not asked, hence the actions proceeded were of a game where open and clear communications were not in play (or this deficit would be a lot smaller).
There is plenty of blame to go around! Initial there was former President Clinton, even though the coffers actually had real cash in his era, the Silicon Valley crash started to leave its mark. It drove Gray Davis (former Governor of California) out of office and it was the beginning of a massive shift. After that the USA had former President Bush. He did a good job, but then 9/11 struck. The consequences had a major influence, it also changed the premise of many, instead of a true revamping of intelligence, 4 agencies were suddenly spending like there was no tomorrow. The military costs went up, which would really hurt the treasury coffers and lastly the financial crash of 2008 was one that had a long term consequence, especially as a building named America got prepped in the years 2003-2005, by the time the 2008 financial fire hit the house, there were no fire hydrants and there was no one able to actually fight that fire. The rest is the now and many are still reeling from those hits.

This takes us back to the article in the Guardian, where President Obama is quoted saying “First, we should sit down and pursue a balanced approach to a responsible budget, one that grows our economy faster and shrinks our long-term deficits further.“

That is a simple answer, stop spending too much. I understand that spending $5 to make $50 is perfectly sensible, but America has become a nation of entitlements and costs, not profits. When you as a nation allow for tax evasion and keep on postponing putting a stop to these acrobatics (the Tax evasion rule is not expected to become active until 2014). So the US is in an extremely fragile situation. It is basically what you hear of Fox News (people like Glenn Beck, Bill O’Reilly and John Stossel), is that view wrong? Well the Nanny state is an overprotective government. I am all for protection. We should protect the weak, the sick and so on. But when you are broke, you cannot pay the beggar with coins you do not have, you cannot feed the hungry with food you cannot pay for. When your money runs out, it runs out. So until the government gets their horses back on track, entitlements will (not should) suffer. Perhaps doing something about Corporations and their tax evasion? For Example, Google paid the UK $12M in taxation, whilst their UK revenue was $3,000M. That is less than 1/2% in taxation. They avoided $2B in taxation in the US, according to the Bloomberg article (at http://www.bloomberg.com/news/2012-12-10/google-revenues-sheltered-in-no-tax-bermuda-soar-to-10-billion.html)

So how much taxation is NOT going into the US coffers? That list of corporations using tax havens is long and they are all prosperous. So, when entitlements fall away, look at those places on why support is gone.

The only part remaining is an article that came to view as I was reading up on a few parts. It is at http://www.rawstory.com/rs/2013/03/25/economics-professor-smacks-down-bill-oreilly-he-has-no-idea-what-a-nanny-state-is/

And the story is about Professor Richard Wolff having a go at Bill O’Reilly. It was on ‘Democracy Now‘ so the idea that this is about a democrat having a go at a Republican should be clear.

The first part was in regards to “a clip of O’Reilly talking about the latest round of European bailouts, which O’Reilly said is happening ‘because they’re all nanny states’ that do not have enough workers to support ‘entitlements’.“

So what are the numbers? According to the site, http://apografi.yap.gov.gr/ where the Greek state currently employs 614,053 people, 15,000 jobs got axed in the first half of 2013. The Greek population is around 11 million; this gives us that just over 5.5% of the ENTIRE Greek population works for the state. There are reports that this used to be over 20% (in 2011), so how is that not a nanny state? According to the Oxford press it is stated as “a view that a government or its policies are overprotective or interfering unduly with personal choice.” when 1 in 5 works for the government, overprotective seems to be the case. The only part I do not agree with, in this case, with Mr O’Reilly is that Greece seems more and more the consequence of short sightedness and utter stupidity. In reflection, when a government asks Goldman Sachs to hide the size of their debt, I personally want to sail towards words like stupidity and irresponsibility.

Professor Wolff sees Germany and Sweden as Nanny States. That is not incorrect, however the next part “they’re the winners of the current situation. The unemployment rate in Germany is now below 5 percent.” is misrepresentation. First of all, when changes were needed (around 2009) Germany tightened the belt by A LOT! This is why it seems that they got off lighter, because they decided against borrowing (a lesson that the USA still has not learned). The second part is that Sweden has a different system. Yes, they do have a protective nanny state, but taxation is also higher. It is 57% at the highest tier; whereas the rich and playful in the US seem to pay only 29%. In addition, most Swedes are ‘proud’ (slightly overstated, I admit) to pay taxation. The more they pay, the higher their status. (Inwards they’ll sulk like nothing you’ll ever see).

So, Professor Wolff is missing his shares of facts too. In addition, Sweden had to deal with its own issues in 2003 as Ericsson dismissed thousands of people. They went from 85,200 staff members in 2001, to 51,600 in 2003. That is over 33000 in just 2 years. Try finding a job in IT in 2003. So as Sweden got itself back on its feet, they had moved themselves into a position to remain cautious. There is a good PDF file to read, it is called ‘Growth and renewal in the Swedish economy‘ It is by McKinsey and Company and worth reading. I wanted to add the link, but like Google’s ability to avoid taxation; they are getting better and better in avoiding clean links (just huge links full of Google statistics garbage). Although Sweden got through it all not too harmed, their current projections are not too good. Their deficit is likely to rise to 3% this year. One of the more noticeable incomes Sweden had was from Vattenfal and their nuclear power plant, the issues in the UK showed that Vattenfal has issues, some of their sites (outside of Sweden) were not panning out the way they were. www.vattenfall.com/en/file/Q2-report-2013_35251329.pdf has some interesting materials. So as they reported an operating profit of MINUS 25 billion (in Swedish kronor), they are still there, but that is an amount that hurts, and of course as they depreciated that much, it will affect the Swedish deficit. Let us not forget, they only have a population of 9.5 million and unlike Greece they are doing decently well. As for health care? The numbers from the OECD (Organisation for Economic Co-operation and Development) show us two interesting facts, percentage of government revenue spend on health gives us USA 18.5% (highest), whilst Sweden spend 13.6% (lowest), then look at the percentage of health costs paid by government which gives us USA with 45.1% (lowest) and Sweden with 81.4% (2nd highest). So, either the Swedes get a much better bang for their buck, or in comparison the American system is extremely flawed. There are ways to find out which, but compared to the UK, which is almost identical to Sweden in covered health costs, yet the slightly higher spending by the UK government leaves me with the thought that an overhaul of US healthcare was essential, but until I see the actual numbers on the new system, I will remain doubtful whether Obamacare would ever be a solution (but I refuse to judge until better numbers are known).

So in the end, the information by Professor Wolff reads less correct when you take another look at certain facts.

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October 17, 2013 · 16:16

A new third World continent

At the final moments we see the news that in the 11th hour an agreement had been reached. Should we be happy? For now many will be happy, for now the Financial industry is relaxing and happy that their rent is safe, but the stress will return soon as the next ceiling will be reached in another 18 weeks.

So what is wrong with the USA today?

It sounds all fun and games to blame either the Democrats or the Republicans, yet overall, both have some level of guilt. Yes, at present the Democrats are wearing the hoodie of blame and shame, but the Republicans are not without issues either.

Consider that the government has maxed out the USA credit card. They have until now REFUSED in any way to take responsibility for the utter irresponsible spending. No, taxing more will not solve anything. That story is old, stale and redundant. If America would like to be taken seriously ever again it would have to cut no less than $350 billion in 2014. So, NOT more taxation, but LESSEN spending. That means if all was equal that every American will get $1000 less in support, which means that it would not impact the top 3% of the nation, but the others will have to pay. This is not me supporting the rich, this is me placing ALL politicians in a limelight where every spend dollar will be shown in the spotlight.

The Democrat story will be that they have a solution, and if these people pay just a few dollars more than….. It is nothing less than utter Bullshit! (Pardon my French!) With a debt of 17,000 billion dollar, a budget drop of 350 billion would mean that the interest of the outstanding debt could not be paid for.

On the other side, the Republican side will have to stop this ludicrous boast of less taxation. That is not, cannot and will not be a solution (for at least a decade). The debt must go!

But there might be a solution with the UN. When America has  been diminished to a third world nation, then perhaps the UNDP will offer support to the USA. I know, the irony of it all, go figure!

I have remained in favour of the US remaining strong from day 1; however, the Democrats refused to step up to the plate to do what needed to be done. The Republicans had stepped up to the plate, but in hindsight, the result was almost nil and they have not endeared themselves to anyone.

The voiced speeches by the Democrats as they are shown on TV stations all over the world today seem to be in bad taste too. I will make an exception for Democrat Harry Reid from Nevada. He had been in the middle in of what might be called a ‘small hell’. If the Navy Seals are used to be between a rock and a hard place, then this man outclassed them to several degrees these last two weeks, as a Republican minded person I will admit to that. I will go further to say that should Harry Reid go for the oval office, then he stands a chance to convert a decent group of Republicans too. Values like respect and moral coming from Nevada? What a tangled web we see!

For many non-Americans it is not about the pure Democrat versus Republican fight, it has always been about the massive debt and the risk they push upon many other nations. It is even a case that the voice of many non-Americans should be heard. When a nation like America has so many corporations that operate their business outside of the USA and as such put hundreds of thousands of workers on the spot as their futures are linked to the status of the USA, then they must realise that accountability remains an international factor.

On Sky News there is a hilarious movie, shot in old fashioned silent movie style explaining the debt ceiling. It is fun to watch and it tells the story nicely (at http://news.sky.com/story/1155554/shutdown-senators-pass-bill-to-avert-default), I do however disagree with one part of it. At 1:53 Ed Conway states one part I do not agree with. “If America was to default, it is not because it cannot pay its bills. It is because their political system would not allow it“.

That is the part that has been my major issue!

It is what I disagree with. If we consider the T-Bill rate of 2.66 (as it was this morning), to get the 16,700 billion in debt, to pay it back, if it was all in T-bills, then the US had to pay an additional 444 billion dollars in ‘fees’. This seems very very little. However, this was not done in one day; it was over many many years. The problem is that as risk grows, the people will be offered a higher return, because if the debt cannot be paid, those bills will become null and void overnight. In the end, that money must be paid and overall, even though for now it is paid, the outstanding debt as it grows and grows, will mean that the chance of EVER paying it all back will become less and less. Consider that the following amounts are due: 2022: $1276B, 2021: $1228B, 2020: $1652B, 2019: $1885B, 2018: $1017B. So from 2018 onwards, the returns will have to be paid to those T-Bill owners. The amount will be in access of 1 Trillion dollars a year. Can anyone explain to me how that payment can be met 5 years in a row whilst the on average the collected annual taxation in 2013 will be an estimated $1.9 Trillion dollars? This means that from 2018 onwards 53% of all collected taxation will go to people owning T-bills. How unrealistic a goal is this?

This is part of the reality politicians ignore (as they will not be in office when it happens) and the people who gets settled with the bills will not have anything left.

Consider in addition that the Tax evasion bill has not been pushed into effect (which means the rich will continue to have additional tax shelters this year) and the Dodd-Frank Act is STILL not active, giving the financial sector too many non-accountable freedoms (which will make sense late on). If you want to know more about the Dodd-Frank Act, take a look at the next link, it has an interesting cheat sheet on the latter one. (at http://www.mofo.com/files/uploads/images/summarydoddfrankact.pdf). Morrison & Foerster is a global law firm. It might have been for internal use, so send them a thank you note if you download it. It is the easiest read in regards to this topic I have ever seen. They also have Patent and Trademark litigation, so I should send them my resume when I get my MIP after my next semester. Cool!

If you wonder about that reasoning after my strong voiced disgruntlement, then remember that the US is a great country. In my mind it was sold down the drain by politicians and exploiters. If we muzzle the first and neuter the second, the US could be a great nation quite quickly again, which would be good for Europe too. A win-win solution I say!

So why aren’t more people nervous about the entire deficit and debt ceiling? That is the part that does not make sense to me. Rolling over debts is a dangerous habit. The definition is clear enough, the dangers on adverse percentages is even more risky as politicians played 11th hour resolution makers. The second part is one that many more are ignoring. This is all based upon 100% of the due payments rolling over. What happens when another nation has a slightly stronger return? What happens when only 80% is sold? Is that such a hard concept? So at that point, where will the required $200B-$275B come from, additional raise of the debt ceiling? I have no actual facts to work from, so I do not know what the level of risk is, but consider that between 2018-2022 no less than $1T in investments are needed, and that the larger wallet friends (like the UK, FR, DE, IT and AUS) many of them at the maximum tapped out amount. How long until THEY (read governments) start the ‘swap’ game? Is that not how we lost most of what we had because we could not control the banks, now we let them advice on the same game, but now with full government budgets? So, we will not be looking at just a few trillion, when that game goes bust (and such a game always goes bust), the population will be stuck with a bill between $70T and $90T. How will we survive that?

Let us not forget that all those actions are taken in closed rooms with only a few insiders fully in the loop. If the next election causes reasoning for full disclosure on such events and only a referendum will allow for this, then the game will not just change fast, it will leave the USA on the outside looking in. A fact is that this risk grows almost exponentially each year the deficit is not dealt with. If Germany has been under pressure for the EU issues from Bernd Lucke and the UK from Nigel Farage from UKIP then we should expect additional players who will be fueling these fears. The upcoming price fight might not yet be the main event, but the debt ceiling issue that comes after the one on February 9th will be a main event and it will likely involve more players then just the US, several of them are unlikely to be one of the 18 Bernanke disciples.

So here we are, and only hours after Jill Treanor wrote her article ‘Financial Conduct Authority launches currency markets investigation‘ on the Guardian at http://www.theguardian.com/business/2013/oct/16/financial-conduct-authority-currency-markets-investigation-benchmarks.

This is a must to read!

Guardian’s Youthful Young City Editor, all complete with her own copy of SAS Miner plugged into her brain started today with “Suspicions that the vast global currency markets may have been rigged by major banks and traders has sparked the City regulator to launch a formal investigation into the £3tn a day market.”

This goes way further than just the LIBOR scandal. Earlier this year I had some doubts on all of this. My doubts were not on the interest part; my thoughts were that the main amount involved, which the percentages were based upon had also been tampered with in some way as well. I still expect my $1T bonus when that gets to be proven!

So what if the benchmark is not JUST the foundation, but part of more. You see, if we consider that governments have been involved in T-Bill Swaps, then the tradeable amount involved is not correct. More precisely, if the volume of T-Bill swaps is to the amount deficits go, then in which direction are the percentages rigged? It might accidentally involve the ‘accidental’ mentioned group of larger wallet friends. Now consider that Germany at present is the only one with an economy more on the stable and positive side then all the other players. So, would there be additional benefits for them in the long run? I actually do not know this (self-confessed lack of economic education), but the fact is that these issues go far beyond the banks themselves. Perhaps that is why the Dodd-Frank Act was never activated? It is just a thought.

So my advice for today, instead of long term investing your $5, this morning, have a pastry with your coffee, because at times there is nothing better than short term gratification and pastries will usually do the trick.

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October 15, 2013 · 19:10

In Media, we distrust!

Is it not a lovely day when you wake up, you go downstairs and if it is warm enough, likely in nothing more than a simple bathrobe you sit down. At this point, whether it is inside, or outside, you get the first start of the day with coffee and the newspaper. For most people, that part had been for a long time a slice of heaven.

We would go through the news whilst sipping tea or coffee (in my case the latter). What if I told you that these times are now forever a thing of the past?

My reasoning? For this I will go over each case in three parts. First the point I make, then the reasoning for that point and lastly the motive I personally think is behind that. I would like to add sources, but at times there are little to none and it is all based on common sense.

First there is no need to rehash the entire Leveson history. That reports was made and filed and suddenly the press was all uppity uppity on ‘the freedom of speech’ and how their rights are now no more.

Let us take a look at this part.

1. How often does the press report on privacy violations by large companies like Microsoft?

Answer: almost never. I found one article by the guardian, and a few by what we would normally all less reliable sources. (at http://www.theguardian.com/world/2013/sep/30/microsoft-privacy-chief-nsa)

Motive: The publications rely on big business (advertisements). It relies less on governments as their form of income and in addition, government is always seeking visibility, big business brings in money. In this situation I personally think that the press seems to be willing to ‘ignore‘ or whisper very softly certain events.

How about Microsoft HealthVault?

They state: “Privacy, It’s your HealthVault account. You decide who can see, use, add, and share info, and which health apps have access to it. HealthVault won’t provide your health information to any other app or service without your permission.”

Venturebeat had the following interesting quotes “For instance, Microsoft reserves the right to store your medical data offshore, in countries that may not have the same privacy protections as the U.S.”

“HealthVault appears to open the door to a potentially unlimited line of people, entities or programs that can obtain permission to read and alter your health information, since it’s possible to delegate the ability to grant those permissions to others.” If did find a few mentions by CBS and ZDNET, yet the papers (the big ones) did not show up in any search. Even though this issue is not that recent, it is still interesting that the big ones aren’t anywhere near this place.

If we consider that this means that if an insurer gets access to this, then the smallest visit to the hospital could result in an increase to your premium. This is all linked to the Health Insurance Portability and Accountability Act 1996. There we find that the HIPAA Privacy Rule regulates the disclosure of Protected Health Information held by what we would call “covered entities” (employer sponsored health plans, health insurers, and medical service providers that engage in certain health transactions.) By regulation, the Department of Health and Human Services extended the HIPAA privacy rule to independent contractors of covered entities who fit within the definition of “business partners”.

So, if these contractors are outside of the national borders, your health data goes into several other directions too.

Consider that we volunteer this and other personal data to Microsoft (your Skype, your software, your Microsoft devices and your browser). How long until you represent a Z-Value? Not before too long, you are diminished to several Z-Values, and as your value depletes to below the norm, what options will remain for you?

Yet, the press seems to banter again and again on NSA and GCHQ. The question becomes, whether the press is nothing more than a simple tool to make us look the wrong way, whilst big business has a free go at us and our personal details.

I do not claim to know what the actual truth is here, but I do know that the press has not been focusing on the wider truth and reality too much lately. That is something that becomes slightly more visible when we read Claire Fox in her smug article (at http://www.independent.co.uk/voices/comment/leveson-has-done-his-damnedest-to-encourage-press-regulation-despite-his-protestations-8874676.html)

When you hear the actual response by his Lordship in regards to WHY he felt it was inappropriate to answer, Claire just trivialises it in the air of “that he would not play ball“. Let us not forget that it is her right to see things in the way she did, I will not attack that, but this situation left me with question marks on how far ‘misrepresentation‘ goes at present.

So if big business is protected through non-visibility, then why don’t we just get rid of all journalists and rely on bloggers? The digital world is ready for it all, journalists no longer seem to be truly ‘story‘ driven, when the bulk hang on the usual GCHQ drab anyone can get from Reuters and the bulk of the big business transgressions remain on blogs, I wonder where the journalistic pride and ethics remained as they claim their part in their need for ‘freedom‘.

2. How will many protect their children and finances if visibility remains low on issues that have an impact? Many PC’s and tablets get linked to games that are ‘proclaimed’ to be free. Yet, when you want to move forward, you can pay for additional options.

The BBC covered this on September 25th (at http://www.bbc.co.uk/news/technology-24272010). The Guardian seemed to have covered the same story and that is pretty much it. So why is there not a lot more visibility?

I had a look at a program called ‘Dragon Story‘. It looks nice, it is a little non-adult, but it has a few original sides. You can breed two dragons together and they leave an egg. You can hatch that egg and get a new different dragon. You can buy many of them, or if you take the time breed your collection. This is all pretty original. The dragons in their habitats collect money and that money can be used to grow your area. Yet, the part not shown is that some dragons are rare, some habitats (larger ones) are expensive. Smaller habitats can be bought with coins, but the larger ones must be bought with gold. That costs actual money. A child can without realising it spend $20 per habitat, some dragons; the really rare ones cost $50. So in 30 seconds a child can spend more money than a full version of Grand Theft Auto costs. It is clear that actions can be taken to prevent some damage, but the visibility is not there. Why?

In reflection upon ‘Dragon Story’, an addictive game named ‘Blockheads’ (a 2-d version of Minecraft) can also be downloaded for free, and you can buy an upgrade so that all actions go twice as fast. The price, $5! Now an additional option can be bought for $3, so that the player can play in higher resolution, a total of $8 for something that need not be bought, the choice is up to the player. THAT is what I call an excellent approach!

So where is the press here?

It cannot be for the lack of ‘public’ interest, as the tablet market in the UK alone is soaring towards 190 million owners this year. That is more than the total global owner base of the PlayStation 2 used to be (which was 150 million). So, one could say that tablet issues should be at the top of every newspaper. The Google search seemed to contradict this (I had to start somewhere).

So when we look at these heated arguments on the freedom of the press, we should be asking ourselves what they are complaining about. Freedom is nice, but when they relate it to the limits of their cubicle we get to miss a lot of information, the press and especially their editors should realise that.

In my view, to the extent I had read the Leveson report, I saw it not as an attack on the freedom of the press, but on the ‘enforcement’ of ethics and accountability. Those two are elements in any form of Journalism. For I am never against the freedom of the press, I do think that some acts require accountability. The hollow phrase ‘the people have a right to know’ lost its value when some used it to tabloid away all levels of privacy. Crashing a funeral less than two weeks ago by the Daily Mail is an excellent example of that. I do wonder whether all this is just about the journalists, or was the Leveson escalation due to a failing by the editors to keep a proper pulse of the journo’s they are supposed to mentor. To that I have no honest answer; there are too many murky facts in the open.

The PRESS fallout has been a long one and we are not there yet!

 

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October 10, 2013 · 00:47

Economic management through newscasts

When you think of the title, you might think that there is no real issue. You might think that certain events always take place and that the news covers it. However, when you monitor the news in several nations, you might see a different line of information.

So, let’s go through the motions and reveal that part that several did not consider, perhaps you should reconsider this in all sincerity.

The first red light was lit when I observed the Dutch news at the NOS. The message was innocent enough. The Dutch Bank has a new president. The man Klaas Knot was voiced on Dutch TV stating [translated] “although the numbers are not here yet, my feeling is telling me that we have passed the recession, and we are now at the start of economic recovery“.

In light of several numbers in the past that were in my personal view clear attempts to manage bad news, numbers that were used as proverbial straws to minimise actions are now surpassed that the economy is on recovery. As I stated before, we are more than a year away from that. So, why are people getting this news? The facts and numbers are a month away. Is it perhaps all about the US deficit ceiling? That 17 trillion dollar debt, oh what a feeling!

Klaas Knot is working from the information on growth from foreign nations. As they left the recession, the Dutch should follow. Another factor mentioned is that real estate prices are not falling any further. In that regard I wonder if that would be an actual possibility. If the houses fall any further, it would only mean that people stopped selling until the prices go up again. However, the NOS did report in summary that growth is not directly visible, especially considering that unemployment rates will go up further this year. I reckon that they might not improve until late second quarter 2014. There is also the actual growth to consider. I reckon that the growth in the first year is unlikely to grow beyond 0.5%, which would already be a good achievement.

So why do I without the economic degree oppose the president of the Dutch Bank who is likely to have a few economic degrees?

First of all, I am willing to doubt my view, however, after we have seen the Dutch predicaments as they cannot find the ability to cut 6 billion and as they struggle with minority groups to get anything done at present in that pesky regard of cut-backs. In addition, on July 11th I wrote a blog on the Dutch pension system and how they would cut 3 billion a year (in ‘Boosting Pensions’), that did not pass the Dutch First Room comparable to the House of Lords in the UK). The only question remains whether those 3 billion were part of the 6 billion euro package or not. If not then fine, if yes, then matters blow up in many faces. However, not to go for the worst scenario, the cut backs do mean that at present the purchasing power of Dutch citizens will decline more, so economic growth will remain out of the people’s reach until 2015. That does not mean that Klaas Knot is wrong, I do however belief that this optimism is linked to another event and should be slightly less optimistic.

The odd thing was that Klaas Knot was stating towards NOS news that it was important for political Netherlands to quickly come to an agreement on controlling government finances, also for 2014. That was a weird quote to be placed as a statement and not in answer to a direct question. So was he aiming for the budget agreements, opening the fountain of Dutch pension accounts or both? The latter seem to be in my mind. However, the NOS newsroom phrased that this was about the 6 billion in cut backs. Yet, if this is a play to get things rolling, it is good that it was followed by the statement from the Prime Minister to not get too optimistic. So why were we seeing these two parts?

The second red light did not become visible until the day after. The same day I get the news on a diplomatic escalation in the Netherlands, sky News UK comes with an entirely different matter. Two elements seemed to be in play. The IMF suddenly lifted the economic growth for the UK by 1.4% for 2013 and for 1.9% for 2014. Those are numbers that are beyond remarkable. Sky News showed Olivier Blanchard the Chief economist of the IMF to make this statement. It was interesting that the IMF calls on Christine Lagarde to give the bad news and Olivier gets to give the good news. There was a shimmer of hope for realism as Ed Conway, economic Editor at Sky News was happy to not reject the notion that the IMF have been lousy forecasters in the past to say the least.

In my view these two red lights are all about managing bad news. This is the preamble to the rising risk that if the US debt ceiling is not raised, we would end up receiving a spill of utter recession that will go on for a long spell. ‘Suddenly’ there was good news, a week before the debt ceiling needs to be raided, whilst the US is still in shutdown mode. Let us not forget that Greece, who also suddenly had ‘good’ news last week is still beyond broke, in addition France and Italy are still not in good shape. The biggest issue is that the UK forecast, which was +0.6%, which was a pretty good achievement to +1.4%. That boils down to a miscalculation of almost $18 Billion! That is a massive miscalculation. There is no indication that such errors were made. Consider that the IMF had high criticism towards the tactics by Chancellor George Osborne, UK’s faithful exchequer.

Three sudden good news moments are too much for just some level of chance. This reeks more and more towards managing impending moments of Doom. In that same newscast President Obama kept on chastising the Republicans. Yet, also to my surprise, several players in the media are giving little or no visibility to the republican side of things. The Democrats are so willing to raise debts again and again, yet the overspending as it is could sink us all and no one seems to be reacting to that part.

So is this raising of credit rates just so that a paper loan for the US can be parked on top of the 2 Trillion dollar debt the UK has? That part is speculation on my side, but it is clear that the recession is nowhere near solved until mid-2014 and only after that will we see decent levels of recovery. In that regard I do consider that those who are managing these numbers are playing a very dangerous game, I admit that this last part is my personal view, but I reckon that many in the UK, Netherlands and Greece can clearly see that improvements are pure speculative and there is no evidence that it will actually happen before 2015 (if they are lucky). The Greek situation was partially confirmed that Greece will need another 10-11 billion Euro bailout mid-2014, as reported by Jennifer Rankin (at http://www.theguardian.com/business/2013/sep/13/greek-bailout-back-on-agenda-as-eurozone-finance-ministers-meet-live), so a nation that is in recovery still needs 1000 euro for every Greek?

The reality of this global game will not be known for another week, but in the mindset of a Lemming it is likely that the quality of life we used to know, for now, only remains in the mind of the terminally ill and only if they do not expect to live past June 2014.

I sincerely hope I am wrong in this case, but the numbers are to some extent there, it seems to me that when coming to some conclusions the weighted events are considered. This is not an abnormal thing to do, however when we deal with several outliers in data, the weighted results tend to throw away those numbers and as such the bad news is never a correct, which does the trick for some, but it leaves Joe Public with a nasty long term invoice at the end of the journey.

 

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October 3, 2013 · 21:50

The numbers we ignore?

Today is another day that the US government is in shutdown mode. This is not Episode 8 from season 5 of the West Wing by Aaron Sorkin (brilliant man). This is reality!

There is polarisation on many levels and even though we want to blame one side as we stand on the other side, there is a deadly reality playing out in the corridors of power. The Democrats refuse to cut their spending; the Republicans will not play soft or compromising. Today we see the Guardian with “Obama meets bank chiefs as economists warn of ‘deep and dark recession’” at http://www.theguardian.com/business/2013/oct/02/obama-bank-chiefs-economist-deep-recession. As we look at a few facts quoted “President Obama met bank executives including Goldman Sachs chief Lloyd Blankfein“. The firm that helped many lose their house. I admit that this is unfair towards Mr Lloyd Blankfein, but the sentiment behind it stays in valid form (I will get to that later on).

“A looming battle over the nation’s $16.7tn debt ceiling. Treasury secretary Jack Lew has warned that the US could default on its debts if the limit is not raised soon.”

The second part is why the republicans are not budging. The Democrats are raising and spending and leaving it all to the next one in office. There is enough evidence to state that it is likely that the Republicans will return to the White house. In that regard, they have ZERO interest in cleaning up the Democrat mess, which will take several administrations. The fact, that the Democrats are not willing to cut their spending, whilst they spend a lot more than their budget allows. It is almost hilarious how things are spun. They claim it is all about affordable healthcare, whilst this option is increasing the debt by $100 billion a year. Now, it there was money coming in on the other side, there might be some level of case, but that is not happening. This current administration has added over 5 trillion dollars in debt during his first term. That is an overspending by 3.4 billion dollars a day. With Obama care this will be even more. Now, this administration inherited a sour deal. The economy had collapsed; there were issues with some financial crash in Wall Street and so on. Yet, the debt he has added to in one term is a lot more than Bush added in two terms. (So both sides have some of the blame). The republicans are not blameless, but they will not accept the continued addition of debt which is currently getting pushed. The US national debt is now well over 100% of its GDP. This is the part many seem to ignore. So if all taxation (which is only 26.9% of the GDP) is used to pay for the loan, then it will take 4 years to get rid of their debt. That works ONLY if the US government pays no wages, fixes nothing, builds nothing, buys nothing and heals no one. So for 4 years Americans must make due with nothing at all. This is not a realistic approach, I admit that! So you can only use to pay what you have left, however the government has been spending 120%-145% of the money they received and with Obama Care spending will increase. America is currently, in my humble opinion bankrupt!

Do you doubt this? This would be a fair enough position to take, consider any company being allowed to spend 120% of their annual revenue. How long until any bank will close the tap? In addition, there should be overall outrage that a company would work 100% of the time just to pay the bank. There is 0% job security in that regard, for if the annual +5%-+15% cannot be made, they will cut the costs that are not desired. In that scenario there will be no healthcare of any kind, because the sick do not contribute to the future of profit. That dangerous situation currently exists!

The article by the Guardian has more “But he warned that would be nothing compared to the Pandora’s box that would be opened if no deal on the debt ceiling was done before 17 October deadline. Congress must agree to raise the US’s $16.7tn debt ceiling by that date or risk being unable to meet its obligations.”

That is the crux! The total debt will increase and the republicans will not stand for that. My earlier comparison to get rid of the debt in 4 years is not realistic, I said that. Only if spending is lower than American income can the debt be lowered. It will take more than 3 generations to get that done. Some disagreed with that number. This is fair enough. Yet, let us make a small calculation.

$17T is $17,000B. The interest due would be $340B (it is actually higher at http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm, but it is about the example).

If we believe the census (as shown in my Blog ‘Biased Journalism on USA shutdown?‘) then the interest due is 13% of ALL collected taxation. How can ANYTHING get done after the interest is paid? And that is only interest, no decrease of the actual loan. So consider that all amenities, support and expenditure of the US must decrease by at least 16% to get this done. How can that ever be a realistic situation? This is why the Republicans are not budging. The more important issue is that the Democrats knew this. They knew that the train would stop and they ignored this. Not unlike in the Netherlands where everyone stated that the SNS Bank was too big to fail, the Dutch government nationalised the bank. Why the Dutch as an example? Well, they are in some similar predicament. They are not able to lower spending. They need to cut an additional 6 billion whilst their GDP was 700 billion last year. If they cannot cut 1%, how will the US ever deal with their debt? There have been words on corporate taxation left right and centre, yet what they are not mentioning is the issue that the UK has seen this year. Big business, like Google has been pushing their own booked revenue to other places. This quote from Bloomberg “Google’s chairman says he is ‘proud’ of the way his company avoids paying taxes ”It’s called capitalism,” Eric Schmidt told Bloomberg in a…” So, whatever money the US treasury has coming in, it is not from the big boys of business. They have the right accountants and tax lawyers. So here we get back to Goldman Sachs chief Lloyd Blankfein.

When we see the acts of Google and how Goldman Sachs was involved in the Greek issues, people would wonder whether they (Goldman Sachs and the US government) are not working together in the same way. If so, then there are more questions on the entire setting of the article the Guardian published (from the link at the beginning). There is no way that someone like Mr Blankfein is not aware what the big boys of industry in America are doing. When we read in places like Forbes that Google is not alone in these acts, but that companies like Apple are doing the same thing, then raising a debt ceiling whilst the captains of industry are not paying anywhere near the tax they ‘should’ then we must ask other questions. All this becomes even more hilarious when we consider the information from the Financial Standard on July 15th (at http://www.financialstandard.com.au/news/view/33335431) where it is stated that “US delays tax avoidance law by 6 months“. So the big boys in that initial Guardian Article are all about gloom and doom, whilst the US treasury seems to be missing out on taxation by not acting on Tax evasion (which is actually not a crime at present). So they want to borrow more, but will not put in place legislation that would lessen the dangers of paying the due interest. That last part is shown in Forbes article last month by Steve Denning. (At http://www.forbes.com/sites/stevedenning/2013/09/12/alan-blinder-six-reasons-why-another-financial-crisis-is-still-inevitable/)

  1. Dodd-Frank Act of 2010 hasn’t been implemented.
  2. The $5 trillion banking assets in derivatives are still off-balance sheet and unregulated
  3. The rating agencies are “still hired and paid by the very companies whose securities they rate.”
  4. The Volcker Rule forbidding proprietary trading by banks has not been implementedAnd I add;
  5. US tax avoidance laws not implemented.

From these parts we could come to the conclusion that the Obama administration has failed the American people almost completely, whilst unable to get spending under control.

American politics is a lot more complex, so there are other factors, but it seems to me that Steve Denning is showing us several dangers that are currently not stopped. So when, not if, they happen, the people as they walk away with nothing left, can wonder how that expensive affordable healthcare is helping whilst they have no house, no job and no food.

It is a sad day for many people, because in the end, not only America seems to be unable to control their budgets, they are only, for now the most visible one.

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October 1, 2013 · 16:46

Biased Journalism on USA shutdown?

We have seen reports of all forms. We see information management in what I have called bad news managing. This has happened in the Netherlands. Is it Biased Journalism, or is this journalism based upon the information handed to them?

The second part would be fair enough, because the journalist is dealing with what is handed to them. However, when we look at the canons of Journalism and their codes of ethics some questions come to the front of the lines. Truthfulness, accuracy, objectivity are three of the elements and there are more than just these three. I am not willing to attack truthfulness. It is in my view an empty gesture to do so. This is all based upon information that the Journalist gets handed. Accuracy might be an issue. They might have passed on the exact information they were handed, yet how accurate was it? Was the information tested in any way? Then there is objectivity. I am not sure if that is a valid point. Let us face the fact that objectivity is in the eyes of the beholder and as such there is more than one viewpoint. In all honesty, any article would need to be viewed from more than one side and the news as we usually watch it on TV is actually not that equipped to do just that. Newspapers are!

I have illustrated in earlier blogs that some of the mentioned information seemed inaccurate to me. This happens, I do not claim to be correct, but it seemed too upbeat to me and as such I questioned it. I was not alone, but not too many public contributors were, and in more than one occasion my view was the correct one. So when I saw the NOS news today, more questions rose in my mind and it is time to ask a few more and some other questions.

The most questionable part was the news on the US Shutdown as that danger approaches within the next 24 hours. What I saw as an issue was the way some parties were illustrated. First of all, it is important to know that I am leaning strongly towards the republican view. Not stating so beforehand would be wrong in my mind. The issue I had was with the NOS newscast of the US shutdown. It was not incorrect, but there were issues that have not been mentioned, which were at the centre of it all.

I see this all as the republican move to stop the abundant of irresponsible spending by a democratic party run government. Yes, we know that this is not about the fiscal cliff this time, but the government budget is directly linked to this. The democrats have taken the debt out of acceptable proportions.

Let us not forget that the US has a 17,000 BILLION dollar debt, this comes down to 340 billion dollars per state. In addition, if we look back to the Californian change in 2003, when Arnold Schwarzenegger became governor, former governor Gray Davis was confronted with a recall because the state shortfall was only 10% of the 340 Billion. That was directly due to the dot com boom collapse and a large group of companies were suddenly in a position no longer able to pay taxation, which meant that California, one of the richest states was suddenly without cash. Now the simple logic that follows, if one of the richest states cannot pay 10% of the outstanding debt, how can the others pay at all? This is the big cake that gets layers after layer of icing. With each layer it is presented as something that can be dealt with, but both democrat and republicans have no real solution. This is at the core of it all. So it is not just about the government budget, it is the issue that the budget is not realistic and that it is only adding to the debt. So when I see the part where Democrat Nita Lowey is talking about a compromise, then I end up splitting my guts with laughter. For two administrations there has not been any decent level of compromise. The republican view is that spending MUST go down by a lot. We could view the state by state comparison, especially against the Netherlands. Most states are larger than the Netherlands and none have a realistic approach to dealing with a 340 billion dollar debt. Now compare that to the Netherlands having to cut 6 billion and the view is almost complete. We all have to tighten the belt and within the USA this would last for no less three generations. The view I am proclaiming to be correct does have issues as well. It is however the view I behold. After Detroit, which already has gone bust, almost two dozen cities are facing the same problem in the US. Fresno, Compton and Oakland are three of them and they are all in California (one of the three rich states). If we would take a deeper look at the 50+ largest cities, then we see healthcare and retirement cost issues that make Detroit look like a joke. It is the healthcare part that is at the centre of it all. The Republicans are utterly convinced that Obama Care will not solve it at all. It will just add to the massive debts. What has been propagated as a solution to all, is in the realistic view of many a non-solution that will push forward debts and invoices that cannot be paid for in the end and as such people will face even more hardship down the line. Not to mention the fact that healthcare professionals might end up seeking greener pastures outside of the US.

The budget shortage is not new. This has been going on since 1995 (at least), however, in those days former president Clinton had two advantages. The first was that the government coffers had a cash surplus. Second was that the dot com boom was going nice. Consultancy firms were going strong, the incomes were really nice and consultants were making loads of cash by selling concepts. So, people were buying ideas and not an existing product. No matter what the reason was (like 9/11), it was the spending that the Bush administration started which gave the treasury such a negative jolt. It was nowhere near the spending that President Obama did, but he did not start this, so let us be fair about it. Against the current administration it must be stated that the no true legislation has been passed stopping Wall street the way it should, so there is no evidence that this will not happen again. And we are all aware that the economic thrashing started all with the Wall Street Clam bake ‘lets go hedge funds’ that was a huge part of the predicament we have now.

The question from the NOS ‘Is there no talking with the Republicans?‘ is not the only question and the one sided part of it is not correct. The linked question is ‘Can US overspending not be contained?‘ is the side the Republicans are dealing with. That part does not seem to be addressed by anyone. We see that side when we look at all the other places, including the Netherlands, the UK and Australia. They all have their own budget ghosts to deal with.

The Dutch government has its own cross to bear trying to find solutions to a 6 billion cutting spree. Too much talking and for too long no results. If we take all these sides (in all the talked about nations), then perhaps another method should be found. The first part is to cut ALL political incomes by 20% and no overtime payment at all (not sure if they get that to begin with). That should make a decent cut in the cost to the national treasuries and might make for quicker decisions. In my view I see no solution in any way to lower taxation. I think that this approach is an unrealistic one. What might be a solution is to change it all to a two tiered tax system with only 27% and 39%. That might work, but only if ALL tax deductibility’s are removed. This has two benefits. The system becomes simpler, and over all, with no deductibility’s left it becomes a clear approach. In addition there is a need to make all commerce taxable at the point of sale (the location of the purchaser’s keyboard). This must be where the buyer physically is. This is to take a stance on that Google, Amazon, et al approach, where on-line companies seem to be selling it all from an empty office in Ireland at taxation levels which should be regarded as a joke.

The system has to be changed. We have heard so many voices that a solution can be made, whilst ZERO results have been achieved for close to a decade. When we see administrations of entire cities go bust, it is time to just end whining about a solution that remains no more than a concept.

By the way, when we look at spending it all, what has been the end result? The fact that the US, the bulk of the Commonwealth and the Netherlands are spending way too much (compared to what is coming in though taxation) is out of proportions. That is why the republicans are putting their foot down and so far there is no evidence that they are holding the wrong position.

What is the right position? That is the question and I do not know whether the Republican position will be the correct one either. Yet, staying with the Democratic view whilst we have almost a decade of evidence that it is not working seems to be a flawed point of view. That view is reinforced by the Heritage foundation where it was quoted “While federal revenues are recovering from the recent recession, spending is growing sharply, resulting in four consecutive years of deficits exceeding $1 trillion.”

So the US government has been spending more than a trillion more then it received. Consider that in 2011 the total revenue was set at 2.3 trillion, spending 43% more then you get each year is not a good idea. Consider that the recession is not done by a long-shot; overspending 40% annually will have long term consequences.

If we accept that a government is not a profit based organisation then we could consider that a government would collect taxation at 105%-110% of what it needs. When you spend money and then only collect 71% you are going to need guarantees that things will go wrong. So when I stated that it will take 3 generations to get rid of the debt I was not kidding. In addition, the 17 trillion was just the national debt. The total debt is set at 60 trillion (roughly). This means that every state in the US would have to come up with 1.2 trillion dollars to deal with it. (I know it is not fair, but I need to show an example).

If we consider the three richest states and considering the 2012 numbers (from http://www.census.gov/govs/statetax) we see the following:

The collected taxation from California was 112.3, New York 71.5 and Texas 48.5, all in billions of dollars. So whether we use either the 340 billion or the larger 1.2 trillion, only 3 of the 50 states have any chance of paying it to any effect. Viewing these numbers, do the math and we see that things must change (by a lot). The Heritage foundation is also showing that current entitlements are double the defence budget. How does this relate to Obama care? Will the info they state gives us that the additional costs by 2019 which was set at 100 billion, which is a little over 12% of all collected annual taxes. So, another 100 billion needed whilst there is no income against that. The slide states “Obama care imposes numerous tax hikes which total more than $500 billion over 10 years. Obama care’s higher tax rates on income and investment will slow economic growth, leaving hardworking American families and businesses worse off.”

These are the issues that the republicans are fighting. We have seen enough ‘evidence’ to know that most economic recovery for Europe will not commence until 2015. So, as the GOP (Republican Party) is watching these developments, whilst they are watching the additional entitlement costs go up even further, costs, which are pushing their sense of humour all the way to the basement of Congress. This means that there are additional issues stopping the America from regaining its status of ‘economic superpower’. So these are some of the elements that are not too ‘illuminated’ as the US government squabble goes on. The only bonus I see at present, is that when the government shuts down, they should consider not paying any of the elected Democrats and Republicans for these days either. It might at least save the treasury a few dollars.

 

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September 29, 2013 · 21:06

More than just Syria

The news has started to illustrate the issue I expected. I stated in my blog on September 20th “What we know about AQ is that they are about them and their needs“. That part is now coming to fruition. As ISIL they are now the third party in a civil war between two parties. My initial personal view is for President Assad and his opposition to come to an agreement and unite in a hunt for the members of ISIL/AQ, paving the way to some form of a seize fire.

Not doing so, will escalate this civil war in a plain hunt for lives who did not agree with the sharia convictions of ISIL/AQ. As Sky News now broadcasts how the victims of Syrian events are smuggled into Israeli Military Hospital where these victims are receiving lifesaving first aid and operations. A Samaritan act that will never be voiced by the victims they saved in fear of deadly reprisals. (At: http://news.sky.com/story/1147748/wounded-syrians-left-bleeding-with-the-enemy).

Isn’t it interesting that these so called Muslim ‘warriors’ are there just to ‘support’ one very specific version of Muslim faith. More important, the acts give weight to actually start open military intervention. In response to the article by the BBC (at http://www.bbc.co.uk/news/world-middle-east-23925037), which stand point I do support. We are now faced with their tactical blunder which we should exploit. This does however require the support of President Assad. My initial assessment is gaining weight, which was more on the side of the Russian stance that Assad was not the one firing the chemical weapons. As I had stated in my earlier blog, it would make sense that an AQ attack to draw America and Israel into this conflict was the fuse to a powder keg. As the initial attack did not happen, ISIL is now actively attacking ‘their’ enemies. When we consider the September 19th report by Reuters (at http://www.reuters.com/article/2013_/09/19/us-syria-crisis-turkey-idUSBRE98I0C120130919)

This ‘game’ had been about de-stabilisation from the very start. As stated by me “AQ only cares for AQ” and as such, any diplomatic option towards AQ should be classified as null and void.

Yet this will take orchestration of some size, yet as AQ made the mistake of getting too close to the Turkish border, the issues could change if any attack on Turkey commences. At that point the NATO members have no option but to come to the aid of Turkey, also, the Turkish President Abdullah Gul would gain massive support and popularity should it get forced into a direct conflict with AQ forces, now trying to overrun Syrian areas. These events also change the game in other ways. AQ has zero support from Russia (in light of their Chechnyan ‘friends’) and at this point the turning table exists for Iran. If they decide not to get involved, which would be fair enough, the end result remains the same; AQ would have to go it alone, with their former temporary friends as well as the Government forces of President Assad at their throats. The bottle neck comes as NATO/Turkey slam down the box in the final side. AQ will cause massive amounts of damage. That is unlikely to be prevented. This is also where I do not completely support the Guardian article by Sarah Margon (at http://www.theguardian.com/commentisfree/2013/sep/20/sarin-gas-syria-icc). The quote “Opposition forces have also committed serious abuses, increasingly resorting to executions and indiscriminate shelling of government-held areas.” might not be incorrect, but it might be incomplete. If AQ is part of the opposition, then we must see whether this was an actual act by what is called the ‘moderate’ opposition forces, or are these events the work of AQ and AQ minded opposition forces. So Syria is now clearly less clear cut. It is a civil war with three parties, each with their own agenda.

As such the question grows, why should we get involved? No matter how the Syrian civil war goes. If AQ is not dealt with, they will flame out wreaking havoc on both Jordan and Israel. In addition, AQ is pushing forward with pressures against Egyptian forces as well as attacks on Israel. Reuters reported yesterday the Sinai attack (at http://www.reuters.com/article/2013/09/28/us-egypt-sinai-idUSBRE98R09220130928). It will take massive amounts of discipline for Israel to keep their cool for now. Should the IDF face these attacks on the north side, as well as attacks on the Sinai Eilat side, then we, successful or not, will have to face the consequences. There are also financial repercussions. In a BBC newscast, from last November “This still means that as of Saturday night Israel had spent roughly $29m on interceptor missiles in three days.” The IDF has an Iron Dome presence, yet how much financial pressure is it under at present?

There is a linked view, which comes from the Heritage foundation, an American Think-tank. The article was by Baker Spring and Michaela Dodge. Baker is a Research Fellow in National Security Policy and Michaela is a Research Assistant for Missile Defense and Foreign Policy, so they do know their missiles. Their quote “Each Iron Dome Tamir interceptor costs more than $100,000 to produce. This is many times the cost of a Grad, Qassam, Katyusha-style rockets. But there is more to assessing the cost effectiveness of a defensive system such as Iron Dome than a simple calculation of the cost of an additional defensive interceptor compared to the cost of an additional offensive rockets.” is on target. Their assessment makes the issues not as clear cut, but what is clear is no matter which approach AQ is taking, Israel will feel tremendous pressures as these events drag on and they are not the only one.

Jordan is facing massive pressures through the Syrian refugees. The Guardian reported some of this (at http://www.theguardian.com/news/datablog/2013/jul/25/syrian-refugee-crisis-in-numbers-updated). This article is focussed on the numbers. It does mention the fact that Syria is short on roughly $2B to get anything done. What is less shown is that Jordan was never known for an abundance of resources, especially water. With an additional 3 million mouths to fill those resources will dwindle down to nil quite quickly. Consider that it will need an additional 2 million gallons of water a day, an amount that will run Jordan dry really fast. You can see how Jordan’s goose gets dry cooked. If these numbers mean little, then consider that with a water scarcity in place, their population due to refugees has grown by 50%, all because of the Syrian civil war. A possible solution would be if we could find some solution in Aqaba. It is not a quick solution, yet the option of running a pipeline from the Sinai through Eilat to Aqaba, giving all parties relief might be an option. As that part of the Sinai is in MFO buffer zone C, and if both Egypt and Israel would agree on it, then there would be an accessible place that is in ‘neutral’ space for now, allowing relief to both Israel and Jordan as they are trying to deal with water shortages for the Syrian refugees. This option might also allow for some agricultural solutions, which would deal with the long term issues that will pop up. The AQ would have to be hunted out of the Sinai, but in that regard both Israel and Egypt agree.

Why there? If that region is to have any future, then anything we start now; any action that allows for a growth of tourism in that region, like a second Sharm-El-Sheik, but next to (or close to) Eilat, could in time be the financial infuse that could grow that region to some level of prosperity. Europe and America are now in a low curve, but it will not stay that way. In addition, as tourism grows business. This option has all the makings for finding a long term peaceful solution. It could become an option which will always be a better one than non-stop flooding the region with money and goods.

In my mind (oversimplified, I admit), I see this as a solution. The Dutch are massive experts in Greenhouses. Consider that these are build close to a water plant in the Sinai, Around Eilat, Israel and close to Aqaba, Jordan. So if we can get the water there, in some form, but likely via tankers, there could be an actual push for peaceful reform. We need to get food there in several ways. Finding a way to grow some of it will down the track be the cheapest and it would start real change.

Even though this Powder keg known as the Middle East has been lit and AQ is the fuse, would it not be the master of all Ironies if Al-Qaeda becomes the glue that actually sets in place some lasting form of peace? As, whoever is running Al Qaeda, faces a possible future where a peaceful Middle Eastern alliance develops with Israel as an accepted partner by all and it was thanks to AQ. Would the howling laughter of people not drive him (or her) insane?

Graveyards and politicians both love irony in equal measure, let’s make it so!

 

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