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Sunday, November 06, 2016

The Price of Certainty

A short film The Price of Certainty, by a Jewish survivor of wartime Poland:

If you have high “need for closure,” you tend to make decisions quickly and see the world in black and white. If you have a low need for closure, you tolerate ambiguity, but often have difficulty making decisions. All of us fall naturally somewhere on this spectrum.

http://www.nytimes.com/2016/11/01/opinion/the-price-of-certainty.html

Saturday, September 10, 2016

Foreign countries not US have first call on Apple's $200bn+ cash trove in Irish shell firms

It's not a recent development for tax offices to look behind sham/artificial structures in dissecting schemes to reduce tax. In recent years the abuse in the CT area has also focused on sham arrangements.

The House of Commons Public Accounts Committee in 2013 rejected Google's argument that sales of corporate advertising were completed and thus invoiced in Dublin as Google UK staff only partially handled sales issues with clients — "an argument which we find deeply unconvincing on the basis of evidence"; "Google has also conceded that its engineers in the UK are contributing to product development and creating economic value in the UK"; "HMRC needs to be much more effective in challenging the artificial corporate structures created by multinationals with no other purpose than to avoid tax."

Edward Kleinbard, professor of law and business at the University of Southern California, is a former chief of staff of the US Congress's Joint Committee on Taxation, and he testified at the US Senate hearings on Apple in May 2013. Prof Kleinbard wrote this week on The European Commission ruling that Ireland provided Apple with illegal state aid:

Tax here was just the instrument for delivering state aid. The US Treasury is expert in detecting tax shams used to disadvantage US tax collections, and should have recognized that the EC similarly is making a sham arrangement argument.

Kleinbard says Jack Lew, US Treasury secretary, and Apple are wrong when they argue that only the Internal Revenue Service has a legitimate claim to Apple’s $230bn in largely untaxed offshore cash, technically in Irish offshore shell companies but actually in the United States. "This is a misstatement of US law."

Apple says 65% of its earnings are foreign-related but it also contradicts itself by saying most profits are generated in the US. However, the the profits it books overseas puts overseas tax offices other than the IRS ahead in the taxing queue. Apple settled a tax fraud case last year with Italy and there are more to come.

For nearly 100 years the nation has followed the principle that the jurisdiction in which income arises (the “source jurisdiction”) has priority in taxing cross-border income. To prevent double taxation, a US company can claim a credit against its US tax bill for levies already paid to source countries. So US tax on a dividend repatriation is a residual liability of the company, payable only to the extent that source countries have not first taxed the income.

Kleinbard says the United States aids and abets US multinationals in their stateless income tax gaming, whose object is to skim profits from countries where income actually is earned, and then to deposit those profits in a zero or near zero tax receptacle. That is the source of Apple’s offshore cash hoard totaling more than $200 billion.

Distilling the facts to their essence, in Europe, Apple has deployed the almost farcical charade that its income from retail sales in Germany, for example, really is earned by an Irish subsidiary that hovers just beyond the German border, doing all the value-added work to offer Apple products to German retail customers, but never quite putting a foot down in Germany.

For the United States, the game is different, but just as artificial. Apple’s plan, authorized in broad outline by IRS regulations, was to create an Irish subsidiary, stuff it with seed money, and to pretend that the subsidiary had its own independent business agenda. Apple Cupertino and Apple Ireland then entered into an “arm’s length cost sharing agreement” of the sort that two independent drug companies might employ to jointly develop a new drug.

The Irish shell companies were available to Apple for massive tax avoidance with reported sales in several countries artificially suppressed. The EC views the structure as a sham and it's unlikely that it was commonly available to other companies.

What makes this a state aid case rather than a tax one is that there is no plausible explanation for Ireland ceding its tax authority other than its understanding that jobs would follow. The parties reverse engineered a methodology to yield an agreed minimal tax take.

Edward Kleinbard: Apple’s Ireland tax avoidance should spur major reforms

Fortune magazine: Nearly 50,000 people have signed two petitions calling on the US Treasury Department to launch an investigation into Apple’s tax practices.

Finfacts:

Apple's stateless firm tax claims likely broke Irish law

Apple's tax woes as Irish conventional wisdom fails again

Ireland's Apple tax appeal to European court likely to fail

EU vs Apple: Ireland's €13bn tax windfall will be shared

How Apple found a bigger tax loophole than the Double Irish

The fable of the frog and Ireland's response to Brexit

Apple's foreign tax rate fell from 12 to 2% in a decade

Top 10% rich world incomes up 40% in 20 years as growth slowed

Italy's lost decades but average Irish standard of living lower

Monday, August 01, 2016

One month after Brexit

The question for markets after the referendum was whether the UK’s Brexit decision would result in a short, sharp shock or a more fundamental re-set. One month on, uncertainty persists. The FT’s senior investment columnist John Authers assesses sentiment.

 

Talking Trade: The FT’s Sebastian Payne rounds up the week’s Brexit news, including International Trade Secretary Liam Fox’s first foray into diplomacy and Prime Minister Theresa May’s visit to Rome.

Lionel Barber, FT editor, and Janan Ganesh, political commentator, discuss how the UK’s three Brexit ministers — Boris Johnson, Liam Fox and David Davis — plan to negotiate exit from the EU, and how they will work

Wednesday, July 27, 2016

How Trump changed US conservatism

Ed Luce of the FT talks to political commentator EJ Dionne about how the Republican party has been transformed in recent years and how the rise of Donald Trump is changing conservative politics.

 

Monday, May 30, 2016

China’s economic miracle under threat from slowing economy

China’s economic miracle is under threat from a slowing economy.

A dwindling labour force and turbulent stock market are adding to the country’s woes.

The FT investigates how the world’s most populous country has reached a critical chapter in its history. Jamil Anderlini narrates.

Will the End of the Chinese Miracle Bring Down Southeast Asia? — Knowledge @Wharton

 

On April 14, 2016, the John L. Thornton China Center and the Hutchins Center on Fiscal and Monetary Policy at Brookings hosted a discussion examining challenges and opportunities facing the Chinese economy, as well as the financial and economic links between China and the world. Ben Bernanke, former Federal Reserve chairman, joins later in the discussion.
 

 

Thursday, April 14, 2016

Irish Times returns to property porn in 2016 with fawning editorial

Ten years ago the Irish Times' Thursday property supplement typically comprised 60 pages — mostly of advertising at €10,000 to €15,000 per page and puff pieces on expensive properties.

We first published this article in 2006 when property porn was at its height in Ireland:

Global Survey 2006: Cost of comparable house in Dublin, Ireland, could buy 9 in Houston, Texas, 3 in Amsterdam, 2 in Sydney and Tokyo

In 2005, the Collins English Dictionary defined property porn as "a genre of escapist TV programmes, magazine features, etc showing desirable properties for sale, especially those in idyllic locations, or in need of renovation, or both."

Ever seen the nauseating 'Lifestyles of the Rich and Famous' American television series that ended each episode with the grovelling host using the catch phrase "champagne wishes and caviar dreams"?

Ten years later after bubble and bust, The Irish Times newspaper is back in full flight with fawning editorial on expensive properties.

Today the main feature is titled 'Riverdance duo’s Howth home for €9.5m' with a strapline 'Moya Doherty and John McColgan, are downsizing. Their 9,000sq ft home is on the market (picture above).

Madeleine Lyons, property editor and special reports editor of The Irish Times, writes:

What’s prophetic is that the site they chose was one of the finest in the capital, and has only been enhanced since. This is reflected in the €9.5 million minimum asking price through Ganly Walters. Danes Hollow will be one of the best properties to come on the market in Dublin this year.

With further elegant homes in London, Manhattan and Martha’s Vineyard, Danes Hollow might be just another part of the couple’s portfolio, but it has that something special.

As the agent puts it: “Whoever buys this property doesn’t even know that they want it. It’s when they see it for the first time that they will know.”

What is part of the property porn genre is the bullshit or exaggerated lexicon of the property industry: so the couple of course have "elegant homes in London, Manhattan and Martha’s Vineyard" but because a place is expensive doesn't mean its elegant!

Property porn typically gives a reason why the property is put on the market and in the past The Irish Times has used "downsizing' as a reason when in fact the vendors were trying to settle bank claims — I'm not suggesting that this is relevant is this case but the fact is that the content is advertorial not objective information.

There are other properties of the rich/ well off that are featured today. Note again the bullshit lexicon used by the freelance writers.

Fishing rights and island included in Co Cork for €3.5m — A sensitive renovation and makeover, costing €2 million, makes this Georgian gem, on the banks of the Blackwater in Fermoy, one of the best of its type in Ireland

Modern drama with rural charm for €2.8m — This Co Meath house near Collon has been tastefully rebuilt and offers plenty of period features, while the extensive grounds are perfect if you – or your horse – like a bit of space

Edwardian elegance in Killiney for €2.8m — Extended in 1990, Steeplewood is a detached period house on beautiful gardens

Smart mix of old and new in Dalkey for €1.95m — Spacious home on Sorrento Road has new enclosed patio area at front of house

Donnybrook five-bed with oodles of potential for €1.4m — Bring your architect with you when you go along to view this one

Show-stopping gardens and seclusion on Sorrento Road for €1.35m — Secluded three-bedroom property with gardens as outstanding feature

A redesigned upside-down mews in Ballsbridge for €950,000 — Delightful town garden with giant ferns and evergreens, raised patio and spot lighting

Thursday, March 24, 2016

John Oliver on Trump's beautiful border wall

Donald Trump, US presidential candidate, has put a range of price tags on the wall he wants to build on the 2,000-mile border with Mexico. It would be 1,000 miles long, made of precast concrete slabs, rising 35 to 40 feet in the air.

John Oliver, the British presenter of Last Week Tonight, a US comic news show, says Trump’s estimates of the cost range from $4bn, $6bn, $7bn, $10bn and $12bn. Estimating the cost of the wall based in part on a piece by Glenn Kessler of The Washington Post, Oliver concluded that the wall would actually cost “conservatively” $25bn.

 

Wednesday, March 16, 2016

War on Drugs: How to make money selling drugs

A documentary on how a street dealer can rise to drug cartel lord with relative ease. 'How to Make Money Selling Drugs' is an insider's guide to the violent but extremely US lucrative drug industry. Told from the perspective of former drug dealers, and featuring interviews with 50 Cent, Eminem, Russell Simmons, Susan Sarandon, and David Simon (creator of The Wire).

The film gives you the lessons you need to start your own drug empire while exposing the corruption behind the war on drugs.

Finfacts 2015: Disastrous War on Drugs and ignoring the evidence

Finfacts Blog 2015: What happened when Portugal decriminalised drugs — Overdose deaths fell to lowest in Europe

 

The Economist wrote in June 2015:

WITH less than 5% of the world’s population, the United States holds roughly a quarter of its prisoners: more than 2.3m people, including 1.6m in state and federal prisons and over 700,000 in local jails and immigration pens. Per head, the incarceration rate in the land of the free has risen seven-fold since the 1970s, and is now five times Britain’s, nine times Germany’s and 14 times Japan’s. At any one time, one American adult in 35 is in prison, on parole or on probation. A third of African-American men can expect to be locked up at some point, and one in nine black children has a parent behind bars. [ ]
Reducing the prison population to European levels is probably impossible, for America is still a much more violent place, even if most districts are reasonably safe. There are roughly 165,000 murderers in American state prisons and 160,000 rapists. If America were to release every single prisoner who has not been convicted of killing or raping someone, its incarceration rate would still be higher than Germany’s.

Sunday, March 06, 2016

Living in Bangkok as a foreign correspondent

In this episode of My City, the FT’s Bangkok regional correspondent Michael Peel takes a closer look at the Thai capital. He meets outspoken critics of the ruling junta and those trying to help the country’s most vulnerable.

 

Tuesday, February 23, 2016

Big brands' cheap clothes and modern slavery

Trendy clothes are cheaper than ever. That sounds great for the people who buy them, but it's horrible for the people who make them.
 
Buying cheap clothing is easy these days, especially thanks to fast fashion labels like Joe Fresh, Zara, Forever 21, and GAP brands including Banana Republic and Old Navy, but despite commitments that slavery work conditions would be forbidden for example at contractors in places like Bangladesh, senior executives of big brands only respond with bromides for public relations purposes when there is an embarrassing story in the media.

Last April, John Oliver, the British comic, in a segment on his America show, "Last Week Tonight," examined the labour practices of fashion brands and he highlighted how unethical they really are.

The Huffington Post says that Oliver points out the problem of child labour has been publicized since the '90s, but thanks to clever and frilly ad campaigns and cover-ups, we as consumers, become blinded (and perhaps sometimes ignorant). That is, until we see something like the Rana Plaza factory collapse, which happened in recent years ago, flash all over our screens.

Oliver closes his segment with preparations of dirt-cheap lunches to be delivered to the offices of the bosses of Gap, Walmart, Joe Fresh, H&M and The Children's Place, making the point that the food had been produced by various outfits and like the clothes, the supply chain has been complicated — how could any company be responsible for their contractors' sub-contracting to more shady operators?

How would they like eating dodgy food from unknown providers?

Tuesday, December 29, 2015

The World in 2016 - Economist video

 

The Economist: Watch some of the biggest stories of the year ahead — before they happen. Early access to our latest film, featuring behind-the-scenes access to China's Olympic training camps, former Doctor Who star David Tennant, the biggest environmental problem you've never heard of, therapeutic virtual reality and much more.

World in 2016

More on El Niño: Irish environmental vandalism and Bandon flooding

Sunday, November 22, 2015

Thanksgiving dinner, Matthew McConaughey, Adele and contemporary prejudices

Matthew McConaughey, the accomplished and versatile American actor, was the host of the Saturday Night Live comedy show yesterday (21 Nov) and Adele, the British singer, was his special guest.

This Thursday is Thanksgiving day and this is a clip from the show with a typically dysfunctional Thanksgiving dinner complete with contemporary prejudices, where Adele's “Hello” keeps intervening as the only thing everyone in the family can agree on.

 

Larry David in Curb Your Enthusiasm - Black Man In A Suit

''Yeah, it is possible for black people to have other jobs.''

Larry David, producer, writer and actor, wrote for Saturday Night Live, wrote and produced the sitcom Seinfeld and created HBO's Curb Your Enthusiasm. He currently plays Bernie Sanders, the Democratic candidate for president, on Saturday Night Live.

Video

Beyond comedy, Jane Elliott, an Iowa schoolteacher, on the day after Martin Luther King Jr. was murdered in 1968, gave her third-grade students a first-hand experience in the meaning of discrimination. She devised a daring "Blue Eyes/Brown Eyes" experiment with labels on participants as inferior or superior based solely upon the colour of their eyes and exposes them to the experience of being a minority.

 

 

Wednesday, November 18, 2015

Solidarity with France after night of terror in Paris

La Marseillaise has been prominent in recent days as peoples across the world have showed solidarity with France after the terrorist murders in Paris.  

A YouTube video of the scene from the 1942 film 'Casablanca,' in which character Victor Laszlo (played by Paul Henreid) leads customers in Rick's Café bar, in singing an impromptu rendition of the French national anthem, La Marseillaise, in response to a group of Nazis who are singing the German national anthem.

La Marseillaise chantée par tout le stade de Wembley lors de France-Angleterre!

Wembley Stadium, London, prior to the start of the England-France friendly football game 17 Nov, 2015 — 4 days after 129 people were murdered in Paris in the worst terrorist attacks since the end of teh Second World War  

 

La Marseillaise (full, high quality) - Placido Domingo

 

Monday, November 16, 2015

Financial Repression: QE undermines pension funds and savers

 

Quantitative easing has been a serious problem for the pensions industry. Amin Rajan, chief executive of Create Research, explains to Long View columnist John Authers how the resultant volatility has reduced investment decisions to a shot in the dark.

According to the FT's Lexicon financial repression is a term used to describe measures sometimes used by governments to boost their coffers and/or reduce debt. These measures include the deliberate attempt to hold down interest rates to below inflation, representing a tax on savers and a transfer of benefits from lenders to borrowers. Financial repression is also used to describe measures to facilitate a domestic market for government debt and the imposition of capital controls. The combined effect of all these measures means funds are channeled to the government that would otherwise flow elsewhere. Financial repression in China is said to be the cause of its huge accumulation of foreign currency reserves. Similarly western governments were being accused of financial repression following the 2008/2009 financial crisis as they embarked on measures including quantitative easing, capping interest rates and creating more domestic demand for their own bonds.

Living in unique economic/ financial times; Interest rates at 5000 year lows

Wednesday, October 28, 2015

Economist Films: Prison reform in Norway compared with the US

Economist Films: More former prisoners are reoffending than ever before. It reveals the latest efforts to break the cycle in the first episode of the new Economist Films series.

 

In Norway according to Business Insider fewer than 4,000 of the country’s 5m people were behind bars as of August 2014. There were about 4,200 Irish prisoners on 30 Sept 2015.

Norway’s incarceration rate is just 75 per 100,000 people, compared to 707 people for every 100,000 people in the US.

On top of that, when criminals in Norway leave prison, they stay out. It has one of the lowest recidivism rates in the world at 20%. The US has one of the highest: 76.6% of prisoners are re-arrested within five years.

The Economist wrote in 2014 that prisoners are often released with no supervision and no help finding a job. That makes them more likely to reoffend. According to a report published in June 2014 by Pew, a think-tank, the number freed with no form of parole has more than doubled over the past 20 years, though this varies a lot from state to state. In Florida 64% of prisoners leave like this; in California the figure is less than 1%.

One US study found that within three years of release, about two-thirds (67.8%) of released US prisoners were rearrested.

In 44 US states the biggest mental-health institution is a prison, and police spend much of their time dealing with the effects of untreated mental illness (see article). But it is not the only one. British police spend as much as two-fifths of their time dealing with cases that involve mental illness, though few have the necessary training. Across Europe, 40-70% of prison inmates are mentally ill.

Badly educated men in rich countries have not adapted well to trade, technology or feminism

The Financial Times reported today that in 2015, the number of over-60s in jail topped 4,000 for the first time on record, more than double the figure 10 years ago. It is the fastest-growing age group in custody and the rise relates to recent convictions for sex abuse dating from past decades.

Wednesday, October 21, 2015

The fund management fee racket

Charley Ellis, author of 'Winning the Loser's Game', explains to the FT’s John Authers how, almost uniquely, the fund management industry has managed to avoid competing on price.

 

Sunday, October 18, 2015

Prospects for Spain’s recovery 

FT deputy editor John Thornhill speaks to Luis de Guindos, Spain’s minister of economy and competitiveness, about the country’s nascent economic recovery, how its high unemployment rates can be tackled and what reforms are still needed.

 

What opportunities are there to invest in Spain and what impact will the country’s upcoming election have on investor confidence? FT hedge fund correspondent Miles Johnson speaks to Joseph Oughourlian, chief executive of Amber Capital.

 

Wednesday, October 14, 2015

Push to keep the UK in the EU has begun

The push to keep the UK in the EU has begun, with the launch of the Britain Stronger in Europe campaign. But as Janan Ganesh explains to Lionel Barber, the editor of The Financial Times, there will never be a clear answer to the Europe question, despite a referendum.

 

Sunday, October 11, 2015

Limerick chartered accountancy firm using stolen Finfacts content

Plagiarism is common on the web and when a business firm takes the complete content of articles from the Finfacts website plus images, and presents it as its own, it's a bridge too far.

MacLoughlin & Company says it "is a small Chartered Accountancy Firm which specialises in Tax, accounting and business solutions to the Limerick area."

It has 209 articles in its website's news section and apart from Finfacts content, there are articles from several foreign sources including this week a complete piece on the sale of a Picasso painting that also appears in The Guardian newspaper with the byline: "Mark Brown Arts correspondent" — MacLoughlin & Company may have contracts with the foreign sources but it has none with Finfacts.

We have no problem with fair use of content with a hyperlink to the original source but in this case the full content that involved significant research, has been republished and is presented by the firm as its own. 

We have submitted a complaint to the Chartered Accountants Regulatory Board.

Irish Politics: Scraps on tax & welfare in place of vision — 9 Oct posted on Finfacts

http://www.finfacts.ie/Irish_finance_news/articleDetail.php?Irish-Politics-Scraps-on-tax-welfare-in-place-of-vision-252

http://accountantlimerick.ie/news/?article=214

Half Ireland's population paid public income supports in 2014 — 8 Oct posted on Finfacts

http://www.finfacts.ie/Irish_finance_news/articleDetail.php?Half-Ireland-s-population-paid-public-income-supports-in-2014-250

http://accountantlimerick.ie/news/?article=215

Irish Budget 2016: Bruton wants 30% flat tax rate for immigrants — 4 Oct posted on Finfacts

http://www.finfacts.ie/Irish_finance_news/articleDetail.php?Irish-Budget-2016-Bruton-wants-30-flat-tax-rate-for-immigrants-228

http://accountantlimerick.ie/news/?article=174

Friday, October 09, 2015

Pro-life, pro-gun, and hypocrisy in America

Trevor Noah of the Daily Show proposes that anti-abortion advocates like Carly Fiorina and Jeb Bush channel their pro-life rhetoric into another vital issue: gun control.

 

Presidential hopeful Ben Carson doubles down on condemnatory remarks he made about victims of a mass shooting at an Oregon community college.