National planning Cyprus-style solution for New Zealand

National planning Cyprus-style solution for New Zealand


The National Government are pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts, the Green Party said today.

Open Bank Resolution (OBR) is Finance Minister Bill English’s favoured option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank’s bail out.

“Bill English is proposing a Cyprus-style solution for managing bank failure here in New Zealand – a solution that will see small depositors lose some of their savings to fund big bank bailouts,” said Green Party Co-leader Dr Russel Norman.

READ MORE:  http://www.scoop.co.nz/stories/PA1303/S00306/national-planning-cyprus-style-solution-for-new-zealand.htm

The America that works

"THE greatest nation on earth—the greatest nation on earth—cannot keep conducting its business by drifting from one manufactured crisis to the next. We can’t do it,” fulminated Barack Obama last month. The crisis of the moment, the “sequester” (a package of budget cuts designed to be so ghastly that Congress would pass a better version), duly came into effect on March 1st. Unless Congress agrees on an extension to its budget, the government will start to shut down on March 28th. In May the greatest nation will hit its debt ceiling; unless it is raised, Uncle Sam will soon start defaulting on his bills.

This is the America that China’s leaders laugh at, and the rest of the democratic world despairs of. Its debt is rising, its population is ageing in a budget-threatening way, its schools are mediocre by international standards, its infrastructure rickety, its regulations dense, its tax code byzantine, its immigration system hare-brained—and it has fallen from first position in the World Economic Forum’s competitiveness rankings to seventh in just four years. Last year both Mr Obama and his election opponent, Mitt Romney, complained about the American dream slipping away. Today, the country’s main businesses sit on nearly $2 trillion in cash, afraid to invest in part because corporate bosses cannot imagine any of Washington’s feuding partisans fixing anything.

READ MORE:  http://www.economist.com/news/leaders/21573544-luckily-dysfunction-washington-only-one-side-americas-story-america-works

Fed Throws Junk Bond Lifeline to Weak Companies

Struggling companies that otherwise might not be able to stay afloat have found a friend in the Federal Reserve.

The central bank's cheap-money policies have allowed borderline companies to get low-cost financing thanks to investors who are thirsting for yield and buying risky bonds as the Fed keeps its target funds rate near zero.

While that's been a boon for poorly rated firms, it also poses the threat that companies that otherwise might fail are getting artificial support and in danger of causing substantial economic damage once interest rates rise.

READ MORE:  http://www.cnbc.com/id/100558326

China Showing Symptoms of Financial Crisis: Report

Just as concerns over a hard landing in the world's second largest economy look to have faded, economists at Nomura sounded a warning that the Chinese economy is exhibiting the same worrying symptoms that triggered the 2008 financial crisis.

The country's rapid buildup of leverage, decline in potential growth and elevated property prices, are three red flags that should not be downplayed, according to economists at the bank, Zhiwei Zhang and Wendy Chen.

"China faces rising risks of a systemic financial crisis and the government needs to take action quickly to contain such risks. We believe the true extent of financial risks in China is not fully appreciated by investors," Zhang and Chen wrote in a report released over the weekend.

READ MORE:  http://www.cnbc.com/id/100562024

Cyprus deal shock sends shares tumbling, gold up

LONDON (Reuters) - The surprise decision by euro zone leaders to part-fund a bailout of Cyprus by taxing bank deposits sent shockwaves through financial markets on Monday, with shares and the bonds of struggling euro zone governments tumbling.

The bloc struck a deal on Saturday to hand Cyprus rescue loans worth 10 billion euros ($13 billion), but defied warnings - including from the European Central Bank - and imposed a levy that would see those with cash in the island's banks lose between 6.75 and 9.9 percent of their money.

Parliament in Cyprus put off a vote on the measure - which has shaken depositors' confidence in banks across the continent - until Tuesday, however, and with public anger at the deal widespread the government said it was already looking to ease the pain for small savers.

READ MORE:  http://finance.yahoo.com/news/yen-firms-asia-shares-fall-001926588.html

Tax Prof: ObamaCare Tax Increases Are Double Original Estimate

The Joint Committee on Taxation recently released a 96 page report on the tax provisions associated with Affordable Care Act. The report describes the 21 tax increases included in Obamacare, totaling $1.058 trillion – a steep increase from initial assessment, according to the Tax Prof Blog. The summer 2012 estimate is nearly twice the $569 billion estimate produced at the time of the passage of the law in March 2010.

READ MORE:  http://www.economicpolicyjournal.com/2013/03/tax-prof-obamacare-tax-increases-are.html

Boxer-Sanders Carbon “Fee” Relies on Huge Bait-and-Switch

A recent story in EnergyGuardian (sub. req’d) centered on Senator Sheldon Whitehouse’s (D-R.I.) support for the carbon “fee” bill introduced by his colleagues Sen. Barbara Boxer and Sen. Bernie Sanders.

Fortunately, the newly-released NERA study gives us a quantitative estimate of how much their scheme would hurt the U.S. economy. The whole episode fulfills the warnings that many of us have been making during the carbon tax debate. Specifically, advocates of a carbon tax rely on a bait-and-switch, where they make wild promises about the alleged environmental benefits of a relatively modest tax rate. As the NERA study shows, however, if the tax rate is modest, the environmental impact is negligible, but if the rate is high enough to really reduce U.S. carbon dioxide emissions, the economic impacts are absolutely devastating.

READ MORE:  http://www.instituteforenergyresearch.org/2013/02/28/boxer-sanders-carbon-fee-relies-on-huge-bait-and-switch/

Economists slice, dice carbon tax at forum

f the idea that the battling parties in Congress might get behind a tax on heat-trapping carbon emissions is laughable, the tax's proponents don't get the joke.

It won't be long, they say, before a cash-strapped U.S. government sees that fighting climate change makes economic sense.

So almost every day in Washington, D.C., one think tank or another is discussing the pros and cons of the carbon tax.

Yesterday, it was the nonpartisan Resources for the Future's turn. The think tank hosted a forum on carbon taxes that drew not only the usual assortment of policy analysts and environmentalists, but also Democratic and Republican Capitol Hill staff and industry representatives.

READ MORE:  http://www.eenews.net/public/Greenwire/2013/02/28/4

Healthcare Costs for Families- A Looming Financial Disaster

The Affordable Care Act was passed with the intent of insuring 700,000 uninsured and functionally cost-prohibitively uninsurable patients because of pre-existing conditions. By the end of 2012, 78,000 were insured. The AP reported last week over 100,000 were insured via the program at the end of February, a highly unlikely number. In any case, a majority of targeted patients remain uninsured, perhaps more.

         

The ACA allocated $5 billion for the program to cover uninsurable patients and about half of that has already been spent, so the program is being canceled as of this week. Of those patients for whom insurance was purchased prior to 2011, the average expenditure on their healthcare was $4.6 million per patient by the end of 2011. The net cost to the population of insured patients is in the $300-$400 billion range. That cost paid by the insurance companies for healthcare services will be distributed to future purchasers of healthcare insurance. The one-time cost to the government to purchase the insurance was $2.5 billion. The bulk of the money represents a cost shift to the private sector, not yet factored in to the next round of rates, which have already increased in cost.

            As a consequence, the IRS, responsible for enforcement of the health reform act has informed the Congressional Budget Office (CBO) that the average family in the US will today will owe $20,000 annually for healthcare insurance. That is for the lowest coverage available that is authorized by government, the Bronze plan.

Gold and Platinum plans may be available, but they may be unaffordable unless you are among the wealthier "1%" of Americans.

 

What are we to make of this?

 

            Firstly, less than 14% of the people intended to benefit from this healthcare reform plan have actually benefited.

            Secondly, over one third of the total money , one trillion dollars allocated by the health reform act for the decade of coverage has already been spent on that small number of patients.          Thirdly, the cost burden transferred to the insurance industry and passed on to the insured population will make private health insurance cease to exist.

 

While the extinction of the health insurance industry which is based upon demographic cost sharing and risk assessment is the goal for so-called "progressives", the government will end up as the sole third party payor for healthcare services.

            Given the inherent inefficiencies of government and the lack of competition, it is highly likely the abject failure of the initial implementation efforts of the Federal healthcare reform legislation will accelerate in the absence of competition. This is a fool’s game which will result in the centralization of decision-making and loss of freedom for individuals, communities, and States.

 

Chris Casscells, M.D.

Director, Center for Healthcare Policy

 Caesar Rodney Institute

Why Central Planning Fails

The Dow is still rising. It rose another 125 points yesterday… hitting a new record high.
Gold is dawdling.

We’re still thinking about how so many smart people came to believe things that aren’t true. Krugman, Stiglitz, Friedman, Bernanke — all seem to have a simpleton’s view of how the world works. They believe they can manipulate the future and make it better. Not just for themselves, but for everyone. Where did such a silly idea come from?

Aristotelian logic came to dominate Western thought after the Renaissance. It was essentially a forerunner of positivism — which is supposedly based on objective conditions and scientific reasoning. “Give me the facts,” says the positivist, confidently. “Let me apply my rational brain to them. I will come up with a solution!”

This is fine, if you are building the Eiffel Tower or organizing the next church supper. But positivism falls apart when it is applied to schemes that go beyond the reach of the “herald’s cry.”

Read more: http://dailyreckoning.com/why-central-planning-fails/#ixzz2NtscGJGh

46,609,072 People on Food Stamps in 2012; Record 47,791,996 in December

 Nearly a quarter of the people living in Washington, D.C. are on the program.

 
On Friday, the United States Department of Agriculture quietly released new statistics related to the food stamps program, officially known as SNAP (the Supplemental Nutrition Assistance Program). The numbers reveal, in 2012, the food stamps program was the biggest it's ever been, with an average of 46,609,072 people on the program every month of last year. 47,791,996 people were on the program in the month of December 2012.

The federal government also says that in a given month in 2012, the number of households on food stamps was 22,329,713.

The state with the highest average number of participants per month in 2012 was Texas, with an astonishing 4,038,440 folks drawing from the program. The second highest is California, with 3,964,221, and then Florida, at 3,353,064.

READ MORE:  http://www.weeklystandard.com/blogs/46609072-people-food-stamps-2012_706745.html

Francois Hollande lurches Right in historic U-Turn to save French economy

French president François Hollande has bowed to massive pressure for business tax cuts to pull France’s economy out of slump and stave off industrial decline, ditching a core element of his socialist platform. 

 

Company taxes will fall by €20bn a year equal to 1pc of GDP, to be phased in gradually by 2015 under a convoluted system of rebates.
 

Premier Jean-Marc Ayrault said it amounted to a 6pc cut in unit labour costs, enough to close the gap with eurozone rivals. "France is not condemned to a spiral of decline, but we need a national jolt to regain control of our destiny," he said.
 

The mid-rate of VAT for restaurants and services will jump from 7pc to 10pc. The top rate will rise slightly to 20pc. Spending cuts will plug the revenue gap in order to meet the EU’s 3pc deficit target.
 

Critics call it the most humiliating U-turn in French politics since François Mitterrand abandoned his disastrous experiment of "Socialism in one country" under a D-Mark currency peg in 1983.
 

READ MORE:  http://www.telegraph.co.uk/finance/economics/9659504/Francois-Hollande-lurches-Right-in-historic-U-Turn-to-save-French-economy.html

 

Recovery in US Lifting Profits, Not Adding Jobs

With the Dow Jones industrial Average flirting with a record high, the split between American workers and the companies that employ them is widening and could worsen in the next few months as federal budget cuts take hold.

That gulf helps explain why stock markets are thriving even as the economy is barely growing and unemployment remains stubbornly high.

With millions still out of work, companies face little pressure to raise salaries, while productivity gains allow them to increase sales without adding workers.

''So far in this recovery, corporations have captured an unusually high share of the income gains,'' said Ethan Harris, co-head of global economics at Bank of America Merrill Lynch. ''The U.S. corporate sector is in a lot better health than the overall economy. And until we get a full recovery in the labor market, this will persist.''


READ MORE:   http://www.cnbc.com/id/100516504

US Oil and Gas Boom Takes Many by Surprise

The rapid growth in U.S. oil production has surprised even industry insiders.

Forecasts that once sounded far-fetched are becoming reality. The oil production boom had been expected, but the magnitude of change in such a short period of time is a surprise. U.S. oil production is at its highest level in 20 years, while at the same time U.S. oil demand is at a 17-year low.

The International Energy Agency projects the U.S. could even leap frog Saudi Arabia and Russia to become the world's biggest oil producer by 2020.

READ MORE:  http://www.cnbc.com/id/100513916

Wealthy's Tax Bill Will Hit 30-Year High in 2013

With Washington gridlocked again over whether to raise their taxes, it turns out wealthy families already are paying some of their biggest federal tax bills in decades even as the rest of the population continues to pay at historically low rates.

President Obama and Democratic leaders in Congress say the wealthy must pay their fair share if the federal government is ever going to fix its finances and reduce the budget deficit to a manageable level.

A new analysis, however, shows that average tax bills for high-income families rarely have been higher since the Congressional Budget Office began tracking the data in 1979. It's middle- and low-income families who aren't paying as much as they used to.

READ MORE:  http://www.cnbc.com/id/100518058

Consumer Spending in U.S. Climbs Even as Taxes Hurt Incomes

Consumer spending in the U.S. rose in January even as incomes dropped by the most in 20 years, showing households were weathering the payroll-tax increase by socking away less money in the bank.

Household purchases, which account for about 70 percent of the economy, climbed 0.2 percent after a 0.1 percent gain the prior month, a Commerce Department report showed today in Washington. The median estimate in a Bloomberg survey of 76 economists called for a 0.2 percent advance. Incomes slumped 3.6 percent, sending the saving rate down to the lowest level since November 2007.

Employment gains, the rebound in housing and growing demand for autos will probably keep supporting consumer spending in the first quarter as the world’s largest economy picks up from an end-of-year slowdown. Even so, rising gasoline prices and the need to rebuild nest eggs may make it difficult for households to match last quarter’s performance. 

READ MORE:  http://www.bloomberg.com/news/2013-03-01/consumer-spending-in-u-s-climbs-even-as-taxes-hurt-incomes.html

Italy behind rise in eurozone jobless to record

LONDON (AP) -- Italy's voters gave their verdict on the austerity medicine they've been forced to take when they went to the polls earlier this week. By Friday, one of the reasons behind the protest was highlighted when the country's unemployment hit its highest level in at least two decades.

Official figures Friday showed that unemployment in the country in January rose to 11.7 percent from the previous month's 11.3 percent. January's figure was the highest since the current way of measuring unemployment was introduced in 1992.

READ MORE:  http://hosted.ap.org/dynamic/stories/E/EU_EUROPE_ECONOMY?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2013-03-01-05-28-59

Consumer Spending in U.S. Climbs Even as Taxes Hurt Incomes

Consumer spending in the U.S. rose in January even as incomes dropped by the most in 20 years, showing households were weathering the payroll-tax increase by socking away less money in the bank.

Household purchases, which account for about 70 percent of the economy, climbed 0.2 percent after a 0.1 percent gain the prior month, a Commerce Department report showed today in Washington. The median estimate in a Bloomberg survey of 76 economists called for a 0.2 percent advance. Incomes slumped 3.6 percent, sending the saving rate down to the lowest level since November 2007.

Employment gains, the rebound in housing and growing demand for autos will probably keep supporting consumer spending in the first quarter as the world’s largest economy picks up from an end-of-year slowdown. Even so, rising gasoline prices and the need to rebuild nest eggs may make it difficult for households to match last quarter’s performance. 

READ MORE:  http://www.bloomberg.com/news/2013-03-01/consumer-spending-in-u-s-climbs-even-as-taxes-hurt-incomes.html

Subway Founder: "If I Started Subway Today, Subway Would Not Exist"

SIMON HOBBS, CNBC: You know, it's 13 years since you wrote the book Start Small, Finish Big, which was about grassroots entrepreneurship. Do you think the environment for those chasing the American dream by setting up their own business has gotten worse or better in those 13 years?

FRED DELUCA, SUBWAY FOUNDER: It's continuously gotten worse because there's more and more regulations and it's tougher for people to get into business, especially a small business. I tell you, if I started Subway today, Subway would not exist, because I had an easy time of it in the '60s when I started and I just see a continuous increase in regulation.

READ MORE:  http://www.realclearpolitics.com/video/2013/02/27/subway_founder_if_i_started_subway_today_subway_would_not_exist.html

Why is Wal-Mart worried? Payroll tax could cut consumer spending

Recent reports forecast lower spending for this year, anticipating that the restored payroll tax will impact consumers' wallets, especially low-income earners. Wal-Mart is adjusting its strategy.

 

 New York

Retailers are preparing for a triple whammy as the restoration of the payroll tax, surging gas prices, and stagnant employment and wages take a bite out of consumers’ disposable income, leaving them with less cash to spend on clothing, groceries, and eating out.

As a result, more than three years after the recession officially ended, American consumers might be preparing to downshift again, if only slightly, with low-income consumers hit the hardest. Sensing consumer trepidation, retailers are scrambling to adjust.

Retailers, restaurants, and consumer goods companies like Wal-Mart are lowering sales forecasts and adjusting marketing campaigns ahead of expectations that consumers will slash spending, The Wall Street Journal reports.

READ MORE:  http://www.csmonitor.com/Business/2013/0222/Why-is-Wal-Mart-worried-Payroll-tax-could-cut-consumer-spending.-video?nav=87-frontpage-entryLeadStoryhttp://www.csmonitor.com/Business/2013/0222/Why-is-Wal-Mart-worried-Payroll-tax-could-cut-consumer-spending.-video?nav=87-frontpage-entryLeadStory