Archive for the ‘Business’ Category

“Fight Against Stupidity And Bureaucracy”

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A few weeks ago I wrote a post that I called “Why are the bureaucrats destroying what made America great?” (if you want to refer to it please click here

In it I posed the question as to why a self-defeating wealth-distributing philosophy is taking the place of the business-friendly environment that America is famed for and that made it the wealthiest nation on Earth. And why the bureaucrats are trying to make it increasingly more difficult and expensive for businesses to operate in the US rather than offering more incentives and encouragement.

drop business incentive programs

The example I gave in the previous post was the huge pharmaceutical corporation called AbbVie, which was relocating from Chicago, Illinois, to Europe and thereby effectively cutting its tax bill in half – a significant saving when you are generating billions of dollars in revenue each year.

Now the latest corporation to show its frustration with the way things are deteriorating in America is the Miami based fast food giant Burger King. It is currently in merger talks with Canadian coffee chain Tim Hortons, in a deal that would allow Burger King to relocate out of the US with a view to trying to cut its “big whopper”  of a tax bill too.

Since the new company would be headquartered in Canada, Burger King would no longer be liable for punitive US taxes which are now regarded as the highest among developed economies.

It’s another high profile example of what is called an ‘inversion’ deal, a strategy that allows US firms to lower their tax bills by merging with a foreign company, and then relocating to the new country.

tim hortons logo

The Obama administration’s response has been predictable  –  cry foul, say it’s not fair, and tell these corporations to forget about the best strategy for their business and just wrap themselves in the Star Spangled Banner.

“My attitude,” the President declared in July, “is I don’t care if it’s legal — it’s wrong.”

It’s great to love your country, but it’s tough when the government of your country doesn’t love you back! And it will take more than bogus emotional claptrap to change the minds of hard-headed businessmen.

What Obama and his henchmen should be doing is asking themselves why it is happening and what THEY are doing wrong that makes these giant wealth creating corporations want to get out of America as fast as they can.

But they won’t do that.

That would make sense –  and sense is the last thing that the bureaucrats want to apply to any situation.

So they’ll continue to spend money they don’t have, on things the country can’t afford and probably doesn’t need, and then pass the bill on to the tax payers.

Their short term solution to these corporate inversion deals will be to try to legislate to make them illegal. Good luck with that, I have never seen legislation drafted by an idiot bureaucrat that a team of top corporate lawyers couldn’t drive a coach and horses through.

So rather than stopping the exodus, it’s more of a question of what will be the next corporation to leave???

drive a coach and horses through

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“Fight Against Stupidity And Bureaucracy”

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Around this time last month I wrote a post about the explosion of sub-prime credit for people seeking automobile loans they couldn’t afford. Here’s a link if you missed it – click here. 

They say that if you don’t learn from what happened in the past you are doomed to repeat it. And it is clear the banksters have learned nothing, mainly because the government was not man enough to teach them a lesson when they almost brought the country to its knees. Their greed was excused and rewarded, not punished in any meaningful and lasting way.

So now we have the auto loans credit explosion, which is another mini sub-prime disaster in the making. And again it is being egged on by the stupidity and greed of Wall Street who just can’t pass on the chance to reap big profits from those people silly enough to take their high interest loans.

greedy banksters

This time, however, it turns out some of the people in positions of power are beginning to recognize that this is becoming a big problem.

The regulators and prosecutors are starting to worry about the level of lending abuses. Not only that but they are also recognizing the similarities with the home loans fiasco that eventually resulted in the financial crisis.

The Consumer Financial Protection Bureau has recently fined subprime auto lender First Investors Financial Services Group Inc. $2.75 million for knowingly providing inaccurate information to credit reporting agencies for at least three years. It was a “computer error” don’t you know, and, of course, they paid the fine but without admitting any liability – perish the thought!

It should come as no surprise that First Investors Financial Services Group is owned by a prominent New York private equity firm.

And like the mortgage sub-prime fraud, the banksters and other money men are not only screwing the people who take out the loans, but once again they are re-packaging them up as “good investments” for their richer clients too.

A United States attorney in Manhattan, has already begun an investigation into whether lenders have sold questionable auto-loan investments to investors, and has sent subpoenas to General Motors Financial and Santander Consumer USA, to try to find out whether the lenders fully disclosed to investors the creditworthiness of borrowers whose loans made up the complicated securities.

sub prime loans

Last time they got away with it. Will this time be any different? You have a lot more faith in the system than me if you think it will. All that is happening so far is tokenism. They need a lot more than a slap on the wrist.

In China or Vietnam and some other locations banksters committing fraud are stood up against a wall a shot. That’s maybe a little harsh, but at the very least some serious jail time is in order.

The fact is the banksters are doing it again because they think that they can get away with it again. And if they get away with it this time, then they’ll do it yet again in the future. All the time racking up fortunes for themselves and leaving the other poor sods, who didn’t know any better than to take out their loans or buy their toxic investments, a lot poorer.

the expendables

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“Fight Against Stupidity And Bureaucracy”

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We had it with the real estate market. Billions of dollars being lent to people who obviously couldn’t afford it.

We saw the trouble, hardship, misery and financial woes that were caused as credit dried up, real estate prices began to tumble, and bankruptcies and foreclosures increased.

And we know the damage it did to the economy when irresponsible banks and other lenders went bust and almost brought down the entire financial system. 

Smart people would learn from such a situation.

Smart people would never contemplate doing such a thing again.

But despite what they would like to have you believe, bankers are not smart people. They’re dumb and they are greedy, a deadly combination.

bad credit 100 percent financing

As a result of the financial crisis millions of Americans (and people in other countries too) have been left with poor credit scores. Yet remarkably they are now able to easily obtain auto loans from used-car dealers, including some who fabricate or ignore borrowers’ abilities to repay. Even if you are bankrupt or living only on social security, banks like Wells Fargo will lend you thousands of dollars to buy a used car.

It’s called the new sub-prime boom, because the lack of caution resembles the frenzied sub-prime mortgage market before its collapse. And it is already bringing misery to many people who have been suckered into taking out loans that they clearly could not afford.

Worse than that, these sub-prime auto loans often come with terms that take advantage of the most desperate, least financially sophisticated customers, with interest rates that can exceed 20 percent. And many of the loans can be at least twice the value of the second hand cars they are being used to purchase!

wall street car crash

This creates a vicious circle for some borrowers, who still owe money on a car that they are trading in when they purchase another one, meaning that the former debt is rolled over into the new loan and they end up, not just paying too much for their current car, but also continue to pay off the loan on their previous car that they don’t even have!

This is the way loan sharks operate. Eventually you end up borrowing your own money and paying them interest for the privilege!

This surge in sub-prime auto lending is being driven by some of the same dynamics that were at work in sub-prime mortgages. There is a veritable deluge of money pouring into sub-prime autos, as the high rates and steady profits of the loans attract investors.

And just as Wall Street stoked the boom in mortgages, some of the nation’s biggest banks and private equity firms are now feeding the growth in sub-prime auto loans by investing in lenders and making money available for loans.

To quote some of the figures, auto loans to people with bad credit have risen more than 130 percent in the five years since the immediate aftermath of the financial crisis, with roughly one in four new auto loans last year going to borrowers considered sub-prime, that is, people with credit scores at or below 640. Wells Fargo, mentioned earlier, made $7.8 billion in auto loans in the second quarter of this year, up 9 percent from a year earlier, and has at least $50 billion in auto loans on its books.

greedy bankers

Even worse, as was the case with sub-prime mortgages before the financial crisis, many sub-prime auto loans are being bundled up into complex bonds and sold as securities by banks to insurance companies, mutual funds and public pension funds. They are all scrambling for these, which in turn creates ever-greater demand for loans, and leads to the banks issuing more and more sub-prime credit.

Unbelievably it’s the same crooks doing exactly the same thing, including using incorrect information about borrowers’ income and employment, so that people who had lost their jobs, or were bankrupt, or living on Social Security, could qualify for loans that they could never afford.

carbuying credit report

Admittedly, the size of the sub-prime auto loan market is only a tiny fraction of the sub-prime mortgage market at its peak, and its implosion would not have the same far-reaching consequences.

For the banks the investors silly enough to buy their bonds, that is.

But the misery is just as great for the people who are suckered into accepting credit they cannot afford.

Illegal it may not be, but immoral it certainly is.

Political leaders who sit astride high horses and purport to be working on behalf of the ordinary people should be doing something about it.

But, as I’ve said before, don’t hold your breath!

obama used car salesman

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Why Are The Bureaucrats Destroying What Made America Great?

Posted: July 20, 2014 in Business, Current Events, Factoids, Politics, Rants
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“Fight Against Stupidity And Bureaucracy”

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The Sunday Sermon

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Since the government and bureaucrats in the United States abandoned the business-friendly environment that made the country the greatest and wealthiest nation on earth, and replaced that with a legislative and wealth redistributing strategy that is anything but business-friendly, there has been a growing trend for successful companies to leave the US.

It should have been obvious – and indeed it was – to everyone but the morons in Washington. 

 

obama cartoon big government

The latest to try to make a move out of the United States is the pharmaceutical giant AbbVie, currently based outside Chicago, Illinois, but not for much longer if they get their way.

Using a $53 billion acquisition of the Jersey-registered, Irish-headquartered global specialty biopharmaceutical company “Shire”, a deal that will allow Abbvie to reincorporate elsewhere, it plans to leave the high tax US for a more advantageous business environment.

By making this move and escaping United States tax rates, Abbvie will pay lower taxes on its international earnings, get access to overseas cash more cheaply, and be able to acquire other companies without making their earnings subject to United States taxes.

Abbvie

And Abbvie is not alone.

There has been a rush of companies wanting to get out of the United States. Health care companies in particular, such as Medtronic, Mylan, Actavis, Perrigo, Jazz Pharmaceuticals and Endo, have pursued these “inversion deals”, as they are called, with particular zeal.

The moral of the story is simply this.

When a country forgets what has made it great and instead turns into something quite the opposite, all the reasons for its greatness disappear. And the United States is doing this at a time when it is heavily in debt – the most indebted nation in the world by a long way.

The short-termism of trying to grab as much money as possible from companies and individuals will end in failure and disaster for all. People like Obama try to put a fancy misleading name on it and call it “wealth redistribution”. What it really is, is a major disincentive for anyone to want to set up and do business in the United States.

redistribution-of-wealth

And as you would expect, the idiots in Washington aren’t scratching their heads and wondering why more and more companies are opting to leave the US. Instead the bureaucrats are trying to think of ways to make it illegal for companies like Abbvie to adopt this strategy. 

Treasury Secretary Jacob J. Lew has already sent letters to senior members of Congress, encouraging them to pass legislation halting inversions. The legislation being considered by some lawmakers would be retroactive, and if passed, could impede AbbVie’s ability to reincorporate overseas.

Treasury Secretary Jacob J. Lew

And proving that stupidity is a cross party phenomenon, on Thursday, Senator Orrin G. Hatch, the Utah Republican who is the ranking member of the Senate Finance Committee, responded to calls from the Obama administration to crack down on inversions by saying he supported a short-term fix, although he suggested that the administration’s initial proposal went too far.

Senator Orrin G. Hatch

It seems fairly logical in my mind that the way to stop this growing exodus, which in the longer term will leave the US a lot poorer and a lot more of its citizens out of work, is to legislate to reduce tax bills, not increase them; to give businesses an incentive to invest and expand in the United States, not to drive them away; and to encourage entrepreneurs to relocate TO the US rather than scramble to get out.

Of course, that’s just in my head. All that is in the heads of the idiot bureaucrats in Washington is self-defeating rubbish like increase minimum wages, increase healthcare contributions, increase taxation, introduce capital controls, increase government bureaucracy so more debt is piled up and the USD$ weakens further, and of course start a few more wars to distract the people from the mess that is being made at home.

So, to pose the question in the title of this post again, why are the bureaucrats destroying what made America great?

Your guess is as good as mine, although while some obviously have malicious intent, I wouldn’t entirely rule out plain old stupidity!

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“Fight Against Stupidity And Bureaucracy”

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Farnborough Airc Show 2014 logo

In the summer in Farnborough in Hampshire, England one of the biggest events in the aviation industry takes place. It’s call the Farnborough Air Show.

I remember when I used to work in that industry helping to prepare invitations, information packs, and all the usual PR stuff. Farnborough is THE place to meet and greet both those who buy aircraft and those firms like Boeing and AIrbus who build them and provide tens of thousands of jobs for smaller companies.

So it is an important event.

At this year’s show they named the world’s best airline, in fact they named the top ten best airlines.

And despite the United States building some of the best airplanes in the world, and despite the United States having some of the world’s largest and busiest airlines, do you know how many United States airlines made it into the top ten?

The title of this post probably gave it away. The answer is….

None. That’s ninguno, aucun, keiner, zero!

Even the regional category for North America was won by Air Canada.

cartoon intrusive airport searches

Apparently, not only are air travelers in America to be treated as potential terrorists, herded and prodded and scanned and humiliated when they are trying to get on to an airplane. But when they do, the comfort and service they can expect will be second rate.

I think that’s a disgrace. America should be leading the world in the standard of their airlines. They should be at least one, if not more, of the top ten list every year offering a consistently high standard that their customers (that’s you and me) deserve.

And this award is decided by the votes of millions of travelers, so customers’ opinions do count.

So time for United States airlines to ditch those bureaucratic bean counters who decide that they can squeeze just another row of seats into an airplane so that everyone is uncomfortable. In the long term this kind of thinking doesn’t save you money, it loses you money. And when your customers vote for the best airline, they don’t vote for you!

For those of you who are interested, this year’s best airline was the Hong Kong based Cathay Pacific. They were voted best performer across all types of travel, economy, and luxury.

Cathay Pacific World's Best Airline 2014

Cathay Pacific World’s Best Airline 2014

Qatar Airways and Singapore Airlines placed second and third respectively in the global category, with last year’s winner, Emirates, slipping to fourth. Fifth to tenth places went to Turkish Airlines, ANA All Nippon Airways, Garuda Indonesia, Asiana Airlines, Etihad Airways and Lufthansa respectively.

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“Fight Against Stupidity And Bureaucracy”

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It’s an interesting question.

But worry not, I am not going to try to sell you an insurance policy nor even recommend one.

Quite the reverse in fact.

Many people have some kind of life insurance for the financial protection of their families if they should be unfortunate to pass away unexpectedly.

It is usually for enough money to pay off the mortgage with a little left over to provide some kind of income for the wife and kids.

At least that’s how it should be.

dead peasants indursnce

But there is a growing trend for employers to insure their employees. A nice gesture you might think at first. Until you find out that the beneficiary of the insurance would not be the survivors or estate of the insured employee, but the corporate pension plan!

It is unofficially known as “dead peasant” insurance, and hundreds of corporations have already taken out policies worth hundreds of billions of dollars, on thousands of employees, providing companies with a steady stream of income as current and former employees die  –  even decades after they have retired or left the company.

And new “dead peasant”policies worth at least $1 billion are being put in place every year!

Unsurprisingly the greedy money-grabbing banksters are especially fond of the practice. Bank of America’s policies have a cash surrender value of at least $17.6 billion; Wells Fargo’s at least $12.7 billion; and JPMorgan Chase at least $5 billion, according to filings with the Federal Financial Institutions Examination Council.

corporate greed

Of course the tax-men are to blame too – aren’t they always? – because so-called company-owned life insurance offers employers generous tax breaks. For example, company-paid premiums are tax-free, as are any investment returns on the policies and the death benefits eventually received. Although having said that it has to be admitted (grudgingly) that the I.R.S. has taken companies including Winn-Dixie and Camelot Music to court for using such policies as tax avoidance schemes.

Many people faced with a request from an employer to consent to such a policy are too afraid not to comply in case it affects their job or promotion prospects. They shouldn’t be because that would probably be illegal as well as unethical. Class-action lawsuits against several companies with such policies are already underway or have been settled. Several companies, including Walmart, settled the suits, paying millions to low-ranking employees who had been covered.

So if you are uncomfortable with the thought that your company might profit from your death, don’t sign up.

And as for the corporations? I’m as fond of making a few bucks as the next man, but you have to draw a line somewhere and I think corporations should be content with the contribution their employees make to their company profits when they are alive, instead of conniving to profit from their deaths also.

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“Fight Against Stupidity And Bureaucracy”

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We all know that one of Steve Jobs favorite things was selling people well designed goods at vastly over inflated prices. People who were obsessed by having the latest gimmicks, bought his stuff in droves at whatever price Jobs put on them and in the process made Apple one of the richest companies in the world.

That’s what you call business, not quite ethical perhaps, but if you can get away with it and you can find people who are silly enough to pay far too much for your goods then why not?

What the creation of this ‘new’ market also did was spawn clones or look-a-likes from companies wanting to cash in on the windfall initially created by Apple.

Many of these are quite legitimate, like the Samsung Galaxy models which have become just as popular as the iPhones and are just as good, if not better, IMHO.

But what has also happened is that the same success has spawned a series of non-legitimate clones – from China – which look the same and provide many of the same functions, although the build quality as with much of the junk emanating from China is very poor.

smart phones

Apple Iphone, Samsung Galaxy S5, Star N9500

So, getting back to the question posed in the title of this post, if you are thinking of buying yourself a smart phone – and you are also thinking of saving a bit of money and buying one of those iPhone or Samsung Galaxy look-a-likes from China – think again.

This week a German firm called ‘G Data’ (which has a US subsidiary) released information that a popular brand of Chinese-made smart phone, the ‘Star N9500’, which is sold internationally by several major retailers, including Amazon.com, has been found to contain pre-installed monitoring software – that’s spy software to you and me.

G Data said it discovered the spy software hidden deep inside the proprietary software found on the Star N9500, which is a cheap smart phone based on the popular Samsung Galaxy S4.

malware

The hidden software contained within the phone’s operating system includes applications that could allow a third party to access and steal the telephone user’s personal information.

There are also secret applications that could permit a hacker to place calls from the telephone, or utilize the device’s microphone and camera without the consent of its owner.

And malware like this can not only allow hackers to access the telephone, but also any computers connected to it.

spy software

It was also discovered that the stolen data was being sent to a server based in, where else, China.

Adding to the intrigue, G Data’s team of experts and several journalists tried for “over a week” to track down the manufacturer of the Star N9500 by contacting several companies located in China’s southern province of Shenzhen, known as the center of the country’s telecommunications industry, but were unable to do so.

This isn’t the first time hidden spyware has been discovered in the operating software of telecommunications hardware made in China, and it probably won’t be the last.

But don’t get completely paranoid just because you read this post or other articles like it.

Just realize that the convenience that this latest technology provides, also provides criminals (which includes spying governments, you listening ennn esss ey?) easier access to your personal information.

And act accordingly.

Phone Spy Software

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