Headline News Archives

Thursday 03.09.2017

Former Congressman Ron Paul champions gold and silver tax-break bill

Invoking claims of illegally printed paper money, the use of gold in the Bible and even foreign entanglements, former Congressman Ron Paul urged Arizona lawmakers Wednesday to let coin collectors and investors escape the state’s capital gains tax. Paul, a three-time presidential hopeful, told members of the Senate Finance Committee it’s not fair or even legal from his perspective for the government to take its share when someone who bought a coin at $300 later sells it for $1,200.

He said the value of the coin really remains the same. It’s the value of that paper money — money he contends is “fraud” — that’s gone down. Paul’s testimony helped buttress similar claims by Rep. Mark Finchem, R-Oro Valley, who already has ushered the tax break in HB 2014 through the House. The result was the Senate panel giving its OK on a 4-3 party-line vote and sending it to the full Senate.

But the real hurdle remains Republican Gov. Doug Ducey, who vetoed similar measures in 2015 and again last year saying he feared the unintended consequences of such a change in tax law.

That isn’t a unique concern. In 2013, Republican Jan Brewer also used her veto stamp. “This would result in lost revenue to the state, while giving businesses that buy and sell collectible coins or currency originally authorized by Congress an unfair advantage,” she wrote at the time.

White House won't say if Trump has confidence in Fed's Yellen

President Donald Trump once accused Janet Yellen of using the Federal Reserve to help his predecessor and said she should be "ashamed" about the job she has done.

A week ahead of the central bank's possible decision to raise interest rates for the first time since Trump took office, the White House will not say how he feels about the Fed chair now.

"Let me get back to you on that one. I don't have any comment on the Federal Reserve," press secretary Sean Spicer said Wednesday when asked about the potential rate hike and whether Trump has confidence in Yellen.

Expectations for the Fed raising the benchmark federal funds rate at its meeting next week have climbed in recent days. On the campaign trail, Trump accused Yellen of keeping rates near financial crisis levels to help President Barack Obama and artificially inflate the stock market. He called her political.

The shopping mall apocalypse is creating a $48 billion disaster on Wall Street

It's a tough time to be in the shopping mall business. Black Friday sales last year provided the latest proof of changing dynamics in the retail sector as consumers continued to move their shopping online. Online sales grew to $3.34 billion, up 22% compared to the previous year's figures, while sales at brick-and-mortar stores fell 5%.

The downturn in physical shopping has had ripple effects affecting malls. According to one analyst, more than half of America's malls will either shut down or continue to struggle in the coming years.

That is likely to have a huge impact on the investors backing loans to those shopping malls. Commercial mortgage-backed securities, known on Wall Street at CMBS, are securities backed by commercial mortgages on real estate like shopping malls. And when an anchor tent decides to close and leave a real estate complex, it can put the loans backing the entire mall at risk.

For example, JCPenney recently outlined plans to close 140 stores. Morningstar Credit Ratings identified 39 locations it thought were likely to close, and found about $7.3 billion in loans securitized in CMBS could be impaired as a result. That's because mall owners often face difficulty finding retailers to take up the space vacated by an anchor tenant.

Why Dodd-Frank Might Never Be Replaced

As Sales Sink, Urban Outfitters CEO Declares Retail “Bubble Has Burst”

The last few years haven’t exactly been great for long-time mall retailers, with chains like Wet Seal, BCBG, Aeropostale, and The Limited filing for bankruptcy, while Abercrombie & Fitch and Barnes & Noble struggle to remain relevant. Now that two additional mall mainstays — Express and Urban Outfitters — one CEO is saying that retailers have no one to blame but themselves.

Speaking to investors last night, Urban Outfitters CEO Richard Hayne pointed to the rampant spread of retail stores in the 1990s and 2000s.

“This created a bubble, and like housing, that bubble has now burst,” said Hayne, according to Bloomberg. “We are seeing the results: Doors shuttering and rents retreating. This trend will continue for the foreseeable future and may even accelerate.”

Bloomberg notes that both Urban and Express saw their most recent earnings fall short of estimates, providing yet another piece of evidence that consumers aren’t heading to the mall like they used to.

Survey: Private employers added robust 298K jobs last month

U.S. businesses added the most jobs in three years last month, a private survey found, a sign that hiring may be accelerating from last year's modest levels. Payroll processor ADP said Wednesday that businesses added 298,000 jobs in February, up from 261,000 the previous month. The gains were led by a huge 66,000 increase in construction, the most in 11 years, and 32,000 manufacturing jobs, the most in five years.

The hiring boom in construction was likely driven by unseasonably warm weather in much of the country. Construction sites typically shut down in snow or freezing weather. Still, job gains were broad-based and suggest that increased business optimism may have led to more hiring. January and February's job gains are above last year's average of about 185,000 per month.

"February proved to be an incredibly strong month for employment with increases we have not seen in years," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.

Measures of business confidence have jumped since the presidential election and the stock market has reached record highs in anticipation of President Donald Trump's promised tax cuts and deregulation. Investors are also optimistic with more evidence emerging of economic growth overseas, including Europe.

Report accuses Caterpillar of tax fraud to prop up its stock price

A new report commissioned by the federal government accuses Caterpillar Inc. of using tax and accounting fraud to prop up its stock price, according to a report late Tuesday.

“Caterpillar did not comply with either U.S. tax law or U.S. financial reporting rules,” the report said, according to the New York Times, which obtained a copy of it. “I believe that the company’s noncompliance with these rules was deliberate and primarily with the intention of maintaining a higher share price. These actions were fraudulent rather than negligent.”

No charges have been filed against the company, and it is unclear if or when federal authorities will act against the construction and mining-equipment giant. Caterpillar told the Times it had not seen the report and could not comment.

The report was authored by Dartmouth College professor Leslie A. Robinson. In it, Robinson said she was hired to give an opinion of Caterpillar’s financial reporting as it pertained to a Federal Deposit Insurance Corporation probe.

Brazil's Recession The Longest And Deepest In Its History, New Figures Show

Brazil's recession was already of historic proportions. Today, government figures confirm that it has grown even worse. The economy last year actually dipped more sharply than expected. The national gross domestic product contracted by 3.6 percent in 2016, statistics agency IBGE said Tuesday.

"The numbers for 2015 were slightly worse," NPR's Philip Reeves reports from Brazil. "Added together, this means Latin America's biggest country — once one of the world's fastest growing economies — has undergone the longest and deepest recession since records began."

The country's economy is "now 8% smaller than it was in December 2014," according to the BBC. Philip explains what's driving the economic trouble:

"The downturn's been fueled by a fall in commodity prices but also by corruption scandals and political turmoil. Nearly 13 million Brazilians are without jobs; government departments are struggling to find funds for public services." Discontent over the dismal economy contributed to last year's impeachment of former president Dilma Rousseff.

United Airlines cutting 300 management positions at Chicago HQ

United Airlines is in the midst of pruning some 300 management positions at the Chicago-based airline's headquarters in the Willis Tower. The staff reductions are expected to be completed by late spring of this year. United employs more than 87,000 people worldwide.

The reductions are tied to a long-term strategy — outlined by CEO Oscar Munoz last fall — to improve network connectivity and revenue management, while continuing to maintain disciplined cost control. Munoz said at the time that his new strategy is expected to generate $4.8 billion in earnings improvement by 2020. At an investors meeting last fall Munoz said "we are talking about what's next for United," adding "we now have the strategy and organization in place to be the best airline in the world."

A spokeswoman said the cuts were being made after management had examined every department and determined what the airline's optimal employment needs were. The layoffs across multiple departments are not expected to affect front-line operations.

The move to trim management ranks comes as United is preparing for the peak summer travel season by adding new seasonal international routes, including service from Chicago's O'Hare International Airport to Dublin and Shannon in Ireland; Edinburgh Scotland, and Rome, Italy. United president Scott Kirby has been overseeing efforts to optimize the carrier's network potential. Last fall Kirby said that he is aiming to "ensure we are offering our customers the right flights to the right destinations at the right time."

GE CEO’s Pay Falls to $21.3 Million in ’16 Amid Oil Market Slump

General Electric Co. Chief Executive Officer Jeffrey Immelt received a $21.3 million compensation package last year, down 35 percent from 2015, as challenges in the oil and gas market suppressed demand for industrial equipment and the company’s shares underperformed the market.

Immelt, 61, received a $3.8 million salary and $5.94 million in cash awards, according to a proxy statement from the Boston-based company Wednesday. The package also included restricted and performance-linked shares worth $4.67 million and $2.14 million in stock options.

After a sweeping transformation in recent years that tilted GE away from finance and strengthened its equipment-manufacturing operations, the company’s momentum slowed in 2016. Persistent challenges in the oil and gas market, coupled with slow demand for locomotives, weighed on the industrial giant’s growth efforts. GE shares returned 4.6 percent in 2016 including dividends, compared with 12 percent for the S&P 500 Index.

“Normally, we expect our diversified model to shrug off headwinds in one market and continue to achieve our goals,” Immelt wrote in a letter to shareholders dated Feb. 24. “In 2016, we simply couldn’t outrun pressure in the resource markets. Consequently, our compensation plans only paid out at 80% of target. This gives us more motivation for 2017.”

Hugo Salinas Price- Apocalypse Is Upon Us

US Credit Card Debt Nears $1 Trillion at End of 2016

Americans added $60.4 billion to their credit card debt in the fourth quarter of 2016, the largest fourth-quarter debt increase since 2007. For the full year, U.S. consumers added $89.2 billion to their credit card debt and closed the year with a whopping $978.3 billion owed on credit cards.

The data were released Wednesday by personal finance firm WalletHub. Researchers now project that the total U.S. credit card balance at the end of 2017 will grow by $100 billion, pushing total debt well above the $1 trillion mark for the first time ever.

The average indebted household’s balance rose to $8,377 in the fourth quarter, just $86 below the all-time high of $8,463 posted in the fourth quarter of 2007. To say the WalletHub researchers are concerned is, perhaps, an understatement: So it is not a question of whether consumers are weakening financially, but rather how long this trend toward pre-recession habits will last and just how bad it will get.

The net addition of $60.4 billion in new credit card debt in the fourth quarter is nearly 54% above the average for the years since the Great Recession. The $89.2 billion in new debt posted in 2016 is the largest increase since 2007 and 145% above the average since the Great Recession.

FBI Comey: “No such thing as absolute privacy in America”

During a speech at Boston College FBI Director James Comey told a gathering of private sector experts attending the Boston Conference on Cyber Security that there is no such thing as absolute privacy in America.

Comey added that even an individuals memories are not absolutely private in America, and that under appropriate circumstances a US judge could compel any American to divulge private communications between attorney and client, husband and wife, and even church attendee and pastor. Comey said:

“Heres something I don't want to freak you out with, but I think is true. Even our memories are not absolutely private in America. Any of us can be compelled in appropriate circumstances to say what we remember, what we saw. Even our communications with our spouses, with our clergy members, with our attorneys, are not absolutely private in America.

In appropriate circumstances a judge can compel any one of us to testify in court about those very private communications, and there are really really important constraints on law enforcement, as there should be. But the general principle is one we've always accepted in this country, there is no thing as absolute privacy in America.

America is turning Puerto Rico into Greece

Greece is an economic disaster zone. Austerity imposed at economic knifepoint by eurozone authorities — the European Central Bank, the European Commission, and the IMF — cut spending and raised taxes, which naturally deepened the country's recession and increased its debt burden by throwing more people out of work and undermining its economic strength.

And now America is doing the exact same thing to Puerto Rico, its Caribbean colony. For a variety of complicated reasons, the island has landed in a debt crisis similar to Greece's. But instead of learning from the staggering disaster created in the eurozone, Congress and President Obama in 2016 decided to turn the nation over to a bunch of Wall Street goons. They passed a law creating a "fiscal control board," more rightly called "la junta" by Puerto Ricans, as it is essentially a dictatorship of unelected technocrats.

The junta is now bleeding Puerto Rico dry to satisfy wealthy bondholders. The roots of the economic problems in Puerto Rico are long and complicated. In brief, the island used to be a manufacturing hub due to a corporate tax exemption, but that was phased out by Congress in 1996 without any compensation. That and its odd treatment in shipping laws led to economic problems. The fact that Puerto Rican debt is exempt from federal, state, and local taxes (again due to a quirk of tax law) led Wall Street to offer extremely generous loans (to serve as a vehicle to stash cash tax-free), which papered over the economic problems for a time. The result was a buildup of $70 billion in debt and an eventual economic crisis. Then the island started hemorrhaging residents, as Puerto Ricans fled to the mainland looking for work.

However, the solution to such a problem is relatively straightforward. Puerto Rico cannot possibly repay its debts on anything like a short-term schedule, and probably not ever. It needs, first and foremost, a reduction on the amount owed, and an extension of the payment schedule — which is only fair as the debts were largely the product of moronic federal policy and Wall Street greed.

Michigan auto supplier expects nearly 200 layoffs

A Michigan auto supplier said it plans to lay off nearly 200 people from its Adrian factory, despite a more than $23 million expansion plan just six months ago. Troy-based Inteva Products, formerly known as Delphi Interiors, has planned the layoffs for at least six months starting in May, MLive reported.

Human Resources manager Ken Smith said the layoffs "are necessitated by the cancellation of our agreement with one of our largest customers and the loss of business associated with the cancellation of that agreement."

New business was cited as the reason Inteva received a nearly $1.3 million incentive from the Michigan Strategic Fund last August. At the time, the company planned to invest $23.3 million in new equipment and expected to increase its workforce with 127 new jobs by 2019. The company employed 474 people at the 980,000-square-foot Adrian plant when the expansion was announced, and 15,000 people worldwide.

The reason for the expansion was to build components for the Chevy Silverado and GMC Sierra. Inteva supplies the auto industry and provides highly engineered components and systems to defense, consumer and other markets, according to the Michigan Economic Development Corporation.

HHGregg Files Chapter 11, Plans Sale of Stores

After pushing a turnaround, the retailer decides a restructuring through Chapter 11 is "the best path forward to ensure long-term success." After four years of declining sales, appliance and electronics retailer HHGregg has filed for bankruptcy protection with an agreement to sell the business to an unidentified party.

As part of a turnaround effort, HHGregg had announced last week that it would close 88 stores, leaving it with 132 stores and eliminating 1,500 jobs. Sales at stores that have been opened for at least a year declined 22.2% during the most recent fiscal quarter.

But the Indianapolis-based company abandoned that effort on Monday, filing Chapter 11 petitions for itself and its Gregg Appliances unit.

“We’ve given it a valiant effort over the past 12 months,” HHGregg CEO Robert J. Riesbeck said in a news release. “We have conducted an extensive review of alternatives and believe pursuing a restructuring through Chapter 11 is the best path forward to ensure HHGregg’s long-term success.”

Italy proposes $105,000 Flat tax to draw foreigners wealthy

Italy on Wednesday (Mar 8) introduced a flat tax for wealthy foreigners in a bid to compete with similar incentives offered in Britain and Spain, which have successfully attracted a slew of rich footballers and entertainers. The new flat rate tax of €100,000 (US$105,000) a year will apply to all worldwide income for foreigners who declare Italy to be their residency for tax purposes.

The measure, proposed in Italy's 2017 budget, is expected to immediately draw in at least a thousand people, according to local media. But those who would want to take advantage of the tax rate would have to have resided abroad for nine of the last 10 years, and have sufficient income to make the €100,000 price tag an attractive deal.

An additional €25,000 per person would also be added to the tax rate of those who set up Italian residency for close family members.

A person is considered an Italian resident for tax purposes if they are in the country for more than 183 days, or six months. According to Italian tax authorities, the flat tax would be renewable every year for a maximum of 15 years.

Scuffles break out in Venezuela at Food Ministry amid chronic shortages

Illinois companies announce nearly 1000 mass layoffs in February, including almost 250 manufacturing jobs

Employers in Illinois announced 982 mass layoffs February with 246 of the lost jobs coming from the manufacturing sector. These figures come from February reporting the Illinois Worker Adjustment and Retraining Notification, or WARN Act mandates. While WARN reports are not indicative of all jobs lost in Illinois, they are a useful tool for studying large scale layoffs.

February’s WARN report marked the worst figures since August 2016 when more than 1,000 workers received pink slips. And February’s losses more than doubled January’s WARN numbers, which included 429 mass layoffs.

The vast majority of the job loss was in Cook County, where 770 employees were laid off. Adams, McLean and DuPage counties also had mass layoff announcements. United Airlines Inc. cut the most jobs, letting go of 300 of its employees permanently due to restructuring.

U.S. Smokeless Tobacco Co. came a close second, announcing 246 permanent manufacturing layoffs at its Franklin Park location. U.S. Smokeless Tobacco did not provide the reason for the layoffs in its WARN reporting. February’s spike in mass layoff should be a wakeup call for Illinois lawmakers currently piecing together a so-called “grand bargain” budget deal. Although several iterations of the “grand bargain” have come and gone, every version seems to have one common theme: tax hikes with little real reform to improve the economy and spur investment and jobs growth.

Ivanka Trump's Fashion Line Sales Up 346 Percent From January to February

Ivanka Trump's fashion line for women seems to be doing quite well despite major retailers' decision to drop it in early February, Refinery29 reports. According to e-commerce aggregator Lyst, Ivanka Trump sales increased 346 percent from January to February.

"Since the beginning of February, they were some of the best performing weeks in the history of the brand," Abigail Klem, the president of the Ivanka Trump fashion brand, told Refinery29. "For several different retailers Ivanka Trump was a top performer online, and in some of the categories it was the [brand's] best performance ever."

The figures are interesting because, last month, Nordstrom and Neiman Marcus announced it would stop carrying Ivanka's fashion line because of declining sales. The move was criticized by President Donald Trump and one of his top aides, Kellyanne Conway. Conway was later criticized for telling people to buy Ivanka's products during an interview on Fox.

Following her father's inauguration, ethics counselors advised Ivanka's company to stop using images of Ivanka in advertising material.

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