Tag: finance

As goes GE so goes…? Not satisfied with the increasing offshoring of taxation (amid the Double Irish with a Dutch Sandwich and so on), US corporations are increasingly digging elsewhere in the vain hope of finding “revenue” to keep the shareholder dream alive. While GE is not alone in this, its latest move perfectly summarizes the farce that US accounting (and tax) regulations have become (and Immelt’s angelic position advising Obama on jobs and the economy). As Reuters reports, GE is suing the Internal Revenue Service for a $658 million tax refund related to a tax loss the company claimed as it exited the reinsurance market more than a decade ago.

Via Reuters,

In a civil complaint filed on Friday in U.S. District Court for Connecticut, GE said the IRS wrongly disallowed a $2.2 billion loss it claimed from the 2003 sale of a reinsurance subsidiary.

 

The complaint said GE, a large conglomerate that sells jet engines and financial products, is owed a $439.3 million federal income tax refund plus $219 million in interest. A court date has yet to be set.

 

“The dispute involves a good-faith difference of opinion over the tax consequences of a restructuring done more than a decade ago,” GE spokesman Seth Martin said in a statement. “While we have paid the taxes in question, we believe it is in all parties’ interests to resolve this through a court decision,” he said.

 

GE is arguing that due to the 2003 sale of a struggling reinsurance business, ERC Life Reinsurance Corp, it could carry back tax losses into years it had taxable gains, according to GE’s court filing.

 

The IRS had disagreed with GE’s claims for losses and reversed a tentative tax refund to the company in 2004, the court filing said.

 

…

 

GE, based in Fairfield, Connecticut, has faced public scrutiny from watchdog groups for its low effective tax rate.

 

Chief Executive Jeff Immelt, a top adviser to President Barack Obama on jobs and the economy, has said repeatedly the United States ought to reform its corporate tax code.

We are sure Immelt has lots more to teach the President…

via Zero Hedge http://ift.tt/1gXGrR1 Tyler Durden

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You know what’s it like, the driver stands there in front of the car that has just hit you up the back while looking at something happening down the street rather than checking on you hitting your breaks…and yet, he says “sorry, but you stopped too quickly, it wasn’t my bad driving”. Why is it that people just refuse to admit the truth even where it comes up and slaps them in the face? It’s exactly the same with the Death of the Dollar. Denial is the first stage in the mourning process that people go through when they have lost a loved one. Yes, just the mere fact that there is many an American out there who is actually denying this means that the Dollar is lying feet up on its back, six feet under already today. They are simply, in denying the fact, espousing the 7 stages of bereavement. The Dollar is dead. Today it’s Australia that will be sending flowers to the Americans.

ASX, the Australian Stock-Exchange operator and the Bank of China announced today that they are going to provide a Yuan settlement service between the two countries by the end of the first half-year 2014. China represents the biggest trading partner for the Australian market and trading in Dollars has no sense today. Transactions have been increasingly made in Yuan rather than the Dollar over the past few years. This new agreement comes just after last October’s agreement between the Eurozone and China and the currency-swap deal.

For all of those out there that will be screaming from the rooftops that China is slowing down, that the economy is under-performing (incidentally, they are still performing way better than any of us in the western world) the Chinese currency is one of the top traded currencies today in the world, and Australia has just said they don’t care if the economy is slowing down. The reason why the deal has been struck is because they are looking at China in the long-term view.

Since September 2013, the Yuan has been in the top ten of tradable currencies, according to research carried out by the Bank of International Settlements. The Yuan saw a jump from 17th position in 2010 to 9th place in 2013. There may be a slow-down in the economy and there may be problems with the structural reforms undertaken by the government, but in the long-term the Yuan will be traded more and more. The Australians are proving that today.

The financial market reforms have been centered on liberalization of the capital account and the convertibility of the Yuan. The only countries that offer complete convertibility at the moment are the USA, Japan and Australia.

Certainly the shadow-banking problems are far from over. There will be more that come out of the woodwork in the coming weeks. It is estimated that 40% of the 10 trillion Yuan in trust products that are used in shadow banking will mature in 2014. That means that we could be in for a lot more examples of the $126 million-worth of products issued by Jilin Province Trust that defaulted on the repayment to investors over the past couple of weeks after having made loans to the failing coal company Shanxi Liansheng Energy (at the same time as 6 other trusts also made loans of up to 5 billion Yuan to this company that was already bankrupt and dead). 80%of trust-product principal is going to be repaid to investors between 2014 and 2016. That could spell trouble.

Bailing out trust investors continually will bring about problems of financial stability of the country. But, in the long-term there is the belief that the Yuan will succeed. All of that is true, but the Dollar may well be dead completely, and buried, before the Yuan fails. 
In the process of acceptance of bereavement, the next stage after denial will be anger. Then the US will enter the period of bargaining with the rest of the world to try to save its place somehow on the international scene. Once it has been through the penultimate stage of depression (oh, no! Not again!), it will finally accept. But, for the moment, they shall just keep on denying lock, stock and barrel. The rest of the world, like the Australians, are seeing to it that the Dollar dies a quicker death than it would perhaps have normally done.

Remember it’s not the value of the Dollar that is important or whether or not the Yuan can be a valued asset in the world to trade with, it’s the perception that we, as consumers and countries, actually have of that currency. The Australians are showing that the Yuan has just been perceived as possibly of greater value than the Dollar.

Tissue to dry your eyes?

Originally posted: Goodbye Dollar, Hello Yuan

  You might also enjoy:London Housing: Same Old Story | What’s With the Chocolate? |  Banks: You Can Bank on It! | China: What Happened to the Gold Data?

Stiglitz: “Sick”! | Hyperinflation – 10 Worst Cases | Death of the Dollar | You’re Miserable USA! | Emerging Markets: Lock, Stock and Barrel | End of the Financial World 2014 |  Kristallnacht on Wall Street? Bull! | China’s Credit Crunch | Working for the Few | USA:The Land of the Not-So-Free  

via Zero Hedge http://ift.tt/1gHYcEs Pivotfarm

Submitted by Nick Cunningham via OilPrice.com,

On February 13 a Norfolk Southern Railway train bound for New Jersey derailed in Vandergrift, Pennsylvania. About 3,500 to 4,500 gallons of crude oil spilled, although miraculously it somehow didn’t leak into nearby water supplies. The Federal Railroad Administration announced that it will investigate the crash. The episode is merely the latest in a series of derailments and will raise pressure on federal regulators to issue new safety rules.

It is hard to imagine the National Transportation Safety Board (NTSB) not taking action soon as the problem has become too common to ignore. Between 1975 and 2010 only 800,000 gallons of crude oil spilled from rail tankers. But in 2013 alone, over 1.15 million gallons of oil spilled. That is because shipping oil by rail has skyrocketed from fewer than 10,000 carloads in 2009 to more than 400,000 in 2013.

With hundred-car trains rolling out from the Bakken in every direction – west to Washington state and Los Angeles, south to Gulf Coast refiners, north to Canada, and east to refineries in New Jersey – towns and cities are calling for greater scrutiny, but are powerless to take matters into their own hands as rail safety is regulated at the federal level.

The NTSB and the Transportation Safety Board of Canada issued joint recommendations on January 23 that call for treating crude oil like other toxic materials. These came on the heels of fiery crash in North Dakota in late December 2013. The recommendations call on rail companies to use reinforced rail cars, enhanced safety procedures, and alternative routes that avoid populated cities and towns. But, the recommendations are not binding – and action on things like rail design safety would need to come from another agency, the Pipeline and Hazardous Materials Safety Administration (PHMSA). Regulators have said that they need more time to review rail designs and that they do not plan on publishing new rules within the next year. But, the issue isn’t going away. CSX, a major rail company, projects that oil shipped by rail will increase by 50% in 2014.

One of the major problems is that rail companies are using DOT-111 rail cars, which are older models used to carry agricultural products. These models have thinner walls that can puncture when they derail. This is particularly important because crude from the Bakken is more flammable than other types of oil. The Association of American Railroads issued new standards for manufacturers for cars built after 2011, which require thicker shells that are resistant to puncturing. But, the vast majority of railcars in use were constructed before this standard.

The big question is whether or not PHMSA will require and accelerate the phase out of DOT-111 cars, making reinforced cars mandatory. Last summer, Senator Chuck Schumer (D-NY) wrote a letter to PHMSA, calling on them to do just that. PHMSA has thus far been unwilling to act, prompting North Dakota Governor Jack Dalrymple to press them for an interim standard until they come out with something more concrete in 2015. And Senators Ron Wyden and Jeff Merkley, both from Oregon, held a meeting with rail executives to push them on safety. Despite the pressure from a few lone politicians, the government has been slow to act and the rail industry has resisted any regulation, arguing it would cost more than $1 billion.

The House Transportation and Infrastructure Committee will hold a hearing on rail safety on February 26, an indication that after multiple train derailments and explosions, the issue is finally getting greater attention on Capitol Hill.

via Zero Hedge http://ift.tt/1gHY9IT Tyler Durden

With exports up 9% but imports up a massive 25% YoY, Japan’s Trade balance pushed to its largest deficit on record. This is the 2nd largest drop in the trade balance on record – beaten only by March/April 2011 (the Tsunami and Fuskushima). The miracle of the J-Curve (the hoped for recovery in exports that will come any minute now from the devaluation of the currency) is simply non-existent!! We love the smell of GDP downward revisions in the morning… Foreigners sold Japanese stocks for the 4th week in a row for the first time in 16 months.

via Zero Hedge http://ift.tt/1murD1M Tyler Durden

Via Mike Krieger of Liberty Blitzkrieg blog,

The following quote written on a piece of cardboard from the ongoing protests in Venezuela basically summarizes how the oligarchs, or the 0.01%, and their political henchmen rule in all countries around the world at the moment. Then they cry like little welfare babies when people criticize their behavior.

Powerful stuff:

They speak like Marx
Rule like Stalin
And live like Rockefellers
While the people suffer

via Zero Hedge http://ift.tt/1murDPq Tyler Durden

This market is becoming far too predictable. From five hours ago:

Another Natgas margin hike by the CME is almost guaranteed

— zerohedge (@zerohedge) February 19, 2014

And from five minutes ago:

And as a reminder, this is the fourth margin hike in the past month. So far, they have done exactly nothing, considering the price of nattie is the highest in over five years.

Source: CME

via Zero Hedge http://ift.tt/1eTGY26 Tyler Durden

Once the family/gang has carved out their turf, they then turn to controlling and exploiting the resoruces (either natural or human) inside of it. How different is today’s President-Congress-Governor-Mayor-Worker relationship to the mafia’s boss-soldiers-associates model?

Is it simply ironic that the term “bankster” has become so ingrained? As Santiago Capital’s Brent Johnson explains in this brief presentation… if you can keep your mind open, today’s business leaders and politicians are no different as they run protection, extortion, control the flow of ‘drugs’, and manage ‘crime’.

Is it possible, he asks, that we are all collectivley empathizing and sympathizing (and in many cases defending) the very system and the very people that are holding us captive?

via Zero Hedge http://ift.tt/1nOOLDL Tyler Durden

Once the family/gang has carved out their turf, they then turn to controlling and exploiting the resoruces (either natural or human) inside of it. How different is today’s President-Congress-Governor-Mayor-Worker relationship to the mafia’s boss-soldiers-associates model?

Is it simply ironic that the term “bankster” has become so ingrained? As Santiago Capital’s Brent Johnson explains in this brief presentation… if you can keep your mind open, today’s business leaders and politicians are no different as they run protection, extortion, control the flow of ‘drugs’, and manage ‘crime’.

Is it possible, he asks, that we are all collectivley empathizing and sympathizing (and in many cases defending) the very system and the very people that are holding us captive?

via Zero Hedge http://ift.tt/1nOOLDL Tyler Durden

After being rebuffed by SnapChat last year to the tune of $3 billion, Facebook decided that growth at any price was all that matters by blowing more than 5 times as much on the purchase of privately-owned WhatsApp. For $16 billion ($4bn cash and $12bn stock), Facebook gets 320 million active WhatsApp users at a whopping $50 per user. Why whopping? Because a few days ago Rakuten bought Viber's 300 million users for $900 million, or about $3 a pop, and about ten times less than what Facebook just paid. Not surprisingly FB shareholders are not happy. The company, which allows users to send messages over the web for free (as opposed to traditional text messages which most Telcos are now offering for free also) "is on a path to connect 1 billion people," Zuckerberg said, adding that they are "adding 1 million people per day…" It seems, as we noted previously, that the real bubble is in private markets not public.

The WhatsApp response:

Almost five years ago we started WhatsApp with a simple mission: building a cool product used globally by everybody. Nothing else mattered to us.

 

Today we are announcing a partnership with Facebook that will allow us to continue on that simple mission. Doing this will give WhatsApp the flexibility to grow and expand, while giving me, Brian, and the rest of our team more time to focus on building a communications service that’s as fast, affordable and personal as possible.

 

Here’s what will change for you, our users: nothing.

 

WhatsApp will remain autonomous and operate independently. You can continue to enjoy the service for a nominal fee. You can continue to use WhatsApp no matter where in the world you are, or what smartphone you’re using. And you can still count on absolutely no ads interrupting your communication. There would have been no partnership between our two companies if we had to compromise on the core principles that will always define our company, our vision and our product.

 

On a personal note, Brian and I couldn’t be more proud to be part of a small team of people who, in just under five years, built a communication service that now supports over 450 million monthly active users worldwide and over 320 million daily active users. They have helped re-define and revolutionize communication for the 21st century, and we couldn’t be more grateful.

 

Our team has always believed that neither cost and distance should ever prevent people from connecting with their friends and loved ones, and won’t rest until everyone, everywhere is empowered with that opportunity. We want to thank all of our users and everybody in our lives for making this next chapter possible, and for joining us as we continue on this very special journey.

Based on the valuations below, it is no wonder shareholders are selling…

As we noted previously, the real dot-com bubble is just outside the public view…

While the world of speculative capital is focused intently on the Twitter and Facebook #Ref/0 fundamental valuations in the publicly-traded equity markets, as the WSJ illustrates, the real dot-com 2.0 bubble is occurring in the private markets. Today there are more than 30 companies in the US, Europe, and China that are valued at $1 billion or more by venture-captal firms and the club is becoming less exclusive as venture capitalists (in their ever growing speculative fervor) funnel large sums of capital into start-ups.

Click image for interactive and sortable WSJ infographic

In summary:

A few days ago Rakuten bought Viber for $900 million. Viber has 300 million users… $3 per user

And today Facebook bought WhatsApp for $16bn; WhatsApp has 320 million active users… $50 per user!

via Zero Hedge http://ift.tt/1fhRYee Tyler Durden