March 7, 2016 nº 1,716 - Vol. 13
 

"The greater danger for most of us lies not in setting our aim too high and falling short; but in setting our aim too low, and achieving our mark."

Michelangelo

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  • Top News

Fed proposes limits on US Banks' dealings with one another

Wall Street giants such as JPMorgan Chase & Co., Goldman Sachs Group Inc. and Citigroup Inc. would face new limits on credit exposure to other large financial firms under a Federal Reserve plan aimed at ensuring banks won’t take others with them if they fail. The proposal, which would limit such exposures to 15 percent of a lender’s Tier 1 capital, represents a second effort after the Fed abandoned a 2011 proposal that called for a 10 percent cap. Even so, the central bank estimates the largest institutions would have to dial back their exposures by almost $100 billion to get below the 15 percent mark. “The credit limit sets a bright line on total credit exposures between one large bank holding company and another large bank or major counterparty,” Fed Chair Janet Yellen said in a statement before the proposal was approved Friday. The measure targets the problem of big-bank connectedness that magnified the 2008 financial crisis, she said.

The mystery Madoff victims who left $2.5 billion on the table

Ever since Bernie Madoff’s Ponzi scheme collapsed in 2008, it’s been much-rumored that investors included tax dodgers shielding money from the IRS, drug dealers who laundered proceeds through the con man and wealthy moguls hiding assets from ex-spouses. After all, the scheme wiped out $20 billion of investors’ money, but the victims’ claims for repayment total just $17.5 billion. Who would walk away from $2.5 billion, and why? Part of the answer may be far less mysterious or dubious than thought. Almost half of the unclaimed money can be traced to a couple of Caribbean-based hedge funds. Their reason, while unknown, may have amounted to a calculated decision that any recovery on their $1.2 billion of claims would be tiny compared with what they might be forced to give back if they got tangled up in US courts, according to lawyers familiar with the recovery process. As for the remaining $1.3 billion in unclaimed money, experts are left to ponder. Unlike the two funds, these are likely individual investors who had a variety of reasons to shy away from the claims process, especially at a time when victims were expecting to recover only 4 or 5 cents on the dollar, legal experts say.

Downfall of Brazil’s Lula marks end of Brics fantasy

The dream of a Brics ascendancy has ended in sadness and squalor after the iconic figure of the era was seized by police at his home here, to the rapturous applause of Brazil’s stock exchange. “Lula” is sacrosanct no more. The once beloved president – and former Fiat car worker – who came to personify Brazil’s seeming rise to prosperity and global stature is under criminal investigation for his role in the ever-spreading Lava Jato (car wash) scandal. So are his three sons, and his wife. “Nobody is above the law in this country,” said the lead prosecutor, Carlos Fernando dos Santos Lima. The shock comes as Lula’s economic legacy turns to ruin. Output has been falling for most of the past nine quarters. It contracted 3.8pc last year. The OECD expects another 4pc fall this year, the deepest slump since national records began in 1901.

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  • MiMIC Journal

China corruption crackdown 'netted 300,000 in 2015'

China's ruling Communist Party says it punished nearly 300,000 officials last year for corruption. Some 200,000 officials were given what was called "light punishment", while more severe penalties were taken against a further 80,000. President Xi Jinping has made a campaign against corruption a centerpiece of his governing agenda. Many high-profile political figures have been jailed after being caught up in the net. There are almost daily reports in the state media of officials being investigated or punished over allegations of bribery, abuse of power or other corrupt practices.

China 'not heading for hard landing', says top economic planner

Chinese Premier Li Keqiang announced the lower growth range in his opening speech at the annual meeting in Beijing, warning of a "difficult battle" ahead. China's chief economic planner said the world's second biggest economy will "absolutely not experience a hard landing" despite growth forecast cuts. Predictions of an abrupt economic slowdown are "destined to come to nothing", said Xu Shaoshi, head of China's state planning agency. China's National People's Congress on Saturday lowered the economic growth target for 2016 to a range of 6.5%-7%. Last year, China's goal was "about 7%", but the economy actually grew by 6.9%. That was the lowest expansion in 25 years.

China to add tax breaks for consumers as spending aids economy

China plans to revamp its income-tax system to include deductions such as mortgage interest, education expenses and the cost of raising children, as the nation seeks to maintain consumption as a major growth driver. The finance ministry submitted a draft plan to overhaul the personal income tax system for the nation’s State Council to review and will submit a draft law to the National People’s Congress this year. China is striving to shift its economy away from a reliance on investment by boosting consumption, which contributed two thirds of economic growth last year. Income tax deductions would put more money into the pockets of ordinary folks at a time spending faces fresh headwinds from a tumbling stock market and weakening currency.

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  • Brief News

Is it becoming harder for international firms to avoid tax?

In January, the Organisation for Economic Cooperation and Development (OECD) successfully brokered an agreement designed to improve the current system. All 31 of its member countries have agreed to share information on the tax international firms pay, leaving them less room for moving their profits into low tax jurisdictions. But the plan would still require implementation at national level. At the heart of the agreement is the concept of transparency, in particular what is known as "country-by-country reporting". This would force companies to tell the tax office of each country in which they operate, how many staff they employ there, what their revenues and profit are and how much tax they pay. The European Commission has proposed EU member states do the same. If its plan is approved, it could eventually be turned into law by individual countries. However it faces major hurdles - direct tax measures have to be voted in unanimously by all EU states.

With transparency there's a question of degree: is country-by-country reporting only for the eyes of the tax authorities in each country, or for everyone? The Commission will publish a report on the question in the spring. Richard Murphy, professor of international political economy at London's City University believes public scrutiny is vital. If multinationals feel that they are out of the public eye, then they feel they can carry on the same way with the tax authorities - and nothing changes. It is only by having their affairs in the public eye, when everyone can see the choices they are making and the press can have a field day, that you have behavioral change. The prospect is already making investors nervous. Investors are crucial to this. They are beginning to question which companies are free-riding. If there is public scrutiny of their accounts that represents a real risk, it could result in a real change in perception of those companies. Momentum appears to be building behind this idea.

However some in the business community are worried. "We recognize need for greater transparency and we share the common objectives to tackle fraud and evasion," says James Watson of the lobby group Business Europe "But we are concerned at initiatives that might make the EU a forerunner and create a competitive disadvantage. "If companies feel they have to reveal more information, and information that is commercially sensitive, that might damage the EU as an investment destination if the EU were to go ahead unilaterally."

For some, though, even the powerful incentive of greater transparency doesn't go far enough - they are calling for a complete overhaul of the system and the introduction of "unitary taxation".

A 1789 law and your iPhone; Congress needs to update the law

Should the courts order Apple to help the Federal Bureau of Investigation unlock an iPhone seized from a murderous terrorist or a dangerous criminal? For law enforcement officials across the country, this is a question of public safety, even of life and death. But according to a federal magistrate in Brooklyn, the real issue in such cases is how much power an 18th century law grants the federal government to force innocent parties to do its bidding. He was right about that, even though his ruling in a little-watched fight between Apple and the FBI could make it harder for investigators to uncover the clues that criminals and terrorists might hide in their encrypted devices. The case before US Magistrate Judge James Orenstein is far less exotic than the more celebrated one in Riverside, Calif., where Apple is resisting a court order. The Brooklyn case involves an iPhone 5s that the Drug Enforcement Agency seized from a suspected drug dealer, Jun Feng. Although Feng has pleaded guilty, the feds contend that they could learn more about his suppliers and customers by searching the phone. Rather than trying to break into the locked phone through brute computer force, the Justice Department wants Apple to circumvent the passcode, as it has done roughly 70 times before.

But the magistrate balked, troubled by the way the Justice Department was trying to use the All Writs Act -- a law that dates back to the very first Congress in 1789. The point of the statute is to give federal courts the power to carry out the orders they issue in situations where Congress hasn’t explicitly provided (or denied) that authority. For example, the All Writs Act has been used to compel phone companies to help law enforcement agents monitor the phone lines a court has authorized for surveillance. Despite the statute’s broad reach, Orenstein ruled that All Writs couldn’t be used to force Apple to unlock a phone it had no connection to other than having built and sold it. On multiple occasions in the last two decades, Orenstein wrote, Congress has considered whether to require communications and technology companies to help federal agents gather evidence. And although lawmakers imposed such a duty on phone companies in a 1994 wiretap statute, they exempted companies that provide information services such as those Apple provides. To allow courts to create obligations after Congress has refused to do so, Orenstein ruled, would be a violation of the Constitution’s separation of judicial and legislative powers

UN human rights chief backs Apple in FBI encryption row

Zeid Ra'ad Al Hussein, high commissioner for human rights at the United Nations, has warned that a "Pandora's box" will be opened if Apple co-operates with the FBI. The FBI has ordered the tech giant to assist it with unlocking an iPhone used by San Bernadino gunman Syed Farook. Prince Al Hussein said the law enforcement agency "deserves everyone's full support" in its investigation. However, encryption was essential in the interests of freedom, he added. "There are many ways to investigate whether or not these killers had accomplices besides forcing Apple to create software to undermine the security features of their own phones," he said in a statement. "It is potentially a gift to authoritarian regimes, as well as to criminal hackers. "Encryption and anonymity are needed as enablers of both freedom of expression and opinion, and the right to privacy. Without encryption tools, lives may be endangered."

Airline safety regulations in flux after MH-370 crash

The head of the US National Transportation Safety Board, Chris Hart, stated on Friday that airlines around the world are not acting quickly enough to address safety standards in the wake of the MH-370 disappearance. The International Civil Aviation Organization (ICAO), a UN agency that sets global aviation standards, has taken actions to address the most common safety gaps. Among other things, planes in "distress" will be required to automatically report their position and other critical information at least every minute to help searchers find the wreckage. Flight tracking, wreckage search, and flight tracking technologies are some of the areas being addressed in general. However, according to Hart, very few if any of these standards may become effective for another decade and not all of them apply to existing airplanes. Hart stated that "We are concerned about the slow pace of progress at both the national and international levels ... We believe this is long overdue." For instance, ICAO also adopted a standard this week requiring planes to include 25-hour voice recorders to capture an entire flight, as well as crew preparations beforehand. This requirement does not apply to planes already in service, which can have lifespans of 20 years or more, nor will they apply to planes manufactured for another five years.

Florida lawmakers amend death penalty law

The Florida legislature sent Governor Rick Scott a bill on Thursday revamping the state's death penalty law. The changes are in response to the US Supreme Court ruling in January that the state's current sentencing scheme is unconstitutional. The new legislation requires jurors to be unanimous on aggravating factors and for 10 of 12 jurors to recommend execution. The uncertainty in the law has forced the state to delay scheduled executions. The previous law was deemed unconstitutional because the state permitted judges to determined whether an individual should be sentenced to death rather than the jury. The bill passed the state Senate and House of Representatives and is awaiting approval by the governor.

Iran sentences billionaire businessman to death for corruption

Iranian state media report that Babak Zanjani, an oil trader who allegedly helped Iran evade oil sanctions, has been convicted of "spreading corruption on earth." Zanjani can appeal the verdict.

Spain socialists' coalition bid rejected again

Spain's Socialist leader Pedro Sanchez has failed for the second time in a week to form a government after his proposal was defeated by parliament. In a 219-131 vote, MPs rejected Sanchez's proposed coalition cabinet with the centre-right Ciudadanos party. If MPs fail to choose a government by 2 May, a snap poll will be held in June. Spain has been governed by a caretaker cabinet of conservative Prime Minister Mariano Rajoy following December's inconclusive elections.

Harvard Law School scraps official crest in slavery row

Harvard Law School is to change its official seal, after a protest that it had links to slavery. The law school, part of the US university, has a seal that includes the crest of a notoriously brutal 18th Century slave owner. Students have been holding protests and sit-ins calling for a change in this official emblem. A Harvard Law School committee says the seal no longer represents the institution's values. Last week, the university announced that it would stop using the term "master" in academic titles, because of connotations of slavery.

French labor bill in debate as PM seeks nod from unions, polls

The French government is prepared to make some changes to its plans to reform labor-law in the next two weeks, Prime Minister Manuel Valls said over the weekend, as he prepares to meet with union representatives opposed to the overhaul. Valls starts a campaign on Monday to win support from France’s biggest unions, after his government’s overhaul of the French labor code was upset by a union backlash that included calls to strike on March 9 and March 31. Hollande last week pushed back a planned bill that would’ve gutted the law that limits the French work week to 35 hours.

Scandal-hit Baltic bank shut by ECB

A Latvian lender linked to a string of money-laundering probes was closed by the European Central Bank. Trasta Komercbanka AS, the Baltic nation’s 13th-biggest lender by assets, had its license revoked after local regulators slapped restrictions on it in January. Latvia’s Financial and Capital Market Commission, which doesn’t deem the bank systemically important, said the move followed “serious and sustained breaches of regulatory requirements in several areas for a long period.” It’s the first time money laundering is among the reasons for the ECB revoking a license.

Law graduate gets her day in court, suing law school

Anna Alaburda’s case against the Thomas Jefferson School of Law, which she attended nearly a decade ago, is going to trial. For the first time, a law school will stand trial on charges that it inflated the employment data for its graduates to lure prospective students.

  • Weekly Magazine Review

Time
Donald Trump’s Wild Ride

Newsweek
Feisty Sanders Jabs Clinton At Flint, Michigan Debate

Business Week
How Snapchat Built a Business by Confusing Olds

The Economist
The primaries: Battle lines

Der Spiegel
Wir schaffen das… offene Europa ab und riskieren unzere Zukunft

L'Espresso
Caso Regeni. Buio di Stato.

  • Daily Press Review

Turkey sacks Ankara police chief after suicide bombings
Al Jazeera, Doha, Qatar

MPs approve Osborne's budget rules
BBC News, Centrist newscaster, London, England

Israeli-Palestinian violence: What you need to know
CNN International, London, England

Heidi Klum is 'mom and a dad at the same time' since her split from Seal in 2012
Daily Mail, Conservative daily, London, England

Denmark's Princess Marie denies boob job after Her & Nu magazine claimed she had one
Daily Mail, Conservative daily, London, England

Tense times in Jerusalem
EuroNews, International news, Ecully Cedex, France

Israel seals off East Jerusalem after 'Day of Rage' attacks
France 24, Issy-les-Moulineaux, France

?? Sanat to present a rich program in its new season
Hurriyet Daily News, (Liberal, English-language), Istanbul, Turkey

'Blood moon' prompts Mormon announcement: This is NOT the end of the world
Independent The, London, England

Pompeii's pilferers punished with a curse from the gods
Telegraph The, Conservative daily, London, England

The Apprentice 2015: episode 1, live
Telegraph The, Celebrity news, London, England

Hung ouster in motion, Chu calls for party unity
China Post, English-language daily, Taipei, Taiwan

Up to 10 Million People Made Sick by Their Phones
Chosun Ilbo, Conservative daily, Seoul, South Korea

Pope Francis makes historic first US visit
Hindustan Times, New Delhi, India

Minister vows to return donations from firms involved in bid-rigging
Japan Times, Independent centrist, Tokyo, Japan

Financial services startup Square files for $275M IPO
New Zealand Herald, Conservative daily, Auckland, New Zealand

Ukraine President cancels trip over protests in eastern Ukraine
Straits Times, Pro-government, Singapore

Beat the post holiday blues
Sydney Morning Herald, Centrist daily, Sydney, Australia

Nike says expects revenue of $50 bn by 2020
The Economic Times, Business, Mumbai, India

It's official ó the 1% finally own 50% of everything
Canadian Broadcasting Centre, Toronto, Ontario

New York teen dies after beating at church during 'counselling'
Globe and Mail The, Centrist daily, Toronto, Canada

Liberty Reserve Brought Down By 'Joe Bogus': How The Feds Arrested Arthur Budovsky
International Business Times, Business news organization, New York, U.S

Wall St declines as Wal-Mart's weak forecast drags on retailers
Reuters, Business News, New York, U.S

Malaysia's embattled PM facing stern test as parliament returns
Reuters, World News, New York, U.S

Blue Jays cut lead to 2-1 against Rangers in Game 5
Toronto Star, Toronto, Ontario

US troops to help fight Boko Haram
BBC News, Centrist newscaster, London, England

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