Aug. 7 (Bloomberg) -- So just how rich are you?
In fact, there’s really no telling just how rich the 1 Percent are, or 0.01 percent, or however far to the right of that decimal point you want to go. Armed with new sleuthing by researchers at the ECB and the London School of Economics, Jeanna Smialek reports they have found that with great wealth comes great obfuscation.
Hidden tax shelters, offshore accounts, impenetrable holding companies and foundations mask the true wealth gap, the research finds, making it that much more difficult to devise appropriate tax policy.
For all the talk about the wealth gap in the U.S., Smialek writes that with the new assumptions about the extra wealth that’s not being calculated in the current models, Europe -- notably the U.K. -- might be even more unequal. Or less equal. Whatever.
This means that declines in poverty and improvements to standards of living may be inaccurate. By accounting, as best they could, for what they can’t find, the World Bank determined that the decline in income inequality from 1988 to 2008 “almost entirely dissipates.”
According to Nobel laureate Joseph Stiglitz, who spoke with Smialek, all this does is make it more difficult for the economy, because the lack of that money -- the money being hidden, its value to the world, the taxes that might be taken from it -- is removed from the flow of consumer spending, which is one reason why that spending has been slow to recover from the recession.
“Some of the problems in the performance of the economic system are related to the true degree of inequality, not the measured degree of inequality,” Stiglitz told her.
In other words, you’re only hurting yourselves.
Today’s U.S. economic indicators are initial jobless claims at 8:30 a.m. EDT, Bloomberg’s consumer comfort index at 9:45 a.m. and the Fed’s monthly consumer credit statement at 3 p.m.
The BOE announces its rate decision at 7 a.m. EDT (preview here), followed by the ECB’s rate decision at 7:45 a.m. (preview here) and Draghi’s news conference at 8:30 a.m. (preview here)
Earnings are due from more than 40 U.S. companies, including Mylan, Wendy’s, AMC Networks, ICE, Scripps Networks, CBS, Duke Energy, Lions Gate, Zynga and Freddie Mac.
Overnight, the Economy Ministry in Berlin said German industrial output rose in June by a seasonally adjusted 0.3 percent, compared with economists’ forecasts for 1.2 percent. In Australia, the unemployment rate rose to 6.4 percent in July, surpassing the U.S. level for the first time since 2007.
- Russia has banned food imports from the U.S., EU and other countries, which is only going to make things worse for Russians. - Bank of America is near a settlement over sales of mortgage-backed bonds that would total $16 billion to $17 billion. - The WHO will announce tomorrow whether it’s declaring an international public-health emergency over the spread of Ebola. - 50,000 Iraqi refugees stranded in the mountains will die from dehydration if they stay or at the hands of the Islamic State if they descend. - No Ebola was found in the patient at New York’s Mount Sinai Hospital. - A Palestinian arrested by Israel said Hamas paid for the kidnap and murder of three Israeli teens in June. - “Living wills” at 11 of the largest U.S. and foreign banks were rejected by the Fed and FDIC. - Erdogan, who has compared Israel to Hitler, said that if the world doesn’t like anti-Semitism, it should stop Israel from killing Palestinians. - Five Australian teens boarded a school bus to hurl abuse at the Jewish children on board. - NYSE’s plan to modify order types include adding “perhaps the most powerful order type in the HFT arsenal.” - Two (2) hurricanes are bearing down on Hawaii. - The search for more MH17 victims was halted by the Netherlands because of peril. - A human skull was found by divers on the Costa Concordia. - China has blocked several foreign instant-messaging apps to crack down on “terror-related information,” the FT reports. - Revel Casino postponed today’s scheduled bankruptcy auction for one week. - Thailand’s parliament is meeting for the first time. - A Cambodian court handed down verdicts of life in prison in the genocide trial of the two highest-ranking surviving officials of the Khmer Rouge. - Russian-U.S. tensions are spilling over into girl’s hockey. - At least one toy truck given to children by the Mets had a Phillies team logo on it.
A charity group with ties to the Tea Party wing of the Republican party and endorsed by some of the biggest names in the GOP is keeping funds raised on behalf of U.S. troops and using them for political operations, Pro Publica reports.
The investigation by the independent, nonprofit investigative journalism outfit, which is overseen by former Wall Street Journal Managing Editor Paul Steiger, was published yesterday by The Daily Beast and finds Move America Forward “repeatedly misled donors and inflated charitable accomplishments, while funneling millions of dollars in revenue to the men behind the group and their political consulting firms.”
The story identifies the most prominent of the “men behind the group” as Sal Russo, one of the founders of the Tea Party Express. His consulting firm, Sacramento-based Russo, Marsh & Associates, created two other PACs, the Move America Forward Freedom PAC and the Conservative Campaign Committee.
Among the questionable actions by Move America Forward cited by Pro Publica, the group said it sent packages to a battalion of Marines in Afghanistan who actually were in Japan at the time; falsified promotional material and solicitations; repurposed correspondence from years prior on solicitation material that misrepresented its origins; depicted soldiers enjoying items it said it sent to them, when they were sent by a different aid group; and solicited funds by falsely claiming a partnership with Walter Reed National Military Medical Center.
Tax returns examined by Pro Publica show millions of dollars the group has collected have gone to Russo and his consulting firm in various ways. Neither Russo nor any of the other principals named in the story responded with comment.
Russo Marsh has been in the news for this before. The left-leaning website talkingpointsmemo.com reported in 2009 that Our Country Deserves Better PAC, one of the PACs behind the Tea Party Express and also founded by Russo, raised $1.33 million from July through November of that year and paid $857,122 of it to Russo Marsh or people associated with it.
Move America Forward raised $7.8 million from 2008 to 2012, according to the story, citing the charity’s tax forms. It quotes a former IRS official characterizing the group’s actions as “playing audit roulette,” and “betting the IRS won’t find them.”
At least someone did.
Apple has lost China as an iPad customer, among other products, as we learned yesterday, but there’s another huge customer base that also may be leaving the company’s tablet computers behind: U.S. schools.
The iPad was an instant hit in middle schools and high schools after its debut in April 2010, promising a slim and lightweight alternative to a load of books that could rival the weight of those kids lugging them. They also filled the job of numerous devices that may or may not have still been around in 2010, like the bulky black-and-white TVs our teacher would bring into the classroom on a rolling stand so that we could watch Apollo astronauts, or overhead projectors or filmstrip projectors -- who remembers filmstrips? -- etc.
But almost as quickly as the tablets made the scene, they were leaving it, the Atlantic reports. A highly publicized adoption of iPads for every student in the Los Angeles Unified Schools system at the start of last year lasted only one full term before the district decided to change course in a direction other schools are taking as well: Chromebooks, with a retail price starting at $279, compared with $399 for iPads.
Spending in American K-12 schools this year is projected to rise 2.5 percent to $9.94 billion, the Atlantic reports, citing the Center for Digital Education. Given that Apple’s estimated sales for fiscal year 2014 are $180 billion, this market doesn’t have the potential yet to make much of a dent.
But like little kids, markets grow up.
Unsealed court testimony in a case fighting the U.S. government’s electronic surveillance of millions of Americans reveals the extent to which NSA and other agencies will fight to maintain their privacy in the pursuit of compromising yours.
The case, Jewel v. NSA, was filed in 2008 and accuses the U.S. government and AT&T of violating the first and fourth amendments to the Constitution by conducting a “dragnet” of electronic data.
This part isn’t the news. What’s news is that the government attempted to remove testimony from the court transcript and tried to persuade the judge to prevent any record that it had done so.
This comes from the Electronic Frontier Foundation, which published the proceedings of the June 6 hearing yesterday only after the U.S. lawyers determined that the basis of their request -- that classified information may have been exposed inadvertently by one of their own, Anthony Coppolino -- was false.
The dispute arose even though proceedings on June 6 were held in an open, “crowded” court, the EFF writes, and even though federal law requires verbatim transcripts.
“The transcript of a court proceeding is the historical record of that event, what will exist and inform the public long after the persons involved are gone,” the foundation wrote Tuesday. “The government’s attempt to change this history was unprecedented. We could find no example of where a court had granted such a remedy or even where such a request had been made.”
One thing we know for certain about Paul Singer: With his trimmed white beard and round spectacles, he could pass for a college professor.
Much of the rest, such as where he grew up, is uncertain, except for this:
Dude plays hardball.
Somewhat paradoxically, it turns out from today’s profile of the man who has almost single-handedly brought an entire country, Argentina, to its knees. As Max Abelson and Katia Porzecanski relate, he calls out the Federal Reserve for having “lost any semblance, any wispy remnant of humility,” and at the same time says “resentment is not morally superior to earning money.”
Along the way, Abelson and Porzecanski describe a piano man, a street fighter with distressed debt, a “stubborn, self-righteous man” who values the rule of law over mercy, and one who apparently doesn’t mind interfering with other investors’ right to be paid what they’re rightfully and legally owed by Argentina unless he gets his share first.
As we gear up for the NFL season, it appears Dallas Cowboys owner Jerry Jones may already be in midseason form.
The sports website Deadspin published photos yesterday of Jones in compromising positions with two women, photos the New York Post reports were first revealed by the sports-gossip site terezowens.com.
Before proceeding, there is a minor NSFW quotient to these images, just FYI. There is no gratuitous nudity, although one of the women is seated on a toilet with her pants down, but the shots are suggestive.
Now that you’ve seen them, you will agree that neither woman appears to be Jones’s wife of 51 years, Eugenia. In fact, we’re not even sure you’d come up with 51 if you added their two ages together.
What response will we get from NFL Commissioner Roger Goodell? The league doesn’t spare the rod when it comes to the (exhaustive) rap sheets that are becoming a locker room staple in this sport.
What happened in that room after these photos were taken? Who are those women? The source of the photos is identified as a man named Frank Hoover, and documentation accompanying them that was unearthed by Deadspin indicates the pictures were supposed to have been used in an extortion attempt.
To what extent do the actions of (former?) Los Angeles Clippers owner Donald Sterling inform Goodell’s response, if any? Because in the end, while it’s not another case of (virulent) racism, it’s conduct unbecoming to a league that won’t fail to fine a player for letting his socks fall down to his ankles.
Here we are in August already and on the first day of the PGA Championship at Valhalla Golf Club. As is our custom, we got Mike Buteau on the phone from the scene in Louisville, Kentucky, to handicap the field (it was a short discussion, as you’ll see) and to paint a picture of the circus surrounding Tiger Woods and Tiger’s parking spot.
Opening Line: How’s the course looking?
Mike Buteau: It’s looking lush and soft. Tiger Woods was saying today that if it stays soft, there will be low scores. The course is very, very long -- about 7,500 yards -- but still, plenty of birdies can be had.
The PGA Championship is probably, of all the majors, the one that is most similar to a regular PGA tour event. That’s not to say that it’s not difficult. But, the British Open is played on the links style -- it’s a very different type of golf, the Masters is the Masters -- it’s just different than all the other tournaments; it’s basically a putting contest, and the U.S. Open is generally one of the most difficult courses they play all year long, and par is always a good score.
But the PGA tends to be the one where you see guys putting up low scores, and this week shouldn’t be any different.
OL: Is this a course for the driver?
MB: Absolutely, because it’s so long. The guy who can hit it the longest and the straightest will have the shortest clubs into the greens and have the most chances at birdie, and right now if you were to look at who that is, he is without question Rory McIlroy. So all eyes are on Tiger Woods, sure, but in reality all eyes should be on Rory McIlroy this week.
OL: He’s got something going on right now, doesn’t he?
MB: The question is, is this officially now the era of Rory McIlroy? Because clearly it is no longer the era of Tiger Woods. Everybody’s been waiting for that next superstar to come along, and we’ve had a few people who have laid claim to it briefly. But nobody has really held onto it and it’s a question now of whether Rory McIlroy is that guy.
OL: What’s the scene at the course today? Tiger’s there, even though he’s injured.
MB: The scene at the course was as comical as any sports “event” that I’ve ever been to. First the PGA put out a statement saying “He has arrived at Valhalla Golf Club.” Then it became apparent that he hadn’t yet arrived because his parking spot was still empty.
Then, all of the cameras -- still cameras, TV cameras, print reporters -- descended on the parking lot in front of the clubhouse. There were some TV reporters who were doing live standup commentary from Tiger Woods’s empty parking spot. There was even a Twitter account created -- @twspot (https://twitter.com/TwSpot) -- that was (speaking as) Tiger Woods’s vacant parking spot. It was amazing.
At one point, standing in the parking lot, watching the whole scene were Keegan Bradley, who won the PGA back in Atlanta in 2011; Phil Mickelson’s caddy, Jim Mackay -- “Bones"; um, Rickie Fowler walked in front of all the cameras as they were filming Tiger Woods getting out his car and photobombed the whole scene; Rory McIlroy walked past at one point and nobody really noticed him go through the parking lot. It was really surreal and very sad at the same time.
But I’ll say this: It has people talking about the PGA Championship. So criticize the overhyped coverage of Tiger Woods, but he’s bigger than the game and he brings in the common fan.
OL: You put it perfectly -- Tiger is bigger than the game. Do you think Rory has the charisma and the sizzle -- not just Rory, anybody -- to be an Arnie or a Jack or a Tiger in the next 10 years?
MB: No. I won’t say never, but I think it’s really going to be a long time before you have somebody capable of doing what Tiger Woods did to golf, which was to bring it to the front of the sports section and then to the front of the entire newspaper.
Well put. Besides, no one plays golf anymore anyway.
To contact the reporter on this story: C. Thompson in Wilmington at firstname.lastname@example.org
To contact the editor responsible for this story: Marty Schenker at email@example.com