As Low Rates Depress Savers, Governments Reap the Benefits

The following is an excerpt from an article in:

The New York Times
Tuesday, September 11, 2012

As Low Rates Depress Savers, Governments Reap the Benefits

By CATHERINE RAMPELL

A consumer complaint is ricocheting around the world: low interest rates are eating away at savings.
Bill Taren, a retiree near Orlando, Fla., discovered in August that his credit union would pay only 0.4 percent annual interest on his saving account, even though inflation averaged 2.8 percent over the last year. So he and his wife decided to just stuff their money in the mattress, he says, because at least there “we can see the cash when we want.”

Jeanne and André Bussière, in Annecy, France, have a stable pension and a bank account that pays 2 percent interest — “almost nothing,” they say — even though the consumer price index rose an average of 2.5 percent over the last year.

Jiang Rong, an information technology professional in Xiamen, China, decided to dive back into the speculative real estate market rather than watch his savings wither at the bank. In China, too, the cost of living is outrunning savings, as local restaurants nearly double their prices.

The fact that interest yields are so low in so many parts of the world is no coincidence. Rates are determined not only by markets, but also by government policy. And right now many governments say they have good reason to keep their own borrowing costs as low as they possibly can. Just last week, the government’s report on job growth in the United States showed continued weakness, and an international forecasting group warned that the European economic powerhouse, Germany, will fall into recession later this year.

Though bad for people trying to live off their savings, low interest rates happen to be quite good for anyone borrowing money, like governments themselves. Over time, interest rates below the inflation rate allow governments to refinance, erode or liquidate their debt, making it easier to live within their budgets without having to resort to more unpalatable spending cuts or tax increases.

Along with keeping rates low, governments are using a variety of tactics to encourage captive audiences, like pension funds and banks, to buy their debt. Consumers, in other words, are subtly subsidizing governments without even knowing it. Economists have compared this phenomenon to a hidden tax on people’s wealth.

“If you ask a central banker is that what you’re doing, and why you’re doing it, they’ll say ‘No, we’re just trying to get the economy going by making it easier for the private sector to borrow,’ ” said Neal Soss, chief economist at Credit Suisse. “But I have a syllogism for you: The government makes the rules. The government needs the money. So why should it surprise if the rules encourage you to lend the government money?”

For more, visit www.nytimes.com.

Banks Facing Suits as States Weigh Their Libor Losses

The following is an excerpt from an article in 

The New York Times
Wednesday, September 05, 2012

Banks Facing Suits as States Weigh Their Libor Losses

By NATHANIEL POPPER

The scandal over global interest rates has state officials like Janet Cowell of North Carolina working intensely behind the scenes to build a case for suing the nation’s largest banks.

Ms. Cowell, the state’s elected treasurer, and several of her staff members have spent the summer combing through the state’s investments trying to determine how much the state may have lost because of suspected manipulation of the London interbank offered rate, or Libor, which is used as a benchmark for trillions of dollars of financial contracts around the world.

“We think this could be as big as the mortgage crisis settlement, that this could be a really high impact situation and that we should be aggressive on this,” Ms. Cowell said, referring to the $25 billion settlement that the nation’s biggest banks entered with state attorneys general.

The activity provides a glimpse at how widely the Libor scandal has spread through the financial world, and how much damage may still be in store for the banks accused of manipulating Libor. Her work also suggests just how difficult it is, and how long it may take, to get to the bottom of the losses.

The attorneys general in Maryland, Massachusetts, New York and Connecticut have all been examining how much their states may have lost as a result of a lowered Libor. A spokeswoman for Connecticut’s attorney general, George C. Jepsen, said that the state’s work with New York’s attorney general, Eric T. Schneiderman, “has broadened significantly over the last few weeks and we are now coordinating with a much larger group of attorneys general.”

Even before the British bank Barclays admitted in June that its employees had tried to manipulate Libor, there were a number of lawsuits filed by cities and municipal agencies seeking damages from large banks for manipulating Libor. But while those cases were filed by private sector lawyers, the public officials are looking at bringing more wide-ranging lawsuits on behalf of the states. The Justice Department has coordinated with the states and is leading its own investigation.

For more, visit www.nytimes.com.

U.S. Chamber Calls for Tax Reform as U.S. Corporate Rate Becomes Highest in the World

Says United States Should Adopt Simpler System with Lower Corporate and Individual Rates and Territorial System

WASHINGTON, D.C.—U.S. Chamber of Commerce Executive Vice President for Government Affairs Bruce Josten issued the following statement today ahead of the U.S. corporate tax rate becoming the world’s highest on April 1, 2012:

“In just a few days, the United States will hold the dubious distinction of having the highest corporate tax rate in the world. By simply standing still, we are falling behind. We need fundamental, comprehensive tax reform to improve our tax system, strengthen the economy, and help American companies compete and win.

“The United States tax system is increasingly out of step with the world economy and its competitors’ tax systems. As countries such as Canada and the United Kingdom have moved to reform their tax systems and lower rates to encourage economic growth, America’s inaction puts American worldwide companies at a competitive disadvantage and threatens our economic recovery.

“The Chamber believes now is the time for comprehensive, fundamental tax reform that lowers the individual and corporate rates and keeps them synchronized. Reform should also shift to a territorial tax system, bring taxpayers certainty, simplify the tax code, and provide adequate transition rules to get our tax code from where it is now to where it should be.

“Ultimately, the marketplace, and not the tax system, should allocate capital and resources. We can’t allow our tax code to continue to punish American businesses and taxpayers. We need reform and we need it now if we are serious about driving economic growth, creating jobs, and enhancing American competitiveness.”

The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.

Why the Web Lacks Authoritative Reviews of Doctors

Excerpt from an article in

The New York Times

Saturday, March 10, 2012

Why the Web Lacks Authoritative Reviews of Doctors

By RON LIEBER

For all the debate about which Web sites have the best model for reliable reviews — paid or unpaid, anonymous or real name, Angie’s List or Yelp or TripAdvisor — one thing is certain: a robust ecosystem exists online for restaurant and hotel reviews that has changed those industries for the better.

So it is puzzling that there is no such authoritative collection of reviews for physicians, the highest-stakes choice of service provider that most people make.

Sure, various Web sites like HealthGrades and RateMDs have taken their shots, and Yelp and Angie’s List have made a go of it, too. But the listings are often sparse, with few contributors and little of substance.

What we have here is a demand and supply problem: many people want this information, and more consumers would trust it if the sites had more robust offerings. But not enough people take the time to review their doctors. And fixing that problem means figuring out why.

Companies have tried to collect reviews of doctors since the early days of the Web, and RateMDs.com has gathered more than most. The founder, John Swapceinski, was inspired to create it after his success with a site called RateMyProfessors.com, which is well known for the “hotness” rating that college students assign (or not) to their teachers.

“Anything that people spend time or money on ought to be rated,” he said. RateMDs now has reviews of more than 1,370,000 doctors in the United States and Canada.

But getting in the faces of the previously untouchable professional class has inevitably led to legal threats. He says he gets about one each week over negative reviews and receives subpoenas every month or two for information that can help identify reviewers, who believe they are posting anonymously.

Kabbage & UPS Partnership Fuels Small Business Growth

News release from UPS:

Kabbage and UPS Partnership Fuels Small Business Growth

Press Release Atlanta, February 15, 2012 UPS Customers Can Increase Cash Lines By Using Their Shipping Data; Kabbage Gains New Debt Facility from UPS Capital® Kabbage, Inc, a provider of working capital for small businesses, and UPS (NYSE: UPS) today jointly announced an important alliance for small businesses across the United States. Effective today, small businesses will be able to direct UPS to share their shipping history with Kabbage via the Kabbage.com website, making it possible for them to potentially obtain more capital at lower rates. In addition, seeing an opportunity to directly help small businesses grow, UPS Capital has provided Kabbage with a new debt facility specifically intended to fund small e-commerce businesses through Kabbage's proprietary system. "Access to working capital for small businesses is fundamental to the country's economic recovery," said Alan Gershenhorn, UPS chief sales and marketing officer.  "This alliance with Kabbage is an example of how UPS and UPS Capital can help small businesses gain access to the working capital they need to grow their business.  We're looking forward to extending our alliance with Kabbage and the thousands of e-commerce companies it supports." The relationship between Kabbage and UPS is truly innovative and will enable Kabbage to potentially increase working capital lines when businesses choose to share their UPS transaction data, which includes information related to the number and frequency of packages shipped. The fact that UPS Capital also is providing a credit facility to Kabbage in connection with this new data relationship reinforces UPS's commitment to small business.  "When given an opportunity to help small businesses grow, UPS has not only risen to the occasion but has been the company creating solutions that meaningfully address those challenges," said Marc Gorlin, chairman of Kabbage, Inc. "At a time when it has been exceedingly difficult for small businesses to get financing, UPS has taken a concerted and thoughtful approach to helping its small business customers. We are fortunate and humbled to have such a committed partner." For additional information on the Kabbage-UPS relationship, please visityoutu.be/bCnqRz6fFyU. Kabbage, which officially launched in October, 2010, has become a critical piece of the operational puzzle for many online merchants who sell on marketplaces like eBay, Amazon, Yahoo! Stores and Etsy as well as operate their own independent online stores. Over 15,000 online merchants have turned to Kabbage for the working capital they need to grow their businesses. To learn more, log on to www.kabbage.com.

More Information About UPS
UPS (NYSE: UPS) is a global leader in logistics, offering a broad range of solutions including the transportation of packages and freight; the facilitation of international trade, and the deployment of advanced technology to more efficiently manage the world of business. Headquartered in Atlanta, UPS serves more than 220 countries and territories worldwide. The company can be found on the Web at UPS.comand its corporate blog can be found at blog.ups.com. To get UPS news direct, visit pressroom.ups.com/RSS.

About Kabbage, Inc.
Kabbage, Inc., headquartered in Atlanta, Georgia, is pioneering the first financial services data, technology and marketing platform for the millions of small and medium businesses that make a living selling online. Kabbage leverages data generated through merchant activity across various marketplaces and channels to understand business performance and craft financing options that meet their needs. Kabbage is venture funded and backed by Mohr Davidow Ventures and BlueRun Ventures, with additional investors including: David Bonderman, founder of TPG Capital, Warren Stephens, CEO of Stephens Inc., the UPS Strategic Enterprise Fund, and TriplePoint Ventures. For more information, please visit www.kabbage.com.

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IRS Announces 2012 Mileage Rates

IRS Announces 2012 Standard Mileage Rates, Most Rates Are the Same as in July 

WASHINGTON — The Internal Revenue Service today issued the 2012 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2012, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 55.5 cents per mile for business miles driven
• 23 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

The rate for business miles driven is unchanged from the mid-year adjustment that became effective on July 1, 2011. The medical and moving rate has been reduced by 0.5 cents per mile.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical or charitable expense are in Rev. Proc. 2010-51.

Notice 2012-01 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.