Tuesday, February 3, 2015

EU opens probe into Belgium tax deals for multinationals

EU opens probe into Belgium tax deals for multinationals


[BRUSSELS] The EU opened an investigation on Tuesday into tax deals that Belgium may be granting multinational firms, the latest in a widening probe into sweetheart tax arrangements across Europe.
Competition commissioner Margrethe Vestager said Belgium's system was believed to breach European Union rules on unfair state aid, adding that it "appears to grant substantial tax reductions only to certain multinational companies."
"If our concerns are confirmed, this generalised scheme would be a serious distortion of competition unduly benefitting a selected number of multinationals," Ms Vestager said.
She declined to name the companies involved.




The commission, the EU executive arm, said the Belgian tax provision allows companies to reduce tax by registering "excess profits" that allegedly result from the advantage of being part of a multinational group.
EU regulators charged Luxembourg last month with giving illegal tax breaks to Internet shopping giant Amazon.
It followed last year's "Luxleaks" scandal, which revealed details of tax breaks given to dozens of major firms while current Commision President Jean-Claude Juncker was prime minister of Luxembourg for 19 years.
The EU has also launched investigations into US tech giant Apple's tax deals with Ireland, coffee-shop chain Starbucks with The Netherlands and Italian automaker Fiat, also with Luxembourg.
AFP



Monday, February 2, 2015

97% Owned (Video)

97% Owned



97% Owned97% owned present serious research and verifiable evidence on our economic and financial system. This is the first documentary to tackle this issue from a UK-perspective and explains the inner workings of Central Banks and the Money creation process.
When money drives almost all activity on the planet, it's essential that we understand it. Yet simple questions often get overlooked, questions like; where does money come from? Who creates it? Who decides how it gets used? And what does this mean for the millions of ordinary people who suffer when the monetary, and financial system, breaks down?
Political philosopher John Gray, commented, "We're not moving to a world in which crises will never happen or will happen less and less. We are in a world in which they happen several times during a given human lifetime and I think that will continue to be the case."
If you have decided that crisis as a result of the monetary system is not an event you want to keep revisiting in your life-time then this documentary will equip you with the knowledge you need, what you do with it is up to you.
Watch the full documentary now

Here's The Secret Letter That Shows The ECB Forced Ireland To Ask For A Bailout by TOMAS HIRST

Here's The Secret Letter That Shows The ECB Forced Ireland To Ask For A Bailout

TrichetGetty Images/Adam BerryJean-Claude Trichet.
leaked letter published by The Irish Times on Thursday shows that the European Central Bank threatened in November 2010 to pull emergency funding from Irish banks if the Irish government did not apply for a bailout.
The letter is significant because the ECB previously held that Ireland voluntarily asked for a bailout, effectively declaring that the state was failing. That has now been shown to be false. 
During some of the worst moments of the financial crisis, central banks around the world acted decisively to head off the possible collapse of the financial system. In Europe, it seems, that support came with a price tag.
Below is the full letter from then-ECB President Jean-Claude Trichet to Brian Lenihan, Ireland's finance minister at the time (emphasis added).
It shows the ECB demanded not only that the Irish government seek a bailout, but also that Irish taxpayers guarantee the emergency funding to its banking sector in order to receive central bank support. The letter is evidence of the ECB straying into government policy of member states as early as 2010.
As this two-line statement issued by the ECB at the time Cyprus fell into difficulty in 2013 demonstrates, making emergency liquidity assistance conditional on accepting economic reforms under the oversight of the so-called troika (made up of the European Commission, the IMF, and the ECB) has now become the region's de facto model for dealing with banking crises. Critics would argue that such conditionality shows the ECB was willing to overstep the traditional boundaries of central banks by straying into the sovereign affairs of euro member states.
Note: The ECB has just released the full exchange of letters between the central bank and the Irish government. They can be found here.
Mr Brian Lenihan, Tánaiste and Minister of Finance
Frankfurt, 19 November 2010
Dear Minister,
As you are aware from my previous letter dated 15 October, the provision of Emergency Liquidity Assistance (ELA) by the Central Bank of Ireland, as by any other national central bank of the Eurosystem, is closely monitored by the Governing Council of the European Central Bank (ECB) as it may interfere with the objectives and tasks of the Eurosystem and may contravene the prohibition of monetary financing.
Therefore, whenever ELA is provided in significant amounts, the Governing Council needs to assess whether it is appropriate to impose specific conditions in order to protect the integrity of our monetary policy. In addition, in order to ensure compliance with the prohibition of monetary financing, it is essential to ensure that ELA recipient institutions continue to be solvent.
As I indicated at the recent Eurogroup meeting, the exposure of the Eurosystem and of the Central Bank of Ireland vis-a-vis Irish financial institutions has risen significantly over the past few months to levels that we consider with great concern. Recent developments can only add to these concerns. As Patrick Honohan knows, the Governing Council has been asked yesterday to authorise new liquidity assistance, which it did.
But all these considerations have implications for the assessment of the solvency of the institutions which are currently receiving ELA. It is the position of the Governing Council that it is only if we receive in writing a commitment from the Irish government vis-a-vis the Eurosystem on the four following points that we can authorise further provisions of ELA to Irish financial institutions:
1) The Irish government shall send a request for financial support to the Eurogroup;
2) The request shall include the commitment to undertake decisive actions in the areas of fiscal consolidation, structural reforms and financial sector restructuring, in agreement with the European Commission, the International Monetary Fund and the ECB;
3) The plan for the restructuring of the Irish financial sector shall include the provision of the necessary capital to those Irish banks needing it and will be funded by the financial resources provided at the European and international level to the Irish government as well as by financial means currently available to the lrish government, including existing cash reserves of the Irish government;
4) The repayment of the funds provided in the form of ELA shall be fully guaranteed by the Irish government, which would ensure the payment of immediate compensation to the Central Bank of Ireland in the event of missed payments on the side of the recipient institutions.
I am sure that you are aware that a swift response is needed before markets open next week, as evidenced by recent market tensions which may further escalate, possibly in a disruptive way, if no concrete action is taken by the Irish government on the points I mention above.
Besides the issue of the provision of ELA, the Governing Council of the ECB is extremely concerned about the very large overall credit exposure of the Eurosystem towards the Irish banking system. The Governing Council constantly monitors the credit granted to the banking system not only in Ireland but in all euro area countries, and in particular the size of Eurosystem exposures to individual banks, the financial soundness of these banks and the collateral they provide to the Eurosystem.
The assessment of the Governing Council on the appropriateness of the Eurosystem’s exposure to Irish banks will essentially depend on rapid and decisive progress in the formulation of a concrete action plan in the areas which have been mentioned in this letter and in its subsequent implementation.
With kind regards,
Jean-Claude Trichet


Read more: http://uk.businessinsider.com/heres-the-secret-letter-that-shows-the-ecb-forced-ireland-to-ask-for-a-bailout-2014-11/#lMG2ilRldIctkpax.97#ixzz3Qcn5EYd9

What the ECB is doing to Greek banks is outrageous

What the ECB is doing to Greek banks is outrageous

DraghiREUTERS/Eric VidalECB President Mario Draghi.
The European Central Bank (ECB) is threatening to withdraw emergency funding from Greek banks if the Greek government doesn't do what it wants.
The central bank's actions toward Greece occur less than two months after secret letters revealed that the ECB threatened to pull emergency funding from Irish banks if the state did not apply for a bailout, in what many saw as an overreach into the sovereign affairs of the country. The ECB later pretended that Ireland had applied for its bailout voluntarily. The letters revealed that in fact the ECB had required the Irish government to apply.
It is one thing for the ECB to require individual banks to follow certain technical rules to maintain their liquidity. It is quite another for the ECB to pressure a government by threatening an entire nation's banks with a sudden default by yanking their liquidity en masse.
That's what is going on now with Greece.
The new Greek government, led by the left-wing Syriza party, is attempting to renegotiate the terms of its bailout deal with the so-called Troika. The Troika consists of the ECB, the European Commission, and the International Monetary Fund (IMF).
Syriza wants a shift in the focus of "structural reforms" toward increasing tax collection and government efficiency and away from crude budget cuts; a "European debt conference" to renegotiate the repayment terms on the country's debt (including linking interest payments to growth and writing down some of the debt); and a reduction in the government budget surplus the country is required to run.
The Troika wants to keep the current deal, which requires the Greek to run a budget surplus (with a target of a 4.5% surplus in 2016) and implement a programme of reforms to bring government debt down from its current 175% of GDP to 124% by 2020.
The country's access to the funding from the central bank that supports its banking system may be cut off at the end of the month unless a compromise is struck. This, at least, is the message coming from members of the ECB's governing board.
SyrizaAlkis Konstantinidis/ReutersHead of radical leftist Syriza party Alexis Tsipras after winning elections in Athens, Jan. 25.
Currently Greece enjoys special dispensation that allows its banks to use Greek government debt and government-guaranteed bank debt as collateral in exchange for funding from the central bank, despite being rated as "junk." This waiver was granted as part of a deal under which the country committed to undertake a package of structural reforms insisted upon by the Troika in exchange for bailout money.
Yet, as Bloomberg reports, ECB Vice President Vitor Constancio told an audience at a conference in Cambridge, England, last week that renegotiation of that deal could put the country's banks at risk. "There will be no surprises if we find out that a country is below that rating and there's no longer a program that that waiver disappears," he said.
If the waiver is withdrawn, then Greek banks will no longer be able to exchange the bonds on their balance sheet for ECB loans. Without that support, the sector could face widespread bankruptcies and could in turn push the country closer to collapse.
Constancio may make it sound as if this is simply a technocratic decision — that the ECB is bound to cut off Greek banks if the country fails to agree a terms with the EC and IMF over its bailout programme — just as it said when it threatened to cut Cyprus off in March 2013.
But that simply isn't the case, according to Professor Karl Whelan of University College Dublin. Instead, he says, this is purely a discretionary decision designed to pressure Greece into making a deal.
He writes (emphasis added):
[Don't] believe for a minute that this is a technocratic thing to do with "the ECB having to follow its rules." And it has almost nothing to do with Greek government bonds being junk-rated. All of the issues discussed above come down to discretionary decisions by the ECB Governing Council (restrictions on T-bills, waivers on junk-rated government bonds, arbitrary lines-in-the-sand on government guaranteed bonds and the mysterious rules of ELA) and there is plenty of wiggle room for them to allow Greek banks to continue receiving various sources of funding next month in the absence of an EU-IMF program agreement.
Greek depositsBank of GreeceGreek bank deposits.
But while the threat is discretionary, the results are very real. In the lead-up to the Greece election, nervous clients of the country's banks began to pull their money out of their accounts at a record rate. In December, depositors pulled €4.6 billion out of Greek banks, taking total deposits to its lowest point since November 2012, and the Greek press is reporting that January saw similar levels of outflows.
As a demonstration of the fears surrounding the banking sector, Greek bank stocks tumbled after Syriza's electoral victory. Investors were clearly worried about the response of the Troika to the new government's pledge to seek a better deal for Greece.
But these fears are forcing Greek banks to be all the more reliant on ECB funding as local sources of capital dry up.
Greek banks ECBMoody'sGreek bank funding mix.

These signs suggests that a number of Greek banks, including the country's largest lenders Eurobank Ergasias and Alpha Bank, may make use of the precautionary lines of credit that they set up with the ECB under its Emergency Liquidity Assistance (ELA). Further doubts surrounding the sustainability of emergency funding are only likely to increase the pace of deposit flight from Greek banks. That is, the ECB may be engineering the very crisis that it claims it wants to avoid.
Why would it seek to do this?
Well, although promoting this type of financial-market volatility may not be an effective way of helping the Greek economy back onto its feet, it has nevertheless proved useful in keeping countries compliant and appears now to be the model of choice rather than of last resort. The longer-term cost, however, may be that these institutions remain more reliant on ECB emergency funding than they would otherwise and much more difficult to rebuild confidence in.
Critics will argue that the central bank is wilfully overstepping its mandate of price stability in the eurozone to meddle in the affairs of sovereign nations. At present, it is hard to find a good argument that they are wrong.


London Cash Startup TransferWise Is Now Worth $1 Billion

London Cash Startup TransferWise Is Now Worth $1 Billion


TransferWise foundersTransferWiseTransferWise founders Taavet Hinrikus and Kristo Käärmann.
London-based peer-to-peer money transfer service TransferWise has raised $58 million in a new round of funding that values the company close to $1 billion.
The Series C funding round is led by US venture capital firm Andreessen Horowitz. Previous investors Valar Ventures, Index Ventures and Seedcamp also participated, reports TechCrunch.
Ben Horowitz, a founding partner at Andreessen Horowitz with an interest in financial technology, is to join TransferWise's board — a first for him for a European startup, according to the Financial Times.
TransferWise allows users to transfer money across borders and currencies significantly cheaper than the transfer options offered by traditional banking services. Founded by former Skype employees, it's transferred more than $3 billion on its platform and is growing steadily — between 15% and 20% every month,reports the FT.
The European technology scene has historically lagged behind the US, and in that context the funding is an impressive achievement. But even in Silicon Valley, the billion-dollar mark is a significant milestone. CEO of Slack David Butterfield recently told Fortune that being in the "Billion Dollar Club" helps acquire new customers and talent. "One billion is better than $800 million because it's the psychological threshold for potential customers, employees, and press," he said.
However, that Andreessen Horowitz led the round is itself a strong sign of increasing US interest in the European technology scene. Google Ventures also launched a European arm last year.
Horowitz said in a statement that he is "thrilled to be backing [TransferWise founders] Taavet [Hinrikus] and Kristo [Käärmann]. They discovered an important secret and are are uniquely prepared to pursue it... Not only is their solution 10 times better than the old way of exchanging foreign currency, but it could not have come at a better time. Since there has been little to no innovation from the traditional banking sector, we see massive opportunity for new financial institutions like TransferWise.”
CEO Taavet Hinrikus said that "Andreessen Horowitz's interest in TransferWise shows how ripe financial services are for disruption... For too long legacy providers’ dominance of the market has allowed consumers to be hoodwinked into paying huge hidden charges for services as basic as currency exchange.”
The new funds will help finance global expansion and more than double the currency options it offers.
The news comes less than a week after music-discovery service Shazam, another British startup, announced that a new round of funding had valued the company at more than $1 billion. TransferWise falls just short of this "unicorn" status — for now.

Sunday, February 1, 2015

US probes Moody's over mortgage ratings: report


US probes Moody's over mortgage ratings: report

PUBLISHED ON FEB 2, 2015 8:04 AM
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A screen displays Moody's ticker information as traders work on the floor of the New York Stock Exchange on Jan 20, 2015. US authorities are investigating the credit rating agency over its glowing assessments of mortgage deals in the runup to the 2008 financial crisis, The Wall Street Journal reported Sunday. -- PHOTO: REUTERS

NEW YORK (AFP) - US authorities are investigating the credit rating agency Moody's over its glowing assessments of mortgage deals in the runup to the 2008 financial crisis, The Wall Street Journal reported Sunday.
Citing people familiar with the situation, the newspaper said Justice Department officials had met with several former Moody's executives. It wasn't yet clear if the probe would result in a lawsuit.
If the investigation is confirmed, Moody's would become the second major US credit-rating firm in the Justice Department's crosshairs, after a case against Standard & Poor's.
S&P is expected to within days agree to pay US$1.37 billion to settle lawsuits over its rosy grading of mortgage bonds in the financial crisis, sources told AFP.
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