Links: 2013-10-17
Skype faces NSA-related privacy probe in Luxembourg — Updated — Tech News and Analysis
“Quite a few tech firms, Skype included, are headquartered in Luxembourg as part of their tax avoidance strategy. Sadly for them, it turns out that the tiny nation’s data protection authorities may have sharper teeth than those in Ireland, where many U.S. companies site their international operations for similar reasons.”
Apple Cuts iPhone 5C Orders – WSJ.com
“A component supplier was notified that the order for iPhone 5C parts would be cut by 50%, a person familiar with the matter said.
The reduced orders could indicate weak demand, or could signal that Apple wanted to ensure adequate supply of the 5C so that potential buyers, who were more likely to be switching from competing phones, didn’t have to walk out of a store empty-handed.
That may have been compounded by the choice of colors, and a need for retailers to have supplies of each.”
Europe won’t save you: Why e-mail is probably safer in the US | Ars Technica
“While there are many choices out there, we’re going to focus on one American service (Riseup.net) and one German service (Posteo.de) to better understand what foreign privacy policies state and what their legal requirements actually are. I chose Riseup because it’s a longstanding US-based alternative for the privacy-minded and Posteo because it’s a similarly marketed German alternative. Like nearly every other e-mail provider, both offer POP and IMAP support as well as a webmail interface—but they’re very different in the promises that they make.”
Interactive: Look For Patterns In Last Night’s GOP Votes Against Debt Deal | TIME.com
“Of the 122 members who won their last election by more than 60 percent, 35 voted for the deal and 87 voted against it.”
Richer Americans Like Living With Poorer People Until They Have Kids – Real Time Economics – WSJ
“The nation’s growing “income segregation” problem, as the researchers call it, is acute where there are high levels of income inequality—but also in places with growing shares of children.
“Parents are more sensitive to neighborhood context and place-based amenities, such as schools, when making residential decisions than are non-parents,” the researchers said. “The presence of children makes residential location more important, and thereby aggravates residential sorting by income.”
In aggregate, it means that better-off Americans are, as a group, increasingly forming their own enclaves and segregating themselves. That could mean worse-quality schools and parks for the children of the lower-income people being left behind. If well-off Americans no longer live near the worse-off, the researchers worry, the nation’s economic resources—and tax revenue—will be pooled in fewer and fewer areas—making expenditures in poorer areas more difficult.”
EconoMonitor : EconoMonitor » The Return of Europe’s Debt Crisis
You can paper over these problems indefinitely in an upswing but eventually you have to write losses down. You have to think the eurozone crisis will flare again at some point. But, if so, then the same is true in the US.
“banking sector problems will continue. European banks may have as much as Euro 1 trillion in non-performing loans. Italian banks may have as much as Euro 250 billion of these.
Increasingly, European governments are resorting to tricks to resolve problems of the banking system including inadequate stress tests, overly optimistic growth and asset price forecasts and accounting stratagems.”
eBay Warns About Weak Holiday Shopping – Business Insider
“”First, from a macro standpoint, Europe and [Asia-Pacific] — which created a bit of anxiety for us in the first half of the year — have stabilized through Q3,” said Swan during the call. “But at the same time, the U.S. e-commerce softened considerably, [and] we have a cautious outlook for the holiday season.””
Revoking America’s Exorbitant Privilege by José Antonio Ocampo – Project Syndicate
I don’t see the reserve currency situation changing anytime soon but do note this.
“The threat of a US default may well end in a political agreement to raise the US government’s debt ceiling, as occurred in 2011. But, whatever the outcome, the latest episode makes it abundantly clear that our globalized world deserves a better international monetary system than the current “non-system” that evolved in an ad hoc manner after the collapse in the early 1970’s of the initial Bretton Woods arrangements.
The need to overhaul the international monetary and financial system was one of the basic lessons of the global financial crisis. While there have been major, albeit incomplete, reforms of international finance, efforts in 2009 and 2010 to reform the international monetary system – including the proposed changes at the IMF – have led to no significant action.”
Jim Chanos On IBM Acquisitions – Business Insider
“Looking at this quarter, revenues missed estimates about 4%, while EPS beat again. It’s much harder for management to massage revenues than earnings, so management pulls the necessary levers to meet or beat that EPS estimate. But the stock’s reaction this quarter shows an investor community that has run out of patience.
IBM experienced particular difficulties in the BRIC countries, where revenues were down 15%, 12% adjusting for currency, led by China down more than 20%. What I found notable on the conference call was that IBM management tried to strike an optimistic tone by highlighting its EPS and free cash flow targets – precisely the metrics that are easier to influence than revenues. In short, I expect many more acquisitions in the next year from IBM, as it furiously tries to meet subjective accounting targets, even as its overall business shrinks.”
UK unemployment data: 0.7% average pay rise dwarfed by inflation | Business | theguardian.com
“The Office for National Statistics said total pay rose at an annual rate of just 0.7% between June and August. Excluding bonuses, pay growth was marginally stronger, at just 0.8% – the weakest figure since comparable records began in 2001. Inflation was running at 2.7% in August.
These latest figures will help to underpin Labour’s claims that while the economy may have “turned a corner” as the chancellor suggests, many ordinary families are still suffering a “cost-of-living crisis”.”
Toronto Condo Sales Jump in Third Quarter – Canada Real Time – WSJ
“Toronto’s condominium market isn’t showing signs of slowing down.
Sales of condos in Canada’s biggest city jumped 18% in the third quarter compared to the same period a year earlier, the Toronto Real Estate Board said in a report released Wednesday.
The average price of a condo edged up about 2% in the same time period to 340,069 Canadian dollars ($328,569).”
Canada’s housing market begins to apply the brakes | Financial Post
““While the momentum for sales activity began improving a few months ago, it may be losing steam after having just climbed back in line with an average of the past 10 years, said Gregory Klump, chief economist with the Ottawa-based Canadian Real Estate Association, which represents about 100 boards across the country.
“Take a look at month over month and we’re up a whole eight-tenths of a per cent. It’s a deceleration from what we saw in August [up 2.9% from July.].””
Apple Cuts iPhone 5C Orders – WSJ.com
“A component supplier was notified that the order for iPhone 5C parts would be cut 50%, a person familiar with the matter said. Analysts said that could signal that device shipments would slow next year or that assemblers would reduce their inventories.
Apple meanwhile has increased this quarter’s orders for the iPhone 5S, two Hon Hai executives said.”
Vital Signs: Business Executives Slash Hiring Expectations – Real Time Economics – WSJ
“Only 29% of executives believe they expect their headcounts will expand over the next 12 months, according to early results from the fourth-quarter Business Barometer, a report by CEB released to the Wall Street Journal. That is down from 38% in the third quarter, and the first decline since the third quarter of 2012.
The partial government shutdown, which started Oct. 1, “is adding to the uncertainty” of executives, said Michael Griffin, executive director at CEB, the member-based advisory firm.”
Oil prices are still ridiculously high despite all of this. That tells you that resources are still limited.
“U.S. output, which includes natural gas liquids and biofuels, has swelled 3.2 million barrels per day (bpd) since 2009, the fastest expansion in production over a four-year period since a surge in Saudi Arabia’s output from 1970-1974, PIRA said in a release on Tuesday.
It was the latest milestone for the U.S. oil sector caused by the shale revolution, which has upended global oil trade. While still the largest consumer of fuel, the rise of cheap crude available to domestic refiners has turned the United States into a significant exporter of gasoline and distillate fuels.”
Beige Book: Businesses complain to Fed about shutdown and Obamacare – Oct. 16, 2013
“Overall, the Fed characterized hiring as “modest.”
Bright spots included high-skilled jobs in technology, health care, and engineering in Richmond, economic and health consulting in Boston, legal and compliance positions in the financial services industry in New York, and accountants and financial analysts in the Dallas district. “
Enemies vs. Adversaries – NYTimes.com
“For democracies to work, politicians need to respect the difference between an enemy and an adversary.
An adversary is someone you want to defeat. An enemy is someone you have to destroy. With adversaries, compromise is honorable: Today’s adversary could be tomorrow’s ally. With enemies, on the other hand, compromise is appeasement. “
Fiasko für die Tea Party – Eric Frey – derStandard.at › Meinung
As I have chronicled on Twitter, all of the foreign commentary of the debt ceiling crisis has been negative. This recent commentary in the Austrian newspaper Der Standard is no different. The paper believes that the Republicans have failed to reach any real objectives and will be chastened by this negative experience. That is the logical calculus from a party perspective but I don’t draw that conclusion because the Tea Party activist Members of Congress have different tactical goals than the party as a whole.
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