October 2010

Google Double Dutch

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Sounds like a sex act, doesn't it? In a way, it is. Business Week has a HOWTO on not paying U.S. corporate taxes, courtesy of Google. shell game

Next time you hear about how we need to lower taxes to make America more competitive, think of this story. International tax law must be a lucrative career. Grand Puppeteer of global money flows, all to play nation states and their corresponding corporate tax codes against each other. The game is to not pay taxes anywhere.

To reduce its overseas tax bill, Google uses a complicated legal structure that has saved it $3.1 billion since 2007 and boosted last year's overall earnings by 26 percent. While many multinationals use similar structures, Google has managed to lower its overseas tax rate more than its peers in the technology sector. Its rate since 2007 has been 2.4 percent.

All perfectly legal, Business Week explains how Google profits end up in Bermuda, and shows how multinational corporations pit national tax codes against each other.

Labor costs are only 10% of U.S.-China price differential.

"The other 90% is subsidy, currency manipulation, environmental practices run amok and labor practices that are simply deplorable," Leo Hindery Jr., chairman of the U.S. Economy/Smart Globalization Initiative, told the Conference on the Renaissance of American Manufacturing held on Sept. 28 in Washington, D.C., according to Industry Week.

Remember Those Green Jobs? Might Label Them Made in China

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Remember all of those green jobs hyped up during campaigns that would save the economy?

Remember how we learned 84% of Stimulus money for green jobs went offshore?

We have a new added dimension. China is subsidizing it's green industries unfairly.

The U.S. Steelworkers made a trade compliant about China and the Obama administration took it on:

All praise from here for President Obama’s courageous decision Friday to proceed with an investigation of China’s opportunistic and illegal trade practices in the clean energy sector. Those of us dedicated to supporting U.S. workers, U.S. jobs and U.S. manufacturing owe him an enormous debt of gratitude.

The Administration deserves a tremendous amount of credit for considering this case on its merits, rather than letting some overarching philosophy dictate the outcome. Demonstrating a willingness to challenge China’s cheating could make a huge difference for American workers and businesses in the clean energy manufacturing sector. And if the Administration’s efforts with China are successful, the ultimate result will be more American jobs.

China Raises Rates, the World Freaks Out

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China raised rates by a quarter percent. The move made headline news, currencies jumped, stocks tanked. Do we have yet another freak out over nothing? Or is it more China holds the globe's economy by the short hairs?

Firstly, the interest rate was about their housing market, which is overheated and to curb inflation, which has risen the most in 2 years.

China’s central bank unexpectedly announced Tuesday that it would raise interest rates for the first time in nearly three years, apparently in the hopes of dampening inflation and cooling off this country’s hot property market.

MarketWatch is reporting the dollar jumped 1.4% against a basket of currencies.

The U.S. dollar jumped 1.4% against a basket of currencies on Tuesday as a rate hike by China fueled worries that the world’s fastest growing economy was trying to slow down

The sudden interest rate increase happened at the same time The World Bank issued a new report, East Asia Pacific Update and China's GDP and CPI numbers are due out this week. The World Bank expects China's GDP to be 9.5% this year.

Industrial Production & Capacity Utilization for September2010

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The Federal Reserve's Factory Production report shows a -0.2% decrease for September 2010 in Industrial Production. Here is a detailed report. Here's something not good, although the Fed is referring to the slowdown in growth, Industrial Production is up 3.6% for Q3 2010. Below is a quote from the report:

The index for manufacturing decelerated sharply in the third quarter

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