France Contemplates Smartphone Tax to Subsidize Gallic Culture

Image: tech2.in.com

European nations have historically subsidized their arts institutions. In the modern era, those funds typically come from tax revenues. That scenario includes the French film industry, currently under siege from America's stunningly successful export of Hollywood entertainment. The French government believes its homegrown cultural talent needs additional sources of revenue to maintain its artistic independence, Gallic identity, and, presumably, highbrow quality.

To that end, the Hollande administration is considering placing a one-percent tax on smartphones and other electronic gadgets "capable of accessing movies, music, and other content," according to a story in Bloomberg BusinessWeek. Tech companies such as Google have opposed the proposed tax scheme. One suspects that warming up in high tech's legal/PR bullpen is the argument frequently appearing in the United States: taxation would "stifle innovation." Of course, high tech's thin, unsubstantiated perspective pivots on the notion that the forces creating the alleged innovation should not be interrupted from doing God's work.

What goes unstated is that France's suggested one-percent skimming of gadget transaction prices means high tech firms won't see that money. Hey, doesn't Paris understand that God's work is expensive?

Young Tech Entrepreneurs "Incubate" in SF Mansions; US Student Loan Debt Passes One Trillion Dollar Level

According to a post in siliconvalley.com taken from a Bloomberg BusinessWeek story, a recent trend among technology's young high priests is to find a mansion, rent it, and live there like it's a frat house. In this case, the "campus" is San Francisco and the too-cool-for-school technocrats are having the time of their lives "incubating." Presumably, ideas advancing the cause of sacred technology are hatched in this one-percenter environment.

While the tech-celebrators commune together, Forbes and other mainstream publications have published stories this year noting that the total amount of unpaid student loan debt in the United States is more than one trillion dollars. In case you're keeping score at home, federal law prohibits student loans from being included in personal bankruptcy filings. The legislation was signed into law in 1976.

The Top 1% Empire Strikes Back

Bloomberg Business Week, whose owner moonlights as New York City's mayor, recently placed a story in its online editions about reactions of certain rich Americans toward criticism of this country's wealth inequity. The piece, written by Max Abelson, appeared on December 20th.

Some of the top dogs in Abelson's story take a "tough darts" stance toward those Americans whose income is below the one-percent threshold -- approximately $350,000 annual income. What's much more striking than coarsely arrogant, dismissive one-liners is the awareness of how certain one-percenters perceive their power. Abelson's story quote from Delphi Financial Group CEO Robert Rosenkranz is revealing: "It's simply a fact that pretty much all the private sector jobs in America are created by the decisions of 'the one percent' to hire and invest...Since their confidence in the future more than any other factor will drive those decisions, it makes little sense to undermine their confidence by vilifying them."

Rosenkranz refers to power, the kind of capitalist power left-wing organizations a half-century ago caricatured. He does not consider social influences at all. The notion that strong criticism would somehow turn these lions of commerce into paper tigers just doesn't ring true. It's generally accepted that the so-called one-percenters have unique access to politicians, media "influencers," and like-minded major asset owners. Consequently, the idea that a handful of demonstrators could make powerful corporate players quiver like a roomful of chihuahuas lacks any sort of substance.

Ironically, a story in December 23rd online editions of the Financial Times noted a Michigan pension fund was suing to block the acquisition of Delphi Financial by Japanese insurance company Tokio (sic) Marine. According to the FT story, the suit alleges Mr. Rosenkranz "violated his fiduciary duty by unfairly enriching himself to the detriment of the company's shareholders." Oops.

Meanwhile, for a reasoned perspective on wealth inequality in the United States, the United Kingdom, and (in passing) Western Europe, Martin Wolf's recent column in the Financial Times is a breath of fresh air. Here's the link to it.

US Housing Establishment Tying Up Loose Ends From 2008 Crash

Remember when the housing bubble burst? Now that we're in the midst of a faintly felt and quite possibly illusory "recovery," apparently the US housing establishment intends to tie up loose ends from the debacle. The "establishment," in this case, refers to the unholy alliance of federal agencies, financial services firms, and propaganda arms (such as the National Association of Realtors) which created and fostered the housing disaster.

Exhibit A comes from the recent settlement of an FDIC lawsuit against three Washington Mutual (WaMu) executives for their impetuous, greedy risk taking in the housing market. In case you don't remember, WaMu was one of the more spectacular bank failures of the past half-dozen years. The three executives in question, however, earned more than $95 million between 2005 and 2008. The settlement, according to online editions of Bloomberg News, will pay $64 million to the FDIC. However, "the cash payments made by the three former officers," the Bloomberg News report states, will total about $400,000. The remainder will come from a WaMu insurance policy. The former execs' had chutzpah and a highly developed sense of entitlement: they had sued for retirement benefits and "golden parachute" payments totaling many millions of dollars. The settlement, meanwhile, is perceived as a face-saving expedient for the FDIC, whose boss at the time involved in the litigation, Sheila Bair, is something of a financial media darling.

Sheila Bair

Intriguingly, a December 11th Bloomberg Business Week story noted that Ms. Bair "is a top candidate among state officials to ensure banks comply with any settlement of a nationwide foreclosure probe."

Exhibit B centers on housing data supplied by the National Association of Realtors (NAR). It turns out the NAR has suddenly discovered it has "accidentally" pumped up housing sale figures for a number of years. The NAR's methodology and stats were publicly questioned in a February, 2011 Wall Street Journal article, according to a post in the financial blog Zero Hedge. Well, by gosh and by golly, it only took the NAR ten months to confirm there was gambling inside its own casino. What are some implications of the NAR's dip into glasnost?

Lawrence Yun

Let's hear it from NAR frontman Lawrence Yun: "For the real estate business, this means the housing market's downturn was deeper than what was initially thought." Meanwhile, left unsaid was that the below-the-surface portion of the housing iceberg -- the shadow foreclosure market -- is likely to emerge and become much more visible in 2012. The disruptive emergence of low-cost housing is a nightmare for American economic and social policy makers. Consequently, it may be time to get the public ready for "continued sluggishness in the housing market." Given that a home in most Americans' primary financial asset, the recast housing figures would imply continued devaluation of residential home prices. If you're among the 99% crowd, that's bad news.

Exhibit C is recondite, but gets to the heart of the corruption's machinery. According to a Bloomberg News report, Morgan Stanley has settled a lawsuit against MBIA over the latter firm's credit default swaps. The deal means Morgan Stanley gets paid over a billion dollars, while MBIA drops a $300 million-plus counterclaim against MS. The significance of MBIA's action was that it had targeted   $233 million of Morgan's residential mortgage-backed securities, and thus keeps them away from unwanted publicity.

As the Bloomberg News story notes, this litigation was just part of the many lawsuits major Wall Street and other financial services launched against MBIA. Basically, the contention was that MBIA created a "fraudulent conveyance" to ship out horseshit mortgage-backed securities, while keeping MBIA's valuable state and municipal bond guarantee business intact. (This episode was a very big deal in 2009, and then forgotten about, except in the war rooms of major money players.)

The question that arises is why issues associated with the housing market's corruption are being tidied up now?