The Euro Split and the Rebirth of the Black Market

Πηγή: NewEurope
By BASIL A. CORONAKIS
April 2 2013

The economic crisis of Europe is at a dead end.

Incompetent leaders, a distorted financial system, large and inefficient administrations in most member states, dysfunctional trade unions, flourishing local cartels and widespread corruption, are the main reasons of the crisis. As European leaders are themselves responsible for the crisis generating reasons in their countries, it is obvious that they cannot resolve the problems they have created.

They are all part of the problem and thus they will not try to resolve it. On the contrary, they will all try to maintain it as is with further temporary remedies (more controls, more taxes, more confiscation of citizens' assets) having in the back of their minds that in politics, there is nothing more permanent than the temporary.

However, such a situation cannot last forever and after the new element, the confiscation of assets (Eurogroup decision for Cyprus), has pushed the crisis beyond the point of no return, we understand that only two alternatives are left for the future of the euro and Europe.

A large event such as war or a popular revolt and for us Europeans large events are unpredictable. A war will be decided by others, i.e. USA, China, Russia and a popular revolt (with only precedent being the French Revolution) as it will be a “bottom-up” large event.

The second alternative is the rapid self-depletion of the obstructive structures created by the Euroidiots in their naïve efforts to save Europe and the ruling financial elite. This is what has begun to happen after the recent looting of the Cypriot deposits.

The “wise” decision of the Eurogroup to give a haircut to private deposits in Cyprus, introducing the concept of getting the citizens to pay with their savings the price of the corruption of their leaders (because this is in essence is the end result of the Eurogroup’s decision), gave birth to three different euros.

We do not believe that what is now happening was premeditated. Because if it were premeditated it could be controlled. It happened because Wolfgang Schaeuble, Jeroen Dijsselbloem and Olii Rhen (in this order) cannot see beyond their nose. It was a bloody mistake which now they cannot correct.

Indeed, the Eurogroup decision for Cyprus has automatically split the euro into three new currencies.

First the euro that ordinary citizens they know. The one which is deposited in the various banks on Europe and can be simply transacted by bank transfer to beneficiaries or used through plastic. This is the official euro and so far its value is “one to one.”

Second comes the euro of the blocked time deposits in Cyprus. The value of this second euro is less than “one to one.” Indeed as time deposits cannot be freely unblocked, even if one pays a penalty, they can be used as collateral for private loans in the free market certainly at an interest rate higher than the interest given by the bank to the blocked deposits. Such interest differential, to be best of our knowledge, varies from 5 to 20%. This is why the value of the this euro is less than “one to one.”

Confidence is an abstract concept, which takes time to build but is can be lost in no time. And this loss is what the Eurogroup has initiated with its naïve decision for Cyprus. People began losing faith to the European banking system thinking “Yesterday Cyprus, tomorrow Spain, after tomorrow France and from there the sky is the limit.” Under this thinking the “cash euro” was born.

The “cash euro” is the third new currency, which people all over Europe, starting from the South and the Southerns living in the North, begin collecting and saving under the mattress gradually as confidence in the European banks is fading out.

This may not be that bad, as it could trigger the beginning of the exit from the crisis in a human and natural way.

With ordinary people turning to hard cash, there will come a moment when most of their transactions with other ordinary people, merchants and providers, will be in the black. Realistically, once a transaction is in cash in times of stagnation and income losses, the first collateral damage will be VAT and the second will be part of the income tax of the seller. Indeed, with businesses at low and shops closing one after the other all over Europe, if one is given to opportunity to survive at the expense of paying VAT, why he should think it twice? As to the buyer, who when purchasing on debit or credit card does not think of the VAT, in the case of counting cash to pay do you think that will think twice to keep in his pocket the VAT?

With the new “cash euro” reality, if the Eurogroup does not manage to restore the confidence of citizens to the European banking institutions, a lot of small firms will emerge all over.

State budgets will be loosing VAT, big retail conglomerates will be loosing business, but the bottom line will be that the black economy will begin soaring, contributing to the exit of the economic crisis.

Man-in-the-Middle Remote Attack on Diebold Touch-screen Voting Machine

Πηγή: The Hackernews
Sep. 27 2011

The Vulnerability Assessment Team (VAT) at the U.S. Dept. of Energy's Argonne National Laboratory in Illinois has managed to hack a Diebold Accuvote touch-screen voting machine. Voting machines used by as many as a quarter of American voters heading to the polls in 2012 can be hacked with just $10.50 in parts and an 8th grade science education, according to computer science.

"This is a national security issue," VAT team leader Roger Johnston told me, echoing what I've been reporting other computer scientists and security experts telling me for years. "It should really be handled by the Department of Homeland Security." "The level of sophistication it took to develop the circuit board" used in the attack "was that of basically an 8th grade science shop," says Argonne's John Warner. "Anybody with an electronics workbench could put this together."

The Argonne team's demonstration of the attack on a Diebold Accuvote machine is seen in a short new video shared exclusively with the Brad Blog. The team successfully demonstrated a similar attack on a touch-screen system made by Sequoia Voting Systems in 2009.





"The cost of the attack that you're going to see was $10.50 in retail quantities," explains Warner in the video. "If you want to use the RF [radio frequency] remote control to stop and start the attacks, that's another $15. So the total cost would be $26."

Does the U.S. Tax its Billionaires Less Than Other Rich Countries?

Πηγή: Foreign Policy
BY JOSHUA E. KEATING

Sep. 20 2011

U.S. President Barack Obama announced his new deficit reduction plan this week, including the so-called "Buffett Rule," which would allow the Bush-era income tax cuts to expire and close corporate tax loopholes. "Warren Buffett's secretary shouldn't pay a higher tax rate than Warren Buffett. There is no justification for it," Obama said this week, echoing comments to the same effect made by the Berkshire-Hathaway CEO billionaire in recent weeks. It's difficult to say whether that statement is actually true or not, but does America coddle its richest citizens more than other countries?

By European standards, yes. Compared to the developing world, not really. The top U.S. marginal tax rate -- 35 percent -- is low by the standards of developed countries. It's about 51 percent in Britain, 47.5 percent in Germany, and 40 percent in France. Until recently, Denmark's highest tax rate was a whopping 63 percent, but that's been recently cut down to about 51 percent -- good news for billionaires like Lego tycoon Kjeld Kirk Kristiansen. Not all rich countries tax heavily however. At 29 percent, Canada's top rate is actually lower than the United States.

But what about the dynamic growing superpowers of the developing world? Things are a little easier for the Learjet set there. Brazil's top income tax rate is 27.5 percent and India's is 30.9 percent. China's is a relatively high 45 percent; however tax evasion is pervasive, so it's unlikely that most of the country's 115 billionaires actually pay that much.

But income is only part of the story. The reason why Buffett's taxes are allegedly lower than his secretary, Debbie Bosanek, is that the vast majority of his income comes from investments, which in the United States is taxed at a rate of only 15 percent. The fact that making investments is, in fact, what Buffett does for a living is irrelevant.

Other countries are not quite so generous. In Germany, for instance, dividends are taxed at a rate of 25 percent and sometimes as high as 60 percent. Moreover, in many European countries, investment professionals have to count dividends as labor income, meaning that they are taxed at the normal income tax rate. That's a pretty big distinction for someone like Buffett, who takes home a relatively modest annual salary of $100,000 but can pocket as much as $42.6 million in dividends in a given year.

The United States wasn't always a billionaire's paradise, though. The top income tax rate was over 90 percent throughout the 1950s and early '60s. And from 1982 to 1985, under GOP favorite President Ronald Reagan, America's richest people were taxed on 50 percent of their income -- a figure even Scandinavia could love.

These days, the most billionaire-friendly places may be the post-Communist states in Eastern Europe, which have increasingly fallen in love with flat taxes. Steve Forbes's dream is now a reality in countries including the Czech Republic, Slovakia, Georgia, Bulgaria, Estonia, and more. Hungary introduced a remarkably low 16 percent flat tax last year, but this week, the debt-addled government announced new taxes on high-income citizens, overturning the rule. Sorry,Sandor Demjan.

The United States is also an outlier in its lack of a Value Added Tax (VAT), a tax on all commercial activities involved in the production and distribution of a product, which is ultimately paid by the consumer. VAT is used throughout the EU and in many other countries, including India, Brazil, and China. Several prominent policymakers including House Democratic Leader Nancy Pelosi and White House economic advisor Paul Volcker have suggested instituting a VAT as a means of addressing the U.S. deficit, but unsurprisingly, the idea of a new tax has gained little traction in Washington.