Awash In Profits, Exxon Extracting Every Penny From Its Franchisees

Every time Sohaila Rezazadeh rings up a sale at her Exxon station on Chain Bridge Road in Oakton, her cash register sends the information to Exxon Mobil’s central computers. If she raises the price of gasoline a couple of pennies, chances are that Exxon will raise the wholesale price she pays by the same amount.Through [...]

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[Source: War On You

Australia's budget

Tax cuts in Labor's first budget

Australia's Labor government unveiled its first budget on May 13th. The new government's main goals in crafting the budget were to reward the electorate with tax cuts and to keep spending under control in order to curb inflation. A raft of tax breaks and benefits, especially for working-class households, will shift some of the tax burden to high-income earners while reducing taxes overall by A$46.7bn (US$43.5bn) over the next four years. At the same time, government spending is set to increase only by a modest 1.1%, resulting in a projected budget surplus of A$21.7bn. The government also plans to delay a significant portion of its spending until next year, when both economic growth and inflation are set to ease.

The 2008/09 budget represents the new Labor administration's first difficult policy test. Since taking office after winning the federal election in November, the prime minister, Kevin Rudd, has fulfilled several high-profile election pledges?including an official apology to Aborigines, ratification of the Kyoto protocol on greenhouse-gas emissions and a decision to reduce military involvement in Iraq. These measures demonstrated that the new government is more in touch with the electorate, but they were successes in part because they produced a "feel-good" effect without requiring immediate sacrifices. Crafting a budget that would fulfil campaign pledges to cut taxes while keeping inflation under control was a task of a different order, presenting genuine dilemmas as the government sought to balance the interests of various political constituencies and conflicting economic imperatives. ...

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[Source: The Economist: News analysis

Feds Accuse Student Of Terror and Espionage For Talking About Constitution

A student of a large bible college in east Texas was accused by federal agents of committing an “act of terror and espionage” after he gave a talk to a group of Boy Scouts in which he encouraged them to educate themselves about the U.S. constitution.Jeff, who wishes to remain anonymous at present, is a [...]

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[Source: War On You

A bloody crackdown

Worsening repression inside Zimbabwe

THE situation in Zimbabwe is akin to war, says the opposition Movement for Democratic Change (MDC). It is certainly looking ever more brutal. Violence and repression have escalated dramatically over the past few days. Pro-government militias roam the countryside, terrorising and beating suspected opposition supporters. The police remain idle or, in some cases, join in with the beatings. The Zimbabwe Association of Doctors for Human Rights, a local outfit, has treated over 240 cases of injury, including broken limbs, resulting from organised violence since parliamentary and presidential elections just over three weeks ago.

Human Rights Watch, an international group, says that ZANU-PF, the ruling party of President Robert Mugabe, has set up torture camps across the country as part of a systematic campaign to intimidate the opposition, which won the parliamentary elections and, it claims, the presidential vote too. Victims are taken to the camps at night and beaten for hours with thick sticks, bars and army batons. Huts and houses have been torched. An unofficial curfew is in force in the poor suburbs of Harare, the capital. The MDC says that ten of its supporters have been killed, some shot dead. The opposition also says that some 3,000 families have had to flee their homes, 500 people have been put in hospital and over 400 opposition activists have been arrested. ...

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[Source: The Economist: News analysis -

Providing cover

The Bank of England offers help

AS THE global banking crisis has gone on, central banks have repeatedly had to improvise responses to an ever-worsening financial storm. In America, the Federal Reserve stretched its powers to the limit when it organised the rescue of Bear Stearns. Now the Bank of England has come up with an innovative plan?a ?special liquidity scheme? that may provide at least GBP50 billion ($100 billion) to help troubled British banks.

The need for a new approach has been clear for several weeks. The most obvious sign has been the elevated (Libor) rate at which banks raise funds through the money markets. This is normally quite close to the Bank of England?s base rate, which sets the cost of overnight funds. When the crisis struck last August, however, it soared (see chart). ...

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[Source: The Economist: News analysis - Posted by FreeAutoBlogger]

Goldman Sachs and Wells Fargo warn 'delusional' investors on stocks

Wall Street faces the growing risk of an equities bloodbath in coming months as the credit crunch spreads to the wider economy and earnings crumble, according to a pair of grim reports issued by Goldman Sachs and Wells Fargo.

Goldman Sachs said the key for equities will be the full-year guidance offered by companies

David Kostin, the chief US investment guru for Goldman Sachs, expects the S&P 500 index of Wall Street equities to plummet a further 15pc over the "near term" as companies scramble to lower their outlook for this year.

"Although only a few firms have reported first quarter results, early signs are awful. We expect a swath of lowered profit guidance," he said in a research note published today, entitled 'Fasten Seatbelts'.

Mr Kostin, who replaced the ever-bullish Abby Cohen as chief strategist in December, expects the S&P index to reach 1,160, which would amount to a fall of 27pc from the bull market peak of 1,576 in September and enter the annals as a relatively severe bear market.

Samsung's woes

POLICE in riot gear took up station in front of South Korea’s prosecutors’ offices on the evening of Thursday April 17th to quell demonstrations. Normally an angry public calling for accountability would welcome corruption charges against a corporate chieftain—but not in the case of the long-running scandal at Samsung Group.

The charges against Lee Kun-hee, the 66-year-old chairman of Samsung, seem small beer compared with the accusations. Mr Lee was publicly accused last year by Kim Yong-chul, a former chief legal counsel at the company, of orchestrating a $200m slush fund to bribe public officials. Mr Lee denied it. A special prosecutor was appointed by South Korea's National Assembly to look into the claims.

On Thursday, after a three-month investigation, Mr Lee was charged with tax evasion and breach of trust. The prosecutor, Cho Joon-woong, said that Samsung controlled hidden funds of around $4.5 billion. But allegations of bribery could not be confirmed, he said, and anyway the statute of limitations had expired. Mr Lee was charged with evading taxes of 113 billion won (around $114m) and with illegally fiddling with the books by selling corporate assets at a discount as a way to pass corporate control to his son.

Moreover, he and nine other company executives also facing charges were not detained. Shares in the group’s publicly traded companies—which range from construction and shipbuilding to optical equipment and electronics—barely shifted, a telling sign that few expect the charges to have any bite.

The mild charges and meek actions by the prosecutors clearly show South Korea’s ambivalence towards wrongdoing at the country’s chaebol. The industrial giants, often family-run, are responsible for the country’s rise to prosperity and prominence over the past two decades. Yet today their enormous power is questioned and occasional infractions criticised, as the country strives to adhere to global norms of accountability, transparency and corporate governance. At the same time, however, South Korea resists holding the groups fully to account, lest it jeopardise economic growth.

In recent corruption cases miscreant bosses have been spared prison on the basis of their importance to the economy, provided they donate some of their ill-gotten gains to charity. Last year Chung Mong-koo, the chairman of Hyundai Motor, saw his three-year prison sentence for embezzlement suspended after he agreed to donate almost $1 billion (though the Supreme Court overturned the deal and ordered a new trial). Kim Woo-choong, the founder of Daewoo, was this year pardoned for an accounting-fraud conviction in 2006.

Indeed in 1996 Mr Lee was convicted of bribing politicians, but his two-year prison sentence was suspended and in 1997 he was pardoned. Often in white-collar criminal cases shuffling into the courtroom in hospital pyjamas or snug in a wheelchair is enough to win the sympathy of the judges.

To a sceptical public, it makes the new charges against Mr Lee seem less an example of rare prosecutorial vigour and more another case of flaccid judicial activity. It is unlikely that Mr Lee will serve time in prison. It helps that Samsung is such a power in the country—its many companies boast a workforce of 220,000 worldwide. Its sales are equivalent to some 20% of the country's GDP.

Samsung apologised for “causing concerns” to South Koreans and said that next week it would unveil a reform plan to put the company right. Now the focus of attention will shift to South Korea’s recently elected president, Lee Myung-bak. Although he campaigned on improving corporate transparency, the former chairman of Hyundai also pledged to push forward business-friendly reforms. In the past, the country tolerated white-collar crime fearing the harm to the economy if the bosses were behind bars. At some point it will have to consider the damage wrought by allowing them free reign.


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[Source: The Economist: News analysis

Credit-Card Companies Put Tighter Squeeze on Cardholders

Credit cards are deeming more consumers risky, resulting in higher rates and lower limits.

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Under the same wing

Delta and Northwest are to merge

SEEING a well-matched couple finally getting together is one of life?s pleasures. And so the news late on Monday April 14th that a rumoured partnership between Delta and Northwest, America?s third- and fifth-largest airlines respectively, is out in the open should be reason to celebrate. Months of speculation that something was in the air ended when Delta announced it had agreed to buy Northwest in an all-share deal worth some $3.6 billion. They will create America?s biggest domestic carrier and could prove to be the spark that lights the flame for others of America?s six big airlines.

America?s airlines have enjoyed a reasonably happy time alone of late. In the past few years business has recovered after the dark period following the September 11th terrorist attacks. Business and leisure flyers have climbed back on to planes, and airlines have returned to reasonable profitability. But that recovery is fragile: a looming recession and high oil prices make the future look uncertain. In the past few weeks four smaller airlines have declared bankruptcy, in part because of high fuel costs. ...

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Protecting Yourself From Aggressive Collectors

As delinquencies rise, collectors are putting the pressure on consumers.

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Who wants to trade?

Politicians won't discuss trade on merit

DISCUSS a trade deal, and you might think that the main issues would be whether it is good for the American economy. But few debates on public policy ever reach this level of purposefulness. And in America, talking trade in an election year is no exception. Recent manoeuvres show how politicians are reluctant to talk about trade on its own merits.

George Bush?s administration signed a trade agreement with Colombia in 2006. But last week, under the auspices of Nancy Pelosi, the party?s leader in the House of Representatives, an arcane rule was invoked to prevent the bill from moving closer to ratification. Susan Schwab, America?s Trade Representative, called the move ?pure, partisan politics? in an interview on Sunday April 13th. ...

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The pope in America

Pope Benedict begins his tour

THREE years ago, in the final weeks of Pope John Paul II's papacy, the Vatican's diplomatic service took great care to distance the Catholic Church from American foreign policy, in order to protect Christians in mainly Muslim lands from being tarred with the same brush as the Bush administration. But as his successor Pope Benedict XVI arrives on Tuesday April 15th for a five-day trip to the United States, the gap between the Vatican and America seems to have narrowed a great deal.

The Vatican fear that Middle Eastern Christians would pay a high price for the perceived misdeeds of American policy seems to have been fully justified. The small Christian minority in Iraq has suffered terribly from that country's internal mayhem; only a few weeks ago a Catholic bishop in northern Iraq, Paulos Faraj Rahho, was kidnapped and killed. But the perceived resurgence of militant Islam in many parts of the world seems to have pushed the Vatican's theological conservatives and America's political conservatives closer together. ...

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