Amid deep recession, Argentina's Macri to eliminate most income tax deductions

Argentine Economy Minister Nicolás Dujovne presented President Mauricio Macri's 2019 budget proposal to Congress today.

The proposed budget proved controversial not only for its "optimistic" assumptions regarding the nation's economy next year; but also for provisions eliminating many income tax deductions enjoyed by individual as well as business filers.

On the chopping block are exemptions for bonuses, stipends, paid travel and moving expenses and other supplemental pay, as well as some business expense deductions.

Numerous scientific, engineering, and other highly-specialized professions, as well as high-risk professions such as in the oil and mining sectors, will also lose their special exemptions - as will employees in Tierra del Fuego, whose promotional income tax rate was enacted in 1972 as part of an effort to develop the remote, far-south province.

Dujovne expects the exemption rescissions to raise 25 billion pesos ($600 million) next year - around $300 for each of some 2 million affected employees.

"The objective is to have equity in the tax code," Dujovne said in a congressional hearing. "There were too many laws modifying its application."

Nevertheless the most controversial exemption - one freeing federal judges and court staff from paying any income tax at all - was not altered. The exemption costs federal coffers $235 million annually.

The decision to retain the costly judicial exemption, critics note, is in line with Macri's policy of weaponizing Argentina's already-strained judiciary against opponents while shielding him and his administration from over 70 charges so far.

"Under Macri," María Servini de Cubría, the nation's most senior federal judge, noted, "pressure on judges has been unprecedented."

Highest unemployment in 12 years

The tax increase is part of a series of austerity measures agreed to with the IMF as part of a $50 billion bailout agreed to on June 8.

The revenue benefit of the proposed changes is limited, however, by the fact that the Argentine federal tax code exempts most of the nation's work force of 19 million. Income taxes last year brought in $17 billion, or just 14% of federal revenues (compared to 47% in the U.S.).

Macri pledged to reduce the budget deficit from 6% of GDP last year, to 1.3% in 2019. Earlier cuts have already trimmed it to 3.7% of GDP - roughly the same level Macri inherited in 2015.

Nobel laureate Joseph Stiglitz expects austerity to exacerbate a severe recession that began after the 2017 debt bubble imploded in April; GDP was down 6.7% just as of June, and unemployment has risen from 5.9% when Macri was elected three years ago to 9.6% currently - the highest in 12 years.

At: https://translate.google.com/translate?sl=auto&tl=en&js=y&prev=_t&hl=en&ie=UTF-8&u=https%3A%2F%2Fwww.infobae.com%2Feconomia%2F2018%2F09%2F19%2Fel-presupuesto-2019-contempla-cobrar-mas-por-ganancias-a-los-trabajadores-y-jubilados%2F&edit-text=

IMF = Poverty. Argentines protest budget cuts and tax increases imposed by the IMF bailout agreed to in June.

The bailout, critics note, was brought about by record external deficits and capital flight caused by Macri's own deregulation.

EU says McDonald's, Luxembourg tax deal not illegal

Source: Reuters

McDonald’s tax deal with Luxembourg did not breach EU state aid rules, EU antitrust regulators ruled on Wednesday - saying the reason the U.S. fast food chain did not pay some taxes was due to the mismatch between U.S. and Luxembourg laws.

The decision by the European Commission came after a three-year long investigation, part of its crackdown against illegal sweetheart deals between EU governments and multinationals that has resulted in Apple, Starbucks, and Fiat paying billions of euros in back taxes.

The investigation had focused on McDonald’s Luxembourg-based subsidiary Europe Franchising which receives royalties from franchisees in Europe, Ukraine and Russia.

Luxembourg in a 2009 tax ruling said the company did not have to pay corporate taxes as its profits would be taxed in the United States. In a second tax ruling, the Grand Duchy said that the company was no longer required to prove that its royalty income was subject to U.S. taxation.

“Of course, the fact remains that McDonald’s did not pay any taxes on these profits – and this is not how it should be from a tax fairness point of view,” European Competition Commissioner Margrethe Vestager said.

Read more: https://www.reuters.com/article/us-eu-mcdonald-s-corp-subsidies/eu-says-mcdonalds-luxembourg-tax-deal-not-illegal-idUSKCN1LZ16W

Another day in corporatocracy.

IMF suspends release of $3 billion tranche of $50 billion Argentina bailout

The International Monetary Fund (IMF) announced a suspension of a $3 billion disbursement scheduled for today as part of the $50 billion stand-by credit line agreed to with Argentina on June 8.

A press release issued by the IMF stated that the disbursement is to be suspended pending ongoing negotiations requested by Argentine President Mauricio Macri for an $18 billion advance and for relaxed terms.

Macri had already drawn $15 billion from the credit line on June 22 - of which $13 billion have already been spent, mostly to compensate for capital flight.

The June 8 credit line was stipulated on Argentina's meeting a set of economic goals, including an inflation rate of no more than 2% a month (28% annualized) and budget cuts of $10 billion (8% of the federal total).

Argentina yesterday reported an inflation rate of 3.9% in August, and 34.4% from the same time last year. September inflation is projected to exceed 6% a month.

From bubble to bailout

The country's current crisis began in April, when reports that the current account deficit had doubled (to a record $31 billion) and that its foreign debt expanded by $52 billion in 2017 alone set off a wave of capital flight - some $25 billion so far this year.

Efforts to stem capital flight, including raising central bank discount rates from 27% in April to 60% now, have thus far failed: The peso has since lost half its value, pushing inflation from 25% in 2017 to an offically projected 42% this year.

Higher interest rates are in turn exacerbating the recession, with GDP down 6.7% as of June and retail sales down 8% in August.

Critics note that besides being unconstitutional, the agreement includes no provisions to curb record current account (external) deficits or capital flight.

The currency crisis intensified on August 29 after President Mauricio Macri falsely claimed to have secured IMF approval for the $18 billion advance. The dollar has since climbed 26%, to 40.53 pesos.

Déja vu

Today's announcement recalls the IMF's December 5, 2001, decision to suspend a $1.26 billion tranche of a similar, $38 billion stand-by credit line agreed to with Argentina a year earlier.

Facing escalating interest payments to bondholders as well as amounting capital flight, Argentina defaulted on $82 billion in bonds within a month of the IMF suspension.

The president at the time, Fernando de la Rúa, who, like Macri, had been applauded by both the IMF and the White House, resigned amid riots.

At: https://translate.google.com/translate?sl=auto&tl=en&js=y&prev=_t&hl=en&ie=UTF-8&u=https%3A%2F%2Fwww.eldestapeweb.com%2Fel-fmi-suspendio-pagos-argentina-que-se-redefina-el-acuerdo-n49186&edit-text=

There, there: the IMF's Christine Lagarde comforts Argentine Economy Minister Nicolás Dujovne before suspending today's scheduled $3 billion disbursement.

Refusing to enact currency controls, Argentina's Macri has mostly used recent IMF loans to finance record capital flight - over $25 billion so far this year. Most analysts now expect a bond default no later than March.

Larry Kudlow: Treasury Dept. "deeply involved" in economic crisis talks in Argentina

Speaking to Fox News business host David Asman this weekend, National Economic Council Director Larry Kudlow revealed that the U.S. Treasury Department is "deeply involved" in talks with Argentine officials over the possibility of pegging the slumping peso with the U.S. dollar.

Kudlow revealed news of these as-yet undisclosed discussions in response to Asman's concerns over the current economic crisis in Argentina.

"They are in deep trouble," he reminded Kudlow. "They've had to go to IMF in order to get an emergency loan for the trouble they're in."

The country's current crisis began in April, when reports that the current account deficit had doubled (to a record $31 billion) and that its foreign debt expanded by $52 billion in 2017 alone set off a wave of capital flight - some $25 billion so far this year.

Efforts to stem capital flight, including raising central bank discount rates from 27% in April to 60% now, have thus far failed: The peso has since lost half its value, pushing inflation from 25% to an offically projected rate of 42% this year.

Higher interest rates are in turn exacerbating the recession, with GDP down 6.7% as of June and retail sales down 8% in August.

The crisis intensified on August 29 after President Mauricio Macri falsely claimed to have secured IMF approval for an $18 billion advance on the $50 billion bailout package agreed to on June 8.

Return to convertibility?

"I know the Argentines," Asman noted. "They would much rather deal with the U.S. Treasury. Is there any chance that that could happen?"

"Yes," Kudlow replied. "The treasury is deeply involved in this discussion. And as you and I learned, the only way out of Argentina's dilemma is to set up currency board - the peso linked to the dollar - but you can't create a single new peso unless you have a dollar reserve behind it."

"That worked in the 90's. It brought down inflation and kept prosperity - that's what they need to do again. And you know what? Treasury Department people are on it."

Kudlow referred to the dollar convertibility adopted by the Argentine Central Bank between 1991 and 2001, which pegged the peso to the dollar at a 1-to-1 parity.

Convertibility intially succeeded in stabilizing hyperinflation and boosting the Argentine economy, which had been in a deep crisis since the last dictatorship's speculation-driven debt bubble collapsed in 1981.

The plan, however, led to a second debt bubble after privatization proceeds dried up in 1994, and ended in a historic collapse and bond default in 2001 that took five years to recover from.

At: http://www.foxnews.com/transcript/2018/09/08/larry-kudlow-on-where-trump-economy-is-headed.html

Trump economic adviser Larry Kudlow has the answer for Argentina's financial woes:

The same debt-fueled plan that led to a collapse in 2001.

Pope Francis summons bishops to Vatican for summit on preventing sex abuse

Pope Francis, signaling the Catholic Church's inability to defuse long-running clergy sex scandals, on Wednesday summoned the presidents of Catholic bishops conferences worldwide to the Vatican in February to discuss protecting children and preventing sexual abuse by priests.

The meeting, on February 21-24, is believed to be the first of its kind and comes amid growing criticism over the pope's handling of sex abuse cases dating back decades.

In addition, Pope Francis will meet Thursday with a group of U.S. church figures led by Cardinal Daniel DiNardo, head of the U.S. Conference of Catholic Bishops. The meeting will include Francis' top sex abuse adviser, Cardinal Sean O'Malley.

DiNardo has said he wants Francis to authorize a full-fledged Vatican investigation into ex-Cardinal Theodore McCarrick, who was removed as cardinal in July after a credible accusation that he groped a teenager. McCarrick, 88, served as Archbishop of Washington from 2001 to 2006.

At: https://www.msn.com/en-us/news/world/pope-francis-summons-bishops-to-vatican-for-summit-on-preventing-sex-abuse/ar-BBNdU4v

Making a point as he discusses church problems, Francis' handling of the inherited abuse scandal is drawing mixed reactions.

Argentine Supreme Court Chief Justice resigns, replaced with pro-Macri junior member

The Chief Justice of Argentina's Supreme Court, Ricardo Lorenzetti, announced his resignation yesterday, effective October 1.

Lorenzetti's surprise announcement follows months of friction with President Mauricio Macri, who faces numerous tax evasion, money laundering, and conflict of interest charges.

Most recently, Macri was charged by Federal Prosecutor Jorge di Lello for abuse of power in signing a $50 billion bailout with the IMF that imposes deep budget cuts without congressional review, as the constitution requires.

Macri is also seeking a government write-down for his family's $300 million debt with the Argentine Postal Service - another case that may soon appear before the high court.

Lorenzetti, who had been Chief Justice since 2007, gave no specific reasons for his surprise announcement, stating only that "the time had come for me to step aside."

Congresswoman Elisa Carrió, a right-wing firebrand and top Macri ally known for her use of intrigue and, her opponents charge, extorsion, celebrated the news, stating that "I don't know if Macri worked to have him removed; but I did."

Lorenzetti, 62, was known as a centrist in the court and had sparred with both Macri and his center-left predecessor, former President Cristina Fernández de Kirchner.

Most junior and conservative

His replacement, Carlos Rosenkrantz, 59, is one of the court's two most junior members as well as its most conservative.

Rosenkrantz authored the infamous "2-for-1" decision, a May 2017 ruling which allows those convicted for human rights abuses during the last dictatorship to deduct pre-sentencing detention time from their current prison terms - a benefit common criminals had already been stripped of in 2001.

Lorenzetti had voted against the 3-2 ruling, and wrote the dissenting opinion.

Rosenkrantz's appointment to the high court became Macri's first serious political scandal when he attempted to install him and another nominee by decree within days of taking office in December 2015.

The Supreme Court invalidated the move, forcing Macri to seek Senate approval - which was granted in June 2016.

Rosenkrantz, a corporate lawyer, has represented among others the Clarín Group - the country's most powerful media conglomerate and the main beneficiary of Macri's media deregulation policies.

Madrid-based Telefónica, Argentina's leading phone service provider, has denounced Macri for allowing Clarín to enter the mobile phone market with preferential treatment - including free access to the nation's 4G network (which cost other providers $400 million) and the June approval of the acquisition of Telefónica's chief competitor Telecom by Clarín in a joint venture with Mexico's Fintech.

Telefónica is reportedly preparing a complaint to be brought before the International Centre for Settlement of Investment Disputes (ICSID).

At: https://translate.google.com/translate?sl=es&tl=en&js=y&prev=_t&hl=en&ie=UTF-8&u=http%3A%2F%2Fwww.infonews.com%2Fnota%2F318390%2Fcambios-en-la-corte-suprema-carlos-rosenkrantz&edit-text=

The Argentine Supreme Court, which under Lorenzetti (second from right) became known for its independence from both left and right-wing administrations, will now have a pro-Macri stalwart - Rosenkrantz (far right) - as chief justice.

Brazil's Lula da Silva to bow out of election; poll rattles markets

Jailed former Brazilian President Luiz Inacio Lula da Silva will step aside on Tuesday so his running mate can stand for the presidency in next month’s election, party sources said, as leftist candidates’ strong showing in a poll pulled markets lower.

Lula, by far Brazil’s most popular politician, hoped the Supreme Court would agree to an appeal for more time to switch the head of the Workers Party (PT) ticket after the top electoral court last week banned him from running due to a corruption conviction.

Despite appeals pending before the Supreme Court, Lula decided not run the risk of votes for his party’s ticket being annulled by the electoral court.

Two sources with knowledge of Lula’s decision said former São Paulo Mayor Fernando Haddad will become the official PT candidate.

A Datafolha poll conducted on Monday showed that transfer has begun. While still in the single digits, support for Haddad increased from 4% to 9%, the biggest gain among the 13 candidates running for president.

The same poll also showed strengthening support for another leftist, Ciro Gomes, a former governor and finance minister, whose support rose from 10% to 13%. Environmentalist candidate Marina Silva, however, slipped by 5 points to 11%.

Far-right candidate Jair Bolsonaro, who was the top vote-getter in first-round scenarios, increased by 2 points to 24% - less than many expected after he survived a near-fatal stabbing last week.

Former São Paulo Mayor Geraldo Alckmin, a center-right candidate, ticked up just 1 point to 10%.

Monday’s poll confirmed previous surveys showing Bolsonaro would lose to every major candidate in a probable run-off vote - with the exception of Haddad, with whom he was in a technical tie.

At: https://www.reuters.com/article/us-brazil-election/jailed-lula-to-bow-out-of-brazils-presidential-race-sources-idUSKCN1LR08N

Brazilian candidates (from left) Jair Bolsonaro (fascist); Ciro Gomes (labor); Fernando Haddad (workers); Marina Silva (environmentalist); and Geraldo Alckmin (centrist).

Former Brazilian President Lula da Silva, his country's most prominent political prisoner, has been blocked from running and has endorsed Fernando Haddad.

Deadly fire exposes wealthy man's secret underground tunnels

A year ago today, a deadly fire exposed Daniel Beckwitt’s curious campaign to build an underground bunker for protection from a nuclear attack.

Neighbors knew nothing about the tunnels before they heard Beckwitt’s screams and saw smoke pouring from the house where 21-year-old Askia Khafra died that afternoon.

The wealthy stock trader took elaborate steps to conceal the network of tunnels beneath his house in this Washington, D.C., suburb. Even the young man helping him dig them didn’t know where they were.

Maryland prosecutors portray Beckwitt, a 27-year-old millionaire, as a paranoid computer hacker who recklessly endangered Khafra’s life. In May, they secured Beckwitt’s indictment on charges of second-degree murder and involuntary manslaughter.

Beckwitt’s lawyer calls Khafra’s death a tragic accident, not a crime. Defense attorney Robert Bonsib concedes Beckwitt is an ‘‘unusual guy’’ but says his client risked his own life in a failed attempt to rescue Khafra.

Beckwitt was freed on bond after his May arrest. His trial is scheduled for April 2019.

At: https://www.msn.com/en-us/news/us/deadly-fire-exposes-wealthy-man-e2-80-99s-secret-underground-tunnels/ar-BBN9lSQ

Eccentric millionaire Daniel Beckwitt and Askia Khafra, the Mali-born man who died helping Beckwitt create his bunker.

Swedish parliamentary elections deadlocked

Source: Aftonbladet

With half of all the votes counted as of 10:45 p.m. the two leading electoral blocks in Sweden's parliamntary elections are nearly even.

The ruling Social Democrat-Left-Green coalition maintained a 0.4%, 2-seat advantage over the center-right Alliance, led by the Moderate Party.

Here are the numbers:

Left Party 8.0 %
Social Democrats: 28.2 %
Environmental Party: 4.4 %
_____________________

Center Party: 8.6 %
Liberals: 5.5 %
Moderates: 19.7 %
Christian Democrats: 6.4 %
_____________________

Sweden Democrats 17.7 %

Swedish Prime Minister Stefan Lfven (left) debates Moderate Party leader Ulf Kristersson last night.

Lfven's Social Democratic-Green-Left coalition is virtually tied in exit polls with the center-right Alliance, which is calling on him to resign.

The far-right Swedish Democrats (actually more moderate than today's GOP) scored a record 16-19%.

1 dead, 4 injured in a shooting near Auburn University

Source: Kare 11

One person was killed and four others were wounded in a shooting early Sunday morning near Auburn University, according to authorities.

AU Alert, Auburn University's emergency notification system, tweeted that the shooting happened at a McDonald's near campus but stressed there is not an active threat to the campus.

The shooting occurred around 2:24 a.m. in the 200 block of West Magnolia Avenue in Auburn, Alabama. According to police, officers were in the area working to disperse a large crowd when they heard gunshots and located several victims.

A 20 year-old male from Tuskegee, Ala., was found dead at the scene, and authorities located four others suffering from gunshot wounds.

Read more: https://www.kare11.com/article/news/nation-world/1-dead-4-injured-in-a-shooting-near-auburn-university/507-592323392

Hardly makes news anymore