Category Archives: Governments

Online Retailers Lose State Tax Subsidy, by Wolf Richter

Online retailers will now have to collect the sales taxes their brick-and-mortar competitors have to collect. From Wolf Richter at wolfstreet.com:

Up to $13 billion in 2017. Brick-and-mortar gets some relief. Consumers not amused.

The US Supreme Court ruled today that states may require out-of-state online retailers to collect sales taxes on merchandise they sell in that state. The decision overturned its 1992 ruling – Quill Corp. v. North Dakota – that had blocked states from compelling retailers with no “physical presence” in that state to collect sales taxes. At the time, two years before Amazon was founded, the internet was dogged by “worldwide wait” dialup, and the idea consumers would buy everything from shoes to couches on the internet was remote.

The 1992 ruling eventually gave a huge boost to out-of-state online retailers in that they received a consistent state tax subsidy with every sale that their in-state and local competitors – brick-and-mortar and online alike – did not receive. At first, online retail was just a minor sideshow, but after a quarter century of booming, it has become the place to be, and the squealing from all sides about the tax subsidy has been deafening for years.

It amounts to big bucks. The Government Accountability Office estimatedthat state and local governments could have collected between $8 billion and $13 billion in sales taxes in 2017 “if states were given authority to require sales tax collection from all remote sellers.”

In today’s ruling, authored by Justice Anthony Kennedy, the Court sided with South Dakota, which had passed a law in 2016 that required large out-of-state online retailers to collect sales taxes on merchandise sold in the state. Online furniture retailer Wayfair, along with Overstock.com, and online electronics retailer Newegg sued to block the law and won in lower court.

To continue reading: Online Retailers Lose State Tax Subsidy

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An Elite Coalition Emerges Against a Trump-Kim Agreement, by Gareth Porter

There is a substantial segment of the American political and media establishment who don’t want the US to leave the Korean peninsula, even if Kim Jong Un, Moon Jae In, and President Trump negotiate de-nuclearization, a peace treaty, and a rapprochement between North and South Korea. In other words, they’re against the negotiations because they might succeed. From Gareth Porter at consortiumnews.com:

Media coverage of the Trump-Kim summit has highlighted a political reaction that threatens to torpedo any possible U.S-North Korean agreement on denuclearization of the Korean peninsula, says Gareth Porter

An implicit coalition of corporate media, Democratic partisans and others loyal to the national security state are actively hostile to any agreement that would endanger the continuation of the 70-year-old Cold War between the United States and North Korea.

The hostility toward Donald Trump on the part of both corporate media (except for Fox News) and the Democratic Party establishment is obviously a factor in the negative response to the summit. Trump’s dysfunctional persona, extremist domestic strategy and attacks on the press had already created a hyper-adversarial political atmosphere that surrounds everything Trump says or does.

But media coverage of the Singapore summit shows that something much bigger and more sinister is now in play: a consensus among foreign policy and national security elites and their media allies that Trump’s pursuit of an agreement with Kim on denuclearization threatens to undo seventy years of U.S. military dominance in Northeast Asia.

Those elites are determined to resist the political-diplomatic thrust of the Trump administration in negotiating with Kim and have already begun to sound the alarm about the danger Trump poses to the U.S. power position. Not surprisingly Democrats in Congress are already aligning themselves with the national security elite on the issue.

The real concern of the opposition to Trump’s diplomacy, therefore, is no longer that he cannot succeed in getting an agreement with Kim on denuclearization but that he will succeed.

The elite media-security framing of the Trump-Kim summit in the initial week was to cast it as having failed to obtain anything concrete from Kim Jong-un, while giving up immensely valuable concessions to Kim. Almost without exception the line from journalists, pundits and national security elite alike compared the joint statement to the texts of previous agreements with North Korea and found that it was completely lacking in detail.

To continue reading: An Elite Coalition Emerges Against a Trump-Kim Agreement

They Were Ordered to Shoot… by Bill Bonner

Does “Just following orders” excuse criminality? From Bill Bonner at bonnerandpartners.com:

“Render unto Caesar that which is Caesar’s” is a line from Jesus of Nazareth.

Typically clever, and almost evasive, it left open the mischievous question – “What is Caesar’s?” – for roughly 2,000 years.

Moral philosophers had been bedeviled for even longer: If you want to do the right thing, can you just obey the authorities… or do you have to figure it out for yourself?

Finally, last week, like Moses coming down from Mount Sinai, legal and biblical scholar, U.S. Attorney General Jeff Sessions – who previously distinguished himself by sponsoring a bill to name September 2016 as “National Prostate Cancer Awareness Month” – handed down the answer.

More on that shortly. But first…

Dry Spell

The Dow was down again yesterday… but only slightly. That makes it the seventh straight day of losses for the index, the worst losing streak in over a year [more in today’s Market Insight].

Where it will go from here, no one knows. But there are good reasons to think that the “top is in.” If so, we’re in for a long dry spell.

If we’re right, U.S. stocks will “underperform” for many years. Readers are advised not to expect to get rich in the stock market, unless they are very lucky or well-advised. Las Vegas is likely to be more rewarding than Wall Street.

We’ll leave it to the technicians and cycle-watchers to make their own case. Here at the Diary, we focus on fundamentals.

Obviously, U.S. finances are worsening. Government deficits are increasing, just as the Fed is putting up interest rates. This is bound to lead to trouble.

But the bigger, or more insidious, problem is Caesar himself; he seems to want more and more things rendered unto him. And our observation is that the more Caesar gets, the less is left for everyone else.

To continue reading: They Were Ordered to Shoot…

The US Annihilated Raqqa While Allowing Thousands of Terrorists to Escape — Why? by Darius Shahtahmasebi

Raqqa would be slightly less inexcusable if the US had got the bad guys, but according to Darius Shahtahmasebi, they didn’t. From Shahtahmasebi at theantimedia.org:

Amnesty International released an explosive report last week, which described the US-led coalition’s disproportionate and indiscriminate war in Raqqa as the US-led “war of annihilation”. The report confirmed what some people have suspected for a while but few have dared to even talk about. Namely, that the United States and its allies have completely destroyed a Syrian city, and left almost nothing but death and destruction in their wake.

In coming to its conclusion, Amnesty researchers visited 42 coalition air strike sites across the city and interviewed 112 civilian residents who had survived the ordeal. The results of their investigation shouldn’t be a surprise to anyone who has been paying attention, as approximately a year ago, Reutersdescribed the plight of one resident in Raqqa who found several of his neighbours lying dead on the street, with cats eating the corpses.

The report even details four cases of civilian families who, between them, lost 90 relatives and neighbours. One family lost 39 in total, all of them allegedly killed by coalition air strikes. This would also not be a surprise to anyone who cared enough to follow this story closely, particularly with the Intercept’s shocking article last year titled, ‘Entire families are being killed by US airstrikes in Raqqa, Syria’.

To be fair, US President Donald Trump did once say he would “take out” the families of Islamic State (IS) fighters. He also once asked the CIA why they delayed an air strike on a terrorist target so as to avoid hitting the house with his family inside it. In other words, the Commander-in-Chief of the world’s military superpower doesn’t have a clue how international humanitarian law works.

To continue reading: The US Annihilated Raqqa While Allowing Thousands of Terrorists to Escape — Why?

America’s Debt Dependence Makes It An Easy Economic Target, by Brandon Smith

Can a nation whose nominal debt is over $20 trillion and unfunded liabilities somewhere between $150-200 trillion bre considered strong? No. From Brandon Smith at alt-market.com:

There is a classic denial tactic that many people use when confronted with negative facts about a subject they have a personal attachment to; I would call it “deferral denial” — or a psychological postponing of reality.

For example, point out the fundamentals on the U.S. economy such as the fact that unemployment is not below 4% as official numbers suggest, but actually closer to 20% when you factor in U-6 measurements including the record 96 million people not counted because they have run out of unemployment benefits. Or point out that true consumer inflation in the U.S. is not around 3% as the Federal Reserve and the Bureau of Labor Statistics claims, but closer to 10% according to the way CPI used to be calculated before the government started rigging the numbers.  For a large part of the public including a lot of economic analysts, there is perhaps a momentary acceptance of the danger, but then an immediate deferral — “Well, maybe things will get worse down the road, 10 or 20 years from now, but it’s not that bad today…”

This is cognitive dissonance at its finest. The economy is in steep decline now, but the mind in denial says “it could be worse,” and this is how you get entire populations caught completely off guard by a financial crash. They could have easily seen the signs, but they desperately wanted to believe that all bad things happen in some illusory future, not today.

There is also another denial tactic I see often in the world of politics and economics, which is what I call “paying it backward.” This is what people do when they have a biased attachment to a person or institution and refuse to see the terrible implications of their actions. For example, when we point out that someone like Donald Trump makes destructive decisions, such as the continued support of Israel and Saudi Arabia in Syria and Yemen, or the reinstatement of funding for the White Helmets in Syria who are tied to ISIS, Trump supporters will often say “Well what about Obama?”

This is a game of shifting accountability. Is one person worse than the other? Possibly. I say give it time and make notes. However, the negative decisions of one politician we don’t like do not diminish the negative decisions of another politician we might like. They should BOTH be held accountable.

To continue reading: America’s Debt Dependence Makes It An Easy Economic Target

China’s Oil Trade Retaliation is Iran’s Gain, by Tom Luongo

Starting a trade war is like dropping a bomb, you never know what’s going to blow up. From Tom Luongo at tomluongo.me:

I’ve told you that once you start down the Trade War path forever will it dominate your destiny.

Well here we are.  Trump slaps big tariffs on aluminum and steel in a bid to leverage Gary Cohn’s ICE Wall plan to control the metals and oils futures markets.   I’m not sure how much of this stuff I believe but it is clear that the futures price for most strategically important commodities are divorced from the real world.

Alistair Crooke also noted the importance of Trump’s ‘energy dominance’ policy recently, which I suggest strongly you read.

But today’s edition of “As the Trade War Churns” is about China and their willingness to shift their energy purchases away from U.S. producers.  Irina Slav at Oilprice.com has the good bits.

The latest escalation in the tariff exchange, however, is a little bit different than all the others so far. It’s different because it came after Beijing said it intends to slap tariffs on U.S. oil, gas, and coal imports.

China’s was a retaliatory move to impose tariffs on US$50 billion worth of U.S. goods, which followed Trump’s earlier announcement that another US$50 billion in goods would be subjected to a 25-percent tariff starting July 6.

It’s unclear as to what form this will take but there’s also this report from the New York Times which talks about the China/U.S. energy trade.

Things could get worse if the United States and China ratchet up their actions [counter-tariffs]. Mr. Trump has already promised more tariffs in response to China’s retaliation. China, in turn, is likely to back away from an agreement to buy $70 billion worth of American agricultural and energy products — a deal that was conditional on the United States lifting its threat of tariffs.

“China’s proportionate and targeted tariffs on U.S. imports are meant to send a strong signal that it will not capitulate to U.S. demands,” said Eswar Prasad, a professor of international trade at Cornell University. “It will be challenging for both sides to find a way to de-escalate these tensions.”

But as Ms. Slav points out, China has enjoyed taking advantage of the glut of U.S. oil as shale drillers flood the market with cheap oil.  The West Texas Intermediate/Brent Spread has widened out to more than $10 at times.

WTIC-Brent-Spread

By slapping counter tariffs on U.S. oil, that would more than overcome the current WTIC/Brent spread and send Chinese refiners looking for new markets.

Hey, do you know whose oil is sold at a discount to Brent on a regular basis?

Iran’s.  That’s whose.

To continue reading: China’s Oil Trade Retaliation is Iran’s Gain

Italy challenges the Western order, by Frank Sellers

Italy doesn’t like its debt, its immigrants, or the EU, and thinks perhaps Europe’s ought to loosen up towards Russia. This is all contrary to the EU playbook. From Frank Sellers at theduran.com:

With a massive influx of immigrants from across Africa and the Middle East, and growing poverty, Italy voted in a populist government representing policies which would seem to virtually overturn the postwar European order.

The austerity measures which have been imposed upon the Italian people have pushed more and more of them down into poverty, with the poverty rate doubling over the course of the past decade.

Relative to migration, Italy is one of the Southern European countries taking the brunt of the migrants who are flooding into Europe by the thousands, helped along by various NGOs which seek to alter the demographic makeup and economic and political order of Europe under the guise of humanitarianism.

The present economic metrics tend to perceive the profits of multinational corporations as a gauge of the health of the economy, rather than the economic situation on the ground level, faced by the Italian citizen. All of these and more are things which this new government has a view towards radically changing.

To combat Austerity, which may be tossed out the window, the option on the table is to review treaties to which Italy is partied which impose or advise them. Rather than gutting the population for the money which the government needs in order to cover obligations to multinational financial interests, a proposal was broached of launching a universal basic income, reduction in the pension age, as well as a flat tax system.

And while the migrant policy is still evolving, it has had a view towards repatriating the migrants which are already within Italy’s borders. Italy has already flexed its will on the migrants issue over refusing a ship full of migrants port in Italy, forcing it to set sail for Spain.

Foreign policy aims at softening the approach towards Russia by eliminating sanctions and by putting the focus on improving relations, benefitting Italy both by allowing a resumption of trade, and the perspective of Russia’s will and capacity to help get a handle on the situation in the Middle East, which is part of what prompts the migration issue, due to the region’s instability.

What this could mean is that an already strained relationship between Italy and the EU could be put to the test, or altered in a significant manner if these proposals are put into play after the fashion in which they were introduced during the elections cycle.

To continue reading: Italy challenges the Western order