Horsemeat scandal: EU ministers want faster action on meat labelling

From - http://www.guardian.co.uk/uk/2013/feb/24/horsemeat-scandal-country-origin-labelling

A European Commission report on tougher rules about origins of frozen beef products is expected but not until the end of 2013

Horsemeat found in frozen beef products has destroyed the trust many people placed in their local supermarkets. Photograph: Luke Macgregor/Reuters

Owen Paterson, the environment secretary, will be among ministers from across the EU pressing on Monday for speedier action on introducing country-of-origin labelling for processed beef and other meat products as they struggle to get a grip on the horsemeat scandal.

On Saturday the French president, François Hollande, joined the growing calls for more traceability at European level and critics have complained that the UK coalition government had been dragging its feet on the issue before the crisis began last month. Country of origin and slaughter for cattle must already be included on labels for fresh and frozen beef but the European commission is paving the way to extend that to other meats and ingredients in processed food. However, a report on implementing tougher rules is not expected until the end of the year. This month, the Commons environment, food and rural affairs select committee said UK ministers had been caught "flat-footed" by the scandal, which has been blamed on mislabelling and criminal fraud, and criticised them for having sought UK exemption from some EU rules.

This would allow minced meat sold in Britain to have a higher fat and collagen content than permitted in other EU member states and remove the requirement for loose meat products to declare the amount of meat they contained. "This is not the time for the government to be proposing reducing the labelling standards applied to British food", said the committee.

Glenis Willmott, Labour MEP for the East Midlands and the party's leader in the European parliament, said last week that in 2011 UK ministers had opposed plans backed by the parliament for more comprehensive country of origin labelling. This had forced MEPs "into a much weaker compromise" as the coalition tried "to kick the issue into the long grass".

She said: "It is interesting that Mr Paterson, one of the most Eurosceptic of ministers, is now advocating EU legislation as a solution to the current crisis. It is simply common sense that a problem in the meat supply chain … needs EU-wide measures to combat it. But it is precisely this kind of EU regulation that Eurosceptics deem 'red tape from Brussels'. In 2011 the UK government said my plans would be too difficult to put into practice because the meat supply chain was too complex. We have now seen what the complexities of the industry can hide."

US GOVERNMENT SUES CREDIT RATING AGENCY OVER DODGY MORTGAGE RATINGS

From - http://worldnewscurator.com/2013/02/05/us-government-to-sue-standard-poors-moodys-may-be-next/#1RKLvw8kY5BBqHQG.99

The United States government is to sue credit rating agency Standard & Poor’s over the triple A ratings the firm gave to mortgage securities prior to the credit crunch and global economic crisis of 2009.

The civil lawsuit, which several US states are expected to join, will focus on decisions by the firm to award the highest rating to a range of mortgage-backed securities – including those based on sub-prime mortgages – in 2007. These securities later collapsed in value. The high rating given to these mortgage bonds helped to fuel a bubble in the sub-prime mortgage sector, and their subsequent collapse in value played a key role in the ensuing credit crunch and debt crisis whose effects are still ravaging the economies of many countries around the world.

Credit rating agencies such as Standard & Poor’s are paid by the issuers of such bonds to provide a rating of their risk, leading to concerns that there may have been a ‘conflict of interests’ – a polite way of saying that these agencies may have been issuing high ratings to secure repeat business, rather than because they had actually assessed the bonds as safe in a proper manner.

Share is Standard & Poor’s parent compay McGraw Hill fell by 14% on Monday as a result of the announcement. interestingly shares in Moody’s – another credit ratings agency – fell by almost as much (10%), suggesting that market analysts believe that they will be next Justice departments hit list.

Credit ratings agency have drawn a great deal of criticism from politicians and pundits, who have suggested that their activities played a large part in creating the conditions for the global economic crisis. In a report published in January 2011 the Financial Crisis Inquiry Commission described the agencies as “essential cogs in the wheel of financial destruction” and “key enablers of the financial meltdown”.

Making Sense of the "Circular Economy"

From - http://www.triplepundit.com/2013/01/make-sense-circular-economy/

If the name Ellen MacArthur rings a bell, you’re probably thinking of the person who set a record for circumnavigating the world in a high tech sailboat, solo no less, but that’s not the only circle for which she is known. Ms. MacArthur, through the charitable organization that bears her name, has formulated an economic concept called the circular economy, which is quickly becoming a buzzword around sustainability circles.

As far as buzzwords go, “circular economy” is a fairly pedestrian combination (as opposed to, say, Sex Pistols) and perhaps that’s just as well. Rather than getting distracted by the words, it’s far more interesting to pick through the concept itself and see how MacArthur’s vision of economic growth meets the challenges of a world of shrinking resources.

The Circular Economy

MacArthur was profiled and interviewed just last week on the Harvard Business Review blog by Eric Hellweg, and for those of you who don’t have time to read the whole thing (though you really should, it’s fascinating), the circular economy concept basically boils down to managing resource scarcity in the context of consumer demand for environmental responsibility.

As described by the Ellen MacArthur Foundation, it comes out like this:

“The circular economy is a generic term for an industrial economy that is, by design or intention, restorative and in which materials flows are of two types, biological nutrients, designed to reenter the biosphere safely, and technical nutrients, which are designed to circulate at high quality without entering the biosphere.”

Why the Circular Economy is more than mere recycling

While the emphasis on reentering and circulating call recycling to mind, MacArthur’s concept of a circular economy is on a different plane entirely. The Foundation’s website is careful to note the difference by referencing Heather Rogers, journalist and author of Here Today, Garbage Tomorrow:

“One of the biggest confusions around a circular economy framework is that sparked by the word ‘recycling’…’The vast majority of wastes are created during the manufacturing process, and that is where we should focus.’”

Recycling puts the onus on consumers to use goods more carefully and to dispose of the leftovers responsibly. The circular economy asks that manufacturers produce goods that involve less waste in the first place, and that enable consumers to integrate recycling into their daily habits more intensively.

Case studies for the Circular Economy

When you look at the Foundation’s case studies, the potentials for economic growth become clear. That’s especially true when you consider that “consumers” doesn’t just mean individual householders, it also means companies that consume products through their supply chains.

The waste oil sector in England, for example, was historically focused on animal feed until new legislation targeted biofuels. The Yorkshire waste oil processor Brockelsby Ltd. adapted not only by pivoting to the biofuel market, but also by double-purposing its operations as a research and development platform to find new values for low-grade waste products, which normally would be discarded.

Another Foundation case study is Massachusetts-based Digital Lumens, which aims to help industrial customers transition out of the “criminally inefficient” incandescent light bulb into high-efficiency LEDs integrated with an energy management system. The company is transitioning, too, from an equipment sales model to a service-based model that could enable it to reclaim spent or damaged components more efficiently.

One final example is New York’s Ecovative, which produces fully compostable bio-based packaging products that stand in for petroleum-based plastics. Ecovative’s unique approach is to literally custom-grow its packages using fungi, which has caught the eye of green-transitioning companies like 3M and Dell among others.

Where the rubber hits the circular road

The sustainability foundation of the circular economy is interesting enough in itself, but real proof of the concept’s viability is the potential for economic growth.

To buttress the case for the circular economy, the Foundation has begun to issue detailed reports on the economic benefits of transitioning out of “an increasingly resource constrained ‘take-make-dispose’ model,” both in the short term and over the long run.

The first report, in 2011, took a look at the stimulating effect on European Union manufacturing sectorfrom economic activity related to product development, remanufacturing and refurbishment.

The second report just came out in 2013, and it focuses on applying the principles of the circular economyto “fast-moving” consumer goods, namely food, beverages, textiles and packaging, which also happen to account for a good deal of municipal waste while absorbing – and wasting – a significant amount of agricultural output.

Barclays to close tax unit

From The Sunday Telegraph - http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9859934/Barclays-to-close-tax-unit.html

Barclays is to close its controversial tax avoidance unit as one of the landmark measures of Antony Jenkins’ much anticipated strategy review designed to show that “Barclays is changing”.

"The Sunday Telegraph can reveal that Mr Jenkins, who will deliver the outcome of the review on Tuesday, will say the bank will shut its structured capital markets (SCM) business.

In the mid-2000s the unit made profits of as much as £1bn in a single year and became synonymous with Barclays’ aggressive investment banking culture under the stewardship of Bob Diamond, Mr Jenkins’ predecessor as chief executive.

The unit, previously run by Barclays’ highest-paid banker, Roger Jenkins, who was paid as much as £40m a year as a result of SCM’s success, gave advice to large companies on how to avoid tax. SCM was responsible for building a network of almost 300 offshore tax-haven subsidiaries which meant Barclays itself paid only £113m of UK corporation tax in 2009, despite profits of £4.6bn.

The strategy review will be delivered at London’s Royal Horticultural Halls just hours after the bank’s full-year results for 2012, which are expected to show that Barclays will have made adjusted profits of £7.18bn, up from £5.88bn in 2011.

The review has seen Barclays split into 75 business units, each of which has been measured on the returns generated and the reputational impact of the specific activities."

Maybe other big banks and consultancies offering Tax Avoidance services will also close. Maybe pigs will fly!

British sugar giant caught in global tax scandal

From The Guardian - http://www.guardian.co.uk/business/2013/feb/09/british-sugar-giant-tax-scandal

One of Britain's biggest multinationals, whose brands include Silver Spoon sugar, Twinings Tea and Kingsmill bread, is avoiding paying millions of pounds of tax in an African state blighted by malnutrition, a year-long investigation revealed on Sunday.

The Zambian sugar-producing subsidiary of Associated British Foods, a FTSE100 company, contributed virtually no corporation tax to the state's exchequer between 2007 and 2012, and none at all for two of those years.

The firm, Zambia Sugar, has recently posted record pre-tax profits and its huge plantation is increasing its capacity to produce more sugar for markets in Europe and Africa. Yet it paid less than 0.5% of its $123m pre-tax profits in corporation tax between 2007 and 2012.

The company benefits from generous capital allowance and tax-relief schemes in Zambia, but the investigation also found that it funnels around a third of its pre-tax profits to sister companies in tax havens, including Ireland, Mauritius and the Netherlands. Tax treaties between Zambia and some of those countries mean the state's revenue authorities are unable to charge their normal tax on money leaving their shores.

The revelations are contained in a report published by ActionAid, which exposes how Zambia Sugar has kept its contribution to the state's exchequer so low, although the company says that globally it actually pays a higher rate of tax on its profits than it otherwise would due to its corporate structure.

It is estimated that the tax haven transactions of this one British headquartered multinational deprived Zambia of a sum 14 times larger than the UK aid provided to the country to combat hunger and food insecurity.

ActionAid's findings will heap more pressure on the chancellor, George Osborne, to make progress in closing gaps in international tax standards and tackling avoidance at the G20 meeting of world leaders this week and the G8 in June.

Shocking figures reveal the growth in UK's wealth gap

From The Observer - http://www.guardian.co.uk/society/2013/feb/10/uk-super-rich-richer-as-majority-squeezed

Inequality has risen sharply since the 1990s, according to a report by the Resolution Foundation thinktank

Buying essentials in London's West End: Britain's super rich have seen their slice of national income grow from 7% to 10% since the 90s. Photograph: Ruby / Alamy/Alamy

The super-rich – the top 1% of earners – now pocket 10p in every pound of income paid in Britain, while the poorest half of the population take home only 18p of every pound between them, according to a report published this week by the Resolution Foundation thinktank, which reveals the widening gap between those at the very top and the rest of society.

Inequality has grown sharply over the past 15 years, according to Resolution's analysis: the top 1% of earners have seen their slice of the pie increase from 7% in the mid-1990s to 10% today, while the bottom half have seen their share drop from 19% to 18%.

There was a dip in top earnings between 2009-10 and 2010-2011, but Resolution's analysis suggests that may have been because highest-paid employees brought forward earnings to avoid the 50p top tax rate on earnings above £150,000, which Chancellor George Osborne has cut to 45p from this April.

Matthew Whittaker, senior economist at the thinktank, said: "If we take the longer view, we see the very wealthiest have continued to prosper while many others have not.

"The growing gap in incomes is pronounced when you look at the top 10th of households, and overwhelming when you consider the position of the top 1%. The rest of society hasn't kept up. It's the squeezed majority, not just the squeezed middle."

RBS bankers must pay Libor fine, says George Osborne

From - http://www.guardian.co.uk/business/2013/feb/04/royal-bank-scotland-libor-fine-osborne

George Osborne is forcing Royal Bank of Scotland to cut its bankers' pay to ensure that taxpayers are not left to pick up the cost of the upcoming multimillion-pound fine for Libor rigging.

The chancellor said his views had been made clear to the management of the bailed-out bank in an attempt to defuse public anger about the portion of the fine – which could amount to between £400m to £500m in total – that will be paid to the US authorities.

"When it comes to RBS, I am clear that the bill for any US fine related to this investigation should on this occasion be paid for by the bankers, and not the taxpayer," Osborne said.

Speaking in Bournemouth where he unveiled plans to reform the banking system, Osborne appeared to back the RBS chief executive, Stephen Hester, but indicated he expects heads to roll as a result of the fine for rigging Libor – a key interest rate. It was "well known" that RBS was considering management changes, Osborne said.

The fine from the UK's Financial Services Authority is thought to be just under £90m with US regulators levying fines of around four times that amount. In the furore that followed the £290m Libor fine paid by Barclays last year, £59.5m of which was levied by the FSA, the law was changed to ensure that fines went to the government.

"Those who were doing the supervising must also bear their share of the responsibility," Osborne said. "The RBS board and the RBS senior management are well aware of that and decisions are in hand."

He added that Hester is "taking the action to ensure those responsible are held to account".

It is expected that the departure of John Hourican, the head of the investment bank, will be announced once the Libor fine is revealed, possibly later this week, although he is not thought to be personally implicated in the rigging of Libor. The size of the bonus pool for 2012 at RBS has yet to be disclosed. It was £390m for 2011 and is expected to fall by as much as £150m. But the call by the chancellor to ensure bankers pay for the Libor fine does not preclude bonuses being paid for 2012.

Responding to questions about why senior bankers should receive bonuses after a year of scandal, Osborne acknowledged that Hester and Barclays boss Antony Jenkins have waived their bonuses.

He said there could have been "enormous public anger" if fines levied on RBS by US regulators were paid by the taxpayer, not the bankers.

"That is not on," said Osborne, who has told the bank's management that a fine imposed by international regulators should be paid out of bankers' pay. If the fine is paid by shareholders, led by taxpayers who own 83%of the bank, "that could have been a very great source of public anger this spring," said Osborne.

The chancellor confirmed remarks by Treasury sources over the weekend which had suggested he was concerned about how the Libor fine would be paid. In his speech, Osborne insisted that "everyone should exercise restraint and responsibility" over bonuses.

Osborne was accused of "rhetoric" and a "partial climbdown" by Ed Balls, the shadow chancellor, after he said he would use legislation to threaten banks with being broken up if they attempted to flout rules requiring them to ringfence their high street and investment banking operations.

Andrew Tyrie, the Conservative MP whose banking standards commission helped create the idea of "electrifying" the ringfence, said the chancellor had taken an "important step in the right direction". The ringfence was a key plank in proposals by Sir John Vickers' independent commission but the banking standards commission had been concerned banks would try to "game" the ringfence. "They will always try to do so unless strong disincentives are put in place," said Tyrie.

Chancellor insists Royal Bank of Scotland, not UK taxpayers, must take up estimated £500m fine for Libor rigging

Inequality for All – another Inconvenient Truth?

From The Guardian - http://www.guardian.co.uk/film/2013/feb/02/inequality-for-all-us-economy-robert-reich

The powerful documentary Inequality for All was an unexpected hit at the recent Sundance film festival, arguing that US capitalism has fatally abandoned the middle classes while making the super-rich richer. Can its star, economist Robert Reich, do for economics what Al Gore did for the environment?

 Former US labour secretary Robert Reich at an Occupy Los Angeles rally in 2011. Photograph: David Mcnew/Getty Images

In one sense, Inequality for All is absolutely the film of the moment. We are living through tumultuous times. The economy has tanked. Austerity has cut a swath through the country. We're on the verge of a triple-dip recession. And, in another, parallel universe, a small cohort of alien beings – or as we know them, bankers – are currently engaged in trying to figure out what to spend their multimillion-pound bonuses on. Who wouldn't want to know what's going on? Or how it happened? Or why? Or if it is really true that the next generation down is well and truly shafted?

…

Any synopsis of the film runs the risk of making it seem dry again, but essentially it describes how the middle classes have come to have a smaller and smaller portion of the economic pie. And how, since 70% of the economy is based on the middle classes buying stuff, if they don't have any money to buy this stuff, it cannot grow. Meanwhile, the government has allowed the super-rich, the "one per cent", to take more of the nation's wealth. Half of the US's total assets are now owned by just 400 people – 400! – and, Reich contests that this is not just a threat to the economy, but also to democracy.

…

And what the film tries to do is thread together evidence that many people know about – the increasing struggle of the middle classes to just get by, the way that the top 1% of society has unshackled itself from the rest of us and has seen its income increase exponentially, and the ever-increasing cost of the traditional avenues of improvement, such as higher education – and weave it into a cohesive and convincing narrative. It is, in some respects, a theory of everything. Reich charts the three decades of increasing median income after the second world war, a period he calls "the great prosperity" and then examines what happened in the late 1970s to put an end to it. The economy didn't falter. It kept on growing. But wages didn't.

The figures that Reich supplies are simply gobsmacking. In 1978, the typical male US worker was making $48,000 a year (adjusted for inflation). Meanwhile the average person in the top 1% was making $390, 000. By 2010, the median wage had plummeted to $33,000, but at the top it had nearly trebled, to $1,100,000.

"Something happened in the late 1970s," we hear him tell his Berkeley class. And much of the rest of the film is working out what happened.

Some inequality is inevitable, he says. Even desirable. It's what makes capitalism tick. But at what point does it become a problem? When the middle classes (in its American sense of the 25% above and below the median wage) have so little of the economic pie that it affects not just their lives but the economy as a whole.

Reich's thesis is that since the 1970s a combination of anti-union legislation and deregulation of the markets contrived to create a situation in which the economy boomed but less of the wealth trickled down. Though for a while, nobody noticed. There were "coping mechanisms". More women entered the workforce, creating dual-income families. Working hours rose. And increasing house prices enabled people to borrow.

And then, in 2007, this all came crashing to a halt. "We have exhausted all the options," he says. There's nowhere else left to go. It's crunch time.

It's crunch time that so many working families understand too well. They may not be familiar with the theory of income inequality but they haven't been able to avoid noticing that they've got less money in their pockets. "I've always thought that kitchen-table economics is the most important topic to most people," says Reich. "Their wages, their jobs, getting by. I've always tried to relate economics to where people live. That's why I was so excited about the film."

…

… In the UK, Royal Bank of Scotland, having covered itself in glory in the Libor interest-rate fixing scandal, is currently contemplating bonuses for its investment banking division of £250m, according to reports last week. This, to put it another way, is the annual wage bill for at least 12,500 of its call-centre workers. Because this isn't just an American problem. It's a British one too.

"If there was upward mobility it would be OK," says Reich in the film. "But 42% of children born in poverty in the USA will stay there. In Denmark it's 24%. Even in Great Britain, where they still have an aristocracy, it's 30%."

It's probably a shocking statistic for Americans to hear. The problem is that by every index you can measure, inequality is worsening in Britain. There are fewer opportunities to overcome the barriers of your birth in the UK than in any other country in Europe. One of the most chilling moments in Inequality for All for a British audience is that how, faced with the same choices that America had in the 70s, we have, in the last year or so, taken the same path.

One of the key moments for Reich was the underinvestment in education, particularly higher education in the 70s. This was when America introduced tuition fees and its workforce started to fall behind the rest of the world's. When opportunities for those from low- and middle-income backgrounds began shrinking: precisely where the UK is today.

It's not just that wages have remained flat in America – as they have in the UK – it's that the expenses of everyday life have soared, in particular education and healthcare.

Last October, an independent commission in the UK led by the Resolution Foundation predicted that in 2020 wages for low- to middle-income families would be the same as they were in 2000. And yet everything else will have gone up. We too are facing the crunch.

In December, the Office for National Statistics found that richest 10% of people in Britain own 40% of the national wealth. In London and the south-east, one in eight households has almost £1m of assets. The bottom half of the country has no net property wealth and only £4,000 in pensions savings. For them, there is just rising prices. And the ever diminishing possibility of things ever being different for them or their children.