Global Tide Turning Against the USA

[Persej]

And the shopping season continues:

AbbVie To Buy Shire For $54 Billion In Biggest Inversion Deal Ever

Abbvie, the pharmaceutical company based in North Chicago, Illinois, said on Friday that it had agreed to buy U.K. drug maker Shire for $54 billion in a transaction that is designed to lower the American company’s tax rate, the largest inversion deal ever.

U.S. companies, particularly pharmaceutical companies, have been increasingly buying foreign companies in order to lower taxes by reincorporating overseas. There has been a steady drumbeat of such inversion deals that involve ever larger and more well-known U.S. companies and Washington has expressed its dissatisfaction with the tactic.

Treasury Secretary Jacob Lew this week pushed Congress to do something about the wave of inversion deals, but there does not appear to be any imminent agreement between Republicans and Democrats on how to do so.

Lowering its tax rate appears to be the primary reason that AbbVie has entered into a transaction with Shire, whose board supports the deal. Earlier this week, a big pharmaceutical company based outside Pittsburgh, Mylan Laboratories, announced it would buy Abbott Laboratories' international generic drug business in a $5.3 billion deal that will allow Mylan to reincorporate in the Netherlands. Mylan is run by Heather Bresch, the daughter of U.S. Senator Joe Manchin of West Virginia.

The 2014 inversion wave will likely continue unless Washington does something about it. Wall Street is pushing these deals amid a broader mergers and acquisitions boom and the companies considering the move, like Walgreen and Pfizer, are getting increasingly bigger and more prominent. Senator Orrin Hatch this week became the first Republican to endorse a potential short-term approach to stopping inversion deals. The Obama Administration and some key Democrats are backing legislation that would limit inversion deals, including the one announced Friday by AbbVie.

_http://www.forbes.com/sites/nathanvardi/2014/07/18/abbvie-to-buy-shire-for-54-billion-in-biggest-inversion-deal-ever/

The combined companies will have a workforce of 30,000 and a market value of $137bn. Both companies insisted there was little overlap between the two. AbbVie makes the world's bestselling drug, Humira, for rheumatoid arthritis, and Shire is best known for its rare diseases expertise and treatments for attention deficit hyperactivity disorder (ADHD). (...)

The deal would allow Chicago-based AbbVie to diversify its product range and lower its tax bill. AbbVie wants to shift its tax base from the US to Britain as part of the deal, a move that would cut its corporation tax rate from 22% to 13% by 2016. The drugs firm is one of a string of US companies looking to redomicile abroad to save billions on tax, most notably Pfizer, whose failed £69bn attempt to buy Britain's AstraZeneca in May was partly motivated by the tax savings it could make. Jacob Lew, the US treasury secretary, has urged the leaders of the congressional tax-writing committees to act now to stop US firms relocating for tax purposes.

Despite the controversy in the US, the deal is unlikely to trigger the public and political opposition created in the UK by Pfizer's pursuit of AstraZeneca because Shire is largely based in the US. It was founded in the UK but is managed in Boston, headquartered in Dublin and generates most of its sales in the US. It employs fewer than 500 people in the UK – out of a 5,000-strong workforce – and has a small research and development unit in Britain. The deal is not expected to generate big job losses, because of the lack of overlap between the two businesses.

_http://www.theguardian.com/business/2014/jul/18/shire-windfall-takeover-abbvie-pharmaceutical

Pay your taxes people, because big companies certainly doesn't want to.

 

[Persej]

And of course there is famous case of Nokia and Microsoft:

Finnish Pride Takes Another Blow From Microsoft Job Cuts

Finland has staked much of its national pride on the worldwide growth of Nokia, based on the outskirts of Helsinki. And many Finns still hold a lot of affection for the company’s handsets.

That pride took a hit in recent years as the company struggled against smartphone rivals like Apple and Samsung. It was further dented last year when Microsoft announced it would buy much of Nokia for a price that eventually amounted to about $7.5 billion.

But maybe nothing hurt quite as much as the news on Thursday that Microsoft was cutting up to 18,000 jobs. About 12,500 of those jobs will come from Nokia groups, or from overlap at Microsoft resulting from the deal.

Microsoft said that roughly 1,100 layoffs, or 6 percent of the total job cuts, would come from Finland, primarily from a manufacturing plant in the north of the country.​ The company added that it would keep engineering teams in other parts of Finland. A further 1,800 job cuts are planned at a manufacturing plant in Hungary.

Since the acquisition was announced last September, Nokia employees and the wider Finnish community had greeted the pending deal with growing pessimism, according to David J. Cord, an American based in Helsinki, who wrote “The Decline and Fall of Nokia.”

Mr. Cord said that many of the best engineers from the handset business had already left the company. The exodus had left Microsoft’s new cellphone unit with many of the lesser well-trained engineers.

While Finland had once been known for its telecommunications prowess, many of the new generation of developers and engineers also have shunned corporate jobs with Nokia. Instead, they have turned to the country’s growing gaming industry and companies like Supercell, which makes mobile games like Clash of Clans and is currently valued at around $3 billion.

“Everyone had been expecting this news,” Mr. Cord said about Microsoft’s job cuts. “It has hurt the Finnish psyche. When Nokia was on top of the world, so was Finland. Now that Nokia has fallen, so has the country.”

But Pekka Koponen, a former Nokia executive who now runs a technology advisory firm in Helsinki, said there was a potential upside to come.

“There is an opportunity to combine the great minds of people who will now need to change jobs with great minds outside the company,” Mr. Koponen said. “The device business has been in a long transformation. The industry in Finland needs to find a new path.”

When Nokia announced a round of ​job cuts, before its handset unit was taken over by Microsoft, the company paid laid-​off employees​ roughly $27,000, and a severance package, to help them start new businesses. Laid-off workers had access to some of the company’s patents. And the Finnish government also provided grants to help former Nokia workers start new businesses. It is unclear whether Microsoft or the Finnish government will provide similar benefits to those losing their jobs in the latest cuts.

The new layoffs come at a difficult time for Finland’s economy, which has shrunk over the last two years, representing the country’s longest recession in two decades. Finnish unemployment stands at around 8.5 percent, significantly higher than the rates of other Nordic countries like Norway and Denmark.

“Microsoft needs to show the same social responsibility that Nokia showed when it did its own round of layoffs,” Mr. Koponen said. “That is the benchmark on which Microsoft will be judged.”

As the new round of job cuts take effect over the next year, many current employees will join a long list of former workers from the handset division who have been laid off as Nokia’s fortunes soured over the last decade.

Stefano Mosconi, a former Nokia executive, went on to create a rival handset maker called Jolla with a group of other ex-Nokia workers. Jolla’s staff is made up of roughly 90 percent former Nokia employees.

“If Microsoft gives them the same treatment as we received, I’m sure they’ll find jobs,” Mr. Mosconi said.

_http://bits.blogs.nytimes.com/2014/07/17/finnish-pride-takes-another-blow-from-microsoft-job-cuts/

 

[Pierre]

The BRICS have just created their development bank : link. One more nail in the coffin of Western hegemony.

 

[un chien anadolu]

The BRICS have just created their development bank : link. One more nail in the coffin of Western hegemony.

This was being discussed for a while but i think the US&EU sanctions against Russia accelerated the realization. I think it's also possible that it might be a factor for the final decision for downing of MH17.

Also another reason is that it's almost a consensus for a time now that in the coming economical collapse the emerging economies will suffer first and worst. Especially the so called "fragile 5" which are India, Turkey, South Africa, Brazil and Indonesia, two of them (Brazil and S. Africa) being members of BRICS. Which is kind of logical because in the last 6-7 years the economic structures of these countries became addicted to the money created out of thin air mainly by FED -like junkies- via quantitative easing. Now since the QE program is ending in a gradual way (and in September it's planned to end fully) money flow related to QE to these/and other countries has almost dried up completely. And at the beginning of this year they had to rise the interest rates for at least not loosing the existing foreign investors' money. In other words they were buying some time. So when QE ends completely this September/October and FED (maybe ECB too) announce a plan/date for raising the interest rate it is more than likely that it will be the beginning of the economic disaster in those countries.
So, since especially Brazil and S. Africa, being members of the BRICS, seem to be the most vulnerable economies to this shock, i think it's a preliminary preparation for trying to hold the newborn union together.

 

[nicklebleu]

So when QE ends completely this September/October and FED (maybe ECB too) announce a plan/date for raising the interest rate it is more than likely that it will be the beginning of the economic disaster in those countries.

I don't think that QE is about to stop - they simply can't. The minute the FED stops printing money, the US economy is gone. Unless they do a "hard reset", which may well be in the cards in the near future. I think it is much more likely that what they will do is tweak the system, "wash" the money abroad and declare it as something else. Like they did a few weeks ago through Belgium.

In my opinion the FED has only two choices: continue printing money, or tank the economy. Either way, the result will be the same.

 

[Persej]

But these changes take time. We must not forget that it took decades after the United States became the world's largest economy for the dollar to replace the British pound as the first international currency.

Like the C's said, big changes take time. Very informative picture in the end of that article. Nothing last forever in this world.

 

[Dirgni]

I found this article about the "Deconstructing the U.S. Economy: The Non-Recovery", which includes information and diagrams that shed some light how U.S. economy fares. (_http://www.sprott.com/markets-at-a-glance/deconstructing-the-us-economy-the-non-recovery/)

Conclusion from the article:

To conclude, numerous indicators of the state of the U.S. economy point to a non-recovery:

The participation rate is low and supported by baby boomers working more or coming out of retirement.
Students (the future labour force) are defaulting on their loans in record amounts.
Disposable income is still below its pre-recession level.
An ever increasing share of disposable income is being spent on health care, crippling discretionary spending.
Higher interest rates are further depressing discretionary spending (home and auto sales).
All of which is resulting in anemic business and economic activity.

Claims that the U.S. economy is suddenly rebounding have been made before. They are misleading at best and fallacious at worst. It would not be surprising to see further deterioration, which would force central planners to initiate additional unconventional intervention (i.e. Quantitative Easing).

 

[whitecoast]

This article isn't directly about the US, but has implications for it.

_http://www.theglobeandmail.com/news/politics/report-germany-to-reject-eu-canada-trade-deal/article19795900/?cmpid=rss1&click=dlvr.it

Germany is to reject a multi-billion free trade deal between the European Union and Canada which is widely seen as a template for a bigger agreement with the United States, a leading German paper reported on Saturday.

Citing diplomats in Brussels, the Sueddeutsche Zeitung said Berlin objects to clauses outlining the legal protection offered to firms investing in the 28-member bloc. Critics say they could allow investors to stop or reverse laws.


The German government could not sign the agreement with Canada “as it has been negotiated now”, reported the paper quoting German diplomats in Brussels.

It also said the clauses in the Canada deal were similar to those in the U.S. agreement, which is still under negotiation.

“The free trade treaty with Canada is a test for the agreement with the United States,” said one senior official at the Commission in Brussels, according to the paper.

If the deal with Canada is rejected “then the one with the United States is also dead”, added the official.

It appears that Germany is becoming reluctant to further mesh itself within the transatlantic trade blocks that are designed to isolate Russia economically. Perhaps it (and hopefully other European states) begin to see the US for the dispensable partner it is, compared to Russia.

 

[Yozilla]

Farewell to toughest ally?

Zbig sez:

“I think he (Netanyahu) is making a very serious mistake. When Hamas, in effect, accepted the notion of participation in the Palestinian leadership it acknowledged the determination of that leadership to seek a peaceful solution from Israel - with Israel. That was a real option. They should have persisted in that,” he said.

“Instead Netanyahu launched the campaign of defamation against Hamas, seized on the killing of three innocent Israeli kids to immediately charge Hamas with having done it without any evidence, and has used that to stir up public opinion in Israel in order to justify this attack on Gaza, which is so lethal,” Brzezinski added.

“I think he is isolating Israel. He's endangering its longer-range future. And I think we ought to make it very clear that this is a course of action which we thoroughly disapprove and which we do not support and which may compel us and the rest of the international community to take some steps of legitimizing Palestinian aspirations perhaps in the UN,” he stated.

From:_http://www.presstv.ir/detail/2014/07/26/372839/zbig-netanyahu-imperils-israels-future/

Since there is a gag about this in MSM mouthpieces, maybe there could be something to it?

Comment from:_http://www.presstv.ir/detail/2014/07/26/372880/fundamental-change-in-us-israel-policy/

Zbigniew Brzezinski’ strong criticism of Israeli Prime Minister Benjamin Netanyahu over the massacre of Palestinians in Gaza indicates a “fundamental change in policy” by the US government and is a “clear message” to Israel, an international lawyer says.

 

[Palinurus]

It appears that Germany is becoming reluctant to further mesh itself within the transatlantic trade blocks that are designed to isolate Russia economically. Perhaps it (and hopefully other European states) begin to see the US for the dispensable partner it is, compared to Russia.

Well, that remains to be seen. There are several undercurrents --popular as well as economic and financial-- going in that specific direction, not only in Germany but also in The Netherlands for instance. The recent downing of flight MH17 in the Ukraine has substantially changed this attitude favorable of cooperation with Russia into its reverse, especially in Holland where a wave of hatred toward Putin and Russia has been artificially whipped up in the slipstream of these recent events in which nearly 200 Dutch citizens were killed. Gives one pause to think about the cluster of motives prevailing with the probable perpetraitors of that crash.

When the emotional turmoil of the heat of this moment has subsided, it would be early enough to speculate about which way forward Germany and its closest allies would eventually choose. Recent events could turn out to be a catalyst for the change into the direction of further and intensified cooperation, but such an outcome clearly is contrary to current Washington wishes -- so all will depend on how the ongoing fabricated 'crisis' is going to be managed, on each and all sides involved. Interesting times ahead, that's for sure. OSIT.


EDITED to add: a perfect example of how these things work out on 'ground level' including the innate level of confusion, can be found here:

http://www.sott.net/article/282649-Results-of-US-EU-anti-Russian-sanctions-coming-in-First-hit-Dutch-food-firm

 

[un chien anadolu]

So when QE ends completely this September/October and FED (maybe ECB too) announce a plan/date for raising the interest rate it is more than likely that it will be the beginning of the economic disaster in those countries.

I don't think that QE is about to stop - they simply can't. The minute the FED stops printing money, the US economy is gone. Unless they do a "hard reset", which may well be in the cards in the near future. I think it is much more likely that what they will do is tweak the system, "wash" the money abroad and declare it as something else. Like they did a few weeks ago through Belgium.

In my opinion the FED has only two choices: continue printing money, or tank the economy. Either way, the result will be the same.

Well since last year they already reduced it from $85bn/month to $35bn/month. So i doubt they would not end it this year, but anything is possible i guess. Maybe like you said , either way, the result will be the same, and they know this too. If they suddenly would decide to stop tapering and rise the QE amount again, the result could be high inflation and a significant credibility loss for FED.

I am not an economist but maybe they're counting on the return of the investment money which is in foreign markets, especially in Emerging Markets, to US, some of which is already leaving these countries and most of it wait for an interest raise by FED.

 

[angelburst29]

This article isn't directly about the US, but has implications for it.

_http://www.theglobeandmail.com/news/politics/report-germany-to-reject-eu-canada-trade-deal/article19795900/?cmpid=rss1&click=dlvr.it

Germany is to reject a multi-billion free trade deal between the European Union and Canada which is widely seen as a template for a bigger agreement with the United States, a leading German paper reported on Saturday.

Citing diplomats in Brussels, the Sueddeutsche Zeitung said Berlin objects to clauses outlining the legal protection offered to firms investing in the 28-member bloc. Critics say they could allow investors to stop or reverse laws.


The German government could not sign the agreement with Canada “as it has been negotiated now”, reported the paper quoting German diplomats in Brussels.

It also said the clauses in the Canada deal were similar to those in the U.S. agreement, which is still under negotiation.

“The free trade treaty with Canada is a test for the agreement with the United States,” said one senior official at the Commission in Brussels, according to the paper.

If the deal with Canada is rejected “then the one with the United States is also dead”, added the official.

It appears that Germany is becoming reluctant to further mesh itself within the transatlantic trade blocks that are designed to isolate Russia economically. Perhaps it (and hopefully other European states) begin to see the US for the dispensable partner it is, compared to Russia.

The U.S. sanctions against Russia is affecting most European States, to one degree or another including Germany. As for Germany rejecting a Free-Trade-Deal with Canada, (with Clauses similar to the U.S. in a future agreement), remember Canada and the U.S. have already formed at three way deal with Mexico in a Free-Trade-Contract, part of the mechanism needed under Agenda 21 and the 10 lane Super Highway that's proposed and under construction to connect from one Continent to another. (This Super Highway is limited to Commercial/Business and Military use - only.) To agree with a Treaty with Canada would put Germany in an awkward position of eventually excepting an agreement with the U.S., then Mexico?

In a way, it's like the U.S. is using Canada (front and center) as bait to achieve "it's end's?" How bonafide is a multi-billion free trade deal, when you can't get the Federal Reserve to release hold of you're own Gold Supply in it's vaults?

“The Boomerang Effect: Sanctions on Russia Hit German Economy Hard”.
_http://www.spiegel.de/international/business/german-economy-hit-by-us-eu-sanctions-on-russia-a-982075.html

I wouldn't be surprised, if Merkel/Germany joined the China and Russian alliance in BRICS, with France following shortly after, then maybe Victor Orban's Hungary with other's to follow? The Eurasian Trade Zone verses the Canadian Free-Trade-Deal.

 

[Yozilla]

I wouldn't be surprised, if Merkel/Germany joined the China and Russian alliance in BRICS, with France following shortly after, then maybe Victor Orban's Hungary with other's to follow? The Eurasian Trade Zone verses the Canadian Free-Trade-Deal.

Indeed there are some indications that it's done deal. Merkel spent 6 days in Beijing, week or two ago, (anyone heard about this in media?) and didn't bring her mum with her... So she wasn't shopping there...

 

[Dirgni]

I wouldn't be surprised, if Merkel/Germany joined the China and Russian alliance in BRICS, with France following shortly after, then maybe Victor Orban's Hungary with other's to follow? The Eurasian Trade Zone verses the Canadian Free-Trade-Deal.

This BRICS suggestion could be better for Germany/Europe than the Free-Trade-Deal IMO. At least we were not forced to take the "American trash (GMO etc.)" we were able to avoid til now IMO. And we can keep our own laws and decide for ourselves what to take and what to leave. But in Germany there are still US troops you should not forget these. These troops came into Germany as WW2 occupation troops and never left since then. Some have doubts about the German sovereignty. But maybe the PTB of this side of the Atlantic decide to get more independent / distant from the PTB of the other side of the Atlantic. Wait and see and "enjoy the ride."

Just my 2 cents. :/

 

[angelburst29]

Quote from: Yozilla
" Merkel spent 6 days in Beijing, week or two ago,...."

I haven't come across any news of Merkel being in Beijing and appreciate the information. My guess, it may have something to do with China revising the legendary "Silk Road" trade routes, which Germany is in line to be part of? Note also, in the article below, Malaysia is working with China to upgrade it's Malaysian Port of Kuantan as part of the Silk Road Route. Wonder if this development, along with BRICS involvement might have something to do with Malaysia's on-going problems with Airline flights, sudden crashes and disappearances?

Many may not be aware, that the United States government, has granted China authorization for 257 Foreign Trade Zones (FTZ's) also known as SEZ's (Special Economic Zones). Each and every one of our State Governors has approved and allocated a certain amount of acres of their U.S. State Land to be inhabited by these FTZ's, governed by China. My guess, these FTZ's figure into the Silk Road mapping for economic development? Our Border's being breached by a massive influx of illegal immigrants will be part of the cheap labor work force in the future?

_http://enforcement.trade.gov/ftzpage/letters/ftzlist-map.html


China Cements Eurasian Trade Routes With Great Silk Road Revival
_http://www.zerohedge.com/news/2014-07-27/china-cements-eurasian-trade-routes-great-silk-road-revival-infographic

Sunday July 27, 2014

When it comes to the rise of Eurasia as the ascendent axis set to oppose US global hegemony, conventional wisdom focuses on the roles of China and Russia. However, the changing geopolitical landscape is certainly far more nuanced than merely the "west" versus the BRICS, and as the following infographic from SCMP shows, China has been quietly working to recreate one of the most legendary trade routes, "the Silk Road", linking Africa to the Middle East (Iraq and Iran) to India, to Indonesia and all culminating in Beijing, while at the same time the reverse leg of the route goes to Kazakhstan, Moscow and ultimately, Germany. The purpose: "to enhance political and economic ties with southeast Asia and beyond."

As SCMP reports, China has set up a 10 billion yuan fund to support infrastructure projects under the umbrella of the silk road plan. Initially floated in relation to Asean countries, the idea has grown to include ports such as Colombo and Gwadar. China is already working with Malaysia to upgrade the Malaysian port of Kuantan and Cambodian officials have made clear their enthusiasm in developing port infrastructure.

Container port data compiled by the United Nations shows China is already the world's biggest merchant marine operator. Around a quarter of the world's container tonnage passed through Chinese ports in 2012. The 155 million twenty foot equivalent Unites (TEUs) handled by Chinese ports dwarfs the 43 million handled by the second biggest operators, the United States. Customs administration figures show around 40,000 ships entered and left Chinese ports in the first half of 2014.

By naming the project the maritime silk road, Xi Jinping links the concept to the ancient sea routes piled by Admiral Zheng He in the 15th century. As head of a huge and technologically advanced fleet, Zheng He restored large-scale maritime trade after centuries of disruption, confirming China's status as the leading source of goods, technology and information for the rest of the world.

In June this year China's 2,400 year-old Grand Canal, which historically linked sections of the silk road, was awarded Unesco heritage status, as were large portions of the ancient overland silk road. The 11,179 kilometer Yunxinou International Railway linking Chongqing and Xinjiang with Europe and, commonly referred to as the "New Silk Road", runs alongside many of these ancient caravan tracts.

The message China is trying to send to the west by recreating trade routes that defined its dominance in global trade, and which would enmesh the entire eastern hemisphere into one massive trade zone, hardly needs to be clarified.

Infographic below: