For Black Friday, Wal-Mart to open at 10 p.m. on Thanksgiving night

Wal-Mart Stores Inc. is planning to get a jump on competitors on Black Friday by opening for the first time ever at 10 p.m. on Thanksgiving night.

The world's biggest retailer revealed its Black Friday plans more than two weeks before the actual day, giving shoppers plenty of time to mull over lists. The shopping kickoff will begin with deals on toys, home and apparel items at 10 p.m. on Thanksgiving day, followed by electronics specials at midnight. Additional deals would be available throughout the weekend.

The discount chain follows other retailers in pushing the opening time earlier on Black Friday, the traditional kickoff to the crucial holiday season. But many others, including Target Corp., Macy's Inc. and Kohl's, have chosen to open at midnight.

“Our customers told us they would rather stay up late to shop than get up early, so we’re going to hold special events on Thanksgiving and Black Friday,” said Duncan MacNaughton, chief merchandising officer of Wal-Mart U.S.

The company has already held on Saturday a sale with items at prices traditionally found on Black Friday.

Among the Black Friday specials announced were men's Wrangler jeans for $9.97 a pair, Bratz and Barbie dolls for $5 each and an Xbox360 with Kinect gaming console for $199.99 (plus a $50 Wal-Mart gift card).

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Photo: A shopper outside a Wal-Mart store in Rosemead. Credit: Don Bartletti / Los Angeles Times

Eurozone debt jitters creeping into French bonds

The European debt crisis has gone from bad to worse as Italian government bond yields have soared, threatening the solvency of the Eurozone’s third-largest economy.

But things could go from worse to worst if bond yields keep rising in France, the continent’s No. 2 economy after Germany.

The market yield on 10-year French bonds jumped to 3.20% on Wednesday from 3.10% on Tuesday. The yield is below the recent high of 3.32% reached on Oct. 24. But what’s troubling about Wednesday’s jump is that it occurred even as German bond yields fell.

Normally, German and French bond yields rise or fall in tandem, reflecting the countries' sort of joined-at-the hip status as the core economies of Europe.

But as global markets tumbled Wednesday, investors rushed to buy German bonds as a haven, while dumping French debt.

The yield on German 10-year bonds fell to 1.72% from 1.80% on Tuesday. The German yield is nearing the recent low of 1.67% reached on Sept. 22.

The French 10-year yield, by contrast, has jumped from 2.52% on Sept. 22. At 3.20%, it's still far below the 7.25% yield on Italian 10-year debt. But it's the trend that's worrisome.

The French government knows it can’t afford for the bond market to turn on it. Paris announced a new round of spending cuts last week aimed at ensuring that the country holds on to its coveted AAA credit rating.

Moody’s Investors Service warned last month that it might put a negative outlook on France’s top-rung rating if Paris made too many commitments to back up its banks or other Eurozone states with tax dollars.

But France’s need to protect itself also raises doubts about its ability to extend help to Italy as Rome’s debt nightmare worsens.

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Photo: The highrise sky-scrapers of Paris' financial district of La Defense, as seen from the upper deck of the Eiffel Tower. Credit: Ian Langson / EPA

Proposed health insurance rate regulation initiative submitted

The consumer group that brought regulation of auto insurance rates to California now wants to do the same for healthcare coverage.

On Wednesday, the Santa Monica advocacy group Consumer Watchdog submitted to the state attorney general's office a proposed initiative that would require insurance companies, health maintenance organizations and preferred-provider organizations to get prior approvals from the California Department of Insurance for proposed rate hikes.

The petition, once cleared for circulation, would need about 505,000 signatures from registered voters to appear on the statewide ballot in November 2012. The initiative, if it qualifies for the ballot, is expected to garner fierce opposition from insurance and related healthcare providers. Backers said they are prepared to fight a one-sided campaign with an industry that could easily spend $100 million.

The health insurance measure would be an update of Proposition 103, an initiative approved by California voters in 1988 that made auto and homeowner insurance the most highly regulated in the nation.

"This applies rate regulation, prior approval (of rates), transparency provisions and refund authority to health insurance," said Jamie Court, president of Consumer Watchdog.

Also under the draft initiative, health insurance executives could be prosecuted for perjury if they provide untruthful information about the need for higher rates for individual and small-group health insurance coverage.

"It's a big hammer to make sure that if rates have to go up, the information is solid," Court said.

The Consumer Watchdog initiative is similar to bills in the state Legislature that have failed to win passage in the last five years.

State Insurance Commissioner Dave Jones authored one of them as a member of the state Assembly two years ago and supported another version that stalled this year.

Jones continues to support the concept of regulating health insurance rates, a spokesman said. But he is still reviewing the Consumer Watchdog ballot initiative.

Representatives of the health insurance industry called the proposed initiative "seriously flawed." It also faces opposition from employers, health plans, doctors hospitals and medical groups.

"If this proposal even makes the ballot, it will be defeated," said Charles Bacchi, executive vice president of the California Assn. of Health Plans.

 

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Photo: Emergency room personnel at UC Davis Medical Center in Sacramento. Credit: Rich Pedroncelli /Associated Press

Dr. Wal-Mart: May offer more primary healthcare, seeks partners [UPDATED]

It’s not enough to be a clothing store, grocer, pharmacy, auto servicer and more. It looks as if Wal-Mart Stores Inc. now plans to play doctor too.

The largest retailer in the country recently sent out a request for information to potential partners to help it offer a range of medical services without the traditionally steep prices.

In the 14-page document, Wal-Mart said that it “intends to build a national, integrated, low-cost primary care healthcare platform that will provide preventative and chronic care services … in an affordable and accessible way.”

Among the areas Wal-Mart is exploring: HIV management, obesity and arthritis monitoring, depression care, pregnancy and STD testing, drug screening, physical exams and even stress and sleep help.

Wal-Mart said it would select partner vendors for clinical care, diagnostic and preventative services, health and wellness products and more by mid-January.

[Update 2:30 p.m.: After the document went public, Wal-Mart released a statement distancing itself from the proposal.

“The RFI statement of intent is overwritten and incorrect," said Dr. John Agwunobi, president of Walmart U.S. Health & Wellness. "We are not building a national, integrated, low-cost primary care health care platform.”]

All this not long after Wal-Mart said that it would no longer give new part-time employees health insurance benefits.

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Photo credit: J.D. Pooley / Getty Images

Nevada casinos see big drop in gambling revenue

Nevada casinos won nearly 6% less from gamblers in September than they did during the same month last year, Nevada casino regulators reported.

The report by Nevada's State Gaming Control Board on Wednesday showed casinos statewide won $864 million from gamblers, $53.8 million less than in September 2010, the Associated Press reported.

Mike Lawton, senior analyst with the control board, told the Associated Press that a big decline in the play of baccarat, a volatile, high-roller game favored by Asian players, was largely to blame for the decrease.

Baccarat players wagered $647.4 million in September, down $344 million, or 34.7%. Of that, casinos won $81.9 million, a decline of $46.4 million, or 36.2%, Lawton said.

Excluding baccarat, overall statewide winnings fell less than 1%, indicating the industry's main gambling revenue sources — card games, slot machines, roulette — are showing signs of recovery after years of double-digit decreases during the economic downturn.

"That core business is showing strength," Lawton told the Associated Press.

Gambling revenue on the Las Vegas Strip fell 5.7% to $490.9 million. Strip resorts generate about half of total statewide casino revenues.

Casinos in Reno won $48.9 million for a 2.6% increase over September 2010. South Lake Tahoe casinos, which have struggled with the spread of Indian casinos in California and the recession, saw revenues drop 14.3%.

Gambling-related stocks plunged Wednesday, along with the rest of the world’s markets. Shares of MGM Resorts International fell 7.3%, Wynn Resorts Ltd. dropped 4% and Las Vegas Sands Corp. was down 3.75%. BJK, an exchange-traded fund that holds dozens of gaming stocks, was down 5.1%.

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Photo: MGM Grand Hotel and Casino in Las Vegas. Credit: Ronda Churchill / Bloomberg

 

New geothermal maps show vast potential energy source

Geothermal energy is hardly new. There is evidence that it was used in the U.S. as early as the 1800s. In 1904, a fellow named Piero Ginori Conti opened the first geothermal plant in Larderello, Italy. It was a dry steam reservoir that was used to generate electricity.

But geothermal, like a lot of alternative energy technologies, barely registers in a nation that still depends mostly on oil and coal. Currently, there is only about 3,000 megawatts of installed geothermal energy capacity in the U.S., according to the Southern Methodist University Geothermal Laboratory. That's in a nation with a total energy generating capacity, from all sources, of 1 million megawatts.

Now, the SMU laboratory has released a new series of geothermal maps of the U.S. that show a practically limitless source of energy -- if it can be tapped.

David D. Blackwell, a geophysics professor at the lab, said the "technical potential" of what could be tapped was roughly equal to about 3 million megawatts, or three times the nation's current energy production.

"The technical potential is our best estimate of what actually might be extracted," Blackwell said. "The question is, 'Do we have the will to go ahead and try to really develop it?'"

The new maps, such as the one displayed here at a depth of 6.5 kilometers underground, show heat sources that range from a relatively cool 50 degrees Celsius (about 122 degrees Fahrenheit) to 300 degrees Celsius.

Most of the hottest spots are in the Western U.S., but SMU officials said that newer technologies for tapping geothermal sources could take advantage of cooler hot spots in West Virginia, Texas and along the Gulf Coast.

"The eastern two-thirds of the country were always dismissed in terms of geothermal potential," said Cathy Chickering, an SMU lab geothermal specialist, adding that the newer technologies could produce energy in those areas.

As an example of the new technologies, Pickering cited the Chena Hot Springs in Alaska, where geothermal energy is being produced in water that is 74 degrees Celsius. "That's significantly cooler than the temperatures people think of as necessary for generating geothermal energy. Other technologies can exploit dry heat by injecting water underground.

The maps were funded in part using by a three-year $480,000 grant from Google. They can be viewed here.

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Graphic: One of the SMU Geothermal Laboratory's new "temperature at depth" maps of potential new sources of energy. Credit: Courtesy of SMU Geothermal Laboratory.

 

Stock plunge continues as European fears grow [Updated]

This post was updated with the market close at 1:12 p.m.

The Dow Jones industrial average closed sharply lower Wednesday, after plunging more than 400 points as fears grew that Europe's debt crisis was wreaking havoc on the continent.

Traders worried about Italy's ability to deal with its 1.9 trillion euros of debt, which was heightened by an anxiety-inducing report from Reuters that Germany and France may move ahead with a plan to shrink the number of countries using the euro.

The plan would be an effort to confront the European Union's current inability to deal with the debt crises in Greece and Italy, but some leaders on the continent fear that it would have a destabilizing effect, according to Reuters.

The Dow ended Wednesday's session down 389.24 points, or 3.2%, to 11,780.94. The Standard & Poor's 500 index was down 3.7%, or 46.82 points, to 1,229.12.

The Dow's drop was its largest since it fell 391 points on Sept. 22. But the sell-off just pushed the index back to where it was on Nov. 1.

On Tuesday, investors had taken heart from news that Silvio Berlusconi would step down as Italian prime minister after a long, rocky tenure. But on Wednesday the focus shifted from Berlusconi to the problems that Italy will continue to have, no matter who is leading the country.

"You've got a collision of raw nerves by investors and a lot of news out of Europe," said Keith Wirtz, chief investment officer at Fifth Third Asset Management in Cincinnati.

Aside from the news itself, the up-and-down nature of Europe's financial woes -- appearing to be resolved only to flare again -- is wearing on investors, Wirth said.

"It's almost like watching a scary movie where you think the bad person is dead and they pop back up again," Wirth said.

Yields on Italian government bonds rose to recent records Wednesday, signaling the distrust that investors have in Italy's ability to repay its debts.

The market yield on 10-year Italian bonds soared to 7.25%, up from 6.77% on Tuesday and the highest since 1997. The yield has surged from 5.93% just two weeks ago.

As investors fled European markets, they poured again into U.S. Treasury bonds, sending the yield on the 10-year Treasury bond below 2%. The dollar gained in value against the euro.

Just a week ago, investors were breathing a sigh of relief as the European Union appeared to develop a package to bail out Greece from its debt crisis. Attention has now swiftly turned to the problems in Italy, which is much larger than Greece. With its 1.9-trillion-euro debt, most analysts say Italy is too big for the European Union to bail out. Without a bailout, Italy could default on its bonds, sending shock waves through the international financial system.  

There are also questions about how willing Berlusconi will be to relinquish power, and how smooth any transition will be.

"Berlusconi's announcement that he would resign once the government votes through economic reforms demanded by the European Union does not appear to have had the desired effect on market sentiment," analysts at Nomura Securities wrote in a note to clients Wednesday morning. "It has become clear that the saga could run well beyond the vote on the 2012 budget law next Tuesday."

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Photo credit: Spencer Platt / Getty Images

Energy watchdog warns against reliance on fossil fuels

The Paris-based International Energy Agency warned today that world governments are locking themselves into a potentially disastrous future that depends too much on fossil fuels. The message came as the IEA released its annual World Energy Outlook.

The IEA has served as a kind of energy watchdog for industrialized nations since the 1973-74 oil crisis.

"We cannot continue to rely on insecure and environmentally unsustainable uses of energy,” said IEA Executive Director Maria van der Hoeven, adding that recent events helped illustrate the dangers, "The Fukushima nuclear accident, the turmoil in parts of the Middle East and North Africa and a sharp rebound in energy demand in 2010, which pushed CO2 emissions to a record high, highlight the urgency."

The IEA has projected a growth in world energy demand of 33% by 2035, most of it driven by China, India and emerging economies. But it also believes that the share of global energy provided by renewable sources, under current mandates, will rise from 13% currently to only 18% during the same period.

That means that the demand for oil, for example, will only continue to increase, from 87 million barrels a day in 2010 to 99 million barrels a day in 2035, the IEA said. The use of coal, the IEA predicts, will rise 65% by 2035.

“Governments need to introduce stronger measures to drive investment in efficient and low-carbon technologies," van der Hoeven said.

The IEA said the modest rise in the share of energy gained by renewables by 2035 was also predicated on a growth in government subsidies from a current $64 billion to $250 billion by 2035, a rise that is by no means certain "in this age of fiscal austerity." The IEA also noted that government subsidies of fossil fuels amounted to $409 billion in 2010.

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Photo: A National Transitional Council fighter patrols the Libyan Oil Refining Co. in Ras Lanuf, west of Tripoli. The Libyan civil war shut down that country's 1.6-million-barrel-a-day oil production. The unrest throughout the Middle East was a sign, says the IEA, of the peril of dependency on fossil fuels. Credit: Youssef Boudlal / Reuters

 

 

Who Rules the Global Economy?

Nancy Folbre is an economics professor at the University of Massachusetts, Amherst.

Most economists today don’t ask who rules the global economy, visualizing it as a decentralized competitive market that cannot be ruled. Yet new evidence suggests that global economic clout is highly concentrated among large interlocking transnational companies.

Today’s Economist

Perspectives from expert contributors.

Three Swiss experts on complex network analysis have recently examined the architecture of international ownership, analyzing a large database of transnational corporations. They concluded that a large portion of control resides with a relatively small core of financial institutions, with about 147 tightly knit companies controlling about 40 percent of the total wealth in the network.

Perspectives from expert contributors.

Their analysis draws heavily on network topology, a methodology that biologists use to good effect. An article in the British magazine New Scientist describes the research as evidence of a global financial oligarchy.

The technical details of economic network analysis are daunting, but the metaphors evoke a “Star Trek” episode: the network is described as a bow-tie shaped “super entity” of concentrated corporate ownership. One cannot help but worry about threats to the safety of the starship Enterprise.

In recent years, research on industrial organization has focused more on corporate strategy than on social consequences. A recent article in the socialist journal Monthly Review, by John Bellamy Foster, Robert W. McChesney and R. Jamil Janna, criticizes both mainstream and left-wing economists for their lack of attention to monopoly power.

Focusing on the United States, they note that the percentage of manufacturing industries in which the largest four companies account for at least 50 percent of shipping value has increased to almost 40 percent, up from about 25 percent in 1987.

Even more striking is the increase in retail consolidation, largely reflecting a “Wal-Mart effect.” In 1992, the top four companies accounted for about 47 percent of all general merchandise sales. By 2007, their share had reached 73.2 percent.

Banking, however, takes the cake. Citing my fellow Economix blogger Simon Johnson, the Monthly Review article notes that in 1995, the six largest bank-holding companies (JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley) had assets equal to 17 percent of gross domestic product in the United States. By the third quarter of 2010, this had risen to 64 percent.

Some of these companies have undergone name changes in the process. A graphic published about a year ago in Mother Jones beautifully illustrates their merger history.

Large companies are often able to offer lower prices than small ones because they can take advantage of economies of scale. On the other hand, if their market power reaches a certain level, they can increase prices as much as they like. The consequences of economic concentration for consumers are complicated by more difficult-to-trace impacts on small businesses, American workers and small businesses.

The concentration of economic power at the top distills political power in ways described long ago by the sociologist William Domhoff in his classic “Who Rules America?” The related Web site provides updated information, exhorting today’s “change agents” to conduct social scientific research seriously.

Public concerns about economic concentration are stoked by hard times. Congress authorized a full-scale investigation of the topic back in days of the Great Depression.

Seems like the time has come for a fully international update.

Stock plunge continues as European fears grow

The Dow Jones industrial average fell more than 400 points at midday as fears grew that the debt crisis was wreaking havoc on the continent.

After a morning in which traders worried about Italy's ability to deal with its 1.9 trillion euros of debt, the afternoon brought an anxiety-inducing report from Reuters that Germany and France may move ahead with a plan to shrink the number of countries using the euro.

The plan would be an effort to confront the European Union's current inability to deal with the debt crises in Greece and Italy, but some leaders on the continent fear that it would have a destabilizing effect, according to Reuters.

The Dow was recently down 408.01 points, or 3.4%, to 11762.17. The Standard & Poor's 500 index was down 3.6%, or 45.75 points, to 1230.17.

Before the Reuters report came out, leading indexes in Germany and France closed the day down 2.2%. 

Just Tuesday, investors took heart from the news that Silvio Berlusconi would step down as Italian prime minister after a long rocky reign. But Wednesday the focus shifted from Berlusconi to the problems that Italy will continue to have, no matter who is leading the country.

Yields on Italian government bonds rose to recent records Wednesday, signaling the distrust that investors have in Italy's ability to repay its debts.

The market yield on 10-year Italian bonds soared to 7.25%, up from 6.77% on Tuesday and the highest since 1997. The yield has surged from 5.93% just two weeks ago.

As investors fled European markets, they poured again into U.S. Treasury bonds, sending the yield on the 10-year Treasury bond below 2%. The dollar gained in value against the euro.

Just a week ago, investors were breathing a sigh of relief as the European Union appeared to develop a package to bail out Greece from its debt crisis. Attention has now swiftly turned to the problems in Italy, which is much larger than Greece. With its 1.9 trillion euros in debt, most analysts say Italy is too big for the European Union to bail out. Without a bailout, Italy could default on its bonds, sending shock waves through the international financial system.  

There are also questions about how willing Berlusconi will be to relinquish power, and how smooth any transition will be.

"Berlusconi’s announcement that he would resign once the government votes through economic reforms demanded by the European Union does not appear to have had the desired effect on market sentiment," analysts at Nomura Securities wrote in a note to clients Wednesday morning. "It has become clear that the saga could run well beyond the vote on the 2012 budget law next Tuesday."

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Photo: Getty Images / Spencer Platt

Dr. Wal-Mart: May offer more primary healthcare, seeks partners

It’s not enough to be a clothing store, grocer, pharmacy, auto servicer and more. It looks as if Wal-Mart Stores Inc. now plans to play doctor too.

The largest retailer in the country recently sent out a request for information to potential partners to help it offer a range of medical services without the traditionally steep prices.

In the 14-page document, Wal-Mart said that it “intends to build a national, integrated, low-cost primary care healthcare platform that will provide preventative and chronic care services … in an affordable and accessible way.”

Among the areas Wal-Mart is exploring: HIV management, obesity and arthritis monitoring, depression care, pregnancy and STD testing, drug screening, physical exams and even stress and sleep help.

Wal-Mart said it would select partner vendors for clinical care, diagnostic and preventative services, health and wellness products and more by mid-January.

Company spokeswoman Tara Raddohl confirmed that Wal-Mart had sent out the request but added that the announcement is “certainly not indicating we are offering medical services beyond our current Clinic operations.”

All this not long after Wal-Mart said that it would no longer give new part-time employees health insurance benefits.

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Photo credit: J.D. Pooley / Getty Images

Young people think college is critical but too expensive

Amid today's grim economy, young people think higher education is an even more critical stepping stone for their generation than it was for their parents.

But they worry that college is far less affordable than it was just five years ago. They fear taking on loads of student-loan debt. And they oppose proposals to cut federal financial aid.

Those are the findings of a survey released Wednesday by three public-policy groups -- the Institute for College Access & Success, Demos, and Young Invincibles. The groups polled 872 adults, ages 18 to 34, from Sept. 25 to Oct. 4.  The margin of error is 3.32 percentage points.

In a nod to the rancorous debate about the role of the federal government in backing student loans and funding other elements of higher education, the sponsors of the study stressed that respondents' opinions cut across racial, econonomic and -- most important -- political lines.

"Young adults across party lines are looking for leadership from Congress and sending them a message: make college more, not less, affordable," Jennifer Mishory, deputy director of Young Invincibles, said in a statement. "Protect the student aid that helps millions afford college and job training every year."

For example, "significant majorities" of Democrats, independents and Republicans are against reducing  access to federal Pell grants or charging interest on loans while students are still in school, according to the survey.

The poll found that 76% of people say college is less affordable today than five years ago and 73% believe graduates have more debt than they can handle. And even though it could reduce the federal deficit, 3 of every 4 respondents do not want Pell grants to be cut.

“This survey clearly shows how young adults view higher education today: It’s more important than ever but also less affordable and it comes with too much debt,” said Lauren Asher, president of TICAS.

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Photo: Students study at UCLA. Credit: Mariah Tauger/Los Angeles Times

Bud Light Platinum coming, says Anheuser-Busch as U.S. sales slip

Bud Light Platinum, a long-germinating beer concept from Anheuser-Busch InBev that’s not quite Bud Light and not really Budweiser, will finally hit stores in January.

Belgium-based Anheuser-Busch, the world’s largest brewer, said Wednesday that the new beer “appeals to a key group of beer drinkers and expands consumer occasions.”

Platinum would have 6% alcohol by volume and 137 calories. Top-selling Bud Light, by comparison, has 4.2% ABV and 110 calories while Budweiser has 5% ABV and 145 calories.

Some beer enthusiasts suggest that Platinum is Anheuser-Busch’s attempt to take advantage of growing interest in craft beers, whose popularity has also sparked a recent boom in beer gardens and micro-breweries.

As overall U.S. beer sales by volume slipped 1% last year, the craft beer industry grew by 11%, according to the Brewers Assn. trade group.

But in a post on BeerAdvocate.com, Todd Alstrom postulates that Platinum may turn out to be a “faux-spirit infused beer” such as Bud Light flavored with the taste of tequila.

The Alcohol and Tobacco Tax and Trade Bureau has already approved a proposed blue and gray label that evokes the existing Bud Light label, according to Advertising Age magazine.

Anheuser-Busch isn’t the only beverage maker changing its product line.

Coca Cola Co. made a splash this fall when it said, in a company first, that it would temporarily turn 1.4 billion classic red cans white to raise awareness for deteriorating polar bear habitats. To tap into rising interest in eco-friendly products, Coke and PepsiCo revealed new bottles this year that the companies said were made from “plant-based” sources.

Anehuser-Busch also said Wednesday that its North American beer sales slipped 3.2% in the third quarter and that it had to increase its prices by an average of 3%.

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Photo: New Bud Light Platinum label. Credit: Alcohol and Tobacco Tax and Trade Bureau

Senators think they have solved the Internet sales tax problem

After years of trying to figure out how to force Internet companies to collect sales taxes on their purchases, Sen. Lamar Alexander (R-Tenn.) thinks he and a bipartisan group of senators finally have hit on the right solution.

Alexander joined Sens. Mike Enzi (R-Wyo.) and Dick Durbin (D-Ill.) on Wednesday to introduce federal legislation that would enable states to more easily collect sales taxes for online purchases made by their residents. They are among a group of 10 senators -- five Republicans and five Democrats -- co-sponsoring the Marketplace Fairness Act.

"If I were president of an online retailer...I would look at this week in Washington, D.C., and I'd make my plans to start collecting sales taxes wherever I sold things in the United States," Alexander said.

He predicted the legislation, which would give states the option of collecting sales taxes from online retailers with annual sales above $500,000, would pass Congress. The bill is similar to legislation already introduced in the House.

"I think we've finally found that sweet spot," Durbin said.

The bill has drawn support from conservatives, including the American Conservative Union, because it leaves it up to each state to decide whether they want to collect the sales tax. And the nearly solid wall of opposition from online retailers has cracked, as Amazon.com Inc., the giant Internet retailer, has backed the proposed legislation.

Enzi said existing law, which requires consumers to voluntarily pay sales taxes for online purchases, costs state and local governments about $23 billion annually.

The legislation come as states have been trying to solve the problem on their own. California has enacted legislation requiring online retailers with subsidiaries in the state to collect sales tax from California customers.

Amazon, which has fought such efforts in other states, had threatened to launch a referendum battle over the California law. But last month, Amazon agreed to begin collecting the taxes starting in September 2012.

Amazon said Wednesday it "strongly supported" the Senate legislation. Alexander, Durbin and Enzi cited Amazon's support as an indication the proposal would not endanger online retailers.

The law would allow states to become part of a group of 24 states that have adopted a streamlined system to reduce the complications for retailers in figuring out a customer's exact sales tax. The law also would allow states to collect taxes on their own if they adopted some simplification requirements.

"It's about closing a tax loophole," Alexander said. "It's about stopping the subsidization of some businesses over others."

But some high-tech groups, along with online auction site eBay, said they oppose the legislation.

“This is another Internet sales tax bill that fails to protect small-business retailers using the Internet and will unbalance the playing field between giant retailers and small-business competitors," said Tod Cohen, eBay's vice president for government relations. "It does not make sense to expand Internet sales tax burdens on small businesses at a time when we want entrepreneurs to create jobs and economic activity.”

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Photo: Sen. Lamar Alexander (R-Tenn.) predicts legislation, which would give states the option of collecting sales taxes from online retailers with annual sales above $500,000, would pass Congress. Credit: Reuters

 

Bipartisan trio of U.S. senators to introduce federal sales tax collection bill

Congressional efforts to pass a nationwide law enabling all states to collect sales taxes on Internet purchases is gaining momentum.

A bipartisan trio of senators scheduled a Wednesday morning briefing with reporters to unveil legislation dubbed the Marketplace Fairness Bill.

The proposal is backed by Sens. Richard J. Durbin (D-Ill.), Lamar Alexander (R-Tenn.) and Michael B. Enzi (R-Wyo.).

The bill, one of at least three now in Congress, comes as California and other states battle with Internet retail giant Amazon.com over the sales tax. Amazon has agreed to start collecting sales taxes in California beginning in September 2012. The company fought an earlier state law by threatening to wage a referendum campaign to overturn the measure, calling it unconstitutional.

The new federal legislation gives states two ways to collect billions of dollars in unpaid sales taxes when consumers buy products from Internet sellers, such as Amazon, Overstock.com or EBay.com. States that become part of a multi-state legal agreement and bring their sales tax codes into conformity with other states can compel Internet retailers to charge and remit the sales tax.

But other states that don't sign the interstate compact still could collect the taxes if they adopt minimum standards to simplify the levies.

The Durbin-Alexander-Enzi bill would exempt all sellers with annual sales of less than $500,000 from collecting individual state sales taxes.

A fact sheet distributed by their offices stressed that the measure "does not create new taxes or increase existing taxes." 

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-- Marc Lifsher

Photo: An Amazon distribution center in Goodyear, Ariz. Credit: Ross D. Franklin / Associated Press

GM profit dips as revenue rises; European sales a sore point

General Motors Co. saw its profits slide 15% in the third quarter.

The nation’s largest automaker said it earned $1.7 billion, or $1.03 per share in the quarter. That compared to a profit of $2 billion, or $1.20 a share in the same period a year earlier.

Revenue rose 7.6% to $36.7 billion.

“GM delivered a solid quarter thanks to our leadership positions in North America and China, where we have grown both sales and market share this year.  But solid isn’t good enough, even in a tough global economy,” said Dan Akerson, GM’s chief executive.  “Our overall results underscore the work we have to do to leverage our scale and further improve our margins everywhere we do business.”

GM is still losing money in Europe but is profitable in North America and is running at the break-even level or better in the rest of the world.

The report continues a string of seven profitable quarters for GM, which emerged from a bankruptcy reorganization and federal government bailout in 2009. On a fully diluted basis -- which accounts for stock options and warrants in the marketplace not yet exercised, taxpayers still own about 27% of the automaker.

And with the news, GM's shares fell $1.70, or nearly 7%, in early trading to $23.34. The stock is almost $10 off its initial offering price of $33 of last November, when it started trading following the automaker's financial restructuring.

GM's financial results were helped by it spending less money to get buyers into its vehicles. Discounts and incentives for the third quarter were 15.5% less that the same period in 2010, according to auto information company Edmunds.com. So far this year, the company is spending about 8% less on sales incentives, according to Edmunds.com estimates.

At the same time, GM is solidifying its place in the auto market.

GM has grown its market share to 20.1% in the third quarter, up from 18.6% in the same period a year earlier, according to Edmunds.com.

Part of the gain comes from the supply crunch suffered by the big Japanese automakers after the that  nation's earthquake in March. 

The shortage of Japanese brands of cars -- especially Toyotas and Hondas -- allowed GM to cut back on  incentive spending, said Jessica Caldwell, an Edmunds.com analyst.

"The addition of compelling products like the Chevy Cruze also contributed to their success," Caldwell said. "But with their Japanese competitors re-emerging, GM will have a tougher fight on their hands in the coming months against refreshed  and redesigned offerings like the Toyota Camry and Honda Civic.”

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-- Jerry Hirsch

Twitter.com/LATimesJerr

Photo: General Motors employees works on a van assembly line in Wentzville, Mo. Credit: Associated Press.

America and China must crush Germany into submission

Barack Obama greets Hu Jintao, the Chinese President (Photo: AP)

As we watch Italy's 10-year bond yields near 7.5pc and threaten to detonate the explosive charge on €1.9 trillion of debt, it is time for the world to reimpose order.

You cannot allow the biggest bankruptcy in history to run its course – with calamitous domino implications – before all options have been exhausted.

One can only guess what is happening in the great global centres of power, but it would not surprise me if US President Barack Obama and China's Hu Jintao start to intervene very soon, in unison and with massive diplomatic force.

One can imagine joint telephone calls to Chancellor Angela Merkel more or less ordering her country to face up to the implications of the monetary union that Germany itself created and ran (badly).

Yes, this means mobilizing the full-firepower of the ECB – with a pledge to change EU Treaty law and the bank's mandate – and perhaps some form of quantum leap towards a fiscal and debt union.

Germany will of course try to say no. But it will pay a catastrophic diplomatic and political price, and will fail to save its economy anyway if it does so.

Having followed the German political scene closely for the last five months, it is clear to me that almost the entire German political establishment is out of its depth, ideological, sometimes smug, apt to view the EMU debt-crisis as a Calvinist morality tale, and lacking in deep understanding of what it has got itself into.

One can understand German worries about money printing – and especially the loss of fiscal sovereignty and democratic control – but matters have already moved on. It is too late for that.

As for the EU authorities with their mad contractionary fiscal and monetary policies in an accelerating slump, they seem to have achieved little by toppling two elected governments in one week.

In Italy they have already made matters worse. I doubt that much will change with "technocratic governments" in either Greece and Italy, yet immense damage has been done to democratic accountability.

The EU Project has become both dangerous and insane.

 

Is Overregulation Driving U.S. Companies Offshore?

CATHERINE RAMPELL

Dollars to doughnuts.

As my colleague Richard A. Oppel Jr. reported on Thursday, Gov. Rick Perry of Texas is arguing that companies are sending work abroad primarily because of overregulation in the United States, and not because labor is cheaper abroad.

Dollars to doughnuts.

“They did not leave to begin with just because they could find cheap labor somewhere,” said Mr. Perry, who is running for the Republican presidential nomination. “That may have been part of a formula, but it is not the reason they left. I would suggest to you they left because they were overregulated, and the cost of that regulation and the tax structure that we have in place in this country is what drove the masses away.”

Is that statement true? Are American regulations so burdensome that they are driving companies abroad?

Certainly the United States tax code is impenetrably complicated, and companies do have to deal with plenty of regulations. But even so, the United States is far friendlier to business than are emerging markets like India and mainland China, according to international analyses of regulatory climates.

For the last nine years, the World Bank has been grading countries on 10 measures of business regulation: getting electricity, enforcing contracts, protecting investors, dealing with construction permits, trading across borders, registering property, resolving insolvency, paying taxes, getting credit and starting a business.

Based on these criteria, these are the top 10 countries where it is easiest to operate a business:

That’s right: The United States comes in fourth.

Hong Kong beats the United States, but mainland China — that bugaboo of American employment protectionists — does not. Instead, China comes in 91st. Despite the higher regulatory burden, American-based multinational companies have increased their employment in China by 161,400 from 2007 to 2008, a gain of about 20 percent, according to the Bureau of Economic Analysis. (The most recent data are for 2008.) In fact, American employment in China rose 77 percent in the prior decade, from 1998 to 2008.

India does even worse, with a ranking of 132nd. Edward L. Glaeser has written for Economix before about India’s struggles with having a stable and transparent regulatory system and public sector.

As they have done in China, American companies have ratcheted up their employment in India by 43,000, or about 13 percent, from 2007 to 2008. From 1998 to 2008, the number of people in India working for American companies rose by 54 percent, according to the Bureau of Economic Analysis.

In another measure of business climate and competitiveness put out by the World Economic Forum, the United States ranks fifth, again ahead of China (26), India (56) and a host of other countries where American companies are adding jobs.

Presumably, then, American companies are not attracted to these places because the business climate is more favorable.

Who Gets Unemployment Benefits

Casey B. Mulligan is an economics professor at the University of Chicago.

It’s commonly assumed that unemployed people not receiving unemployment benefits have been unlucky enough to go without a job for so long that their benefits have run out. But often more important are limited work histories and a low propensity to take benefits that are available.

Today’s Economist

Perspectives from expert contributors.

Historically, many unemployed people have not collected unemployment payments because of ineligibility, lack of awareness or simple unwillingness to collect benefits. But some of those patterns changed during the recent recession.

Perspectives from expert contributors.

The chart below shows the number of unemployment compensation beneficiaries per unemployed person, for people 16 to 24, people 25 and over and all people 16 and over. This ratio can be less than one for all of the reasons mentioned and because some unemployed people may exhaust their benefits sometime during the calendar year.

Not surprisingly, more than three-quarters of young unemployed people do not receive unemployment compensation, in large part because they are much less likely to have the employment history that is required for eligibility. Young people are disproportionately represented among the unemployed, and their limited work histories are the primary reason why a large fraction of the unemployed does not receive benefits.

More striking is the increase to 85 percent from 50 percent among people 25 and over. Before the recession began, about a quarter of unemployed people that age had been unemployed for more than 26 weeks, when unemployment benefits were typically exhausted.

The remaining quarter of the unemployed did not receive benefits for a variety of other reasons: they may not have been interested in or aware of benefits, or they may have been ineligible because they quit their jobs (rather than lost them).

By 2010, unemployment was lasting much longer, but the time for receiving benefits had increased even more. Ninety-two weeks was a typical unemployment benefit period in 2010 (in some states it was 78 weeks, in others 99 weeks), yet only 12 percent of the unemployed 25 and over were unemployed that long.

That means as many as 88 percent of the people that age who were unemployed could have received benefits. That 85 percent received benefits tells us how rare it was for eligible people to forgo benefits during the recession.

The recipiency rate change from 2007 to 2010 is thus a combination of a decreased likelihood of exhausting benefits and an increased propensity to receive benefits early in the unemployment spell. These two factors change so much that even though the average weekly number of unemployed people 25 and over increased by more than six million from 2007 to 2009, the average weekly number of those people not receiving unemployment insurance actually fell by 700,000. (For the purposes of this calculation, I assume that, consistent with the law, nobody received unemployment benefits for a week that she or he was employed.)

This absolute decline in nonparticipating unemployed suggests that people are more willing (equivalently, less unwilling) to collect unemployment benefits than they were before the recession began.

Unemployment insurance is known for its ability to expand eligibility as a recession gets going, whether through the “extended benefits” that take effect at given jobless rates or through legislative action beyond that. But an adjustment almost as important has occurred in the labor force itself: during the recession, people increased their propensity to take advantage of available benefits.