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Update on WTO GATS, gambling, and Antigua

The Register provides an update to the tiny Antigua case.

The case originated back in 2003 after the prosecution of Jay Cohen, an expatriate American who ran a sportsbook out of Antigua called the World Sports Exchange, and ended up doing time in a federal prison – in Las Vegas, of all places – for violation of the Wire Act. The high profile prosecution led the Antiguan authorities to file a formal complaint with the WTO, because the US continued to allow US companies to offer various forms of remote domestic gambling while aggressively prosecuting Antiguan companies under legislation originally drafted to fight the mob. A fuller treatment of the case can be found here, but, suffice to say, the WTO sided with the Antiguans.

The ramifications of that defeat are still rippling around the world, and major American trading partners such as the EU and Japan have begun lining up behind the Antiguans in defense of WTO principles. Potential damages are really starting to pile up – the AP reported today that EU online gambling firms are pressing for $100 bil in damages.

Traditional trade sanctions would do little for a small country like Antigua, so the WTO rules allow smaller countries the option of suspending their own WTO commitments, and the Antiguans have been threatening to suspend their intellectual property obligations to the US. That in turn ultimately caught the attention of powerful Silicon Valley and Hollywood interests, and last week the mainstream American press suddenly discovered that something important was happening.

Antigua filed a claim with the WTO for $3.4 bil to compensate the little island nation for the economic fallout resulting from repeated American legal attacks on Antigua-based internet gambling providers. The US has countered with an offer of – ahem – $500,000. The EU, however, is the largest and most dynamic online gambling market in the world, and the US is trying to buy that claim out by offering to liberalize such dynamic, hot-growth economic sectors as warehousing and storage services.

JohnA sent the link. The Register has links to past articles on the progression of the case if interested.

As industry chases entry into markets, notice the small ripples like Intellectual Property rights of a case like Antigua grows large when the crack in the dike is opened for bigger players, and the bargaining begins to widen openings. The US has of course played the same way.

Will the changes catch regular people off guard? I imagine most people in the revolutionary Renaissance and Enlightenment period missed the enormity of change as they went about making a living. Most of us do. Of course, what is actionable information in this regard?

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In the words of a founder

Thomas Jefferson wrote a dire warning about banks and debt:

‘If the American people ever allow the banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children will wake up homeless. I sincerely believe the banking institutions (having the issuing power of money) are more dangerous to liberty than standing armies. My zeal against these institutions was so warm and open at the establishment of the Bank of the United States (Hamilton’s foreign system), that I was derided as a maniac by the tribe of bank mongers who were seeking to filch from the public.’

Some problems are intractable and somewhere in between what we think they will be. Seems like we are still hashing this out to some degree.

Update: The opinion was deleted to let Thomas Jefferson talk for himself.

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Feisty one lays it on the line to Americans

“When you’re up to your eyeballs in alligators, it’s hard to remember that you came to drain the swamp.”

As an anti-war crazy left wingnut, I suggest we look further abroad than our own noses for the Swampthing, the movie version actually being a love story and not a horror movie.

Hat tip to Tom Paine Dispatch for this tip on looking to deal with swamps and critters.

How To Drain The Swamp
Rami G. Khouri
September 26, 2005

Rami G. Khouri is editor-at-large of the Beirut-based Daily Star newspaper, published throughout the Middle East with the International Herald Tribune.

“The big question that challenges us all in the Middle East is this: how, in practical terms, does the Arab world make the transition from mild autocracies, benign monarchies and a few police state dictatorships to more democratic rule? How do we “drain the swamp”?

George Bush and Tony Blair have offered their way, via war in Iraq and an aggressive reform agenda throughout the region. Arab citizens and political actors have other suggestions, and have been constantly meeting and working to find the keys that unlock the current rigid systems and open the door to democratic transformations. I attended one such meeting in Beirut last week that provides valuable insights into both the sentiments and the transformational mechanics of the Arab quest for democracy, accountability and just plain decency in how power is exercised in our societies. Here was a group of concerned, thoughtful, and realistic Arab citizens from different countries bringing down the lofty rhetoric of freedom and democracy to the practical level of how to change society

We don’t need fancy new organizations, complex international mechanisms or slightly forced speeches by leaders of large Western democracies to drain the swamp and promote democracy and freedom in the Arab world. Anybody who wishes to move in this direction should simply listen more carefully to the thoughts of those who live in the swamp. Ordinary Arabs must enjoy the right to meet and discuss, to organize and act, and to have access to a fair system of laws and judicial courts. These three practical steps are the focus of activists throughout this region, and they should stimulate more serious strategies for political change in the Arab world by friends abroad.”

Read from the MIT Center on International Studies about Arabs and the NYT article on women and Saudi Arabia.

This sort of thing might be more compelling than any war on nation states. You know that, so talk about it.

Media Matters reports a Rush L statement:

“During the September 26 broadcast of his nationally syndicated radio show, Rush Limbaugh called service members who advocate U.S. withdrawal from Iraq “phony soldiers.”

Do not push that button. In my eyes you eliminate yourself from the conversation.

Democratic leadership say things, Republican leaders say things, but it is for the perspective of the American voter, not the benefit of the ME. For that we have to get out of the box, look around to unfamiliar arguments, and consider something other than our own reflection. Some of the points about US leadership are salient and related to ME, but are not part of the swamp.

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Slavery in my backyard and a thousand points of light

Local slaves from Mexico, Russia, and…

(At the lecture) Coonan also said that it’s happening within the Chinese community as well, with traffickers promising young women a better life in America. According to Coonan, in nearby Quincy, a Chinese restaurant has Hispanic women working there and living in a small shed behind the restaurant. Many of these restaurants also have their employees living in the kitchen after hours as well.

“I think the most shocking thing is that everything is close to home,” said Danielle May, who attended the lecture. “This is not something that you see on the international news being in Cambodia, or Thailand. This issue is happening at home. I think it’s scary. Quincy is 45 minutes away and people are being enslaved. This is shocking that this is 2007 and slavery is still going on.”

According to the lecture, countries lose U.S. aid if they do not enforce trafficking laws. The Victims of Trafficking and Violence Protection Act of 2000, stipulates that if a victim testifies on being trafficked, they receive a Traffic Visa (T-Visa), which allows them permission to work in the U.S. for about three years and then they are eligible to apply for a green card.
Most Americans are stunned to find slavery still exists in the United States, let alone the rest of the world. Unlike the state-sanctioned, race-based crime of the past, modern-day slavery is largely an illegal, global phenomenon, fueled primarily by commercial gain.

Some are slaves in factories and farms. Others-primarily women and girls-are slaves in brothels in Mumbai, Amsterdam or Las Vegas. Still others are held in domestic servitude. Children are kidnapped as child soldiers, forced to become street beggars, or lured and abused as slaves to an underground industry known as child sex tourism.

Government alone can’t stop the international slave trade. That’s why a coalition of private citizens, nonprofit organizations and civic leaders are nurturing and leading a 21st century abolitionist movement by spotlighting the issue, increasing public awareness, pushing countries to do more, and producing programs to help throw the traffickers in jail and protect the survivors.

We are beginning to understand the tricks of today’s human traffickers, which are the same tactics as those used by the slave masters of old: deception, fraud, coercion, kidnapping, beatings and rape.

Victims obtained from a foreign country are often lured by deceptive schemes. They usually arrive indebted to their handlers, seldom know where they are, rarely speak the local language and have no one to turn to after the traffickers seize their passports and documentation.

Under the control of the traffickers, victims are subjected to overwhelming physical and mental pressures. Confined by beatings and threats against their families back home, trafficking victims surrender their dignity to poor living conditions and long hours in order to enrich their captors.

Trafficking victims-whether from across the ocean or the street-learn to trust no one, not even the police. Coerced to cooperate, trafficking victims become skilled at hiding in plain sight, disguising their shame from society, ever wary of discovery and fearful of retribution.

There’s a movement afoot. It asks each of us to be responsible, find out what is happening, pay attention to the signals, and insist on nothing less than abolition.

Categories of slavery are listed by the Department of State.

1-888-373-7888 is a number to call to ask for advice and report concerns:scared, foreign, unable to leave premises, demeanor is not natural might indicate employment is not voluntary.

Funding for a two year study of and help for slaves in the US under the The Victims of Trafficking and Violence Protection Act of 2000 was won in 2003 in the area and then not renewed. Grants are notoriously fleeting.

The idea that there are 100,000 actual ‘domestic servitude’ slaves in the US is so stunning for most of us that in my opinion it simply slips away in denial rather than outrage, even for me.

Aside from the psychological aspects of slavery, 90% in one study of ‘freed slaves’ report that sending money home (meaning most of the money) was more important, as the perception was the money sent was needed to help avoid catastrophe at the slaves’ home of origin, or local traffickers would harm family that remained behind if trouble was caused. Powerful forces indeed.

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Ownership society and taking responsibility for performance

This NYT article reports on new structuring of ownership of nursing home chains by private equity funds.

Habana is one of thousands of nursing homes across the nation that large Wall Street investment companies have bought or agreed to acquire in recent years.
Those investors include prominent private equity firms like Warburg Pincus and the Carlyle Group, better known for buying companies like Dunkin’ Donuts.
As such investors have acquired nursing homes, they have often reduced costs, increased profits and quickly resold facilities for significant gains.
But by many regulatory benchmarks, residents at those nursing homes are worse off, on average, than they were under previous owners, according to an analysis by The New York Times of data collected by government agencies from 2000 to 2006.

For instance, Florida’s Agency for Health Care Administration has named Habana and 34 other homes owned by Formation and operated by affiliates of Warburg Pincus as among the state’s worst in categories like “nutrition and hydration,” “restraints and abuse” and “quality of care.” Those homes have been individually cited for violations of safety codes, but there have been no chainwide investigations or fines, because regulators were unaware that all the facilities were owned and operated by a common group, said Molly McKinstry, bureau chief for long-term-care services at Florida’s Agency for Health Care Administration.
And even when regulators do issue fines to investor-owned homes, they have found penalties difficult to collect.
“These companies leave the nursing home licensee with no assets, and so there is nothing to take,” said Scott Johnson, special assistant attorney general of Mississippi.
Government authorities are also frequently unaware when nursing homes pay large fees to affiliates.
For example, Habana, operated by a Warburg Pincus affiliate, paid other Warburg Pincus affiliates an estimated $558,000 for management advice and other services last year, according to reports the home filed.
Government programs require nursing homes to reveal when they pay affiliates so that such disbursements can be scrutinized to make sure they are not artificially inflated.

However, advocates for nursing home reforms say investors exaggerate the industry’s precariousness. Last year, Formation sold Habana and 185 other facilities to General Electric for $1.4 billion. A prominent nursing home industry analyst, Steve Monroe, estimates that Formation’s and its co-investors’ gains from that sale were more than $500 million in just four years. Formation declined to comment on that figure.

One nursing home had 22 companies/affiliates with its operation. The intent is to make the nursing home licensee asset poor, and skim off cash flow at probably 20% (MY GUESS) return since this is the favored ‘new economy’ rate.

Clients and regulators cannot sort out who does what for and to whom. Seems to be the way ownership of mortgages was divided into 3 or 4 different bundles that constricted any reasonable response by companies to the mortgage hullaboo.

I still have a primitive need to know where to throw my bricks in times of a company needing to take responsibility. Hopefully we can find a better way to spend all this sloshing around liquidity. Reminds me of a financial laundry at the moment.

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Correct wringing of hands

Do you remember that silly men’s room hand washing post cactus posted a while ago?

I could hardly believe this video on WebMD. You never know what might stick in your mind from reading Angry Bear!

Update:
What’s the difference between government bonds and men?

Bonds mature.
(Now this makes the post legit.)

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Currency and regional partnerships

Malaysia unpegs the ringgit from the US dollar

The bank said the current valuation of the ringgit is consistent with the country’s economic fundamentals and takes into consideration “developments in our trading partner countries” — an apparent reference to China.Malaysian had insisted previously that it is not working with China on changes to their currency exchange rates, although it had indicated it may be prepared to take action if China moves on its yuan.”Changes in the international and regional financial and economic environment have made it important for Malaysia to have a stable exchange rate against its major trading partners, in particular, the regional countries,” it said.Consequently, the stability of the ringgit exchange rate against the regional currencies will become increasingly important, and stability can best be achieved by maintaining the value of the ringgit against a trade-weighted index of Malaysia’s major trading partners, it said.

The Emirate’s Bank anouncement suggests that even though Kuwait unpegged from the US dollar, what is stopping other countries in the area from unpegging their currencies is only the high price of oil. High inflation is taking a toll. The central banking aspect as well is only a portion of the money in play, with significant amounts of money not in view:

Sometimes, for currency anchors, there is a price to pay – mainly during times when the currency is tied to a weaker currency that gets eroded in the market place. But when the peg is to a robust currency with momentary correction, is the choice of most central banks of the world, is the currency of the world’s largest economy and as yet, the dominant one, then any debate on chopping or changing is perhaps premature and would have to be dealt with, not at the currency level but on the basis of overall trade-weighted export pricing and other geo-political considerations.

While these are only a few examples, it does appear that China’s trading partners will follow their lead, and the ME oil producing nations are being squeezed to do the same unpegging eventually. If oil prices fall, the pressure to unpeg increases.

I wonder what other currencies are in play.

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WTO GATS and strategies of regional hubs Part 1

Now India is outsourcing outsourcing.

One of the constants of the global economy has been companies moving tasks – and jobs – to India, where they could be done at lower cost. But rising wages for programmers here, a strengthening currency and companies’ need for workers in their clients’ time zones or for workers who speak languages other than English are challenging that model.
At the same time, India is facing increased competition from countries seeking to emulate its success as a back office for wealthier neighbors: China for Japan, Morocco for France and Mexico for the United States, for instance.
Looking to beat back these new rivals, leading Indian companies are opening back offices in those countries, outsourcing work to them before their current clients do.
Many executives in India now concede that outsourcing, having rained most heavily on India, will increasingly sprinkle tasks across the planet. The future of outsourcing, said Ashok Vemuri, an Infosys senior vice president, is “to take the work from any part of the world and do it in any part of the world.”
In May, Infosys’s Indian rival, Tata Consultancy Services, announced a new back office in Guadalajara, Mexico; it already has 5,000 staffers in Brazil, Chile and Uruguay. Cognizant Technology Solutions, with most of its operations in India, has now opened back offices in Phoenix, Arizona, and in Shanghai. Wipro, another Indian company, has outsourcing offices in Canada, China, Portugal, Romania and Saudi Arabia, among other locations.
Last month, Wipro said it was opening a software development center in Atlanta that would hire 500 programmers in three years.
In a poetic reflection of the new face of outsourcing, Wipro’s chairman, Azim Premji, told Wall Street analysts this year that he was considering hubs in Idaho and Virginia, in addition to Georgia, to take advantage of “states which are less developed,” Premji said.
Infosys is building an archipelago of back offices – in Mexico, the Czech Republic, Thailand and China, as well as in low-cost regions of the United States. The company wants to become a global matchmaker: Any time a company wants work done somewhere else, even just down the street, Infosys hopes to get the call.

“It’s the equivalent of a bachelor’s in computer science in six months,” said a trainee, Melissa Adams, 22. Adams graduated last spring from the University of Washington with a business degree and turned down Google for Infosys.
Still, even as outsourcing moves in new directions, old perceptions linger.
When Jeff Rand, 23, another American trainee, told his grandmother, “I’m going to be moving to India and working as a software engineer for the next six months, she said, ‘Maybe I’ll get to talk to you when I have a problem with my credit card.’ “
“It took me about two or three weeks to explain to my grandma that I was not going to be working in a call center,” Rand said with a rueful chuckle.

The value of cultural affinities and language are being put into the mix as companies compete through both WTO GATS and other agreements. Multi-lateral trade agreements and such are increasing as Doha negotiations have ground to a stop. The same trend is being played out in Europe as US firms (finance, banks, lawyers) expand into that market.

I believe the trend in countries cooperating in regional trading partner policies, for example the responses to de-pegging or considering de-pegging national currencies from the US dollar, will accelerate the process.

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Canada, Canada

:) Canadian reserves make mouths water:

When the U.S. Department of Energy formally acknowledged these reserves in 2003, it vaulted Canada’s oil reserves from 21st to 2nd in the world, behind only Saudi Arabia. It’s little wonder then that the U.S. Energy Policy Development Group has described the tar sands as “a pillar of sustained North American energy and economic security.” Canada’s so-called “black gold” has come to be regarded as an abundant, secure, and affordable source of crude oil.

I would add that the Canadian side of the Great Lakes can be siphoned off to the US southwest and Wisconsin, and the water also used to sort out the oil from the sand pits in Alberta. Since we can leave the bad oily stuff there in Canada we do not have to buy it, which makes the oil a lot cheaper. The remainder of the water can be used to raise the level of the US side of the Lakes to aid our shipping industry.

Since Australia does not exist except in imagination, maybe they are safe. Not much water, that’s for sure. Although the markets are full of imaginative ideas. Hmmmm.

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