Financial Times Blog

15 January 2019

Question: According to MSN: Money, what are ten (10) quirky Social Security facts you need to know?

Finance – Pg. 7

–        A cut-throat sales culture in the retail division, where perverse incentives led employees to open millions of false accounts and mis-sell other products, was ignored or brushed aside by the board and senior management until the story went public in 2016.  Wells’ first response when the problems emerged was mass firings of lower-level employees.  More than 5,000 were forced out

–        But Wells considers itself more than just another bank: it was on top of the industry in returns, valuation and reputation

–        A strong culture of credit risk management was matched by precious little culture of operational risk management

–        …primary checking accounts – a key yardstick for what retail customers think of the bank – are increasing at a rate of nearly 2%, recovering from zero growth immediately after the scandal broke, but still less than the 5% in the two years before

–        Financial services is a sticky business.  Customer relationships, once won, are hard to lose

–        Wells’ key challenge, then, is winning new customers

Car sales in China fall for first time in 28 years – Pg. 15

–        Vehicle sales in China fell for the first time in almost three decades last year, as the end of government tax breaks and a wider economic slowdown reduced consumer demand for new cars in the world’s largest market

–        Sales of passenger vehicles were 23.8m in 2018, down 4.1% from the previous year

–        China’s overall vehicle sales, including trucks and buses, were down 2.8% to 28.1m last year…

–        A wave of defaults by peer-to-peer lending companies that provided high-interest consumer loans, which accounted for as much as 10% of car purchases, has also hit spending power, especially in rural areas that depended on the sector

Answer: (1) Staying in school pays for children getting benefits; (2) Parents can sometimes get survivor benefits; (3) Just got married? You might still have to wait; (4) Multiple ex-spouses can get benefits if they qualify; (5) Remarrying sometimes affects your benefits – but not always; (6) Being in prison suspends Social Security benefits; (7) You can get a do-over on when you claim; (8) You can get a new Social Security number; (9) Social Security numbers don’t get reused; (10) There’s a strangely prices time limit to fix mistakes

14 January 2019

Question: What is the current level of U.S. Debt?

China thwarts market entry for foreign card-payments groups – Pg. 1

–        China’s central bank has refused to acknowledge applications submitted by Visa and Mastercard to process renminbi payments, even though Beijing removed formal obstacles to international participation in the $124tn market in 2017

–        Visa and Mastercard’s efforts to enter China date back at least a decade.  The WTO ruled in 2012 that China was discriminating against foreign payment providers, nearly two years after the US government filed the complaint.  China’s new application rules, published in 2017, were aimed at resolving the issue

–        In November, American Express became the first foreign card scheme to win initial approval to establish a renminbi bank card-clearing company

–        However, Amex’s approval was for a new 50-50 joint venture with a  Chinese partner, even though the rules permit wholly foreign-owned ventures

US shutdown hits Wall St as approvals for IPOs and deals are put on hold – Pg. 13

–        National security reviews of acquisitions conducted by the Committee on Foreign Investment in the US, the powerful inter-agency group in Washington that vets takeovers, have been suspended

–        The SEC has stopped examining proxy and registration statements, and its staff will not provide interpretive advice to companies or dealmakers seeking feedback on regulatory filings

India becomes fourth-largest market for vehicle sales – Pg. 13

–        India has displaced Germany as the world’s fourth-largest market for vehicle sales by volume and is on track to take the number three position from Japan within three years

–        India’s car market has lots of capacity for further growth.  Fitch estimated that car density – measured by the number of passenger cars per 1,000 people – was just 27 last year, versus 145 in China and 570 in Germany

Answer: $21.9tn, of which $16.0tn is owed by the public

12 January 2019

Question: According to MSN: Money, what are ten (10) things you cannot deduct from your taxes anymore?

Federal employees feel the financial pain of US government shutdown – Pg. 3

–        …US government shutdown hit on December 21….

–        For many of the 800,000 federal workers affected, reality hit yesterday – the first day that many did not receive their payslip as a result of the continuing government impasse…

–        ….about 420,000 federal employees continuing to work during the shutdown.  They were prohibited from applying for temporary assistance or temporary aid because his employer would consider it “double-dipping” and he could lose his job

Global Economy – Pg. 7

–        The day after suddenly announcing that he was ditching the presidency of the World Bank for a Wall Street private equity firm, Jim Yong Kim made an appearance before staff to muster an explanation

–        Mr Kim’s abrupt, voluntary exit has not only triggered confusion and frustration for staff at the bank but raised profound questions about the leadership and the future role of an institution that has been a centerpiece of the US-led international economic order

–        Created in the aftermath of the second world war in conjunction with the IMF to help reduce global poverty, the World Bank’s influence has been waning as it has faced growing competition from private sources of capital and regional development banks and much more assertive bilateral lending by China to many poor countries

–        Moreover, since it has traditionally been led by an American, it is now facing the prospect – much sooner than many inside the Bank could fathom – of a new president chosen by Donald Trump….

–        (Prof Note: I say this in ignorance of specifics, but does this not say something about Mr Kim who leaves the bank early and in, apparent, disarray?!  Did Mr Kim not make a commitment to the Bank and to the globe?!)

–        Mr Kim is joining Global Infrastructure Partners, …

Answer: (1) Personal exemptions; (2) Alimony; (3) Nonmilitary job-related moving expenses; (4) Home equity loan interest; (5) Theft losses; (6) Casualty losses not from a disaster declared by the president; (7) Employee business expenses; (8) Investment expenses; (9) Tax preparation fees; (10) Legal fees paid on an award, judgment or settlement