[sunnykerr]

BNP Paribas to pay $9bn to settle sanctions violations France's largest bank BNP Paribas has agreed to a record $9bn (£5.1bn) settlement with US prosecutors over allegations of sanctions violations. As part of the deal, the bank will plead guilty to two criminal charges of breaking US sanctions against trade with Sudan, Iran and Cuba. It will also be prevented from clearing certain transactions in US dollars for one year from the start of 2015. The settlement is the largest for such a case in US history. "Between 2004 and 2012, BNP engaged in a complex and pervasive scheme to illegally move billions through the US financial system," said US Attorney General Eric Holder in a press conference. In doing so, the bank "deliberately and repeatedly violated longstanding US sanctions", he said. Mr Holder added that he hoped the settlement would serve as a warning to other firms that did business with the US that "illegal conduct will simply not be tolerated". As part of its agreement with US authorities, BNP agreed to fire and not re-hire 13 individuals who were associated with the sanctions violations. 'Unfair decision' BNP said as a result of the fine it would take an "exceptional charge" of 5.8bn euros (£4.6bn) in the second quarter of this year. It said this was on top of the $1.1bn it had already set aside to cover the cost of the US penalties. However it said it expected "no impact on its operational or business capabilities", and said it would post "solid results" for the second quarter. BNP chief executive Jean-Laurent Bonnafe said resolving the issue was "an important step forward" for the bank. "We deeply regret the past misconduct that led to this settlement," he added. France has been pressing the US over the size of the fine, which almost equals BNP's entire 2013 pre-tax income of about 8.2bn euros (£6.7bn, $11.2bn). French Foreign Minister Laurent Fabius has previously said a fine of the size suggested would be "an extremely serious problem", an "unfair and unilateral decision" and "not reasonable". US regulators have recently stepped up their actions against banks that violate laws against money laundering and tax evasion, amongst other violations. Earlier in May, Swiss bank Credit Suisse agreed to a $2.6bn penalty and admitted criminal wrongdoing in helping "tax cheats" avoid paying US taxes. And in 2012, UK-based bank Standard Chartered paid a total of $674m (£419m) to US regulators and authorities for illegally hiding transactions with Iran and other countries under US sanctions. To date, the largest fine levied against a bank by US regulators for sanctions violations was the $1.9bn HSBC paid in 2012.

Sudan, I can understand.

Iran is becoming increasingly dubious, especially in light of the U.S. (albeit recently) relaxing its own embargo there.

But Cuba?

It takes a long time for things to change, apparently.

[sunnykerr]

India raises minimum export price for onions India has raised the minimum export price for onions, to maintain price levels at home, as fears grow of a shortage because of adverse weather conditions. Effective immediately, exports of onions can only take place at or above the price of $500 (£292) per tonne. That is a 67% jump from the government's recent pricing policy on a key ingredient for Indian dishes. Two weeks ago the government had set a minimum export price of $300 per tonne. But at a recent meeting the government's findings showed that wholesale and retail prices of onions have been going up. The inter-ministerial committee said in a statement it reached a unanimous decision to raise the minimum export price, keeping in view "rising retail and wholesale prices and delayed monsoon." Rainfall in June, the first of the four-month monsoon season has been below average across the country. A poor monsoon season generally stokes food inflation, in addition to delaying the exports of some crops and increase the need for imports. India has been producing, on average 18 million tonnes of onions per year. Most of the local produce is for domestic consumption. Last year, the country exported less than 10% of its onion harvest. Reviving the economy India's new prime minister, Narendra Modi, who was sworn in just over one month ago, had made tackling inflation his top priority after widespread resentment about rising prices contributed to the exit of the previous government. Mr Modi's administration is scheduled to present its first budget next week. Many observers will be looking at what measures the new government will be implementing, to tackle food inflation, manage the trade gap and create jobs for India's youth, as it attempts to revive the economy. Asia's third-largest economy has been experiencing subdued growth, due largely to a slowdown in the manufacturing sector. The latest figures showed an economic expansion of 4.6% in the three months to March, which is below analysts' forecasts and at the same pace as the previous quarter.

The story doesn't say if India exports its onions and, if so, to whom.

Because I would imagine that, in such a case, such a raise may have a signicant impact on the world.

Onions are a very basic food group for a lot, a lot, a lot of cuisines.

[sunnykerr]

Germany approves first-ever national minimum wage The German parliament has approved the country's first minimum wage, in a vote in the Bundestag on Thursday. The wage will be set at 8.50 euros (£6.80) per hour, which is higher than the equivalent in the US and UK. Angela Merkel's Christian Democrats approved the new policy as part of a power-sharing deal with the Social Democratic Party (SPD). Germany has previously relied on trade unions and business groups to fix minimum pay instead. At the moment, the country is one of seven in the 28-nation EU without a minimum wage level. The minimum wage has been the subject of much controversy in Germany, with business leaders warning that it would result in fewer jobs, or force companies to move production facilities to other countries, where labour is cheaper. Lobbyists have also claimed that the policy would make Germany less competitive. However others have been angered by concessionary measures, including a two-year grace period for some employers to phase in the policy. Additionally, the wage does not cover minors, interns, trainees or long-term unemployed people for their first six months at work. For the rest of Germany's employers, the regulations will come into effect on 1 January 2015. The wage will be reviewed annually from 1 January 2018. Regardless of the outcome of Thursday's vote, the policy will still need to be passed by Germany's upper house, the Bundesrat. Other European countries have been adjusting their minimum wage policies. In March, the UK government announced a 19p increase to the national minimum wage, bringing it to £6.50 per hour. In May, Swiss voters overwhelmingly rejected a proposal to introduce what would have been the highest minimum wage in the world, in a referendum. Under the plan, employers would have had to pay workers a minimum 22 Swiss francs (about $25; £15; 18 euros) an hour.

I didn't realize how many countries don't have a minimum wage.

I seem to have been taking a lot for granted in that regard...

I mean, I don't mean to sound completely naive, but I just wonder how they handle not having a minimum wage...

[sunnykerr]

German Chancellor Angela Merkel begins China visit German Chancellor Angela Merkel is beginning a three-day visit to China with trade issues high on the agenda. The countries are important trading partners and Mrs Merkel is travelling with a large delegation of German business executives. On Sunday she is visiting Chengdu, capital of south-western Sichuan province, where more than 150 German companies are active. The visit is Mrs Merkel's seventh to China since taking office in 2005. She will also hold talks with Premier Li Keqiang and President Xi Jinping. BBC Berlin correspondent Stephen Evans says the Chinese market is important for Germany while China is looking to Germany as the supplier of machinery and cars for its rising middle class. In the past, the chancellor has spoken out against human rights abuses in China but it is not clear if she will voice her disapproval this time, he says. At a joint business council in Beijing, the German delegation is expected to address sticking points such as fair market access for foreign companies and respect for intellectual property rights. In an article in Welt am Sonntag, German intelligence chief Hans-Georg Maassen warned that small and medium-sized German firms were at risk of industrial espionage from Chinese government agencies. "They are up against very powerful adversaries. The Chinese technical intelligence agency alone has over 100,000 employees," Mr Maassen said in an excerpt of an interview to be published on Sunday. China is Germany's second largest export market outside Europe after the US. It sold goods worth 67bn euros (£53bn; $91bn) to China last year, while imports from China topped 73bn euros.

Obviously, today's Germany is completely different from that Germany of historical war movies.

And yet, my first thought upon reading just the headline to this story was "Uh-oh, dangerous allies."

That's unfair and uncalled for, but I'm still hoping Merkel repeats her comments on the human-rights abuses inherent in China's manufacturing world.

[sunnykerr]

Greek public sector workers start 24-hour strike Public sector workers in Greece have begun a twenty-four hour strike in protest at continuing cuts in government spending. Hospitals, tax offices, prisons and archaeological sites are expected to be disrupted by the action. The workers are protesting against austerity measures, including a 40% reduction to salaries and pensions. The strike coincides with a visit from Greece's international creditors to check on the country's progress. The European Commission, the International Monetary Fund and the European Central Bank - known collectively as the Troika - are monitoring austerity measures that were a condition of a 240bn-euro (£190bn; $325bn) bailout. The lenders have praised Greece's progress in meeting the targets set. It has achieved a "primary budget surplus", with its deficit wiped out apart from interest owed on the bailout. After six years of recession, the economy is expected to return to growth this year. But the BBC's Mark Lowen says that after Greece's high court ruling that recent wage cuts to judges, the armed forces and emergency service workers were illegal and must be repaid, there will be tense discussions about the widening hole in next year's finances. The nagging question remains about how to bring down a 26% unemployment rate caused chiefly by four years of austerity, our correspondent adds.

Obviously, the timing is significant for Greece's future.

Beyond that, it's just one of the latest massive strikes.

There was taxi strikes all over Europe; the South Africa miners strike; in British Columbia (here in Canada), teachers' strike...

I'm sure I'm skipping over a fair amount in that short list.

Point is, it's hard to put any one of these in a global context.

[sunnykerr]

South Africa metal strike puts brakes on car production A two week-old strike by South Africa's metal workers is beginning to take its toll on manufacturing. Japanese car maker Toyota will halt production at its Durban assembly plant from Tuesday as the supply of components dries up. Ford and General Motors have already suspended some operations. Workers in the engineering and steel industries have been calling for pay rises of up to 15%, which employers say they cannot afford. The National Union of Metalworkers of South Africa (NUMSA) has rejected the latest offer by the employers' organisation to raise pay by 10% this year, 9.5% in 2015 and 9% the following year. Union leaders plan to meet on Tuesday to discuss intensifying the strike action. The strike is targeted at the steel and engineering sector, which makes products for industries such as mines, automotives and telecoms. Stalled Irvin Jim, NUMSA's General Secretary, said his 220,000 members would not accept anything less than a 10% annual increase over three years. Kaizer Nyatsumba, the Chief Executive Officer of Steel and Engineering Industries Federation said in a statement: "We have now done everything that we could possibly have done to end the strike." Talks are continuing in the hope that a deal could be struck in the next few days. South Africa's economy stalled at the start of this year as a five-month strike in the platinum sector undermined confidence and damaged export earnings.

I don't really know much about economics, but if miners, engineers and now auto-industry workers are all thinking about striking, does there come a point where you start wondering about the larger issues at play?

[sunnykerr]

Time Warner rejects Fox takeover bid US media giant Time Warner has rejected an initial takeover approach from rival 21st Century Fox estimated at $80bn (£46.6bn). The takeover approach by the Rupert Murdoch owned company was made last month, it was revealed. Twenty-first Century Fox confirmed in a statement on Wednesday that its offer for Time Warner had been rejected. It added it was not currently in talks with Time Warner about pursuing the deal further. "21st Century Fox can confirm that we made a formal proposal to Time Warner last month to combine the two companies," the company said. "The Time Warner board of directors declined to pursue our proposal. We are not currently in any discussions with Time Warner." Twenty-first Century Fox, owns movie studio 20th Century Fox and cable news channel Fox News. According to the New York Times, Fox offered to sell Time Warner-owned CNN as part of the takeover deal proposal for its rival in order to clear any objections US regulators might have had to the deal. A statement released by Time Warner said after lengthy discussions it had decided it was not in its best interests or those of its shareholders to accept the proposal or to pursue any further discussions with Fox. Time Warner's share price jumped some 16.35% higher in the first 20 minutes of trade on the New Stock Exchange to $82.62 per share.

Media convergence at its best, huh?

In the not-too-distant future, it'll all be monopolies.

[sunnykerr]

China suspends McDonald's and KFC's meat supplier Chinese branches of fast food chains, including McDonald's and KFC, have stopped using meat from a supplier in Shanghai following allegations it sold them out of date meat. According to Xinhua, the state-owned news agency, authorities in Shanghai have ordered the suspension of operations at Shanghai Husi Food Co. Reports by local media said that Husi had re-processed expired meat products. McDonald's and KFC said they had stopped using meat from Husi. In a statement posted on its website, translated from Mandarin, the Shanghai Municipal Food and Drug Administration said it had "decided to investigate claims of the alleged use of expired raw food material production and the processing of it in food". Shanghai Husi is the Chinese unit of US-based food supplier OSI Group. According to OSI's website, the company's unit in China "started to provide high-quality products to McDonald's China" in 1992. The unit began supplying Yum China in 2008. Yum China manages the KFC and Pizza Hut chains and its sales have been hit by recent health scares. Yum's sales dipped after a report in 2012 said two of its suppliers were providing chickens with excessive levels of antibiotics. Just as the firm was recovering from those allegations, fears of an outbreak of bird flu in the country dented its sales. Practices 'unacceptable' Benjamin Cavender from consultancy China Market Research Group, based in Shanghai said: "Yum has just started rebuilding credibility and had some decent sales which just came out for the second quarter. "I think this is really going to set them back." According to figures from research firm Euromonitor, McDonald's and Yum are the two leading fast food chains in China, based on sales. Speaking to Reuters a spokesperson for McDonald's in China said: "If proven, the practices outlined in the reports are completely unacceptable to McDonald's anywhere in the world" She added that the firm used a "few protein suppliers" in China.

Well, you can't really blame them for stopping business with a provider that sells them bad meat, right?

[sunnykerr]

For anyone wondering if the sanctions against Russia are likely to work:

Russia's surprise interest rate rise 'to curb inflation' Russia's central bank has unexpectedly raised its key bank interest rate over concerns about inflation and "geopolitical tension". The bank's board decided to raise the interest rate by 50 basis points, or half a percent, to 8% per year. Analysts said that they had not expected the move. The rate hike will come after Western sanctions over the crisis in the Ukraine were boosted. Domestic stocks and the rouble tumbled earlier this year after sanctions were implemented. The Central Bank of Russia said on Friday that it will raise the interest rate on Monday to ease inflationary pressure. "Inflation risks have increased due to a combination of factors, including, inter alia, the aggravation of geopolitical tension and its potential impact on the rouble exchange rate dynamics, as well as potential changes in tax and tariff policy," the bank said. In June, core inflation grew to 7.5%, well above the bank's forecast of up to 6.5% for the year. "The main reason for inflation acceleration was the effect of the observed rouble depreciation on prices of a wide range of goods and services," the bank said. Vulnerable The consumer price growth rate increased to 7.8% in June. The bank said that its rate hike was to try to bring the rate down to 4%. Monetary conditions have been tightening since March due to "geopolitical factors", the bank said. Research firm Capital Economics said that the rate rise had taken analysts by surprise, and could be a pre-emptive move to try to limit the amount of cash leaving Russia ahead of any new sanctions by the US and Europe. "The key concern is that another jump in capital outflows would add to downward pressure on the rouble, which in turn would exacerbate inflation pressures," said Neil Shearing, Capital Economics' chief emerging markets economist. Should conflict escalate in Ukraine, the key interest rate may have to rise to 10% or more, Mr Shearing said. "Russia's economy is more vulnerable to sanctions (or even the mere threat of sanctions) than most still seem to believe," he added.

And if that's not how that works, I apologize.

I've said it before, but this is so not my area of expertise.

It seems to me, though, that the sanctions are clearly only going to affect the ordinary people.

[sunnykerr]

US economy grows by 4% as Fed cuts stimulus The US economy grew at an annual rate of 4% during the April-to-June period, latest figures released by the US Department of Commerce have shown. The growth during the second quarter reverses the contraction seen earlier in the year. Following the report, the Federal Reserve said it would continue to ease back on its stimulus efforts. In a widely-expected moved, the Fed announced a cut to its bond purchases to $25bn (£15bn) a month from $35bn. The central bank has been buying bonds in an effort to keep long-term interest rates low and thus encourage spending, rather than saving, by businesses and consumers. Big spending "Information received since the Federal Open Market Committee met in June indicates that growth in economic activity rebounded in the second quarter," said the Fed in a statement after its two-day meeting in Washington, DC. Consumer spending - which makes up over two-thirds of US economy activity - grew by a robust 2.5% during the second quarter. Business spending increased by 14% in the world's largest economy, as businesses restocked inventories. In the previous quarter, from January to March, the US economy shrank a revised 2.1% on an annualised basis, as a result of harsh winter weather. Even with the rebound, many economists believe that the harsh winter will weight on growth for the year, which is expected to be around 1.6% - less than in 2013. Inflation fears The Fed also added that the labour market continued to be weaker than expected, and said that it planned to keep short term interest rates low for the foreseeable future, at least until mid-2015. Some have worried that keeping rates so low could spur inflation. The Commerce Department figures showed that inflation, as measured by a component of the overall GDP report, increased by 1.9% - which is within the Fed's target, but an increase from the 1.4% annualised figure reported during the January-to-March period. "Inflation has moved somewhat closer to the Committee's longer-run objective," said the Fed. Strong figures Also on Wednesday, a report by private payroll processor ADP showed that the US private sector added 218,000 jobs in July. Although official jobs figures will not be released until Friday, the figures are an encouraging sign that the US economy is finally growing at its potential. All three US stock indexes traded higher in the wake of the figures. Marc Chandler, global head of currency at investment firm Brown Brothers Harriman, wrote in a note to clients that overall, the US economic growth data was "strong". However, he pointed out that as a result of revisions to economic data going back to 1999, "it now appears the US economy grew more slowly than previously known over the past three years." The US recovery from the depths of the 2009 recession remains the weakest since World War Two.

Numbers will always be nothing more than what they are.

I'm sure the notion that the economy is showing tangible signs of recovery will do little to reassure anyone who's experienced unemployment for a long period.

Still, it seems that things are starting to solidify finally.

[sunnykerr]

Russia bans Polish fruit and veg amid sanctions war The Russian authorities have introduced a sweeping ban on imports of fruit and vegetables from Poland, depriving it of a major export market. Russia's food hygiene authorities said the imports had unacceptable levels of pesticide residues and nitrates. They earn Poland more than 1bn euros (£795m; $1.3bn) annually. Russia is Poland's biggest market for apples. The move follows EU sanctions against Russia over Ukraine - and Poland has condemned Russian actions there. Poland and some other former communist bloc countries are among the most vocal critics of Russia in the current crisis, accusing Moscow of supplying the separatist rebels in eastern Ukraine with arms and volunteers. The cost to Poland of the import ban is likely to be 0.6% of GDP (national output) by the end of the year, Polish Deputy Prime Minister Janusz Piechocinski was quoted as saying. Agriculture accounts for about 3.8% of Poland's total GDP. Polish growers plan to seek compensation from the EU for the loss of earnings. Poles have been posting images of apples on social media as a way of protesting against Russia. Ukraine exports hit On Thursday Russia announced a ban on more imported Ukrainian food: soy products, cornmeal, sunflowers and fruit juice. Earlier Russia banned Ukrainian dairy produce and canned fish and vegetables. Last year it banned Ukrainian Roshen chocolate, produced by billionaire businessman Petro Poroshenko, who is now Ukraine's president. Previously Russia also imposed such boycotts on Georgia and Moldova - former Soviet republics, like Ukraine, whose pro-Western policies have angered the Kremlin. Russia is an important export market for Georgian and Moldovan wine. Currently Russia is blocking imports of Moldovan fruit. In each case the Russian authorities say they have public health reasons for imposing a ban. In January - before its March annexation of Crimea - Russia also imposed a ban on imports of pigs and pork from the EU. The European Commission says that move was "disproportionate", closing a market worth 25% of total EU pig and pork exports. In 2013 those exports to Russia totalled 1.4bn euros. The EU has complained to the World Trade Organization, accusing Russia of breaking the rules. The Russian ban was based on some cases of African swine fever among wild boars on the EU's borders with Belarus.

I suppose it was predictable that Russia would strike back against the sanctions.

So, if ever out Eastern Europe allies start saying they're against the sanctions, we'll know why.

Also, you know these bans won't affect the Russian oligarchs.

They'll find their vegetables, no problem.

[sunnykerr]

Portugal unveils bank rescue plan Portugal's central bank has announced a plan to rescue the troubled lender Banco Espirito Santo (BES). The group will be split into two - a "good bank" with the healthy assets and a "bad bank" with the riskier ones. The "good bank", which will be called Novo Banco, will be loaned 4.9bn euros ($6.6bn; £3.9bn) from what is left of Portugal's bailout fund. The move had been expected after BES on Friday reported a record loss of 3.6bn euros for the first half of the year. Since June, when concerns about the financial health of the company first came to light, its shares have plunged 89%. 'No taxpayer risk' The company, which is Portugal's largest listed lender, will be delisted from the stock market on Monday, with shareholders set to lose almost all their investment, says the BBC's Alison Roberts. All of BES's depositors will be protected. "The plan carries no risk to public finances or taxpayers," said Carlos Cosa, Portugal's central bank governor at a late night news conference in Lisbon. "There was an urgent need to adopt a solution to guarantee the protection of deposits and assure the stability of the banking system," he added. Novo Banco will consist of the bank's core business of taking deposits and lending to home-buyers and companies. It is so far unclear what will happen to the "bad bank", most of which relates to other businesses in the Espirito Santo Group, which include tourism, health and agriculture. The cash injection for Novo Banco comes from a so far unused part of Portugal's bailout fund from the EU and the International Monetary Fund. 'Uncertainties' The idea is that Novo Banco will be run by the "resolution fund" - set up as part of the eurozone's banking reforms and funded by Portugal's financial institutions. The bank will eventually be sold off, with the proceeds used to pay back the 4.9bn euro loan from the bailout fund. In a statement, Novo Banco's chief executive, Vitor Bento said "the key uncertainties that have been hanging over the institution for some time have now been removed". "Novo Banco is also taking with it... a dedicated workforce, a strong customer focus and comprehensive banking services that help to drive the Portuguese economy," he added. Mr Bento was installed as chief executive of BES just three weeks ago as part of a management reshuffle designed to restore confidence in the bank. The European Commission said it approved of the rescue plan. "The adoption of this resolution measure is adequate to restore confidence in financial stability and to ensure the continuity of services and avoid potential adverse systemic effects," it said in a statement. Portugal itself only recently emerged from a three-year bailout plan. It was lent 78 billion euros in total by the European Union and the IMF on the condition that it implemented severe austerity measures.

They can say the shareholders will take on more of the losses, which I suppose isn't the worse thing ever, but I'll wait and see.

I have a feeling taxpayers are still going to be left with the bulk of whatever debt is accrued.

Isn't that how it usually goes?

[sunnykerr]

Walgreens to buy up Alliance Boots High Street chemist Alliance Boots is to be bought up by US pharmacy giant Walgreens. The board of Walgreens will now seek shareholder approval for the £9bn deal to go through. Walgreens bought a 45% stake in the company in 2012 and now wants to buy the remaining 55% stake. The firm said it would not use the deal to alter its current tax structure, and expects the merged company to be based in Chicago. Boots will remain at its UK headquarters in Nottingham. Cost reductions The pharmacy chain has long been a mainstay of the UK retail scene, with 2,487 stores across the country. It employs more than 60,000 people in the UK, including more than 6,500 pharmacists. The impact of the buy-out on jobs is not yet clear. Walgreens has said it will look to make cost reductions of $1bn over three years at "corporate, field and store-level" across all of its businesses. However, it will also invest "across core businesses at suitable returns to drive organic growth". Walgreens shares slumped 14% on the New York Stock Exchange on Wednesday. Investors had expected the firm to move its headquarters abroad in order to cut its tax bill. "We are excited to move forward with the next important step in becoming a new kind of global health care leader," said Walgreens chief executive Greg Wasson. The new combined company will be called "Walgreens Boots Alliance", and its headquarters will be in the Chicago area, Walgreens said. Mr Wasson will become chief executive of the new company, and Stefano Pessina, who is currently executive chairman of Alliance Boots, will report to Mr Wasson. Walgreens, which started out in Chicago in 1901, had 248,000 employees in 2013. It has 8,231 shops across all 50 US states and the federal District of Columbia, Puerto Rico, Guam and the US Virgin Islands. Tax plan ditched Walgreens said it had thoroughly evaluated moving its headquarters abroad for tax purposes, but that the move would not have been feasible under current US tax rules. A move would have put it at too much risk from scrutiny by the US tax authority, the Internal Revenue Service (IRS), the company said. "We took into account all factors, including that we could not arrive at a structure that provided the company and our board with the requisite level of confidence that a transaction of this significance would need to withstand extensive IRS review and scrutiny," Mr Wasson said. In addition, public opinion may have been against a move for tax purposes, the company added. In May, pharmaceutical company Pfizer dropped a bid for UK company AstraZeneca following an outcry that it was partly motivated by a wish to buy the firm for tax reasons. Being domiciled abroad is attractive for US companies because of the relatively high rate of US corporation tax compared with other countries.

Well, here's something I didn't know.

I didn't realize U.S. corporations actually paid such high taxes, in the end.

[CityGal]

Yes, US Corporations have some of highest tax rates levied and are the largest tax paying group to the government. It is one of the factors hurting the US economy and it's inability to expand the economy. The same holds true for other non-Global, smaller US companies and mom & pop owners as well. High taxes and other factors are stifling growth.

-----------------------------

Here's new article on the Amazon vs. Hachette business battle.

http://www.nytimes.com/2014/08/08/bu...le-amazon.html

Plot Thickens as 900 Writers Battle Amazon By DAVID STREITFELD AUG. 7, 2014 ROUND POND, Me. — Out here in the woods, at the end of not one but two dirt roads, in a shack equipped with a picture of the Dalai Lama, a high-speed data line and a copy of Thoreau’s “Civil Disobedience,” Amazon’s dream of dominating the publishing world has run into some trouble. Douglas Preston, who summers in this coastal hamlet, is a best-selling writer — or was, until Amazon decided to discourage readers from buying books from his publisher, Hachette, as a way of pressuring it into giving Amazon a better deal on e-books. So he wrote an open letter to his readers asking them to contact Jeff Bezos, Amazon’s chief executive, demanding that Amazon stop using writers as hostages in its negotiations. The letter, composed in the shack, spread through the literary community. As of earlier this week 909 writers had signed on, including household names like John Grisham and Stephen King. It is scheduled to run as a full-page ad in The New York Times this Sunday. Amazon, unsettled by the actions of a group that used to be among its biggest fans, is responding by attacking Mr. Preston, calling the 58-year-old thriller writer “entitled” and “an opportunist,” while simultaneously trying to woo him and his fellow dissenters into silence. Mr. Preston has dismissed Amazon’s suggestions that he is a “human shield” for Hachette. Credit Craig Dilger for The New York Times Mr. Preston is unswayed. “Jeff Bezos used books as the cutting edge to help sell everything from computer cables to lawn mowers, and what a good idea that was,” he said. “Now Amazon has turned its back on us. Don’t they value us more than that? Don’t they feel any loyalty? That’s why authors are mad.” This latest uproar in Amazon’s three-month public battle with Hachette comes at a vulnerable moment for the Internet giant, which is rapidly transforming itself into an empire that not only sells culture but creates it, too. Amazon does not want to be seen as hostile to content creators, one of the four groups it says on its investor relations web page it is expressly set up to serve. But it also has to price their creations cheaply enough to draw hordes of consumers, while at the same time making enough of a profit to satisfy investors. It is a complicated balancing act. Some argue it is impossible. Amazon just surprised Wall Street by saying it may lose more than $800 million this quarter, potentially wiping out its profits for the last three years, partly because creating video content is expensive. The prospect of this unexpected loss has raised questions about whether Amazon’s money-losing ways are finally catching up with it — and whether that is the real reason it is making new demands on publishers like Hachette. Amazon has been forced by the controversy to shed its longtime practice of refusing to comment on anything. Asked about the writers’ rebellion, it issued a statement that put the focus back on Hachette, bringing up the Justice Department’s antitrust lawsuit against Hachette and other publishers in 2012: “First, Hachette was willing to break the law to get higher e-book prices, and now they’re determined to keep their own authors in the line of fire in order to achieve that same end. Amazon has made three separate proposals to take authors out of the middle, all of which Hachette has quickly dismissed.” Mr. Preston pointed out it was Amazon that put the authors in the line of fire in the first place. Russell Grandinetti, Amazon’s vice president for e-books, has called Mr. Preston twice in recent weeks, trying to get him to endorse the company’s proposals to settle the dispute, as well as to pipe down. The most recent proposal would have Amazon selling Hachette books again, but with Hachette and Amazon giving their proceeds to charity. No thanks, Mr. Preston said. A proposal that weakens Hachette by cutting its profits was not in the interests of Hachette’s authors. But he took the opportunity to ask Mr. Grandinetti why Amazon was squeezing the writers in the first place. His response, according to Mr. Preston: “This was the only leverage we had.” Amazon declined to comment. “It’s like talking to a 5-year-old,” Mr. Preston said. “ ‘She made me hit her!’ No one is making Amazon do anything.” No one is making Mr. Preston do anything, either. He dismisses Amazon’s suggestions that he is a “human shield” for Hachette, one of the Big 5 publishers in the United States. He and the other writers say they are acting independently. Most, in any case, are not published by Hachette. Mr. Preston is not sure how he has found himself in charge of a group calling itself Authors United. “I don’t like fighting,” he said. “I’m a wimp. When the bullies in seventh grade said they would meet me in the parking lot after school, I made sure I was nowhere near it.” Other writers who signed the letter include Robert A. Caro, Junot Díaz, Malcolm Gladwell, Lemony Snicket (the pen name of Daniel Handler), Michael Chabon, Michael Lewis, Jon Krakauer, Scott Turow, George Saunders, Sebastian Junger, Philip Pullman and Nora Roberts. “We feel strongly that no bookseller should block the sale of books or otherwise prevent or discourage customers from ordering or receiving the books they want,” the letter states. Some writers wholeheartedly supported the letter but were afraid to sign, Mr. Preston said. A few signed it and then backed out, citing the same reason. The Times ad, which cost $104,000, was paid for by a handful of the more successful writers. Mr. Preston’s longtime writing partner, Lincoln Child, is among those with qualms. The ideal solution would be for authors to be self publishing, with full control of their publicity and a relatively easy way to distribute... “I am very apprehensive,” Mr. Child said. “Not all David and Goliath stories end happily for the little guy. But I think Doug did the right thing.” Amazon supporters point to a rival petition on Change.org. It is a rambling love song to the retailer. Signers sometimes append invective decrying the New York publishers for having the audacity to reject novels. “There is something wrong with a system that picks those who use their elitist ideas of art to choose who is published,” reads a comment. The petition has 7,650 signatures. By comparison, a 2012 Change.org petition calling on Amazon to ban the sale of whale and dolphin meat drew over 200,000 signatures. Mr. Preston is not one of those writers who checks his Amazon ranking on a regular basis, or even totes up his sales. He would rather be writing. But he recently thought he should get some numbers from Hachette. They came in the other morning, and they seemed worth sharing with his wife, Christine. About half his book sales used to come from Amazon. But since the retailer started discouraging orders, his paperback sales are down 61 percent and his e-book sales are down 62 percent. His last novel, written with Mr. Child and published by Hachette in November, was “White Fire.” A week before publication, 25,000 Amazon customers had ordered a copy. Their new novel, “The Lost Island,” came out Tuesday. It had only a few thousand pre-orders, all made before Amazon lowered the boom on Hachette and stopped selling forthcoming Hachette books. Mrs. Preston, a photographer, studied the bleak sheet. “It’s gotten personal,” she said. “I knew you were going to take a hit, but I had no idea it would be like this.” “Are you worried?” Mr. Preston asked. “Because you should be. What if Amazon says, ‘Why should we sell Doug Preston’s books? He’s a thorn in our sides.’ Guess what? All this goes away.” There is a lot to go. The shack itself is negligible, but the house a few steps away is spacious and splendid. It is set on 300 acres that have been owned by the Preston family for much of the last 100 years. Amazon has tried to use Mr. Preston’s success against him, dismissing him as “rich” and thus not in touch with the masses of struggling writers. “It makes me laugh,” he said. “Tech company billionaires are calling a mere writer ‘rich.’ I think they’re rattled.” A version of this article appears in print on August 8, 2014, on page A1 of the New York edition with the headline: Plot Thickens as 900 Writers Battle Amazon. 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[sunnykerr]

I'm assuming a lot of the foreign buy-outs we here about, as the story points out, also shows the way in which U.S. corporation get around having to pay their taxes, though.



The Amazon thing is really gross. There's just no other way to look at it.