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North American Edition
15th September 2021
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Former U.S. intel operatives admit hacking American networks for UAE
Three former U.S. intelligence operatives who helped the United Arab Emirates spy on its opponents have admitted to violating U.S. hacking laws and exporting sensitive military technology without gaining the necessary permission of the U.S. government. Marc Baier, Ryan Adams and Daniel Gericke struck a deal in U.S. federal court in Washington, D.C.,  to avoid prosecution. The trio were part of a clandestine unit named Project Raven that hacked into the accounts of human rights activists, journalists and rival governments. “Hackers-for-hire and those who otherwise support such activities in violation of U.S. law should fully expect to be prosecuted for their criminal conduct,” Acting Assistant Attorney General Mark J. Lesko for the Justice Department’s National Security Division said. “This is a clear message to anybody, including former U.S. government employees, who had considered using cyberspace to leverage export-controlled information for the benefit of a foreign government or a foreign commercial company,” Assistant Director Bryan Vorndran of the FBI’s Cyber Division observed, adding “There is risk, and there will be consequences.”
Supply chain crisis will leave permanent scar, UPS warns
The supply chain crisis unleashed by the pandemic will inflict lasting damage on the globalization driven by multinationals, according to a top executive at UPS. Sharp swings in consumer demand, a battered airline industry and disruptions to global shipping have created the severest crisis in years, warned Scott Price, president of UPS International. “A lot of companies are coming to us saying ‘where is the best place to put manufacturing and assembly?’” he said. “There’s an understanding that reliance on stretched supply chains puts you at risk.” He added that the damage wrought on the aviation industry had laid bare the vulnerability companies face in moving large amounts of cargo in the belly of passenger aircraft. Industry estimates suggest it will take until 2025 for air travel to fully recover on long-distance routes.

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Two regional Fed chiefs sell stock holdings to address ethics concerns
Eric Rosengren and Robert Kaplan, the leaders of the Boston and Dallas Federal Reserve Banks, have said they would sell off individual stocks they own, invest the proceeds in diversified indexed funds or cash savings and cease trading in individual securities. Both men defended their actions as consistent with their respective bank’s code of conduct policies, but said they didn’t wish to create any perception that their trading of securities and investments would conflict with their role in setting monetary policy. 
D.C. AG targets Amazon’s first-party business in amended antitrust complaint
Washington, D.C. Attorney General Karl A. Racine has expanded his antitrust complaint against Amazon to include the company's relationships with wholesale retailers. New sections recently added to the district’s legal complaint, first filed in May, focus on Amazon’s contracts with so-called first-party sellers, companies that sell to Amazon, which in turn sells products to customers. The earlier complaint focused on third-party sellers who directly sell to consumers via the Amazon marketplace, alleging that the company acted anti-competitively by effectively blocking them from offering better deals off Amazon’s site. According to the updated suit, the deals allow Amazon to lower its prices to beat out competitors and make the wholesalers who provided it with goods compensate it for any lost profit. This in turn leads wholesalers to increase their prices elsewhere, including when selling to Amazon’s rivals, thus making it harder to compete with the e-commerce giant, Mr Racine alleged. Amazon spokesman Jack Evans pointed to a past statement the company issued about the lawsuit, which said: “The DC Attorney General has it exactly backwards – sellers set their own prices for the products they offer in our store.” The statement added: "The relief the AG seeks would force Amazon to feature higher prices to customers, oddly going against core objectives of antitrust law." Amazon has filed a motion to dismiss the lawsuit.
Everseen's court data with Walmart set for 2022
Irish-based technology company Everseen’s lawsuit against Walmart over claims it stole technology to build a competing product is set to go before a jury trial in the US next year. Chief US district judge Susan O. Hickey has published an initial scheduling order outlining dates for various stages of the case. This included a date for a jury trial in Texarkana, Arkansas, commencing the week beginning August 15th, 2022.
Applications to start a business declined in August
Applications to start new U.S. businesses declined in August for just the third time this year and the first time since June as the recent surge in coronavirus cases put entrepreneurs on hold. The Commerce Department said on Thursday that business applications fell 4.7% to a seasonally adjusted 427,842 last month. The data is derived from business applications for tax identification numbers. There were a seasonally adjusted 50,564 applications from corporations, down 2.5% from July. Applications for businesses with planned wages totaled 51,240, a decrease of 3.7% from the prior month. They fell in all four U.S. regions, led by a 6.2% drop in the South, and were lower across all industries except in mining, real estate and unclassified services. The largest drop was in utilities, which recorded a 12.8% decline, with other sizable drops in accommodation and food services, as well as the arts and entertainment category.
Fed officials prepare for November reduction in bond buying
Federal Reserve officials will seek to forge agreement at their coming meeting to begin scaling back their easy money policies in November.  Many of them have said in recent interviews and public statements that they could begin reducing, or tapering, their $120bn in monthly purchases of Treasurys and mortgage-backed securities this year. While they are unlikely to do so at their meeting on September 21st-22nd, Fed Chairman Jerome Powell could use that gathering to signal they are likely to start the process at their following session, on November 2nd-3rd. Under the plans taking shape, officials could reduce those purchases at a pace that allows them to conclude asset buying by the middle of next year. “I think it’s clear that we have made substantial further progress on achieving our inflation goal,” New York Fed President John Williams said. “There has also been very good progress toward maximum employment.”
Democrats advance plan requiring employers to offer retirement plans
Democrats have included a provision in their $3.5tn healthcare, education and climate bill that would require companies without retirement plans to automatically enroll workers in individual retirement accounts. The House Ways and Means Committee on Thursday voted 22-20 to approve the measure. Starting January 1st 2023, the provision would require employers to deduct at least 6% from workers’ paychecks and automatically increase that savings rate by one percentage point a year until reaching 10% of pay. Companies exempt from the requirement, aside from those that already offer retirement plans, would include those with five or fewer employees and those which have been in business for less than two years. The measure wouldn’t cover employees under 21 and would require employers to automatically enroll part-time employees working more than 500 hours a year for at least two consecutive years. Employees would be free to opt out or change their savings rate. Companies that fail to comply would be fined $10 per employee per day for up to three months.
Mastercard to buy CipherTrace as bet on crypto deepens
Mastercard has agreed to buy blockchain analytics company CipherTrace, which sells cryptocurrency anti-money laundering services, as the payments company deepens its bet on digital assets. Based in Menlo Park, California, CipherTrace develops tools that help businesses and law enforcement root out illicit digital currency transactions. The deal comes after Mastercard announced in February that it would start supporting selected cryptocurrencies directly on its network this year. “Digital assets have the potential to reimagine commerce, from everyday acts like paying and getting paid to transforming economies, making them more inclusive and efficient,” said Ajay Bhalla, president of cyber and intelligence at Mastercard. “With the rapid growth of the digital asset ecosystem comes the need to ensure it is trusted and safe. Our aim is to build upon the complementary capabilities of Mastercard and CipherTrace to do just this.”
House Democrats float 26.5% corporate tax rate
Senior House Democrats are coalescing around a draft plan that could raise as much as $2.9tn to pay for most of President Joe Biden’s sweeping expansion of the social safety net by increasing taxes on the wealthiest corporations and individuals. The preliminary proposal would see the corporate rate rise to 26.5%, with the top rate for individuals boosted to 39.6%, a 3% surtax on people making more than $5m, and the top capital gains rate lifted to 28.8% from 23.8%. The plans, aimed for a Ways and Means Committee vote later this week, will face challenges as Democrats try to determine how far they are willing to go in reversing the 2017 tax cuts and imposing stiffer burdens on corporations and high-income households. Some Senate Democrats, including Joe Manchin of West Virginia and Mark Warner of Virginia, have said they don’t want to raise the corporate tax rate above 25% from its current 21%. The Biden administration’s capital-gains plan has been facing sustained opposition from rural Democrats. The administration plan would impose taxes on unrealized gains at death, with a $1m per-person exemption and special rules to protect farms and family owned businesses.
U.S. service members’ tax penalties in Germany weren’t ‘on my radar,’ says Blinken
A U.S.-Germany treaty dispute that has exposed large numbers of U.S service members and Defense Department support staff to tax penalties in the European country was not “on my radar,” Secretary of State Antony Blinken has said. The tax dispute centres on the interpretation of the NATO Status of Forces Agreement, which Blinken, as head of the U.S. State Department, oversees. In some cases, U.S. military personnel in Germany have been penalised as much as six figures, while still having to pay their U.S. taxes. U.S. military personnel can expose themselves to the German tax hit if they are viewed to be in Germany for reasons beyond their military service – such as being married to a German or owning German property. However, Americans serving elsewhere, such as Italy, Spain, Britain, Japan or South Korea, face no similar financial situation.
U.S. states where borrowers owe the most in student debt
Student debt has grown significantly over the past several decades in the U.S. The Federal Reserve estimates that, in the second quarter, Americans owed $1.73tn in student loans, a 3% annual increase despite a lengthy pause on federal student loan interest rates and the elimination of billions of federally held student loans by the Biden administration. WalletHub recently compared the 50 states and the District of Columbia based on 11 measures of indebtedness, including average student debt totals and earning opportunities,  to determine which states struggle the most with student debt. They identified West Virginia as the state most impacted by student debt, with data suggesting that borrowers from the state experience some of the worst ratios of student debt to income, even when adjusted to account for the local cost of living. The second worst state for student debt holders is New Hampshire, while the least serious student debt difficulties could be seen in California and Utah. 

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