KeNo's Housing and Economic Portal: Thursday July 14 Housing and Economic stories

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Amazon won't collect sales tax; cuts off California affiliates - (www.latimes.com) Amazon.com has terminated its relationship with approximately 10,000 Internet business partners in California after Gov. Jerry Brown signed a law that requires out-of-state electronic retailers to collect sales tax on purchases from Golden State customers. The termination took effect Wednesday evening, hours after Brown took action on a bill that will produce an estimated $317 million a year in new state and local government tax revenues. Amazon said it canceled the contracts because it does not intend to comply with the new law. "This legislation is counterproductive and will not cause our retail business to collect sales tax for the state," said Paul Misener, Amazon's vice president of global public policy. Amazon did not say whether it planned to close a research lab in Cupertino that develops Kindle e-readers and offices of other related business entities that might make it liable to collect sales taxes under the new law.

The West must stop living on the never-never - (www.telegraph.co.uk) There comes a point where attempts to stave off disaster do more harm than good. Are we reliving the 1930s or the 1970s? Looking at the catastrophe which has befallen Greece, it’s beginning to seem more like the former. The economic upheavals of the 1970s felt pretty awful at the time, but ultimately, Western economies worked their way through the decade’s inflationary traumas to enter an unprecedented period of prosperity and economic advancement. It’s much less easy to be optimistic about the outcome of today’s uniquely complex mix of economic challenges. Admittedly, there is as yet no comparison with the social deprivations of the 1930s, but even so, the inability of many countries to raise themselves out of their post-bubble slump makes comparisons with the pre-war era hard to avoid. Everything up to and including the kitchen sink has been chucked at the problem, but still we are struggling to achieve escape velocity. Both in terms of fiscal and monetary measures, policymakers are all out of ammo.

First, blame the lenders - (www.ritholtz.com) I’ve noticed something intriguing about the debate regarding the Greek default/restructuring/bailout: There is a familiar odor to the “Blame the profligate Greeks” meme now circulating. It is little more than a brilliant marketing ploy. This distraction ignores the simple reality that lending to insolvent people, institutions and countries is first and foremost the fault of the lenders. Let us start first with the Greeks, who lied their way into the EU (with the help Goldman Sach’s financial engineers). The ridiculous pay and vacation structure, the absurdly generous pension plan, the excessive spending by Athens. They are a nation that can honestly be described as tax scofflaws. Yes, Greece is a mess. Which begs the question: WHO THE FUCK WOULD LEND A DIME TO THESE PEOPLE? None of these factors were well-hidden. Everything about Greece is well known to any casual visitor, from its Welfare state to its deficits. Even the shenanigans Greece went through to join the Union European were not unknown. Rather than confront their obvious lack of qualifications, the EU turned a blind eye to it, in order to form their more perfect union. Which brings us back to the lenders. What is their role, if not to exercise expert judgment? If they cannot independently determine who is credit worthy and who is not, than why do they even exist at all? We might as well leave piles of money around and ask borrowers to self-regulate their appropriate credit limits.

UK's small businesses would be hardest hit by Greece default - (www.telegraph.co.uk) “The small and medium-sized enterprise sector is particularly vulnerable to a banking crisis,” Adam Posen, an external member of the Monetary Policy Commitee (MPC), said. “When banks contract, banks then only do gilt-edged lending. We’re already seeing some of that. “If there were to be a financial problem in the euro area, that would probably reduce liquidity for small and medium-sized enterprises in this country. That’s serious about employment, that’s serious about investment, that’s serious about inflation.” His concerns were picked up by the Bank’s Governor Sir Mervyn King, who confirmed fears that Britain’s banks “could be drawn in” to a sovereign default crisis if it spreads beyond Greece. “One of the things going on at present is a significant contraction of bank balance sheets,” he said. “The sector that is suffering most from that, is that those parts of the economy that have to rely on banks are suffering – and that is very much the SME sector.

US monetary policy: a boon to banks - (www.nytimes.com) The most pronounced development in banking today is that executives have become bolder as their business has gotten worse. The economy is clearly weaker than expected, and housing prices are falling throughout the land, eroding bank asset values. Yet regulators are on their heels in Washington as bankers and their lobbyists push back against the postcrisis regulations, even publicly condemning the new rules. In a well-covered exchange, Jamie Dimon, JPMorgan Chase’s chief executive, challenged Ben S. Bernanke, the Federal Reserve chairman, about the costs and benefits of the Dodd-Frank rules. More attention has been paid to the banker’s audacity, but the response of the world’s most powerful banking regulator was more troubling. Mr. Bernanke scraped and bowed in apology without mentioning the staggering costs of the crisis the banks led us into.