U.N. agency warns of recession linked to 'imprudent' monetary policy

Mon, October 3, 2022 at 9:05 AM·2 min read
By Emma Farge

GENEVA (Reuters) -A United Nations agency warned on Monday of the risk of a monetary policy-induced global recession that would have especially serious consequences for developing countries and called for a new strategy.

"Excessive monetary tightening could usher in a period of stagnation and economic instability" for some countries, the United Nations Conference on Trade and Development (UNCTAD) said in a statement released alongside its annual report.

"Any belief that they (central banks) will be able to bring down prices by relying on higher interest rates without generating a recession is, the report suggests, an imprudent gamble," it said.

The report said that higher interest rates, including hikes by the U.S. Federal Reserve, would have a more severe impact on emerging economies, which already have high levels of private and public debt. The report, entitled "Development prospects in a fractured world", also warned of a potential debt crisis in the developing world.

"The current course of action is hurting vulnerable people everywhere, especially in developing countries. We must change course," UNCTAD Secretary-General Rebeca Grynspan told a press conference in Geneva.

Asked about solutions, she suggested there were other ways to bring inflation down, mentioning windfall taxes on corporations, better regulations to control commodity speculation and efforts to resolve supply-side bottlenecks.

"If you want to use only one instrument to bring inflation down...the only possibility is to bring the world to a slowdown that will end up in a recession," she said.

Overall, UNCTAD revised down its 2022 global growth projection to 2.5% from the earlier 2.6% estimated in its March assessment. It expects growth of 2.2% in 2023.

The International Monetary Fund also warned last month that some countries may slip into recession next year and revised its growth forecast downwards.

(Reporting by Emma Farge;Editing by Bernadette Baum and Aurora Ellis)

U.N. agency warns of recession linked to 'imprudent' monetary policy




Mon, October 3, 2022 at 9:05 AM·2 min read
By Emma Farge

GENEVA (Reuters) -A United Nations agency warned on Monday of the risk of a monetary policy-induced global recession that would have especially serious consequences for developing countries and called for a new strategy.

"Excessive monetary tightening could usher in a period of stagnation and economic instability" for some countries, the United Nations Conference on Trade and Development (UNCTAD) said in a statement released alongside its annual report.

"Any belief that they (central banks) will be able to bring down prices by relying on higher interest rates without generating a recession is, the report suggests, an imprudent gamble," it said.


The report said that higher interest rates, including hikes by the U.S. Federal Reserve, would have a more severe impact on emerging economies, which already have high levels of private and public debt. The report, entitled "Development prospects in a fractured world", also warned of a potential debt crisis in the developing world.

"The current course of action is hurting vulnerable people everywhere, especially in developing countries. We must change course," UNCTAD Secretary-General Rebeca Grynspan told a press conference in Geneva.

Asked about solutions, she suggested there were other ways to bring inflation down, mentioning windfall taxes on corporations, better regulations to control commodity speculation and efforts to resolve supply-side bottlenecks.

"If you want to use only one instrument to bring inflation down...the only possibility is to bring the world to a slowdown that will end up in a recession," she said.

Overall, UNCTAD revised down its 2022 global growth projection to 2.5% from the earlier 2.6% estimated in its March assessment. It expects growth of 2.2% in 2023.

The International Monetary Fund also warned last month that some countries may slip into recession next year and revised its growth forecast downwards.

(Reporting by Emma Farge;Editing by Bernadette Baum and Aurora Ellis)

Advanced economies need to change course on monetary policy as excessive central bank tightening risks sparking a global recession, UN trade group says


Jennifer Sor
Mon, October 3, 2022 

United NationsBebeto Matthews/AP Photo

Advanced economies need to change course on monetary policy, as central bank tightening could be sparking a global recession.

The idea that central banks can lower inflation with more rate hikes and avoid a recession is "an imprudent gamble," a UN trade group said.

The group trimmed its growth estimates for the global economy this year, and expects an even bigger slowdown in 2023.

Advanced economies need to change course on their monetary policy, as central bank tightening could be sparking a global recession, according to a United Nations trade group.

"Excessive monetary tightening could usher in a period of stagnation and economic instability," the United Nations Conference on Trade and Development warned in a statement on Monday, shortly after releasing a report on growing recession risks.

In the report, the UN group trimmed its growth estimates for the global economy from 2.6% to 2.5% this year, and expects an even bigger slowdown in 2023, with just 2.2% growth next year.

"Any belief that [central bankers] will be able to bring down prices by relying on higher interest rates without generating a recession is, the report suggests, an imprudent gamble," the group added.

That's largely due to global inflationary forces, with nations being rocked by soaring energy prices amid Russia's war on Ukraine as well as lingering supply-chain issues from the pandemic. Eurozone inflation touched a record 10% last week despite a series of aggressive rate hikes from the European Central Bank, and US inflation also remains stubborn to Fed policy, only cooling slightly to 8.3% in August.

It's supporting the case for more aggressive hikes to come from major economies, as central bankers scramble to get inflation back down to target levels. But the level of tightening needed to rein in prices risks screeching the global economy to a halt, the UN report warned. That particularly applies to the Fed and other advanced economies, as the dollar and euro encompass large chunks of world trade and debt volume.

"What does seem likely is that the impact of Fed tightening will be more severe for vulnerable emerging economies with high public and private debt," the report said, calling a debt crisis a "very real possibility" for developing countries.

It echoes warnings from other experts who have sounded global recession alarms as central banks attempt to undo the damage from ultra-loose monetary policies during the pandemic.

Top economist Nouriel Roubini warned on Monday there are signs that a debt crisis has already started, and a hard landing of the economy before the end of the year is now the baseline scenario.

Noble laureate Paul Krugman has also warned that the Fed's rate hikes could have an outsized effect on the global economy.

New British PM Liz Truss’ First Month in Power Is Officially a Record-Breaking Sh*tshow

Dan Ladden-Hall
Mon, October 3, 2022 

Ian Forsyth/Getty

Shortly after making it into the final two for the Tory leadership race in July, Liz Truss sent out a message of thanks to her supporters with an oddly prophetic typo. “I’m ready to hit the ground from day one,” she wrote.

What was once just an amusing typo has turned out to be a well-kept promise. Even with Truss’ first two weeks in office being eclipsed by the death of Queen Elizabeth II, the new regime has already managed to inflict a surprising array of disasters on the country and itself. The so-called “mini-budget” delivered by fledgling finance minister Kwasi Kwarteng on Sept. 23 has been at the heart of the mayhem.

Liz Truss is Britain's New Prime Minister—God Help Her (and Us)

Kwarteng, a longtime Trus ally, is a free-market radical who, like Truss, believes that unfettered economic growth will cure the United Kingdom’s legion of social ills. It may have come as a bit of a surprise when the free market, in turn, had a radically negative reaction to Truss and Kwarteng’s proposals, which represented the biggest cuts in British tax in half a century.

At a time when spiraling energy and food costs threaten to leave millions of Britons choosing between heating or eating this winter, Kwarteng’s flagship financial policies included removing a cap on banker’s bonuses and removing the top 45 percent rate of income tax, which would only benefit those earning over $168,000 a year.

But the breathtaking tax cuts, coupled with a promise to tackle rising energy bills through massive government borrowing, immediately sent the markets into meltdown as confidence in British finances evaporated. The pound fell to an all-time low against the dollar, British stocks and bonds plummeted, and the Bank of England was forced to take emergency action to avoid a potentially catastrophic collapse of pension funds, warning that a “material risk to U.K. financial stability” had been created by the statement.

Members of Truss’ own party reacted with horror. “Liz is fucked,” one former Conservative minister told Sky News after the mini-budget, adding that Tory lawmakers had already started formally requesting a vote of no confidence in her leadership over fears that she would “crash the economy.” And even Conservative party heavyweights Michael Gove and Grant Shapps on Sunday denounced the plans as “tin-eared,” adding that the cuts had “managed to alienate almost everyone, from a large section of the Tory parliamentary party taken by surprise to the City traders who will actually benefit.”

Kwarteng also faced calls to resign for the turmoil—which grew louder when it emerged that he’d attended a champagne reception attended by hedge fund managers who also allegedly benefited from the chaos in the market. But despite the uproar, it looked like for all the world like Truss and Kwarteng would stick to their guns and press ahead with $50 billion of unfunded tax cuts.

On Sunday, Truss was asked during a BBC interview if she was “absolutely committed to abolishing the 45 percent tax rate for the wealthiest people in the country.” She said yes. By Monday morning, that absolute commitment was absolutely dead. “We get it, and we have listened,” Kwarteng wrote in a tweet announcing that the tax cut would no longer go ahead.

The humiliating U-turn was reportedly taken to avoid an even more humiliating open rebellion of Conservative lawmakers in the House of Commons planning to block the tax cut going through. Losing such a sensitive vote so early in an administration would be a disaster for Truss and her allies and their grip on power.

But Conservative lawmakers can already feel their party’s grip on the electorate more broadly slipping away, with fears growing that they will face decimation at the next election. Staggering polling figures published last week put the opposition Labour party 33 points ahead of the Tories—the biggest lead the party has enjoyed in Britain since the 1990s, according to data analytics firm YouGov. Even more alarming for Tory lawmakers was the fact that the mammoth lead was partly explained by an exodus of people who had voted for the Conservatives at the last general election in 2019 switching allegiance to Labour.

With the Conservative party’s annual conference underway this week, Truss will have to find some way to reestablish her credibility within the party. So somber is the mood at the event that even a traditional karaoke event has been canceled. Delegates arriving at the conference have even been subjected to abuse by angry protesters outside the venue. But the message inside is arguably even more upsetting for the Tories’ rank and file. Over the weekend, veteran British pollster Sir John Curtice informed gobsmacked attendees that they were heading for electoral disaster, with Truss now as unpopular as Boris Johnson when he was toppled.

To say she’s only been prime minister for less than a month, that’s a truly incredible achievement.

'Widespread dismay': Ex-Tory minister calls on Liz Truss to call general election


Emily Cleary
Mon, October 3, 2022 

Liz Truss smiled as she made her way to the Tory party conference on Tuesday (Getty)

Nadine Dorries has called for Liz Truss to call a general election after accusing her of reneging on a series of policies put in place when Boris Johnson was prime minister.

Dorries, one of Truss's earliest and most vocal supporters during the summer's leadership campaign against Rishi Sunak, revealed her "dismay" at Truss's performance since entering Number 10.

On Monday, Truss and chancellor Kwasi Kwarteng buckled in the face of widespread criticism from the public and Tory MPs and axed her plans to abolish the top rate of income tax that would benefit the most wealthy.

And later, Dorries applied more pressure with criticism of other steps taken by Truss, tweeting: "Widespread dismay at the fact that 3 years of work has effectively been put on hold. No one asked for this.

"C4 sale, online safety, BBC licence feee [sic] review - all signed off by cabinet all ready to go, all stopped."

"If Liz wants a whole new mandate, she must take to the country."

Nadine Dorries has blasted the PM for putting 'on hold' policies she had actioned while culture secretary (Twitter/Nadine Dorries)

Former ally Dorries is just one of a number of senior Tories to criticise Truss's performance since she became PM less than a month ago.

Last week a former Tory minister MP told Sky News the new Prime Minister is "f*****" and the party were already looking to bring her down following the disastrous mini-budget on 23 September.

The unnamed MP said: "They are already putting letters in as think she will crash the economy. The tax cuts don’t matter as all noise anyway - mainly reversing back to the status quo this year.

"The issue is government fiscal policy is opposite to Bank of England monetary policy - so they are fighting each other. What Kwasi [Kwarteng] gives, the Bank takes away."

Nadine Dorries was one of Truss's most vocal supporters during the Tory leadership contest. (Getty)

Another Tory MP told the broadcaster that Friday's announcement - which included reversing a 1.25% hike in National Insurance - had been a "s***show".

They said they weren’t aware of any coordinated plan to vote down government legislation, but added they would not rule it out.

On Monday morning Truss and Kwarteng abandoned their plan to abolish the top rate of income tax.

The pair had planned to scrap the 45% rate on earnings over £150,000 in a move to be paid for by borrowing. But despite defending the policy for more than a week despite widespread criticism from fellow party members as well as financial experts, the proposal was reversed on Monday morning in an embarrassing U-turn.

Kwasi Kwarteng and Liz Truss appeared stony-faced at the Tory party conference after announcing an embarrassing U-turn on tax policies on Monday morning (Getty)

Dorries' call for an election came as Labour pushed further ahead in the polls.

Last week, a YouGov/Times poll placed Labour 33 points ahead of the Conservatives, believed to be the largest lead for Labour in any recorded poll since 1998, when the-then PM Tony Blair was enjoying his "honeymoon period".

By Monday lunchtime almost half a million people had signed a petition calling for a general election. The petition must now be considered for debate in Parliament.

HERE COMES DOOM & GLOOM

UK
Kwasi Kwarteng won't rule out new wave of austerity after massive U-turn on 45p tax cut

Ross McGuinness
Mon, October 3, 2022 

Chancellor Kwasi Kwarteng at the Conservative Party annual conference in Birmingham on Monday. (PA)

Kwasi Kwarteng has refused to rule out austerity measures to pay for controversial tax cuts.

Kwarteng and prime minister Liz Truss abandoned their doomed plan to abolish the top rate of income tax for the highest earners.

The government had planned to scrap the 45% rate on earnings over £150,000 in a move to be paid for by increased borrowing.

But in a sensational U-turn, following fierce opposition from the public and politicians, Kwarteng announced on Monday that the plan had been ditched.

However, Kwarteng's budget last month also contained tens of billions of additional tax cuts, including: cancelling the planned increased in corporation tax; reversing the planned 1.25 percentage point rise in National Insurance contributions; bringing forward the 1p cut to the basic rate of income tax to April 2023 - one year earlier than planned; and major changes to stamp duty.

Minutes after the plan was scrapped, Kwarteng refused to rule out a new era of austerity to pay for these additional cuts.

Speaking from the Conservative Party conference in Birmingham, where he is due to give a speech later on Monday, he told BBC Radio 4’s Today programme: “You will see what our spending plans are in the medium-term fiscal plan but I’m not going to be drawn into that.”

And in a separate interview with LBC Radio, Kwarteng refused to rule out any more U-turns on his controversial mini-budget, which also scrapped rules which capped bankers' bonuses.

He would only say: "I'm totally focused on delivering the growth plan."

In the same interview, amid some confusion, Kwarteng indicated the government does not plan to introduce austerity measures.

"I don't think so at all," he said, when asked whether he thought there would be a return to austerity. "What we're trying to focus on is growing the pie, growing the economy, because without growth we won't get good public services.

"Without growth we won't have higher standards of living. Without growth we won't have enough funding for the NHS. So that's the focus of my chancellorship, that's what the prime minister's focused on and I think if we can grow this economy we can have a much more successful society."

Something that the chancellor did rule out, however, was more tax cuts, declining to repeat his previous pledge after his mini-budget that there is “more to come”.

He told the BBC: “There will be no tax cuts ahead of a budget.”

When asked if he planned to introduce cuts to public services, Kwarteng insisted the government was sticking to its comprehensive spending review (CSR) from last year, meaning it would not raise spending in line with inflation, which currently stands at just under 10%.

He said: “I think it’s a matter of good practice and really important that we stick within the envelope of the CSR."

Chancellor Kwasi Kwarteng speaking to LBC Radio at the Tory conference in Birmingham. (PA)

At the weekend, levelling-up secretary Simon Clarke, one of Truss's allies, said the UK must reduce public spending to help fund the government's tax cuts.

In an interview with The Times, he criticised the "very large welfare state" and said Britain has been living in a "fool's paradise".

As recently as July, a leading economist warned that the UK is facing "austerity by stealth" because of soaring inflation.

Jonathan Portes, professor of economics at University College London, said the UK's public services were facing austerity by the back door because inflation meant money promised to schools and hospitals is not stretching as far.

On Monday, Labour MP John McDonnell said he feared "the Tories are now planning another severe round of austerity to pay for the tax cuts to corporations and increased borrowing costs caused by them".

Liberal democrat leader Sir Ed Davey said on Monday that Kwarteng should be sacked.

Read more: Mini-budget 'doesn't disproportionately benefit high earners' says Treasury minister

“I welcome this U-turn but the unfortunate truth is that this Conservative government is in complete chaos," he told Sky News.

“I don’t think the chancellor has the credibility to make all the changes that are needed and I think he has to go, and I think that would really restore confidence.

“We need a far more radical overhaul of the budget, we need it soon and we need it to be done in a transparent way, and I come to the conclusion, regrettably, that I think this chancellor can’t deliver that.”

Analysis-Britain's budget bomb still ticking despite tax U-turn



Mon, October 3, 2022 
By Andy Bruce

LONDON (Reuters) - Prime Minister Liz Truss's U-turn on abolishing Britain's top rate of income tax may be only a first step on the path to restoring fiscal credibility, with investors warning that the government still needs to show that it can afford its plans.

On the face of it, Britain's financial markets look in better shape than last week, when the pound crashed to a record low against the U.S. dollar and government bonds tanked in response to finance minister Kwasi Kwarteng's economic plans.

The BoE had to step in on Wednesday to restore order to Britain's long-dated government bond market, which seized up when pension funds rushed to raise cash amid the turbulent market reaction to Kwarteng's Sept. 23 "mini budget".

While the pound edged up and government borrowing costs fell on Monday after the decision to reverse the planned cut to the highest rate of income tax, investors still had a clear message: Kwarteng must convince them that he can finance his growth plan without ruining Britain's reputation for managing the budget.

"The answer will be clear in a few weeks' time when the Bank of England's emergency measures end," said Jane Foley, head of forex and rates strategy at Rabobank.

The BoE's bond-buying intervention is due to finish on Oct. 14.

"UK assets, the pound and gilts are not out of woods yet," Foley added.

The worry is that wild market conditions could return quickly unless Truss and Kwarteng acknowledge that their promises of future economic growth on their own are not enough to explain how a high-spending, low-tax agenda will be funded.

Any relapse into severe dysfunction for the gilt market would pile pressure on the BoE to keep buying bonds - even with inflation close to its highest level in 40 years.

This, economists say, could open the door to full-blown "fiscal dominance", when a central bank's mission to control inflation is compromised by its involvement in government financing - anathema for investor confidence.

"The issue was not tax changes announced at the mini-budget but the institutional 'scorched earth policy' that preceded it. UK risk premia will likely only pull back if that is addressed," said Simon French, chief economist of brokerage Panmure Gordon.

Orla Garvey, senior portfolio manager of fixed income at Federated Hermes, said last week that yields on long-dated gilts were likely to shift higher once the BoE's intervention ends.

Others too warned that gilts still look vulnerable.

British government bonds have mostly failed to recoup the historic losses incurred in the aftermath of Kwarteng's announcement - with the exception of the long-dated debt subject to the BoE's support.

"We have to see what happens when the Bank of England stops buying next month. It's just a sticking plaster," one pension fund manager told Reuters last week.

Kwarteng hopes markets stay calm enough to allow him to wait until Nov. 23 before announcing his next budget plans. Unlike his mini-budget, they will come with forecasts for the economy and the public finances from Britain's budget watchdog.

 

HOME TRUTHS

Truss has repeatedly blamed Britain's market crash on global financial conditions.

While bond prices for many governments have fallen sharply in response to rising U.S. interest rates, in September 10-year British gilts suffered their steepest calendar-month loss since at least 1957, according to a Reuters analysis of Refinitiv and Bank of England data.

It was also the heaviest fall for any Group of Seven country's 10-year bonds since 1987.

One cabinet minister, Simon Clarke, said in an interview with The Times on Friday that the worst of the market anxiety had passed. But economists, including those from major U.S. banks, are not so sure, even after Monday's U-turn.

"The key question now is whether this signals a broader change in tack with respect to this government's fiscal approach," analysts at U.S. bank Citi said. "Markets are yet to be convinced."

The slump of Truss's Conservative Party in opinion polls "is likely to add to the pressure for the PM to (change) course, especially given the initial weakness of Truss' position," they said in a note to clients.

If the government fails to calm markets, the pressure on the BoE is likely to build as the Oct. 14 end-date for its emergency bond-buying approaches.

"If the Bank resists fiscal dominance and does indeed stick to its mandate, the pound should stabilise - but the costs will be substantial," said academic economist Jonathan Portes, senior fellow at the UK in a Changing Europe think tank.

In this scenario, which could see the BoE raising interest rates sharply, homeowners, businesses and public services would bear the cost of Kwarteng's tax cuts.

"But if it doesn't, the pound will continue to fall, and inflation will stay higher and longer, and the UK will become a steadily less attractive place to invest," Portes said. "Again, we will all pay the price."

(Reporting by Andy Bruce; Additional reporting by Kate Holton, Tommy Wilkes, Huw Jones and Sinead Cruise; Editing by Hugh Lawson)

Where does the UK go from here to fix budget crisis?

Mon, October 3, 2022 

LONDON (Reuters) - New Prime Minister Liz Truss and finance minister Kwasi Kwarteng reversed their controversial plan to scrap Britain's top rate of income tax on Monday, saying the furore was distracting from their broader economic plans.

Below is a summary of key dates ahead for Truss and Kwarteng as they try to stabilise financial markets and reassure investors - and members of their own Conservative Party - about their plans, which have caused turmoil in financial markets.

THIS WEEK - CONSERVATIVE PARTY CONFERENCE

Kwarteng is due to speak to the annual conference of the ruling Conservative Party after 4 p.m. (1500 GMT) on Monday, and Truss will speak on Wednesday, giving them a chance to try to move forward after the top income tax rate debacle.


COMING WEEKS - OUTLINE ECONOMIC REFORM PLANS

Truss and Kwarteng want to speed up Britain's slow economic growth rate, something they say will help fund the broader tax cuts they still plan to make. Details of how they will overhaul Britain's complex planning system, the rules that govern the City of London, immigration and other so-called supply-side reforms are expected in the coming weeks.

OCT. 7 - BUDGET WATCHDOG SENDS DRAFT FORECASTS TO KWARTENG

Britain's independent Office for Budget Responsibility is due to send a draft of its economic forecasts to Kwarteng, part of the process of preparing his first full budget statement on Nov. 23. The OBR is not expected to publish the draft forecasts despite the clamour among investors for more clarity on the outlook for the economy.

OCT. 14 - BANK OF ENGLAND'S BOND-BUYING DUE TO EXPIRE

The Bank of England last week launched an emergency move to buy long-dated British government bonds after the sudden surge in yields put pension funds at risk. The buying programme is only due to run until Oct. 14, exerting pressure on the government to calm investors before then.

OCT. 21 - THE RATINGS AGENCIES HAVE THEIR SAY

Ratings agencies Moody's and S&P Global have scheduled Oct. 21 as the date for their next updates on Britain's sovereign credit rating. Last week, S&P cut the outlook for its AA rating to "negative" from "stable," suggesting a downgrade could be coming. Moody's described the tax cut plans as "negative" for Britain's creditworthiness but stopped short of actually changing the rating's outlook.

OCT. 31 BANK OF ENGLAND SET TO START SELLING BONDS

The BoE had been due to start selling bonds from its roughly 840-billion-pound stockpile of government debt this week - a key part of its reversal of years of huge stimulus for the economy - but it postponed the first sale operations until Oct. 31 while it carries out its new temporary bond-buying programme.

NOV. 3 - BANK OF ENGLAND INTEREST RATES ANNOUNCEMENT

The BoE look set to raise interest rates sharply at its next scheduled policy meeting as it responds to the increased inflation pressure brought by the government's broad tax cut plans. A Reuters poll showed most economists expected a three-quarters-of-a-percentage-point increase which would be the biggest since 1989, taking Bank Rate to 3.0%. Almost as many economists forecast a bigger increase to 3.25%.

NOV. 23 - KWARTENG'S BUDGET DAY

After outlining his tax cuts on Sept. 23, Kwarteng is due to announce his first full budget on Nov. 23 when he is expected to spell out how he plans to address the huge increase in borrowing required to fund his programme. The OBR will also publish its forecasts for the economy and the public finances.

TO COME - LAWMAKERS VOTE ON TAX CUT PLANS

The government must seek parliamentary approval for its tax-cut plans but, facing unrest about its plans among some Conservative lawmakers, has not yet set out a timetable. Most of the measures are not due to come into force until April next year. But a tax cut for home buyers is immediate and must be put to a vote in parliament by late November, according to the Institute for Government. The government could introduce a Finance Bill after Kwarteng's Nov. 23 fiscal announcement, to secure approval for most of the tax changes, or it could introduce a specific bill to deal with the less contentious stamp duty change before an overall vote at a later date.

($1 = 0.8908 pounds)

(Additional reporting by Kylie MacLellan; writing by William Schomberg; editing by Mark Heinrich)

UK
Chart shows mini-budget still benefits the rich even after 45p tax rate U-turn

Ross McGuinness
Mon, October 3, 2022 

The chancellor's mini-budget still favours the rich despite a U-turn over scrapping the 45p rate of tax, economists say. (Getty Images)

Kwasi Kwarteng and Liz Truss are dealing with the fallout after they abandoned their plan to abolish the top rate of income tax for the highest earners.

Kwarteng said the policy, announced in his mini-budget on 23 September, to axe the 45% rate on earnings over £150,000 had become a “terrible distraction” amid widespread criticism.

A number of Tory MPs had gone public with their opposition to the plans, with rebels branding them “politically tin-eared”.

However the chancellor and PM are pressing on with other tax cutting measures announced last week – which still benefit higher earners.


Who benefits most from the government's mini-budget?

 (Resolution Foundation/Yahoo)

Analysis by the Resolution Foundation think tank reveals the richest 5% of British households are still set to gain £3,500 on average next year.

This is almost 40 times more than the £90 cash gain for the poorest households.

“Despite today’s U-turn, the richest 5% of households still stand to gain far more than the entire bottom half of the income distribution combined," said Lalitha Try, researcher at the Resolution Foundation.

“The welcome decision this morning to scrap the abolition of the 45p tax rate has made the chancellor’s package of tax cuts less focused on the very richest households.

"But the top are still the main winners, and the scale of spending cuts required to pay for them is largely unaffected."

Liz Truss and Kwasi Kwarteng have abandoned a plan to abolish the top rate of income tax for the highest earners in an astonishing U-turn. The Chancellor acknowledged that their desire to borrow billions to axe the 45% rate on earnings over £150,000 had become a “terrible distraction” amid widespread criticism and threats of a rebellion. Hours before he had been due to tell the Conservative Party conference they must “stay the course” on the plans, he issued a statement saying: “We are not proceeding with the abolition of the 45p tax rate.”

The think tank's chief executive, Torsten Bell, called Kwarteng’s mini-budget “the biggest unforced economic policy error of my lifetime”, after the value of the pound plunged against the dollar, forcing the Bank of England to pump in £65bn in an attempt to halt the market slide.

The Resolution Foundation found that scrapping the abolition of the 45p tax rate removes 62% of the cash gains going to the richest 5% of households, and 54% of the gains going to the richest 10%.

Chancellor Kwasi Kwarteng explains his 45p rate tax cut to the media at the Conservative Party annual conference in Birmingham on Monday. (PA)

Another think thank, the Institute for Fiscal Studies (IFS), pointed out that the planned axing of the 45p rate was the "smallest part" of the mini-budget, representing about £2bn out of £45bn in cuts.

Its director, Paul Johnson, tweeted: “From a fiscal point of view, important to remember cut to 45p rate was just about smallest part of the mini-budget.

“What was a £45bn tax cutting package is now a £43bn package. This U-turn has, in itself, essentially no effect on fiscal sustainability.”

He added: “The chancellor still has a lot of work to do if he is to display a credible commitment to fiscal sustainability.

“Unless he also U-turns on some of his other, much larger tax announcements, he will have no option but to consider cuts to public spending: to social security, investment projects, or public services."

Following the announcement of his U-turn, Kwarteng refused to rule out a return to austerity measures in order to fund his controversial tax cuts.

Read more: Ex-Tory minister calls on Liz Truss to call general election

Prime minister Liz Truss at the Conservative Party annual conference in Birmingham on Monday. (PA)

On Sunday, Truss was criticised for appearing to shift the blame on to Kwarteng, suggesting it was his idea to ditch the 45p rate.

While Downing Street insists she has full confidence in the chancellor, the pair are in for a rocky ride at the Conservative Party conference in Birmingham this week.

Former cabinet minister Michael Gove suggested Truss had bitten off more than she could chew with the plan for scrapping the 45p rate.

Gove told Times Radio: "I think she’s recognised, as we all do in politics, that if you bite off just that little bit more than you can chew, then the right thing to do is to extract the gobstopper as it were, and then get on with the job.

As turbulence goes, it has been a pretty hairy 24 hours.”

 

NOT MY FAULT

UK cabinet was not informed of plans to scrap top rate of tax, Truss says



Sun, October 2, 2022 

BIRMINGHAM, England (Reuters) - British Prime Minister Liz Truss said on Sunday her cabinet of top ministers was not informed in advance that the government planned to abolish the top rate of tax, adding it was a decision taken by finance minister Kwasi Kwarteng.

The government sparked turmoil in financial markets last month after Kwarteng delivered a plan to cut taxes, mainly benefitting the wealthiest, without detailing the impact on the public finances or how ministers would reform the economy to spur growth.

Truss's comment that it was Kwarteng's decision to remove the top rate of income tax is the first sign Truss might be trying to distance herself from her chancellor. However, she also reiterated the government was sticking with the policy.

Asked whether all her cabinet was told of the move, Truss told the BBC: "No, no we didn’t. It was a decision that the chancellor made."

Truss said: "When budgets are developed, they are developed in a very confidential way. They are very market sensitive. Of course, the cabinet is briefed, but it is never the case on budgets that they are created by the whole cabinet."

According to the Sunday Times, Kwarteng attended a champagne reception with hedge fund managers at the home of a Conservative donor on the same day he delivered his mini-budget.

One source told the newspaper that guests told Kwarteng to "double down" on his radical tax cutting plans.

Truss said her finance minister met business people all the time as "that's his job".

The opposition Liberal Democrats called for an official investigation into what happened.

Jake Berry, chairman of the Conservatives, said he also attended the event, when the finance minister gave a short speech that did not include any insight into the government's future plans.

Berry said Kwarteng in his speech at the event "did not give any insight into future plans and I’m sure in terms of his private conversations he didn’t give any".

(Reporting by Elizabeth Piper and Andrew MacAskill; Editing by Raissa Kasolowsky)

Exclusive-Mexico's CFE ordered to pay Canada firm $85 million in arbitration case


The logo of Mexico's state-run electric utility known as the CFE, is pictured at its building office in Monterrey

Mon, October 3, 2022 
By Dave Graham and Stefanie Eschenbacher

MEXICO CITY (Reuters) - Mexican state power utility Comision Federal de Electricidad (CFE) last year lost an international arbitration case to Canadian firm ATCO Ltd , and had to pay redress of about $85 million, according to three people familiar with the matter.

Though the case relates to a pipeline contracted by the previous Mexican government, it offers an indication of the sort of dispute compensation the current administration could have to pay over its contentious moves to tighten state control of the energy market.

The London Court of International Arbitration made the award on the Ramal Tula pipeline to ATCO in October 2021, the sources said. Once legal fees and interest were added, the sum came to around $100 million, which CFE paid ATCO in December, they added.

ATCO could not comment because its contractual dealings with CFE are confidential, a spokesperson said, adding the Canadian firm remained committed to pursuing efficient, lower-emission energy solutions in Mexico. The court declined to comment and CFE did not reply to requests for comment.

ATCO pursued arbitration because after President Andres Manuel Lopez Obrador took power in 2018, CFE canceled a contract the last administration agreed with the Canadian firm to build a natural gas pipeline near the central city of Tula on the grounds that the work was incomplete, the sources said.

ATCO had already built most of the 17 kilometer (11 mile) pipeline due to supply a power station. But the firm said it could not finish the final stretch due to resistance by local communities, and therefore invoked force majeure.

The Canadian company argued Mexico had not done enough to enable the pipeline's completion, and the court agreed, the sources said. Mexico had initially estimated the project was worth $66 million when it was awarded in 2014.

Lopez Obrador has overhauled legislation to bolster the position of CFE and state oil company Petroleos Mexicanos (Pemex) at the expense of independent operators, arguing that past governments skewed the market in favor of private capital.

Still, in July, the U.S. Trade Representative requested dispute settlement talks with Mexico over billions of dollars in energy investments, arguing Lopez Obrador's policies violated the United States-Mexico-Canada (USMCA) trade agreement.

Canada quickly joined the U.S. complaint, which officials are working to resolve.

CFE said in its 2021 annual report it was facing 21 cases of international arbitration, and had significantly raised its reserves for litigation and lawsuits.

There have, however, been signs that Mexico is finding ways to get past some disputes.

In August, Canadian firm TC Energy said it had sealed a deal with CFE to build a $4.5 billion pipeline in southeast Mexico.

In the announcement, TC Energy said the two sides had agreed to "mutually terminate" international arbitration relating to other pipelines the Canadian firm was building in Mexico.

(Reporting by Dave Graham and Stefanie Eschenbacher; Additional reporting by Nia Williams in Calgary; Editing by Josie Kao)

STATEHOOD OR INDEPENDENCE
Biden visiting Puerto Rico because 'they haven't been taken very good care of'

Myah Ward and Gloria Gonzalez
Mon, October 3, 2022

Andrew Harnik/AP Photo

President Joe Biden will survey storm damage and meet with families and community leaders in Puerto Rico on Monday, where he’s set to announce more than $60 million in funding through the Bipartisan Infrastructure Law for disaster recovery and preparedness for future storms.

Before boarding Marine One, the president said he’s visiting Puerto Rico because “they haven’t been taken very good care of.”

“They’re trying like hell to catch up from the last hurricane. I want to see the state of affairs today and make sure we push everything we can,” Biden said.

The recovery and ongoing search and rescue efforts after Hurricane Ian have threatened to overshadow the devastation in Puerto Rico, which was ravaged by Hurricane Fiona more than two weeks ago. More than 100,000 people continue to go without power as a result of the storm damage.


The official number of fatalities in Puerto Rico from Hurricane Fiona stands at 25, but experts fear the death toll could be far higher, especially since some of the most devastated regions of the island remain difficult to or inaccessible due to washed-away roads, mudslides and ongoing power outages.

Once on the ground in Ponce, Puerto Rico, Biden will receive a briefing on the storm’s aftermath. He’ll then deliver remarks about the administration’s response efforts. The new round of funding will be used to shore up levees, strengthen flood walls and create a new flood warning system that will help Puerto Ricans prepare for future threats.

Biden and first Lady Jill Biden will meet with families and community leaders later Monday at Centro Sor Isolina Ferré Aguayo School, where they will participate in a community service project and speak with federal and local officials who have played a role in Puerto Rico’s recovery.

The most recent presidential visit to the U.S. island territory was when then-President Donald Trump traveled to the storm-ravaged region after Hurricane Maria in 2017. At the time, there was an overwhelming sentiment that Puerto Ricans had been neglected by the U.S. government as they sought to pick up the pieces.

Trump met with officials and victims and was shown destroyed houses and uprooted trees. The trip also produced one of the former president's oddest and most infamous moments in office: Trump tossed rolls of paper towels to a crowd that was gathered to see him at Calvary Chapel in San Juan.

Trump told Puerto Ricans they should be proud that only 16 people had died, though the number continued to rise once he departed. The government of Puerto Rico later said 64 people died due to the storm, but research attributed an estimated 2,975 deaths in the weeks after the storm.

Karina Claudio Betancourt, director of the Open Society Foundation’s $20 million post-Hurricane Maria project in Puerto Rico, said she would initially say “welcome to Puerto Rico” to Biden before talking to him about why Fiona caused such devastation despite being a “weaker” storm compared to Maria.

“This is the place that five years after Maria we’re still reeling from that hurricane,” she said. “It wasn’t only a natural disaster. It was a political disaster.”

Now Biden’s response to Hurricane Fiona will be watched closely by Puerto Ricans.

LUMA, the private company managing the island’s power grid, said 92 percent of its 1.5 million customers on the island have power again, although residents in restored areas report the power continues to cut in and out. The biggest ongoing power loss remains in the Mayagüez region, where 32 percent of customers were without power as of Sunday evening. About 14 percent of customers in Ponce, where Biden is expected to visit this afternoon, had not had their power restored as of Sunday evening.

Ruth Santiago, a community and environmental attorney in Puerto Rico and a member of the activist group Queremos Sol — "We Want Solar" in English — is meeting with Biden Monday, and her coalition wrote an open letter to the president demanding an “urgent” transition of the electric system. FEMA should prioritize spending the billions of dollars set aside for Puerto Rico’s electric grid after Maria to pay for rooftop solar systems and batteries in homes, businesses and institutions in Puerto Rico, starting with the poorest and most marginalized communities, the coalition states in its letter.

The letter notes that some of the 25 Fiona-related deaths have been attributed to a lack of electricity.

“To a large extent, these deaths could have been prevented,” the letter states.

Joe Biden Visits Puerto Rico in Wake of Hurricane Fiona: 'I Want to See the State of Affairs'

Virginia Chamlee
Mon, October 3, 2022 

President Joe Biden

Ting Shen/Bloomberg/Getty

President Joe Biden touched down in Puerto Rico Monday, just weeks after a slow-moving Category 1 hurricane named Fiona moved over the island, causing an estimated billions of dollars in damages.

Ahead of boarding Marine One Monday morning, Biden told reports: "I'm heading to Puerto Rico because they haven't been taken very good care of. They've been trying like hell to catch up from the last hurricane. I want to see the state of affairs today and make sure we push everything we can."

While in Puerto Rico, the president is expected to deliver remarks "about the Administration's commitment to the people of Puerto Rico and to helping rebuild more secure and resilient infrastructure," a pool report detailed.

RELATED: At Least 1 Dead in Puerto Rico After Hurricane Fiona Creates 'Catastrophic' Floods and Power Outages

Biden will also announce "more than $60 million in funding through the Bipartisan Infrastructure Law to shore up levees, strengthen flood walls, and create a new flood warning system to help Puerto Rico become better prepared for future storms."

Puerto Rico: In an aerial photo, floodwaters surround houses

Caribbean Air and Marine Branch/ZUMA Press Wire Flooding in Puerto Rico from Hurricane Fiona

During their brief visit, the president and his wife, first lady Dr. Jill Biden, will visit Centro Sor Isolina Ferré Aguayo School to meet with families and community leaders impacted by the storm and participate in a community service project, the pool report said.

RELATED: Hurricane Fiona: How You Can Help People in Puerto Rico Affected by the Storm

Puerto Rican Gov. Pedro Pierluisi said at a news conference following the storm that residents are "going through a difficult moment but our people are strong and very generous," according to ABC News.

Following the storm, Biden declared an emergency in Puerto Rico and authorized the Department of Homeland Security and the Federal Emergency Management Agency "to coordinate all disaster relief efforts," with FEMA specifically authorized to "identify, mobilize and provide at its discretion equipment and resources necessary to alleviate the impacts of the emergency."

Fiona's landfall came two days before the fifth anniversary of Category 4 Hurricane Maria's assault on the island, which resulted in nearly 3,000 deaths and about $90 billion in damages.

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Later this week, Biden is scheduled to visit Florida, where another hurricane — the Category 4 Ian — recently caused catastrophic damage in parts of Florida.

Biden appeared at FEMA headquarters following the storm last week and said Ian "could be the deadliest hurricane in Florida's history."

"The numbers we have are still unclear, but we're hearing early reports of what may be substantial loss of life," he said.

"We know many families are hurting," Biden added. "Many, many, are hurting today."

THE SOUND OF ONE HAND CLAPPING

Energy Firms Pledge to Cut Carbon Emissions to Zero by 2050



Nilanjan Choudhury
Mon, October 3, 2022 

With the rise of ESG (Environmental, Social and Governance) investing and a broad-based transition toward clean energy, a number of oil/gas companies have decided voluntarily to become carbon neutral over the next three decades.
The Net-Zero Scenario

Carbon neutrality, also termed as net zero, refers to a situation wherein all carbon (and other greenhouse gas, or GHG) emissions are offset by absorbing the same from the atmosphere. It is considered an important yardstick by climate scientists to ensure that global warming is limited to 1.5°C above pre-industrial levels by 2050, in sync with the Paris Climate Agreement.

Of late, the concept has gained traction operationally, with companies across a diverse spectrum laying out concrete strategies about their future sustainability endeavors. For the energy operators in particular, the pressure to decarbonize has been intensified by institutional investors and major clients committing to an ESG agenda and consequently snubbing carbon emitters.

As the focus on energy transition accelerates, let’s look at some of the oil and gas companies outlining net-zero commitments by 2050.

It all started with Repsol REPYY, which in December 2019, announced its non-binding plan of reducing net carbon emissions to zero by 2050. The move, which complies with the Paris Agreement climate goals, marked the first such initiative in the oil and gas industry.

The company is expected to use its 2016 carbon intensity level as the baseline. It plans to reduce 10% intensity by 2025 and 20% in the next five years. It expects carbon intensity to fall 40% by 2040 and reach 100% by 2050.

In February 2020, BP plc BP announced a plan to reduce net carbon emissions to zero by 2050 or sooner. This London-based energy behemoth plans to sell assets worth some $25 billion to finance its green energy push. As part of its net-zero ambition, this company has vowed to cut fossil fuel production by 40% from the 2019 levels.

That year, Norway’s Equinor EQNR also set out its strategy to enhance its transformation into a net-zero carbon emitter. The company plans to reduce net carbon intensity by 20% by 2030 and 40% by 2035 while investing more in renewables and low-carbon solutions.

In 2021, Suncor Energy committed to slash overall emissions across its operations by 10 million tons per year by 2030. Notably, this would imply a nearly 30% reduction in GHG emissions, which amounted to 29 million tons in 2019. The second-largest oil producer in Canada said in May that it intends to be net zero by 2050.


Suncor is also one of the founding signatories of a coalition of leading Canadian oil sands producers that recently announced a collaboration to achieve net-zero GHG emissions from their operations by 2050.

Shell SHEL also gave a climate strategy update last year, establishing its short- and medium-term goals for reducing its carbon footprint. The London-based company, which assumes to have peaked its total carbon emissions in 2018, is aiming to slash its net carbon intensity by 6-8% in 2023 from the 2016 baseline and further 20% by 2030. Additionally, the decrease will expand to 45% in 2035 before achieving its goal of zero emission by 2050.

In June 2021, EQT Corporation brought forward a comprehensive plan to achieve net-zero GHG emissions across its operations by 2025. This leading natural gas producer pledged to slash GHG emission intensity by 70% in just four years. Moreover, it set a climate target to reduce 65% of the company’s methane emission intensity below the 2018 levels by 2025.

Schlumberger SLB is another energy major that is targeting net-zero GHG emissions by 2050. The leading oilfield service player is planning a 30% cut in direct and indirect emissions by as early as 2025. Importantly, the company expects to reach the short-term target ahead of schedule.

By 2030, the company is eyeing to cut emissions by 50%. By this timeframe, the company is also planning to reduce Scope 3 (or indirect) emissions by 30%. Schlumberger boasted of becoming the first company in the energy service industry to add Scope 3 emissions ambition in the net-zero emission target.

Other oil and gas firms that committed to net-zero emissions strategy include TotalEnergies, Devon Energy and Occidental Energy etc.
Wrapping Up

As one can see, a significant number of major oil companies have publicly set net-zero environmental pledges by 2050, mostly since 2020. A big reason for such a rallying call is the market’s growing recognition of corporate ESG credentials.

There is no doubt that the Oil/Energy space has stepped up efforts toward a decarbonization goal. At the same time, the pathway to balance harmful emissions is not without its share of challenges. First and foremost, the companies need to earmark large amounts of capital on ESG initiatives (research and development, utilization of new technology etc.) that might hurt future returns and lower equity value. There are also significant technology and execution risks.

As of now, it is difficult to ascertain how much of this is hype and how much actual change will occur as this complex evolution involves a monumental shift in the energy sector’s business model by effectively moving away from their primary operations of oil and gas development.

While some of the transition strategies are very ambitious indeed, what’s clear is that companies with a strong ESG bent are held in high regard by the public that might ultimately boost the stock price.

Woman Who Lured Migrants Onto Martha's Vineyard Flights Identified


Migrants from Venezuela after they were lured onto a plane and flown to Martha's Vineyard. (Photo: Boston Globe via Getty Images)

Ron Dicker
Mon, October 3, 2022 at 7:27 AM·1 min read

A woman who lured Venezuelan migrants onto chartered planes to Martha’s Vineyard in Republican Florida Gov. Ron DeSantis’ stunt to protest border policy is an Army veteran named Perla Huerta, The New York Times and CNN reported.

A person briefed on a Texas sheriff’s criminal investigation of the flights identified Huerta, a former combat medic and counterintelligence officer, of Tampa, Florida, according to the Times. A migrant who helped Huerta lure others onto flights from Texas confirmed it was her in a photo, according to the newspaper. CNN said a friend identified Huerta in a photo taken by a migrant.

A man who assisted Huerta said she approached him to recruit migrants for the unannounced airlift, which DeSantis organized and funded with state money. She told him she wanted to aid others in the journey north, but did not mention Florida’s involvement, the helper said.

“I was also lied to,” the man told the Times. “If I had known, I would not have gotten involved.”


A politically connected charter airline, Vertol Systems, received payments of $615,000 and $950,000 in September, according to Florida records cited by the Times.

The Washington Post reported last month that the cowboy-hat-wearing mystery woman Perla approached the huddled asylum seekers on the streets of San Antonio and promised them food, shelter and jobs.

The White House and other Democrats have condemned the actions of DeSantis and Texas GOP Gov. Greg Abbott, who has sent busloads of migrants to Democratic cities, for using undocumented people as “political pawns.”

DeSantis is facing multiple lawsuits alleging he illegally transported the migrants under false pretenses.

This article originally appeared on HuffPost and has been updated.



Former Army intelligence agent helped DeSantis recruit migrants for Martha’s Vineyard migrant flight: report

Josh Marcus
Sun, October 2, 2022 

A former US Army combat medic and counterintelligence agent named Perla Huerta reportedly recruited migrants for Florida governor Ron DeSantis’s controversial flights in September carrying Venezuelan asylum-seekers to Martha’s Vineyard.

Police officials, a lawyer, and migrants who encountered her pointed to Ms Huerta as the recruiter for the flights, The New York Times reports.

Ms Huerta served tours in Afghanistan and Iraq and was discharged last month after two decades of service, the Times reports, citing her military records.

It is unclear if Ms Huerta worked for the state of Florida or Texas.

Texas governor Greg Abbott has said he was not involved in the migrant flights out of the Lone Star State.

The Independent was unable to locate Ms Huerta for comment.

The potential identification helps clear up one of the lingering mysteries about the flight: who recruited the nearly 50, mostly Venezuelan migrants, to board the flights.

Migrants say they were promised work papers, jobs and even paid to board the flight and encouraged others to join them.

A 27-year-old Venezuelan migrant named Emmanuel told San Antonio Report that a woman named Perla gave him $200 from “an anonymous benefactor” to recruit fellow asylum-seekers outside a city-run migrant centre in San Antonio, Texas, where the flights originated.

“Perla informed me that in those sanctuary states, the state has the benefits to help migrants,” Emmanuel said. “I’ve just been the mediator because I like to help people.”“A lot of people really come without plans, they want to come and just work and they have a hand that’ll provide them shelter,” he added. “I just saw it in that way, like a sweet way, doing it for good.”

They were even given a brochure making false claims about the “Masachusetts Refugee Benefits” they’d receive upon arrival in the East Coast.

“These brochures are not ours and not sure who prints or distributes them, at this point,” office chief of staff Falah Hashem at the state’s refugee agency told The Independent.

The migrants aboard the Martha’s Vineyard flights have sued Governor DeSantis, calling the trips a “fraudulent and discriminatory scheme.”

Woman Who Helped Con Martha’s Vineyard Migrants Was Ex-Military: Reports

Nikki McCann Ramirez

ROLLING STONE
Mon, October 3, 2022 

Ron-DeSantis - Credit: (Photo by Joe Raedle/Getty Images)

The mysterious woman known as “Perla” who allegedly deceived migrants into boarding Governor Ron DeSantis’s stunt flights to Martha’s Vineyard has been identified as former U.S. Army combat medic and counterintelligence officer Perla Huerta, CNN and The The New York Times report.

Many of the 50 migrants sent to Martha’s Vineyard as part of a potentially illegal political stunt by DeSantis were allegedly approached outside of the San Antonio migrant resource center by a woman named “Perla,” who promised the migrants transportation to cities like New York and Boston, as well as resources like housing, food, and cash assistance if they signed on to the transport. Some of the migrants who agreed were held in a motel for days until Perla and her associates had secured enough volunteers for the flight.

According to the Times, Perla was photographed by various migrants she approached outside the shelter, where she had also enlisted other migrants to aid her in gathering volunteers for the flights. Those photos were passed along to attorneys representing the migrants who would eventually be abandoned by flight organizers on Martha’s Vineyard, who matched them to social media images of Perla Huerta, a Tampa, Florida, resident.

An Army spokesperson confirmed to CNN that Huerta spent more than two decades as “a Combat Medic Specialist (68W) and Counterintelligence Agent (35L) in the regular Army from April 2002 to August 2022,” and had achieved the rank of master sergeant. It is still unclear how Huerta is connected to or being compensated by the Florida government, who has claimed responsibility for the flights.

One migrant assisting Huerta, who spoke to the Times on conditions of anonymity said Huerta never revealed her relationship to the Florida government, claiming he was also deceived by Huerta into harming the people he intended to help. “If I had known, I would not have gotten involved,” he said.

A group of the migrants who fell victim to the scheme have filed a class-action lawsuit against DeSantis and various members of the Florida government, as well as the woman previously known as “Defendant Doe 1,” now identified as Perla Huerta.

CRIMINAL CAPITALI$M
eBay officials who harassed couple with insects, bloody pig mask sentenced to prison

Norman Miller, MetroWest Daily News
Mon, October 3, 2022 

BOSTON — A Massachusetts woman, who along with her husband, was targeted in a campaign of harassment and terror by eBay Inc. officials, told a federal judge Thursday that they felt like prisoners in their own home.

"In August 2019, it became our prison," Ina Steiner said in a written victim impact statement provided to U.S. District Court Judge Patti Saris. "I was afraid to answer the front door or get the mail. I was afraid to go for a walk. I was afraid to leave the house, but I was also afraid to be inside and each evening when dusk settled and night fell, my anxiety grew."

On Thursday, two men whom authorities say took part in the harassment were sentenced in U.S. District Court. Both are former eBay executives.

Ina and David Steiner, accompanied by their attorney Rosemary Scapicchio, background, accuse eBay of a terror campaign.

Saris sentenced James Baugh, 47, of San Jose, California, to 57 months in prison, followed by two years of supervised release, and imposed a $40,000 fine. She sentenced David Harville, 50, of Las Vegas, to two years in federal prison, followed by two years of supervised release, and imposed a $20,000 fine. Baugh was head of security at eBay and Harville was the company's director of global resiliency.


Both men pleaded guilty earlier to this year to several charges in connection to the harassment of Ina and David Steiner. They will begin serving their sentences later this year.
Negative press angered eBay

Authorities say the harassment started in August 2019 after officials at eBay – an international online marketplace platform that connects buyers and sellers of various items – were angered by what they considered negative press written by the Steiners on their e-commerce website called Ecommercebytes.

Baugh and several of his subordinates then began an online and in-person harassment campaign against the couple, which included online threatening messages, mailing disturbing items such as live insects and a bloody pig's mask to the couple's home, and even pretending to work with the couple to find out who was harassing them. They even followed the Steiners in vehicles and allegedly considered breaking into their home or sending gang members to scare the couple.

More: Natick couple was harassed by several eBay Inc. executives

The harassment had a negative effect on the couple, Ina Steiner wrote in her impact statement.

"The defendants employed psychological warfare – they primed us for fear, and it worked," she wrote. "I began feeling pressure when breathing, I had nightmares, I began losing weight and had trouble sleeping, fearing we would get 'swatted,' which would put our lives in danger if the police came to our home with guns drawn."

The leader of a group of eBay employees who are accused of engaging in a cyberterror campaign against a Natick couple has pleaded guilty.

In August 2020, the Steiners reported the harassment to local police. Police began an investigation, along with federal authorities. Members of the harassment campaign actually worked with investigators first, puting forth several "suspects" prior to the scheme being revealed.

Seve

In her impact statement, Ina Steiner called the harassment a "deliberate, cruel attempt" to destroy their business.

"The defendants' crimes have had a profound impact on me, my husband, and on our livelihood. They upended our lives and we're still dealing with the fallout after three long years," she said.

SCOTUS: Supreme Court to hear challenge to law that shields internet companies from lawsuits

Live updates: Ian's death toll climbs to 68 as rain, flooding continue; 600K without power in Florida

David Steiner, in his victim impact statement, said the website lost advertisers and revenue, and forced the couple to cash in certificate of deposits that they had planned to hold until after retirement. Steiner indicated he also had to go on Social Security at age 62, rather than waiting until 67, just to make ends meet.

Steiner said he still can't understand why eBay, which posted 2021 sales of more than $10.4 billion, and its employees would attack journalists in such a manner over what they perceived as negativity. He wondered that if it had worked, would that have been the company's strategy against any other negative press going forward.

"I’ve held on to this anger, afraid that if I let it go, no one will make eBay fully accountable for their actions," David Steiner said in his impact statement. "If they are not, what is there to deter corporations from mobilizing security agencies and their security own department from repeating eBay’s actions? This is too important to let go of my anger yet."

The Steiners have filed a federal civil suit against all members of the harassment campaign, as well as eBay and its executives. Settlement talks earlier this year fell apart.

Follow Norman Miller on Twitter @Norman_MillerMW.

This article originally appeared on MetroWest Daily News: eBay executives who harassed tech bloggers sentenced to prison