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Is China Stealing its Economic Success? MoneyNews
(Headlines - scroll down for full stories)
The National Association of Consumer Bankruptcy Attorneys (NACBA) has weighed in on the impact of the new bankruptcy law - and members are anything but happy about it. According to an NACBA study - which assessed 61,000 bankruptcy filers working with six U.S. credit-counseling bureaus - 97% of consumers attempting to file for bankruptcy cannot afford to repay their debts. In a Thursday article on the study, CNNMoney pointed out that under terms of the new debt-reform law that went into effect in October 2005, Americans looking for bankruptcy relief are required to attend credit-counseling sessions and must do so within six months of filing.
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The new law was heavily criticized by public-interest groups, which accused Congress of being in bed with big business interests and producing what they see as a harsh bankruptcy reform bill. Business leaders defend the new law, saying the standards for declaring bankruptcy were too lax and needed shoring up.
The NACBA study also concluded that 79% of consumers facing severe debt problems claimed that their money problems were due to circumstances beyond their control, like ill health or the loss of a job. Regardless of what people think about the new reform bill, it is indeed having a significant impact on bankruptcy filings. Lundquist Consulting says the number of bankruptcy filings reported so far is down almost 75% from the same period in 2005. According to CNNMoney: "Brad Botes, NACBA's executive director, said the filings may be down because some consumers falsely believe bankruptcy is not an option for them because of the more stringent law." Editor's Note:
2. Is China Stealing its Economic Success? The speed of China's economic growth has been amazingly fast - fast like the hands of a well-trained pickpocket, according to some economic observers. An article in Germany's Spiegel International this month calls China out on what the publication deems to be ethically questionable economic practices. "It used to be jeans and Adidas," says Spiegel. "Now, though, China is becoming adept at stealing much more technologically advanced products - like passenger jets and magnetic railway systems. Is this the beginning of an economy based on thievery?" Spiegel cites a trade mission to China this week, led by German Foreign Minister Frank-Walter Steinmeier. But this time, widgets and washing machines aren't the focus of the trip. "Politely put, these business executives are concerned about what some would call the German-Chinese technology transfer," Spiegel reports. "But to be blunt, they're really incensed about China's growing large-scale theft of ideas and patents, trademark and product piracy. 'We have to discuss the Chinese government's attitude on this question,' Steinmeier said." While China has been in the copycat business for decades, critics say the copyright-infringement abuses have never been worse. "Fully 70% of all illegal copycat products come from Asia, and most of that comes from China, in what has mushroomed into a $300 billion market," says Spiegel. "And the issue is no longer just a pair of poorly copied Adidas running shoes or a plastic version of a Gucci watch. More recently, the Chinese and others have taken to pirating expensive, high-tech knowledge, allowing them to duplicate entire machines and systems." German companies have reported attending trade shows in China only to find that their own products are on display. But some of the knock-offs are so poorly made that consumers who don't know the difference mistakenly begin to think less of the genuine articles. "More than half of the companies affected by patent theft have had these experiences in China," Heiko Beploat, of the German Machinery and Equipment Manufacturing Association, tells Spiegel. Some forms of copyright theft are difficult to prove, however. Spiegel points to the fact that China is launching its own magnetic levitation train service - less than two years after the rollout of Germany's Transrapid magnetic train system (a version of which is already operating in Shanghai). Spiegel says the announcement "smelled of espionage." "Suspicions are also mounting in Europe," concludes Spiegel. "European Union Industry Commissioner Gunther Verheugen plans to make the issue of patent theft and industrial piracy a focal point of his agenda this year. And if his efforts are unsuccessful, the EU Commission will address these problems at this year's meeting of the World Trade Organization (WTO)." Editor's Note:
3. H&R Block Bungles its Own Taxes, Pays $32M Imagine Ford Motors building a car with no steering wheel, or Betty Crocker producing a cake mix using concrete as a key ingredient. Those two absurd scenarios don't even compare to a recent admission from H&R Block.
The tax-preparation firm - one of America's biggest - has declared that it actually screwed up on its own taxes. The company said it had underestimated its own state income tax rate liabilities over the past several quarters. And now the mistake has led to H&R Block having to write a $32 million check to cover back taxes. The timing couldn't have been worse for the company. As tax season approaches, February and March are key months for the firm's bottom line, and such a massive public-relations gaffe certainly won't do much for the tax-paying public's confidence in Block. "It wasn't particularly material," Alexander Paris, an analyst at Barrington Research in Chicago, tells Reuters. "And it's not particularly unusual. A lot of companies are going back and reviewing their controls because of Sarbanes-Oxley and finding tax errors. "But for a company like H&R Block, it was particularly embarrassing." The news didn't get any better for the company, as it also announced it will cut its earnings forecast for 2006, blaming a soft start to the 2006 tax season for some of its woes. Block also slashed its forecast for full-year 2006 earnings, attributing the cut to - among other things - "a slower start to the tax-filing season than in previous years." H&R Block said fiscal third-quarter net earnings fell 69% to $28.8 million, or 9 cents a share, from $92.3 million, or 28 cents per share, during the corresponding quarter in 2005. Revenues for the quarter rose 12% to $1.2 billion, the company said. Analysts expected H&R Block to report earnings of 26 cents a share on sales of $1.19 billion.
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