Apple vs. Samsung

Apple Inc. on Monday gave a federal judge a list of eight Samsung Electronics Co. products it wants pulled from shelves and banned from the U.S. market, including popular Galaxy model smartphones.

U.S. District Judge Lucy Koh asked for the list after a jury in San Jose last week slammed Samsung with a $1.05 billion verdict, finding that the South Korean technology giant had "willfully" copied Apple's iPhone and iPad in creating and marketing the products. Samsung plans an appeal.

The products Apple wants out are all smartphones: Galaxy S 4G, Galaxy S2 AT&T, Galaxy S2, Galaxy S2 T-Mobile, Galaxy S2 Epic 4G, Galaxy S Showcase, Droid Charge and Galaxy Prevail.

Koh on June 26 banned the Galaxy Tab 10.1 from the U.S. market after finding it likely violated a "design patent." Samsung is now asking for that ban to be lifted after the jury found the computer tablet didn't infringe that particular patent, but it did find it infringed three Apple's software patents that cover the popular "bounce-back" and pinch-to-zoom features.

The judge has scheduled a Sept. 20 hearing to discuss Apple's demands for the sales bans. She asked Apple on Friday to submit the list of products its wants removed from U.S. stores after Samsung complained that it doesn't have enough time to prepare for the scheduled hearing.

The judge is deciding whether to reschedule the hearing to give Samsung more time to prepare. Samsung plans to ask the judge to toss out the jury's verdict as unsupported by the evidence. Failing that, the company says it will appeal the verdict to higher courts, including the U.S. Supreme Court.

In addition to the sales bans, Apple also plans to ask the judge to triple the damages to $3.15 billion because of the jury's finding that Samsung "willfully" copied Apple.

The Banks

Congress, lobbyists and editorial writers have been engaged in an intense debate over how to provide effective governance for the US banking system in the wake of the 2008 financial crisis and, more recently, JPMorgan Chase's billion-dollar derivatives losses. It is a complex subject and, not surprisingly, the language has been at times as opaque as the derivatives themselves - and the inability of the public to understand the system is contributing to a decline in trust and confidence. I believe the real solution lies in formulating a simpler, not a more complex, set of regulations.

The Fiscal Cliff

President Barack Obama and Congress face the question of whether to step back from the fiscal cliff by not allowing the current tax rates to expire at year end and by postponing the spending curbs mandated by last summer’s Budget Control Act.

Before year end, Congress must also decide whether to allow a 27 percent cut in Medicare payments to doctors to take effect – as required by a 1997 budget law -- or whether to put it off, as it has done for the past several years.

“We think that economic growth right now is being held back by the anticipation of this fiscal tightening, both in terms of the possibility of a sharp downturn, but also just uncertainty about what will happen,” Elmendorf told reporters at a CBO briefing.

“The sooner that uncertainty is resolved – especially if it is resolved in the direction of less fiscal tightening next year, then the stronger we think the economy would be” for the rest of this year and next year.

Social Security

As millions of baby boomers flood Social Security with applications for benefits, the program's $2.7 trillion surplus is starting to look small.
 
For nearly three decades Social Security produced big surpluses, collecting more in taxes from workers than it paid in benefits to retirees, disabled workers, spouses and children. The surpluses also helped mask the size of the budget deficit being generated by the rest of the federal government.
 
Those days are over.
 
Since 2010, Social Security has been paying out more in benefits than it collects in taxes, adding to the urgency for Congress to address the program's long-term finances.
 
"To me, urgent doesn't begin to describe it," said Chuck Blahous, one of the public trustees who oversee Social Security. "I would say we're somewhere between critical and too late to deal with it."
 
The Social Security trustees project the surplus will be gone in 2033. Unless Congress acts, Social Security would only collect enough tax revenue each year to pay about 75 percent of benefits, triggering an automatic reduction.
 
Lawmakers from both political parties say they want to avoid such a dramatic benefit cut for people who have retired and might not have the means to make up the lost income. Still, that scenario is more than two decades away, which is why many in Congress are willing to put off changes.
 
But once the surplus is spent, the annual funding gaps start off big and grow fast, which could make them hard to rein in if Congress procrastinates.
 
The projected shortfall in 2033 is $623 billion, according to the trustees' latest report. It reaches $1 trillion in 2045 and nearly $7 trillion in 2086, the end of a 75-year period used by Social Security's number crunchers because it covers the retirement years of just about everyone working today.
 
Add up 75 years' worth of shortfalls and you get an astonishing figure: $134 trillion. Adjusted for inflation, that's $30.5 trillion in 2012 dollars, or eight times the size of this year's entire federal budget.
 
In present value terms, the Social Security Administration says the shortfall is $8.6 trillion. That means the agency would need to invest $8.6 trillion today, and have it pay returns of 2.9 percent above inflation for the next 75 years, to produce enough money to cover the shortfall.
 
That's the rate of return Social Security expects to get from its trust funds. The problem, of course, is that Social Security doesn't have an extra $8.6 trillion to invest.
 
Social Security Commissioner Michael J. Astrue said he is frustrated that little has been done to solve a problem that is only going to get harder to fix as 2033 approaches. If changes are done soon, they can be spread out over time, perhaps sparing current retirees while giving workers time to increase their savings.
 
"It won't be easy but it's just going to get harder the longer they wait," Astrue said.
 
There is no consensus in Washington on how pressing the problem is.
 
President Barack Obama created a deficit-reduction commission in 2010 but didn't embrace its plan for Social Security: raising the retirement age, reducing benefits for medium- and high-income workers and raising the cap on the amount of wages subject to the payroll tax, all very gradually.
 
The issue has been largely absent from this year's presidential election. Neither Obama nor his Republican opponent, Mitt Romney, has made it a significant part of the campaign.
 
Blahous, a Republican, warns that the magnitude of the problem is becoming so great that "Social Security's days as a self-financing program are numbered" if Congress doesn't act in the next few years. Democrat Robert Reischauer, Social Security's other public trustee, is less dire in his predictions but has told Congress that it needs to act within five years.
 
Others express less urgency.
 
"I would like to see Congress move on this tomorrow but we do have 22 years before there is any cut in Social Security benefits," said Sen. Bernie Sanders, a liberal independent from Vermont who heads the Senate Social Security caucus. "Compared to other crises — the collapse of the middle class, real wages falling for American workers, 50 million people having no health insurance — how would I rate the Social Security situation? Nowhere near as serious as these and many other problems."
 
AARP, the nation's most powerful lobbying group for older Americans, agrees.
 
"I'm not suggesting we need to wait 20 years but we do have time to make changes to Social Security so that we can pay the benefits we promised," said David Certner, AARP's legislative policy director. "Let's face it. Relative to a lot of other things right now, Social Security is in pretty good shape."
 
Social Security is financed by a 12.4 percent tax on wages. Workers pay half and their employers pay the other half. Self-employed workers pay the full amount.
 
The tax is applied to the first $110,100 of a worker's wages, a cap that rises each year with inflation. For 2011 and 2012, the tax rate for employees was reduced to 4.2 percent but is scheduled to return to 6.2 percent in January.
 
Social Security's finances are being hit by a wave of demographics as aging baby boomers reach retirement, leaving relatively fewer workers behind to pay into the system. In 1960, there were 4.9 workers paying Social Security taxes for each person getting benefits. Today, there are about 2.8 workers for each beneficiary, a ratio that will drop to 1.9 workers by 2035, according to projections by the Congressional Budget Office.
 
About 56 million people collect Social Security benefits, and that is projected to grow to 91 million in 2035. Monthly benefits average $1,235 for retired workers and $1,111 for disabled workers.

RBS - Reluctant Businesses Save

The state of business lending in Britain is proof of the adage that you can lead a horse to water but you cannot make it drink. Only, in this case, the government has not just sugared the water but is also serving it in a gilded cup. Despite a raft of new lending schemes - most recently Funding for Lending - companies are unwilling to visit their banks to drink from the well of extra debt. According to data from the Bank of England, businesses were paying an average of more than 7 per cent to borrow money five years ago. It now costs 2.6 per cent. But Friday's first half numbers from RBS showed that total assets in the corporate lending business were flat at about £114bn against the same period last year. It was a similar story at other banks.