US reaches $95.5M settlement in for-profit education case

US reaches $95.5M settlement in for-profit education case - Yahoo Finance

"A Pennsylvania company that
enrolls more than 100,000 students at for-profit trade schools and
colleges across the U.S. and Canada has agreed to pay $95.5 million to
settle claims it illegally paid recruiters and exaggerated the
career-placement abilities of its schools.

Under the deal
announced by the Justice Department on Monday, Education Management
Corp. also agreed to forgive $102.8 million in loans it made to more
than 80,000 former students.

"This
case not only highlights the abuses in EDMC's recruitment system; it
also highlights the brave actions of EDMC employees who refused to go
along with the institution's deceptive practices," U.S. Attorney General
Loretta Lynch said at a news conference."

..

"That lawsuit, and others like it, claimed the company signed up students
it knew likely wouldn't succeed or finish its programs. It did so by
paying recruiters using illegal enrollment-based incentives in hopes of
raking in government financial aid, which provided the bulk of the
company's income, the lawsuit said."

...

"

Nadia Taylor, 23, of Durham,
North Carolina, said she enrolled at the Culinary Institute at
Raleigh-Durham in 2011 after being cold-called by a recruiter who knew
personal details about her, including her low-income status, and that
her mother was incarcerated and her father deceased.

Taylor
said the recruiter talked her into a four-year bachelor's degree
program without disclosing its cost — $100,000 — which Taylor learned
about only after completing her first quarter. Taylor said she
eventually quit school in 2014, with two months left, when the
curriculum was changed requiring her to take more classes she couldn't
afford.

"I would love a
degree," said Taylor, who cooks at a steakhouse after losing her job as a
hotel sous chef because she doesn't have a diploma. "Right now I have
$47,000 in debt and literally not one thing to show for it.""

How Pfizer has shifted U.S. profits overseas for years

How Pfizer has shifted U.S. profits overseas for years - Yahoo Finance

"Pfizer has used transactions
between companies within its group to allow an Irish subsidiary based in
Ringaskiddy - Pfizer Ireland Pharmaceuticals - to buy the rights to
patents developed in the United States and then use them to make drugs
which are sold back to U.S. affiliates.

Even
though the Irish and other overseas units pay $3.2 billion a year in
royalties to use such patent rights, the higher prices at which Pfizer
in the United States imports manufactured drugs from affiliates means
almost all the profits from these drugs are reported overseas.

Drugs
which were discovered in the United States, manufactured in Ringaskiddy
and sold back to the United States include anti-cholesterol treatment
Lipitor - the best-selling prescription drug of all time - and epilepsy
drug Lyrica, which generated revenue of over $5 billion last year for
Pfizer."

...

"

Pfizer does have manufacturing
plants in the United States but filings for its overseas units show
non-U.S. companies supply over 80 percent of U.S. sales.

Those
sales generate margins of around 40 percent for Pfizer's overseas arm -
earning it over $17 billion in 2013. However, Pfizer has reported
losses on its U.S. business in each of the past five years.

Pfizer
said it follows the "arm's length" tax principle when conducting
inter-company sales and purchases. This says companies should transact
with affiliates at the same prices unconnected companies would.

However,
academics say it is very hard to judge whether inter-company sales of
unique products like patented chemicals, for which there is no
independent open market, are conducted at prices that independent
companies would agree to use.

"The
current arm's length rules are always difficult to enforce because of
the lack of a comparable price (in the drugs industry)," said Edmund
Outslay, tax accounting professor, Eli Broad College of Business at
Michigan State University" 

...

" Ed Kleinbard, Professor of law
at the University of Southern California said the company's arrangements
reflected "aggressive tax planning" and it seemed, from the outside, to
be almost as capable in tax planning as pharmacology.

"This is a company that is investing heavily in tax research, as well as pharmaceutical research," he joked."

How companies prey on your weaknesses: Robert Shiller

How companies prey on your weaknesses: Robert Shiller 

It's no secret we do things we
know we shouldn't. We overeat, gamble away our savings and live like
tomorrow will never come. One reason, two Nobel laureates argue, is that
there are plenty of businesses happy to lead us astray.

Robert
Shiller, an economist at Yale University, used his understanding of how
human behavior can affect markets to predict the dot-com crash of the
early 2000s and the housing collapse of 2007. He won the Nobel Prize for
Economics in 2013 for his work showing that stock and bond prices can
move out of step with economic fundamentals even over the long run.

In
his new book with George Akerlof, another Nobel-prize winning
economist, Shiller examines the many ways credit-card companies,
financial firms and other businesses lure people into buying things that
might harm them. The authors call that phishing, adopting the word for a
common email scam to a broad array of cynical business practices. They
call the person who takes the bait a phool. Their book is called
"Phishing for Phools: The Economics of Manipulation and Deception."

Their
big point: It's not that bad actors are gaming the free market, it's
that hucksters and dishonest marketing are part of the free-market game.

In
a recent interview with The Associated Press, Shiller talked about how
phishers lure phools, the appeal of one-armed bandits and the media's
misleading fascination with splashy stories. The interview has been
edited for length and clarity.

Q: What prompted you to write this book?

A: I often tend to think that things are not what they seem.

Q: Your focus isn't on malevolent fraudsters but people just doing their job?

A:
We agreed that we shouldn't portray these people as evil. This is just
what you get with free markets, depending on how free you let them be.
My previous books were all about the positive aspects to markets. But
markets are often presented too positively, with a certain reverence.
Life is more complicated than that.

Q: Could you explain why you chose the word, phish?

A:
We use it as a metaphor because people are aware of computer phishing.
You can so easily be fooled by them because you don't see all the work
that went into luring you in. Things look perfectly plain and simple but
in fact it's all artifice. There are a lot of these phishers, some of
them are savvy operators, and they're experimenting. They find a ploy
and, man, it works.

Q: This isn't a new trend but it's getting worse?

A:
Yes. Take the slot machine. In the 19th Century, it dispensed sweets
and toys. It was the first vending machine. Now, it's optimized for
gambling. Companies experiment with different things. There's the
jingling and bright lights, all part of a mesmerizing effect. They like
to give you the sense that you've almost won, with three cherries, for
instance. You can program it so that two cherries come up, and you can
see the third cherry stopping just one off. You think, "I almost won!"

I don't actually play these machines, mind you.

Q: The gist is that businesses keep casting new lures into the water until they get a bite?

A:
It's the same thing with Cinnabon. They don't publicize the
experimentation they do. Manufacturers of food try to get the optimal
ratio to tap into your impulsivity. They don't care about your health.
Cinnabon boasts about their genuine Makara cinnamon from Indonesia. They
can boast about that sort of thing. They can't say, "Boy, we really
cranked up the fat and sugar."

They
place them carefully indoors, in train stations and airports, where
you'll smell it. You're frustrated, your flight was delayed, and you're
in a bad mood. They catch you right there. The mind tends to have a
conversation, producing an excuse to eat it alongside a memory of your
resolve not to eat it. They try to help one side of this conversation
with the slogan, "Life needs frosting." It's a beautiful slogan, a great
justification for giving in. It works, I bet.

Q: You say the news media is guilty of phishing, too. How so?

A:
They often focus on things that aren't important because they know what
kind of story sells. In March of last year, this Malaysia Airlines
plane went down mysteriously. The logical thing is to think somebody
made a mistake. However, the news media latched onto a mystery story for
days and days. It's just a waste of time to think about. In terms of
human welfare, it would be much better if the cable stations put up the
periodic table of the elements to remind everybody. That would be useful
information compared to the Malaysian airlines story.

I
was on Neil Cavuto's Fox Business TV show. He asked me what I thought
about the Federal Reserve raising interest rates. I said I don't think
it really matters whether the Fed raises rates this meeting or next
meeting. He said, "Look we're doing a whole show about this." There's
too much attention to these little stories.

A former hedge fund manager jacked up the price of a crucial drug 750 per pil

Turing increases price of Darapim to 750 per pill - Business Insider
















A
biotech company founded by a former hedge fund manager recently
purchased the rights to a critical anti-parasitic drug and jacked up the
price by more than 5,000%.Start-up Turing Pharmaceuticals acquired Daraprim, a drug used to treat toxoplasmosis, in August. Toxoplasmosis is a disease caused by a common parasite that can be deadly, especially for those who are immunosuppressed.


Turing immediately increased the price of Daraprim from $13.50 per pill to $750, The New York Times reported.


In an interview with Bloomberg TV's Betty Liu on Monday, the
company's CEO Martin Shkreli defended the move, explaining that
they "need to turn a profit on the drug."


Daraprim, which has been around for 62 years, has had multiple
owners. Shkreli said that other companies were "giving it away almost."
He added that even at $750 per tablet, it's "still underpriced relative
to its peers."


It costs very little to make Daraprim, but Shrkeli said there are
other costs such as distribution costs that have increased over the
years.

It looks like banks might have rigged another huge market - Yahoo Finance

It looks like banks might have rigged another huge market - Yahoo Finance

It looks like banks might have rigged another huge market

The market for US Treasury bonds may have been rigged.

That’s according to a federal antitrust lawsuit, first reported by Bloomberg's Alexandra Scaggs and Matthew Leising.

The plaintiffs — Cleveland
Bakers and Teamsters Pension Fund, represented by law firm Quinn
Emmanuel Urquhart & Sullivan — claim that Treasury dealers including
Goldman Sachs, JPMorgan, and Morgan Stanley coordinated to manipulate
primary market Treasury auctions.

They cite data from Rosa
Abrantes-Metz, who has testified in other market-rigging cases and is
an adjunct associate professor at New York University.

According to her analysis, 69% of a certain type of Treasury auction — for so-called reissued Treasuries — look suspicious.

The richest Americans are winning the economic recovery - Yahoo Finance

The richest Americans are winning the economic recovery - Yahoo Finance

U.S. Census Bureau data out Wednesday underscore just how lousy the recovery has been if you aren't rich.

Looking at eight groups of household income selected by Census,
only those whose incomes are already high to begin with have seen
improvement since 2006, the last full year of expansion before the
recession. Households at the 95th and 90th percentiles had larger
earnings through 2014, the latest year for which data are available.

Income
for all others was below 2006 levels, indicating they're still clawing
their way out of the hole caused by the deepest recession in the
post-World War II era.

Median household income is 6.5 percent lower than in 2007, the year the recession started.

Overall,
median income was $53,657 in 2014, not a statistically significant
difference on an inflation-adjusted basis from 2013's median of $54,462.
It's the third straight year that there's been no significant change,
after two consecutive years of annual declines.

More Than Half Of American Schoolchildren Now Live In Poverty

More Than Half Of American Schoolchildren Now Live In Poverty

"Overall, 51 percent of U.S. schoolchildren came from low-income
households in 2013, according to the foundation, which analyzed data
from National Center for Education Statistics on students eligible for
free or reduced-price lunches."

"The report shows the percentage of schoolchildren from poor households
has grown steadily for nearly a quarter-century, from 32 percent in
1989. "By 2006, the national rate was 42 percent and, after the Great
Recession, the rate climbed in 2011 to 48 percent," says the report."

"The analysis shows the highest percentages of poor students in
Southern and Western states. Mississippi had the highest rate of
low-income students -- 71 percent. New Hampshire had the lowest, at 27
percent.

“No longer can we consider the problems and needs of low
income students simply a matter of fairness," the report says. "...
Their success or failure in the public schools will determine the entire
body of human capital and educational potential that the nation will
possess in the future."

Most Americans are one paycheck away from the street

Most Americans are one paycheck away from the street - MarketWatch

"Approximately 62% of Americans have no emergency savings for things such
as a $1,000 emergency room visit or a $500 car repair, according to a
new survey of 1,000 adults by personal finance website Bankrate.com.
Faced with an emergency, they say they would raise the money by reducing
spending elsewhere (26%), borrowing from family and/or friends (16%) or
using credit cards (12%)."

"The findings are strikingly similar to a U.S. Federal Reserve survey
of more than 4,000 adults released last year. “Savings are depleted for
many households after the recession,” it found. Among those who had
savings prior to 2008, 57% said they’d used up some or all of their
savings in the Great Recession and its aftermath. What’s more, only 39%
of respondents reported having a “rainy day” fund adequate to cover
three months of expenses and only 48% of respondents said that they
would completely cover a hypothetical emergency expense costing $400
without selling something or borrowing money."

"Why aren’t people saving? “A lot of people are in debt,” says Andrew Meadows, a San Francisco-based producer of “Broken Eggs,”
a documentary about retirement. “Probably the most common types of debt
are student loans and costs related to medical issues.” He spent seven
weeks traveling around the U.S. and interviewed over 100 people about
why they haven’t saved enough money. “People are still feeling the heat
from the Great Recession.” Some 44% of senior citizens have enough
savings to cover unexpected expenses versus 33% of millennials,
Bankrate.com found."

"But while the jobs market is improving and the Affordable Care Act has
given an estimated 15 million people access to medical care, the Great
Recession does appear to have taken its toll on Americans’ finances; in
fact, they’re 40% poorer today than they were in 2007. The net worth of
American families — that is, the difference between the values of their
assets, including homes and investments, and liabilities — fell to
$81,400 in 2013, down slightly from $82,300 in 2010, but a long way off
the $135,700 in 2007, according to a report released last month by the
nonprofit think tank Pew Research Center in Washington, D.C."

Is Global Poverty Falling? Not in Absolute Terms - WSJ

Is Global Poverty Falling? Not in Absolute Terms  - WSJ

While there has been progress in reducing
the number of people living below the poverty line, this has been
achieved largely by raising those considered ultrapoor to just above the
poverty line, rather than by boosting the standard of living of the
poor more broadly, according to a paper from Martin Ravallion, economist at Georgetown University’s Center for Economic Research.


“There has been very little absolute gain for the poorest,” Mr. Ravallion writes in a new working paper from the National Bureau of Economic Research.
“Using an absolute approach to identifying the floor, the increase in
the level of the floor seen over the last 30 years or so has been
small—far less than the growth in mean consumption.”

“The bulk of the developing world’s progress against poverty has been
in reducing the number of people living close to the consumption floor,
rather than raising the level of that floor,” Mr. Ravallion. “Growth in
mean consumption has been far more effective in reducing the incidence
of poverty than raising the consumption floor. In this sense, it can be
said that the poorest have indeed been left behind.”