British Airways strike: Passengers asked not to turn up at airports
British Airways (BA) has asked its passengers not to turn up at airports as the biggest strike action in the airlines 100 year history begins on Monday.
 
More than 1,500 flights have been cancelled as the company was accused of bullying its own staff by union bosses, who warned they could continue the action until the end of the year, The Telegraph reported.
 
Some 280,000 people will be affected by the strike which is set to continue on Tuesday, costing BA 80 million pounds ($98 million) in lost revenue.
 
Flights to New York, Delhi, Hong Kong and Johannesburg have all been affected, with the airline telling passengers: "If your flight is cancelled, please do not go to the airport." 
 
Travellers have been offered full refunds, flights on different carriers, or the option to fly on a different date, but should not turn up at the airport without a confirmed flight.
 
BA and The British Airline Pilots' Association (BALPA) are clashing after the union rejected a proposed 11.5 per cent pay rise for its pilots, taking their pay package to around 200,000 pounds a year.
 
BALPA says that BA "has resorted to breaking agreements and threatening pilots who will strike, which is bound to make matters worse" after they emailed their 4,300 pilots on Friday warning that strike action would be a ‘serious breach' of their contract.
 
The airline further threatened to withdraw a travel perk, where staff can book tickets for ten per cent of the full fare plus taxes, for three years if they chose to strike.
 
BALPA branded the airline's behaviour "illogical and irresponsible" and "will further deepen the fall out with their pilots", reports The Telegraph.
 
British Airways said on Sunday: "We're extremely sorry for the problems caused by the strike action called by the pilots' union, BALPA on 9, 10 and 27 September.
 
"We continue to be available for constructive talks with BALPA, on the basis that there are no pre-conditions to those talks.
 
"If you have a flight booked with us on those dates, it is likely that you will not be able to travel as planned due to BALPA's strike action. We are offering all affected customers full refunds or the option to re-book to another date of travel or alternative airline."
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    General Electric engaged in 'bigger fraud than Enron': Whistleblower
    A whistleblower has accused General Electric (GE) of hiding massive losses by engaging in a $38 billion accounting fraud, which is "bigger than Enron".
     
    In his report this week, investigator Harry Markopolos accused GE of utilising many of the same accounting tricks as Enron did to mislead the investors. 
     
    "In fact, GE's $38 billion in accounting fraud amounts to over 40 per cent of GE's market capitalisation, making it far more serious than either the Enron or WorldCom accounting frauds," said the report.
     
    GE denied the charge saying the 175-page report contained false statements.
     
    "GE will always take any allegation of financial misconduct seriously. But this is market manipulation - pure and simple," Lawrence Culp, Chairman and Chief executive Officer of GE said in a statement.
     
    "Mr. Markopolos' report contains false statements of fact and these claims could have been corrected, if he had checked them with GE before publishing the report," said the statement.
     
    To investigate GE's fraud, Markopolos team went out and located the eight largest Long-Term Care (LTC) insurance deals that GE is a counterparty to, accounting for approximately 95 per cent or more of GE's exposure. 
     
    Either these eight insurance companies filed false statutory financial statements with their regulators or GE's financial statements are false, alleged the report.
     
    The investigator said he got access to these eight insurers' statutory financial statements filed with the relevant state insurance commissions. 
     
    "What they revealed was that GE was hiding massive loss ratios, the highest-ever seen in the LTC insurance industry, along with exponentially increasing dollar losses being absorbed by GE," said the report.
     
    "What's even more doubtful is GE becoming cash flow positive in 2021 as management would have you believe."
     
    "After we accounted for the $38 billion in accounting fraud, GE's debt to equity ratio goes from the 3:1 ratio that it reported at the end of the 2nd quarter 2019 to a woefully deficient 17:1," the report alleged.
     
    Leslie Seidman, GE Director and Chair of Audit Committee, also accused Markopolos of inaccuracies.
     
    "The report contains numerous novel interpretations and downright mistakes about the actual accounting requirements, making his conclusions about GE's reporting questionable at best," Seidman said in a statement. 
     
    "The fact that he wrote a 170-page paper but never talked to company officials goes to show that he is not interested in accurate financial analysis, but solely in generating downward volatility in GE stock so that he and his undisclosed hedge fund partner can personally profit," Culp said.
     
    The Enron scandal, revealed in 2001, led to the prosecution of several of its executives. Enron's CEO, Jeff Skilling resigned on August 14, 2001. The company was downgraded to junk status on November 28, 2001 and filed for bankruptcy protection on December 2 that year. 
     
    Markopolos is best known for his role as the whistleblower, who warned the Securities and Exchange Commission (SEC), the US's top financial watchdog, about Madoff's Ponzi scheme, the Guardian reported. 
     
    After Madoff pleaded guilty to swindling investors out of $65bn in savings, he was jailed for 150 years in 2009.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    COMMENTS

    Arumugaraja

    1 month ago

    Financialization of Business is the biggest drawback of America. Everything is seen in terms of share price.
    Even Trump tax benefit was used for share buyback rather than investment not even for employee wages.
    A recession is talked about in America but when actually it is to set in?

    ramchandran vishwanathan

    1 month ago

    The whistle blower is a credible gentleman , he worked systematically over the years to expose Madoff. At that time too all stakeholders were in denial mode. Let's hope GE comes out with facts and counters his findings.

    pravin banker

    1 month ago

    I was first involved with GE way back in 1980, just before Jack Welch became CEO. I was at IBM Treasury and the Treasurer Art Northrop used to send me on an annual pilgrimage to GE HQ in CT to learn the latest techniques on Financial Engineering/Accounting. GE for many years had promised sustained 15% per year earnings growth come "Hell or High Water" - meaning independent of the economy which- as you all know - is impossible w/o resorting to FE.

    I was the first to bring down Enron. We were retained by Tractebel to buy certain Enron assets in Europe. The assets were supposed to be collateralized by some 5 billion in Osprey bonds. The bonds were underwritten by Paine Webber which was acquired by UBS. I took the deal to Robert Wolf, then Chairman of UBS Americas stationed in Stamford, CT. What a fabulous deal - UBS had some 500mm of the Osprey bonds in portfolio and could acquire the balance 2.5b required for Tractebel to acquire the assets. The bonds were trading at under 80% of par so a savings to Tractebel of aropund 600mm.

    Wolf summoned the two Investment Bankers that spearheaded the Osprey bonds. They started to smirk. Wolf was furious. They then asked for a few minutes to bring to his attention the prospectus. Deep in the prospectus a qualification was inserted by then Enron CFO Fastow. The collateral could be moved by fiat by Fastow six months after issuance. The shifty Fastow had removed the collateral and pledged it for other loans. The Osprey Bonds had no collateral.

    With a 500mm exposure Wolf panicked. He raced out of his office into the cavernous trading floor where almost 800 toiled. He barked an order to move the bonds from the high grade desk to the Junk desk and ordered the traders to sell/ short the bonds as well as the shares. The shares were trading at 27. Within weeks the shares plunged below $1 per share. The biggest shareholder was Alliance - left holding the bag.

    The rest is History.

    SO - while I would not fully believe that "whistleblower" Marcopolus, There is some basis for credibility. The ingrained culture at GE is to Financial Engineer. Culp surely resorted to some of it.

    THERE may be some light though. An Insurance qualified billionaire client of ours is offering to assume the long term care liability for a sum certain. No one else will. If he strikes a deal with Culp, the one big exposure will have been lifted and the shares could rocket higher to over 12 per share. Most USA based Hedge Funds are long GE and will pile in.

    Managing Director - Global Financial Network Inc/ Director - Balkan Capital Management OOD

    Sudhir Mankodi

    1 month ago

    If true, how much of investors\' wealth is likely to be wiped out?

    Balaji Kasal

    1 month ago

    If it is True, it is serious. Shows weak USA economy. How Big Companies and Govt putting reality under carpet. Question is how long?
    It would better for USA as well World Economy show maturity and face reality. And might take Total Reset sooner than later.
    Thanks.

    US-China Trade Wars: A Challenge for the New Government?
    The ongoing trade skirmish between the US and China is showing no signs of abating with the US increasing tariffs from 10% to 25% on $200 billion worth of Chinese products on 10 May 2019. China in retaliation has said that it will raise tariffs on $60 billion worth US imports beginning 1 June 2019. China has already imposed tariffs on US products worth $110 billion last year. The worsening economic indicators in the US, like student loan delinquency and yield curve inversion, may pose challenges for the incumbent Indian government as well, says a research note.
     
    In the report, Dr Soumya Kanti Ghosh, group chief economic adviser of State Bank of India (SBI), says, "Not just China, the US is waging tariff war with other countries, with tariffs imposed on its major trade partners Canada, Mexico and others as US is convinced that it has to reduce its burgeoning trade deficit.
     
    Interestingly, we find that the impact of such tariffs may be hurting US more and hence that country may be caught in a vicious cycle of imposing more tariffs as a veiled threat of not retaliating."
     
     
    US President Trump has created a lot of noise on the trade front, since he joined office, with the language of the various trade related documents making it amply clear that US has felt itself to be handed the short end of the stick by its trade partners. It began with the 2017 US Trade Policy Agenda outlining the new administration’s four trade priorities: promoting US sovereignty, enforcing US trade laws, leveraging American economic strength to expand their goods and services exports, and protecting US intellectual property rights. 
     
    Since then the US has renegotiated the North American Free Trade Agreement (NAFTA) with Canada and Mexico and the US Korea (KORUS) free trade agreement. It has imposed tariffs on imported steel and aluminium, which have invoked retaliation from its trade partners.
     
    "With all the hullabaloo created over President Trump’s trade measures, we looked at US’ trade deficit and found that its goods trade deficit has in fact increased in 2018, with imports growing more than exports. A strengthening US economy and strong dollar have supported the imports, despite the hue and cry raised by President Trump on the trade deficit," Dr Ghosh from SBI added.
     
    On an annual basis, in the end use commodity category, foods, feeds, beverages exports has seen the slowest growth. More than 800 food and agricultural products from the US have been subject to retaliatory tariffs from China, the EU, Turkey, Canada, and Mexico. This could be reason for the slowing exports growth of agricultural products. With nearly 20% of farm income derived from exports, the trade war will impact the US farmers to a considerable extent, SBI says.
     
    For example, Dr Ghosh says, Chinese data shows that the monthly growth of imports from US has declined more as compared to Chinese exports to US after July 2018. Although, China will be impacted more as the base of its exports to US is much larger than its imports, it appears that US is not going to remain unscathed, he added.
     
     
    The report also points out the large difference between the official trade statistics released by the US and People’s Republic of China. However, as the latest data is available in the Chinese General Administration of Customs, SBI found that in absolute terms Chinese exports to the US have gone down to $31.4 billion in April 2019 from $36.1 billion in April 2018. Meanwhile Chinese imports from US have declined to $10.3 billion in April this year from $13.9 billion in same period a year ago.
     
    In addition, SBI says, there are even concerns about the tariff wars spilling over to the financial markets in the form of China cutting short its exposure in US treasury market. China owns $1.13 trillion in treasury, a fraction of the total $22 trillion in US debt outstanding but 17.7% of the various securities held by foreign governments, according to data from the treasury and the Securities Industry and Financial Markets Association.
     
    With 25% tariffs on $250 billion worth of Chinese goods, the US can generate revenue to the tune of $62.5 billion annually. "Will this be sufficient to compensate for the loss incurred by the American consumers and exporters and more importantly the harm caused to the China-US relations? A recent survey by Pew Research Centre has found that American public is more positive about free trade agreements and sceptical about tariffs. With the upcoming elections, it would not be amiss for the US President to take into account sound economic principles and people’s mandate," Dr Ghosh from SBI concludes.
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