Category: Business

The past three months have been financially painful for many Americans — but not for billionaires.  However, US billionaires have become $565 billion richer since March 18, according to a report published last week by the Institute for Policy Studies, a progressive think tank.

Total wealth for billionaires now stands at $3.5 trillion, up 19% from the low point near the beginning of the pandemic, the report said. Amazon (AMZN) boss Jeff Bezos alone is worth $36.2 billion more than he was on March 18.

Since that day, nearly 43 million Americans have filed for initial unemployment benefits. Lower-income workers, especially in travel and service-sector jobs, have been hit particularly hard by the health crisis.

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The numbers put an exclamation point on the deep divide between haves and have-nots that is helping to fuel unrest across the United States. Wealth inequality is likely to get even worse because of this crisis, experts say.

The acceleration of wealth for the richest Americans is being driven by the remarkable recovery of the stock market, which has skyrocketed in large part because of unprecedented action from the Federal Reserve.

“The stock market taking off — and decoupling from the real economy — is exacerbating inequality,” said Kristina Hooper, chief global market strategist at Invesco.

Despite the turmoil on the streets of US cities and a record 43 million Americans filing for unemployment benefits, the Nasdaq is on the cusp of hitting record highs — an astonishing feat that underscores how quickly Wall Street has rebounded.

The Fed’s emergency response, including slashing interest rates to zero and promising to buy unlimited amounts of bonds, was designed to make risky assets like stocks look more attractive. Investors have essentially been forced to gamble on equities — and Big Tech in particular is benefiting from that.

Large tech companies aren’t just surviving during the pandemic — many of them are thriving. The crisis has made Amazon, for instance, even more essential than it already was. Amazon shares have spiked 47% from their mid-March lows.

Facebook (FB) also swiftly recovered to record highs. The net worth of Mark Zuckerberg, the company’s co-founder and CEO, has climbed $30.1 billion since March 18, the IPS report found.

The report calculated billionaire wealth using data provided by the Forbes Global Billionaires List, a real-time assessment of net worth. March 18 is used as the starting date because that is the date tied to the 2020 Forbes Global Billionaire survey. It also roughly matches up with when US states and the federal government began imposing health restrictions.

Other tech power players have also amassed more wealth over the past three months. The net worth of Tesla (TSLA) boss Elon Musk, Google founders Sergey Brin and Larry Page and former Microsoft (MSFT) CEO Steve Ballmer have all climbed by $13 billion or more apiece since March 18, the report found.

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Meanwhile, the United States has been gripped by mass unemployment caused by social distancing requirements imposed to fight the pandemic.

Economists expect Friday’s jobs report to show the United States lost another 8 million jobs in May, lifting the pandemic tally to 28.5 million — three times the number of jobs lost during the Great Recession. The unemployment rate is expected to climb to nearly 20%, higher than it’s been since the Great Depression.

“Surging billionaire wealth juxtaposed with the suffering and plight of millions undermines the social solidarity required for us to recover together in the years ahead,” Chuck Collins, co-author of the IPI report, said in a statement.

Of course, millions of average Americans are also benefiting from the V-shaped recovery in the stock market. The rebound has lifted the value of investment portfolios, pension funds and retirement accounts. Even just betting on a vanilla fund that tracks the S&P 500 would have given investors a tidy return of nearly 40% since the March 23 lows.

About 52% of families owned stocks directly or indirectly through retirement plans like 401(k)s, according to 2016 stats from the Federal Reserve.

Yet a surging stock market helps the rich more than the rest of the country. That’s because the top 10% of households owned 84% of all stocks in 2016, according to NYU professor Edward Wolff.

These trends help explain the unrest that has gripped the United States. Although the initial catalyst was police brutality, the protests and riots are taking place in a nation divided across racial and economic lines. And those fault lines appear to be growing during the pandemic.

“You’ve got a combustible concoction of lost income and inequality,” said Joe Brusuelas, chief economist at RSM International.

Reliance Industries Ltd (RIL) chief Mukesh Ambani is the ninth richest person in the world along with Steve Ballmer of Microsoft and Larry Page of Google, each having a net worth of $67 billion, according to the Hurun Global Rich List 2020.

Ambani, 62, maintained a place in the top 10 for the second time after a $13 billion or 24 per cent surge in his wealth to $67bn.

“The only Asian in the Top 10, Ambani’s wealth increased mainly on the back of a good performance in his telecom business,” the Hurun Rich List said.

Ambani is restructuring Reliance Industries to facilitate the planned strategic investments in group businesses – Reliance Jio, Reliance Retail, refining and petrochemicals. The conglomerate aims to be a zero net debt company in 18 months and is in discussion to sell 20 per cent oil-to-chemicals business to Saudi Aramco, at an enterprise value of $75 billion. RIL became the first Indian company to hit the milestone of achieving Rs 10 lakh crore market capitalisation.

Amazon CEO Jeff Bezos retains the top spot in the Hurun Global Rich List 2020 with $140 billion, down $7 billion, mainly due to the world’s largest divorce settlement with former wife MacKenzie Bezos, who makes the list in her own right with $44 billion.

Amazon is one of four companies, whose valuations have hit $1 trillion, the others being Microsoft, Apple and Google. Bezos bought a $165 million home, setting a new record for Los Angeles. In February, he pledged $10 billion to help fight climate change.

Bill Gates, dropped down to third place on the Hurun Global Rich List 2020, with $106 billion, despite growing his wealth $10 billion or 10 per cent. Last month, Gates announced a $100 million commitment to fight coronavirus which has triggered a global health emergency.

Over the past two decades, the Bill and Melinda Gates Foundation has given out more than $50 billion to global health and education. (IANS)

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IBM tapped Arvind Krishna as its next CEO last week. And this week WeWork confirmed it hired Sandeep Mathrani as its new chief executive.  They join a growing number of global CEOs of Indian origin, according to social media, news reports and online searching (incidentally, Google is run by an Indian).

Here’s a list of Indian American CEOs:

Shantanu Narayen, Adobe

Sundar Pichai, Alphabet, the parent company of Google

Satya Narayana Nadella, Microsoft

Rajeev Suri, Nokia

Punit Renjen, Deloitte

Vasant “Vas” Narasimhan, Novartis

Ajaypal “Ajay” Singh Banga, Mastercard

Ivan Manuel Menezes, Diageo

Niraj S. Shah, Wayfair

Sanjay Mehrotra, Micron

George Kurian, NetApp

Nikesh Arora, Palo Alto Networks

Dinesh C. Paliwal, Harman International Industries

A disclaimer that this is hardly complete or exhaustive. Some are the children of Indian immigrants.

To be sure, there is a risk of reading into one group’s success as a case of Indian exceptionalism, which I truly do not believe. Rather, a series of external factors have contributed to the rise of the Indian CEO, which says more about the state of corporate America, a globalized workplace, technological disruption and the leaders who might prevail.

”It’s not a not a surprise that we’re seeing Indians rise in corporate ranks,” says Richard Herman, coauthor of a book on migrants to the U.S., Immigrant, Inc. ”Of all the immigrant groups coming in today, Indians are head-and-shoulders above others, and this is partly because of their English language skills and also the advanced education that many of them are bringing to the U.S.”

Nooyi, says Herman, is part of a growing trend where U.S. companies are being created, or led, by foreign-born individuals who bring in something special. Herman cites new research from Brigham Young University showing American workers innovate and solve problems faster when working with a ”socially distinct newcomer,” meaning, a person from another culture.

Despite these personal success stories the number of immigrants who are leading corporate America, Indian or otherwise, is still a tiny fraction. But, says Herman, ”look at where the data was ten years ago and maybe it was zero or one [Indian then].”

The first of these happened in the early 1980s. After a decade of low borrowing costs, which enabled governments to expand their balance sheets considerably, interest rates began to rise, making debt-service increasingly unsustainable. Mexico fell first, informing the United States government and the International Monetary Fund in 1982 that it could no longer repay. This had a domino effect, with 16 Latin American countries and 11 least-developed countries outside the region ultimately rescheduling their debts.

In the 1990s, interest rates were again low, and global debt surged once more. The crash came in 1997, when fast-growing but financially vulnerable East Asian economies—including Indonesia, Malaysia, South Korea, and Thailand—experienced sharp growth slowdowns and plummeting exchange rates. The effects reverberated worldwide.

The World Bank has just warned us that a fourth debt wave could dwarf the first three.

But it is not only emerging economies that are vulnerable to such crashes, as America’s 2008 subprime mortgage crisis proved. By the time people figured out what “subprime” meant, the U.S. investment bank Lehman Brothers had collapsed, triggering the most severe crisis and recession since the Great Depression.

The World Bank has just warned us that a fourth debt wave could dwarf the first three. Emerging economies, which have amassed a record debt-to-GDP ratio of 170 percent, are particularly vulnerable. As in the previous cases, the debt wave has been facilitated by low interest rates. There is reason for alarm once interest rates begin to rise and premia inevitably spike.

The mechanics of such crises are not well understood. But a 1998 paper by Stephen Morris and Hyun Song Shin on the mysterious origins of currency crises, and how they are transmitted to other economies, shows that a financial tsunami can make landfall far from its source.

How the source of financial trouble can vanish, leaving others stranded, was illustrated in the delightful short story “Rnam Krttva” by the celebrated twentieth-century Indian writer Shibram Chakraborty. In the story—which I translated into English and included in my book “An Economist’s Miscellany”—the desperate Shibram asks an old school friend, Harsha, to lend him 500 rupees ($7) on a Wednesday, to be repaid the following Saturday.

But Shibram squanders the money, so on Saturday, he has little choice but to ask another school friend, Gobar, for a loan of 500 rupees, to be repaid the next Wednesday. He uses the money to repay Harsha. But when Wednesday rolls around, he has no way of repaying Gobar. So, reminding Harsha of his excellent repayment record, he borrows from him again.

It is not too late for countries to build seawalls to protect against debt tsunamis.

This becomes a routine, with Shibram repeatedly borrowing from one friend to repay the other. Then Shibram runs into both Harsha and Gobar one day at a crosswalk. After a moment of anxiety, he has an idea: Every Wednesday, he suggests, Harsha should give Gobar 500 rupees, and every Saturday, Gobar should give the same amount to Harsha. Shibram assures his former school friends that this will save him a lot of time and change nothing for them, and he vanishes into Kolkata’s milling crowds.

So who are the likely Harshas and Gobars in today’s debt wave? According to the World Bank, they could be any country with domestic vulnerabilities, a stretched fiscal balance sheet, and a heavily indebted population.

There are several countries that fit this description and run the risk of being the conduit that carries the fourth debt wave to the world economy. Among advanced economies, the United Kingdom is an obvious candidate. In 2019, the U.K. narrowly avoided a recession, with a growth rate a shade above zero—the weakest growth in a non-recession period since 1945. The country is also about to undertake Brexit. Conservatives in Britain have promised that a “tidal wave” of business investment will follow. This is unlikely: if there is a tidal wave, it will probably be one of debt instead.

Among emerging economies, India is especially vulnerable. In the 1980s, India’s economy was fairly sheltered, so the debt wave back then had little impact. At the time of the East Asian crisis in 1997, India had just begun to open up, and it experienced some slowdown in growth. By the time of the debt wave in 2008, the country had become globally integrated and was severely affected. But its economy was strong and growing at nearly 10 percent annually, and it recovered within a year.

Today, India’s economy is facing one of its deepest crises in the last 30 years, with growth slowing sharply, unemployment at a 45-year high, close to zero export growth over the last six years, and per capita consumption in the agricultural sector decreasing over the last five years. Add to this a deeply polarized political environment and it is little wonder that investor confidence is rapidly declining.

It is not too late for countries to build seawalls to protect against debt tsunamis. While India’s political problems will take time to solve, the Union budget—to be presented on February 1—is an opportunity for preemptive action. The fiscal deficit needs to be controlled in the medium term, but the government would be wise to adopt expansionary fiscal policy now, with money channeled into shoring up infrastructure and investment. Managed properly, this can boost demand without increasing inflationary pressures, and strengthen the economy in order to withstand a debt wave. The country’s leaders must seize this opportunity. The alternative is to adopt the brace position.

The world’s already huge debt load smashed the record for the highest debt-to-GDP ratio before 2019 was even over. In fact, it broke that record in the first nine months of last year. Global debt, which comprises borrowings from households, governments and companies, grew by $9 trillion to nearly $253 trillion during that period, according to the Institute of International Finance.

That puts the global debt-to-GDP ratio at 322%, narrowly surpassing 2016 as the highest level on record. More than half of this enormous number was accumulated in developed markets, such as the United States and Europe, bringing their debt-to-GDP ratio to 383% overall.

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There are plenty of culprits. Countries like New Zealand, Switzerland and Norway all have rising household debt levels, while the government debt-to-GDP ratios in the United States and Australia are at all-time highs. In emerging markets, debt levels are lower, for a total of $72 trillion, but they have risen faster in recent years, according to the IIF.

China’s ratio of debt to GDP, for example, is approaching 310%, the highest level in the developing world. Investors have long kept a skeptical eye on the highly-leveraged country. Following a push for Chinese companies to reduce their borrowing in 2017 and 2018, debt levels rose again last year, the IIF said in its Global Debt Monitor report.

Such massive worldwide debt is a real risk for the global economy, especially because the IIF expects levels to rise even further in 2020.

“Spurred by low interest rates and loose financial conditions, we estimate that total global debt will exceed $257 trillion” in the first quarter of 2020, the IIF said.

The Federal Reserve lowered interest rates three times last year, and the European Central Bank’s benchmark rate is still at its post-financial crisis lows.

Despite favorable borrowing conditions, the refinancing risk is massive. A total of more than $19 trillion of syndicated loans and bonds will mature in 2020. It’s unlikely that all of these will be refinanced or repaid.

Another issue that the report brings up is the financing needs for urgent climate change action.

The United Nations’ Sustainable Development Goals require $42 trillion of infrastructure investments by 2030, but “countries with limited borrowing capacity could face severe challenges in meeting development finance needs,” the IIF said.

Recession fears are again on the rise, with the vast majority of chief financial officers bracing for an economic downturn in 2020—and historical data shows that trends of declining optimism among America’s financial executives can sometimes be a harbinger for looming market sell-offs.

Recession fears are back in full force: 97% of CFOs said that an economic downturn has already begun or will begin in 2020—up from 88% who said the same thing last year, according to Deloitte’s latest CFO Signals Survey.

Many on Wall Street primarily use CFO sentiment as an indicator of the business environment, but deteriorating forecasts can sometimes help warn of looming market downturns, historical data shows.

Going into 2019, for example, just 28% of CFOs said they expected the North American economy to improve—half the number it was a year earlier, in 2018. That statistic fell to 24% in the following quarter, right before the S&P 500 dropped almost 7% in May and again by nearly 6% from mid-July to August.

Business optimism also notably declined before the big December 2018 market sell-off, when the S&P 500 shed over 9%: Over two thirds of CFOs warned that the U.S. market was overvalued, and a metric of their forward-looking optimism hit a two-year low.

Before the market lost almost 10% in the third quarter of 2015, some CFO growth expectations hit their lowest levels in five years, reflecting rising concern ahead of the sell-off. The S&P 500 also fell by 5% in the first month of 2016—in Deloitte’s prior outlooks, CFO optimism had been steadily on the decline.

Going further back, CFO sentiment was also relatively accurate in warning of the 2008 financial crisis: According to Duke’s CFO Global Business Outlook, optimism had plunged to a record low by September 2017—with pessimistic CFOs outnumbering optimists by around four to one.

What to watch for: It’s important to remember that CFO sentiment, which helps give insight into business and consumer spending, is primarily an indicator of economic activity—rather than stock market behavior.

Crucial quote: “While as a stand-alone they don’t offer much insight, it’s most helpful to look at these surveys hand-in-hand with hard economic data,” says Mark Freeman, chief investment officer at Socorro Asset Management. “What really matters is the extent to which sentiment potentially translates into CFO behavior—that has earnings implications, and that does matter to the market from a fundamental standpoint.”

Tangent: Nearly two thirds of CFOs surveyed by Deloitte said that U.S. economic performance beyond 2020 will “depend substantially” on the outcome of the elections, while trade policy remains CFOs’ “most worrisome external risk.” Respondents also cited falling expectations for two key measures of the economy: Consumer sentiment, which has largely held steady so far, and business spending, expectations for which hit a three-year low. More than 80% of CFOs also said they had already taken at least one defensive action to mitigate against a potential downturn, as evidenced by their growing focus on cost reduction and returning cash.

The market boomed in 2019, with major indexes hitting numerous record highs as stocks posted their best annual return in six years, thanks to the U.S. economy’s moderate expansion holding steady and renewed trade optimism on Wall Street.

On the last of day of trading in 2019, the session capped off a strong year for the stock market: In 2019, the S&P 500 rose by 29%, the Nasdaq by 35% and the Dow Jones Industrial Average by 22%. Both the S&P 500 and Nasdaq posted their biggest one-year gains since 2013, while the Dow’s performance was its best since 2017.

As stocks continued to rise, Wall Street put recession fears on the back-burner, especially as the U.S. economy’s moderate pace of expansion held steady. Solid consumer spending, a robust labor market and an apparent recovery in the housing market have all been good indicators in this regard.

Another huge reason for the market’s renewed optimism in 2019 was the signing of several new trade deals toward the end of the year, including a revised North American trade agreement to replace NAFTA and, after months of on-again, off-again negotiations, the long-awaited phase one trade deal with China.

U.S. and Chinese negotiators agreed upon a phase one deal in October, before both sides officially confirmed terms of the deal in December. As it stands, the phase one agreement is expected to be signed in the first week of 2020, as both sides work to finalize the legal and translation process.

The de-escalation of trade tensions with China was also a boost for the global economy, as tariffs from the last year and a half of the trade war have weighed heavily on international trade volumes.

What’s more, Wall Street is at ease knowing that the Federal Reserve is now on hold, after signalling that it has no plans to cut interest rates in 2020 and will remain on the sidelines unless inflation flares up.

What to watch for: Going into 2020, the market is optimistic that economic growth can continue, especially with diminishing tariff pressures and the Federal Reserve now on hold. Recession fears have been dampened for now, with stocks expected to continue their rise next year—but at a more modest pace, according to strategists polled by Reuters. The market should be boosted by more stable global economic growth, accommodative central bank policies and a recovery in corporate earnings, not to mention defusing trade tensions with China.

Mukesh Ambani’s Reliance Industries said it had been inviting people to sign up to its grocery delivery service. The company is aiming to use its massive mobile phone customer base as a springboard for the business.

The new e-commerce venture could become a major challenger to India’s existing online retail giants. Two subsidiaries of Mr Ambani’s business empire, Reliance Retail and Reliance Jio, said they had soft-launched the venture, called JioMart.

JioMart says it offers “free and express delivery” for a list of grocery goods, which currently numbers some 50,000 items.

Unlike its rivals, JioMart will connect local stores to customers via an app rather than providing and delivering the goods itself.

India’s online grocery market is in its infancy – currently estimated to be worth around $870m a year, with just 0.15% of the population using such services. However, analysts predict the sector could see annual sales of around $14.5bn by 2023.

Grocery delivery has long been tipped as the next frontier in the battle for business in India. A staggering number of internet and smartphone users – plus an unorganised grocery delivery sector – make it a promising market for app-based services.

Some of the world’s largest and best-known technology companies, including Walmart and Amazon, are hoping to cash in too.

This should be a cakewalk for Reliance – it already has hundreds of millions of subscribers to its telecoms network, and operates its own grocery stores as well as retail stores for international brands.

Plus it has the advantage of being an Indian company. Amazon and Walmart have been held back from expanding in this space by government laws aimed at protecting domestic business.

There are Indian competitors operating in the market already – Big Basket and Grofers are the most well-known. But they’ve had to put the brakes on expanding or tweak their business models to meet the challenges of operating in India, such as poor infrastructure, unreliable mobile networks and strict labour laws.

Reliance has a reputation for disrupting markets it starts businesses in, be it power, oil, retail or telecoms. Its foray into e-commerce is unlikely to be any different.

India’s e-commerce market is currently dominated by Amazon and Flipkart, which is owned by Walmart . Both companies suffered a setback last year when the Indian government introduced new laws that restrict foreign-owned online retailers from selling goods from their own subsidiaries . This helped give Indian companies, which are not affected by the new rules, an edge over their foreign rivals.

Ambani, who is the chairman of Reliance Industries, has an estimated fortune of more than $60bn (£45bn). The group’s core business is oil refining but it also has major investments in other sectors including retail and telecoms.

Reliance Retail owns grocery stores in India, runs outlets for global brands, including Hugo Boss and Burberry, and in 2019 bought the British toy shop Hamleys . Reliance Jio is India’s second-largest telecom operator, with more than 360 million subscribers.

The leveraging of a giant social-media presence, a catchy tune about a family of sharks and a burgeoning collection of junkyards are just a few of the curious ways that helped make 2019 a fertile year for fortunes to blossom around the world.

Kylie Jenner became the youngest self-made billionaire this year after her company, Kylie Cosmetics, signed an exclusive partnership with Ulta Beauty Inc. She then sold a 51% stake for $600 million.

It has been almost two months since the Washington Nationals captured their first World Series championship, but people around the world are still singing along to the baseball team’s adopted rallying cry: “Baby Shark, doo-doo doo-doo doo-doo.” The Korean family that helped popularize the viral earworm are now worth about $125 million.

Even car wrecks proved to be a treasure trove. Willis Johnson, the gold-chain-wearing Oklahoma native who founded Copart Inc., has amassed a $1.9 billion fortune by building a network of junkyards to sell data. The emergence of atypical fortunes underscores just how much money the uber-rich accumulated in 2019.

And the richer they were at the start of the year, the richer they got. The world’s 500 wealthiest people tracked by the Bloomberg Billionaires Index added $1.2 trillion, boosting their collective net worth 25% to $5.9 trillion.

Such gains are sure to add fuel to the already heated debate about widening wealth and income inequality. In the U.S., the richest 0.1% control a bigger share of the pie than at any time since 1929, prompting some politicians to call for a radical restructuring of the economy.

“The hoarding of wealth by the few is coming at the cost of peoples’ lives,” Representative Alexandria Ocasio-Cortez, a self-described democratic socialist, said in a Dec. 12 tweet as the U.K. began to vote.

Still, the defeat of Britain’s socialist opposition leader Jeremy Corbyn, whose campaign included attacks on billionaires and calls to “rewrite the rules of our economy,” gave an added boost to mega-fortunes.

Leading the 2019 gains was France’s Bernard Arnault, who added $36.5 billion as he rose on the Bloomberg index to become the world’s third-richest person and one of three centibillionaires — those with a net worth of at least $100 billion. In all, just 52 people on the ranking saw their fortunes decline on the year.

Amazon.com Inc.’s Jeff Bezos was down almost $9 billion, but that drop is because of his divorce settlement with MacKenzie Bezos. The e-commerce titan is still ending the year as the world’s richest person after Amazon shares jumped on Thursday. The company reported a ‘record breaking’ holiday season with billions of items shipped and “tens of millions” of Amazon devices like the Echo Dot sold.

Here’s what the year looked like for the 0.001%:

2019 Winners

The 172 American billionaires on the Bloomberg ranking added $500 billion, with Facebook Inc.’s Mark Zuckerberg up $27.3 billion and Microsoft Corp. co-founder Bill Gates rose $22.7 billion.

Representation from China continued to grow, with the nation’s contingent rising to 54, second only to the U.S. He Xiangjian, founder of China’s biggest air-conditioner exporter, was the standout performer as his wealth surged 79% to $23.3 billion.

Russia’s richest added $51 billion, a collective increase of 21%, as emerging-market assets from currencies to stocks and bonds rebounded in 2019 after posting big losses a year earlier.

2019 Declines

Rupert Murdoch’s personal fortune dropped by about $10 billion after proceeds from Walt Disney Co.’s purchase of Fox assets were distributed to his six children, making them billionaires in their own right.

Interactive Brokers Group Inc.’s Thomas Peterffy saw his wealth slump by $2.1 billion as investors weighed a reshaped competitive landscape for brokerage businesses after rival Charles Schwab Corp. eliminated commissions and agreed to buy TD Ameritrade Holding Corp.

WeWork’s Adam Neumann saw his fortune implode — at least on paper — as the struggling office-sharing company’s valuation dropped to $8 billion in October from an estimated $47 billion at the start of the year. Still, SoftBank Group Corp.’s rescue package left Neumann’s status as a billionaire intact.

New Billionaires

White Claw, the “hard seltzer” that was the hit of the summer among millennials, helped boost Anthony von Mandl’s net worth to $3.6 billion.

Mastering the art of fast-food deliveries proved rewarding for Jitse Groen, whose soaring Takeaway.com NV lifted his wealth to $1.5 billion.

The popularity of soy milk gave eight members of Hong Kong’s Lo family a combined $1.5 billion.

Despite the widespread gains, plenty of the world’s richest people may be happy to wave farewell to 2019. The year included messy details of the Bezos divorce and the Jeffrey Epstein saga, which enveloped a who’s who of financiers and entrepreneurs, after the convicted pedophile arrested in July by federal agents after stepping off his private jet at Teterboro Airport in New Jersey.

Through it all, their bank balances remained robust, as a record bull market got a December kick with an easing of trade tensions between the U.S. and China, a resolution to Britain’s political stalemate and a blowout U.S. jobs report.

Bill Gates has surpassed Amazon (AMZN) CEO Jeff Bezos to reclaim the distinction of richest person in the world, with a net worth of $110 billion, according to the Bloomberg Billionaires Index.

It’s the first time, the co-founder of Microsoft (MSFT) has held the top spot in over two years. He briefly topped Bezos last month after Amazon reported that its profit for the three months ending in September fell nearly 28% from a year earlier. But Gates’ time at the top was short-lived.

He has regained the lead because Microsoft (MSFT) shares are up nearly 48% this year, which helped boost the value of his stake in the company. In October, Microsoft beat out Amazon for a $10 billion cloud-computing contract with the Pentagon, adding some additional drama to the Gates/Bezos wealth race.

Bezos, who this year paid out a significant portion of his Amazon stake in his divorce from his wife of 25 years MacKenzie Bezos, now sits at second with a net worth of $108.7 billion.

Gates recently commented on his wealth in response to a wealth tax proposed by some Democratic political candidates, including Sen. Elizabeth Warren.

He said he’s paid more than $10 billion in taxes already and it would be fine with him to up that to $20 billion. However, having to pay $100 billion would prompt him to start “to do a little math about what I have left over.”

India added over 1,300 start-ups, including 7 unicorns in 2019, making the country the third biggest start-up ecosystem in the world behind China and the US, according to a new report from industry body National Association of Software and Services Companies (Nasscom).

The total funding received by start-ups in 2019 stood at $4.4 billion, said the report, adding that total investment in the start-up ecosystem increased by 16 per cent year-on-year in 2019.

The cumulative valuation of the start-ups has now crossed $55 billion. The addition of 7 new unicorns in 2019 has brought up their overall number to 24, according to the report titled “India’s Tech Start-up Ecosystem”.

These 7 unicorns are Pune-based software company Icertis, Bengaluru-based Ola Electric, Delhi-based logistic courier service provider Delhivery, Gurugram-based cargo service Rivigo, Pune-based data protection and management-as-a service Druva, Mumbai-based fantasy sports platform Dream11 and Bengaluru-based online grocery store BigBasket.

The Indian start-up ecosystem has the potential to grow four times by 2025, it added.

“There are multiple levers propelling this remarkable growth of the ecosystem that are bolstering the Indian start-ups as well as creating an environment conducive for continued innovation,” said Nasscom president Debjani Ghosh.

“What stands out most starkly in this report is how various elements of the ecosystem are coming together in symphony to give rise to an orchestra of innovation – right from government support, evolution of the investor landscape, increase in participation from the corporates, growth of national digital infrastructure, to incredible global exposure,” she said.

The report showed that during 2014-2019, an estimated 8,900 to 9,300 start-ups were born, with their overall base growing at 12-15 per cent year-over-year.

While Bengaluru, Delhi-NCR, and Mumbai are home to 55-58 per cent start-ups in India, Jaipur, Ahmedabad, Kolkata and Kochi are the emerging start-up hubs in the country, said the report that Nasscom brought out in collaboration with global management and strategy consulting firm Zinnov. (IANS)

By Chacko Zachariah

(Licensed Real Estate Broker and Realtor, Fabulous Homes, Inc., 954-491-7600, CZachariah2000@Yahoo.com)

Florida offers several Tax Savings and Benefits for Living, Working, Doing Business, and Owning Real Estate in Florida. Florida does not have any State or Local Personal Income taxes nor any Intangible Personal Property Taxes on most items. Florida offers the standard Homestead Exemption and additional Homestead Exemptions based on specific eligibility requirements. It puts an Annual Cap on the Assessed Value of your Homestead Property and allows Portability of the Accumulated Assessment Savings from one Homestead Property to the Next. Florida has a Cap on the Maximum Tax that you have to pay when buying a Yacht or Vessel (for example; even if you buy a US $100 Million Yacht in Florida, the Maximum Sales Tax you have to pay is capped at just US $18,000; instead of the usual sales tax of US $ 6 to 7 Million!). C corporations are the only types of businesses that pay Florida’s state income tax, while other types of corporations and sole proprietorship pay no Florida income tax irrespective of how big they are. In addition, Florida offers numerous Tax Incentives and Tax Credits for Businesses starting, expanding, or relocating to Florida.

(A) No State or Local Personal Income Taxes

Florida is the one of the very few states in USA that has No State or Local Personal Income Taxes. With the new US Tax Laws enacted in 2017, most people in the USA are encountering double taxation, while Florida is the one of the very few states in the USA where you can escape all or some of the double taxation and save money and thus avoid some of the adverse effects from the restrictions placed on the SALT (Sales And Local Tax) deduction. SALT tax includes the State and Local (City) Income Taxes, Intangible Personal Property Taxes, the Local Sales Taxes, and the Real Property Taxes. Thus, with these new restrictions placed on the SALT deduction, most people are now taxed twice on the same earned income. (The famous Boston Tea Party during our Independence struggle almost 250 years ago was on “Taxation Without Representation”.)

It should be of great interest to know that by allowing taxpayers the ability to deduct state and local taxes (SALT), taxpayers avoided double taxation and ended up with more net income. Further, deduction for property taxes along with the full deduction of mortgage interest always provided a strong incentive for individual home ownership which also led to increase in personal wealth and the standard of living. This created a boom in the home building, development, and construction industries, and stimulated real estate, mortgage, finance, other related businesses throughout the U S. This led to a stronger U S economy and brought about a faster and stronger growth of the U S GDP. These were the reasons for the enactment of these laws several decades ago allowing such deductions and had been used by taxpayers for generations for great benefits. However, several Presidents and Congresses, starting in the early 1980s, had been slowly chipping away and ripping off the taxpayers by lowering the amounts of deductions they could take on these items and using the additional taxes collected as a result to subsidize and benefit their favorite special interest groups and use it as additional welfare programs for big businesses.

Since Florida is the only state that also offers that combination of beautiful coastlines, beaches, weather, and island resort style living along with tremendous savings from not having to pay any individual state or local income and other taxes, a healthy and rapid migration to Florida of the well to do and the wealthy has begun to materialize in the last couple of years. They have been buying fabulous properties at bargain prices and are setting up permanent residences and businesses in Florida.

(B) The Homestead Exemption

The Homestead Exemption is a legal principle enacted in various states in USA to protect a homeowner’s primary (permanent) residence (the homesteaded property) from certain types of creditors. In Florida, January 1st of each year is the date on which permanent residency is determined.

The Florida Constitution also provides additional tax-saving exemptions for the homestead property on the first and third $25,000 of the assessed value of an owner-occupied residence. However, that third $25,000 exemption applies only to the non-schools portion of an homestead property’s assessed value.

Further, Florida law allows several other additional Property Tax Exemptions and Reductions for the homestead property owner depending on eligibility. They include:

$500 Disability Exemption
$500 Disability Exemption for Blind Persons
$500 Exemption for Widowed Persons
Additional Exemption for Low-Income Seniors
Full Exemption for Low-Income Seniors who have lived in their home for at least 25 years.
Exemption for Deployed Military Personnel
$5,000 Veteran’s Disability Exemption
Additional Exemption for Combat-Wounded Florida Disabled Veterans
Full Exemption for Veteran’s Service-Connected Total and Permanent Disability
Full Exemption for Totally and Permanently Disabled Persons
Full Exemption for Totally and Permanently Disabled First Responders
Surviving Spouse of Military Veteran or First Responder
Historic Property Exemption for property on the National or Florida Registers of Historic Properties
“Granny Flat” Exemption – Taxpayers who build additions onto an existing Homestead or perform extensive renovations to an existing Homestead to provide living quarters for a parent or grandparent may be entitled to a special exemption equal to the amount of the new construction (up to 20% of the homestead value).

(C) “Save Our Homes” (SOH) Amendment

Further, in Florida, pursuant to the 1992 SOH Amendment to the Florida Constitution, the assessed value of your Homestead property can increase by no more than 3% (three percent) above the previous year’s assessed value or the consumer price index, whichever is less. The Florida Department of Revenue certifies the annual percentage amount for each year. This law capped the maximum the assessed value of your homestead property can increase from year to year. This was a great help to the homeowners.

(D) Save Our Homes Portability Amendment (SOH Portability)

Prior to 2008, even if you had homestead on your property and the assessed value of your Homestead property only increased by no more than 3% above the previous year’s assessed value or the consumer price index, whichever was less, when you sold that property and either ‘up-sized’ or ‘downsized’ to a new home in value, you ended up having to pay higher property taxes on your new home compared to what you had been paying on your previous home, even if it was worth much less than your previous home. This is because: (a) you lost all the “Save Our Homes Savings” that you had accumulated over the years (savings on your home’s assessed value) by owning your previous homesteaded property in Florida, and (b) the assessed value of the your new home is its market value and in most cases is the purchase price you paid for it.

Many homeowners who wanted to ‘up-size’ or ‘downsize’ to a new home for some reason or another were shocked to find that because the property tax on their new home in many cases was much higher than what they had been paying on their previous homesteaded property they would be unable to move and this made their situation untenable.

In order to alleviate this situation and help homeowners, the “Portability of Save Our Homes” Amendment to the Florida Constitution was passed in 2008 to allow eligible homesteaded homeowners to move the accumulated savings on the home’s assessed value from one homesteaded property to another. As a result, Homesteaded homeowners are now allowed to move their Save Our Homes (SOH) benefit up to a maximum of $500,000 from one homesteaded property to another in Florida.

The new law allows that Portability may be used an unlimited number of times and may be used for moves to anywhere within Florida. Portability does not require you to sell your previous home, but merely that you can no longer claim it anywhere as your primary (permanent) residence.

Portability applies to both ‘up-sizing’ and ‘downsizing’ in value of the new property. If the new homestead has a higher just value than the previous one, the accumulated benefit can be transferred; if the new homestead has a lower just value, the amount of benefit transferred will be reduced. The local County Property Appraiser provides these figures for each homestead property in its jurisdiction by calculating it based upon specified formulas mandated by the State Law.

To be eligible to move these SOH Portability savings to a new primary residence, the new homestead must be established within two tax years of the “abandonment” of homestead at the previously homesteaded property. Owners of homesteaded properties sold (or “abandoned as homestead”) are eligible to move their SOH savings to a newly purchased property so long as the owner obtains homestead on the new property within the strict period allowed by law.

Therefore, if you purchase another home as your primary Florida residence and want to obtain Homestead Exemption for that property and if you held a Homestead Exemption on a previous property within the previous two (2) tax-years anywhere in Florida, you must also submit a Portability application with your Homestead application. The Portability application transfers any tax savings you have earned on your previous homesteaded primary residence to the new eligible primary residence, but it does NOT transfer your Homestead Exemption from one property to another. You MUST first apply for a Homestead Exemption in order to be eligible for Portability. Thus, you must submit an application for Homestead Exemption for your new primary residence and also an application for SOH Portability.

(E) Maximum Sales and Use Tax on Boats and Vessels in Florida

Florida residents used to buy expensive Yachts and register them in foreign countries; in the Islands off the coast of Florida and other countries around the world which offered several tax havens and other benefits. In order to encourage large Yacht manufacturing and sales in Florida, to support the Boating and Marine Industries and to bring in more revenues to the state and local governments, the Florida Legislature changed the laws pertaining to selling, owning, and registering Boats and Vessels in Florida in 2010. As a result, the maximum that can be taxed when purchasing a boat or vessel and registering it in Florida is capped at US $18,000!

This $18,000 total includes all sales and use taxes, plus any discretionary sales surtax. This is to encourage purchasing, registering, and using yachts in Florida year round. Thus for example, you can now buy a US $100 Million Yacht in Florida and or register it in Florida and the maximum you get taxed is US $18,000! After that all you have to pay is the nominal annual boat registration license tag renewal fees. For more information and detailed instructions on this maximum tax, please see Florida Department of Revenue’s Tax Information Publication (TIP) 10A01-07 issued on June 22, 2010.

Incidentally, the world famous Fort Lauderdale International Boat Show is celebrating its 60th year this year and will be held from October 30 – November 3, 2019. Similar Boat Shows are held in Miami and Palm Beach and other major coastal towns in Florida every year. Thousands of Yacht manufacturers and dealers from around the world exhibit at these shows and hundreds of thousands of visitors from the U S and abroad come to theses shows. These shows generate billions of dollars worth of business for the boating industry as numerous boats and related equipment are sold, billions for hotels, restaurants, and tourism, and billions of dollars in tax revenues for the state and local governments each year. Further, the visitors to these shows also engage in numerous real estate transactions throughout the regions where these boat shows are held, thus also benefiting the real estate and construction businesses.

(F) Intangible Personal Property Tax

Florida repealed the Intangible Personal Property Tax on most items on January 1, 2007. Therefore, there are NO Intangible Personal Property Taxes on items such as stocks, bonds, mutual funds, money market funds, unsecured notes, certificates of deposits, patents, copyrights, life insurance, partnership interests, etc. There remains intangible personal property tax only on two items: mortgage deeds and leases of government owned properties to nongovernmental entities. This is another benefit to living in Florida. For more information, see the Florida Department of Revenue’s Tax Information Publication, TIP 07C02-01, Dated: January 2, 2007.

Before the repeal of the Florida Intangible Personal Property Tax, individuals possessing intangible property above a certain limit had to file the Florida Intangible Personal Property Tax forms and pay the taxes every year. Now you don’t have to file them anymore.

(G) Florida is a Business Friendly State

Individuals are not the only ones who benefit from Florida’s tax structure. Businesses in Florida pay less taxes than in many other states in the USA. C corporations are the only ones that pay Florida’s state income tax, while other types of corporations as well as sole proprietorships pay no Florida income tax irrespective of how big a business they are.

The State of Florida and its Counties and Cities encourage businesses to operate, relocate, expand, or open branches and divisions in Florida and offer several Tax Incentives and Tax Credits to medium and large businesses to relocate to Florida, set up operations, and create jobs. There are several categories of these incentives and tax breaks and some of them last for several years. Florida tries its best to promote itself as a business friendly state.

Further, in the past three decades Florida has become the gateway for banking, finance, and trade, and other businesses to the Caribbean, Central America, and South America. Therefore, several U S and foreign companies have set up their South American headquarters in Florida for conducting their businesses in various countries in the Caribbean, Central America, and South America while utilizing Florida’s business friendly climate.

Florida’s population has now grown to 22 Million, thus offering a large customer base. When you combine that with its spectacular coastlines and beaches, beautiful weather, vibrant cosmopolitan culture, availability of all the amenities at your finger tips, along with the low taxes and tax breaks for doing business, it sure makes it a great place to set up a new business, expand, or relocate one.

As you can see, Florida is the only state in the USA that also offers that combination of beautiful beaches, coastlines, weather, and resort style living, while also offering all the amenities that you can think of as well as all these tax savings that you obtain from owning Florida Real Estate or doing Business. These show what a beautiful, vibrant, and enchanting place Florida is to live, work, and play as well as a great place to set up a new business or relocate one. Residential properties along Florida’s coastal regions sell for anywhere from the US $300,000s to $100 Million.

Next in Part III of this series on ”Florida and Florida Real Estate” will be a brief explanation of Florida’s Economy and its Real Estate.

Chacko Zachariah, has been a Licensed Real Estate Broker and Realtor with Fabulous Homes, Inc., in Florida, selling Luxury Homes, Condominiums, Commercial, and Industrial Properties for over the past 30 years. He can be reached at 954-491-7600 or CZachariah2000@Yahoo.com

Several individuals of South Asian origin are among eleven people charged with alleged credit card fraud, according to the Office of the U.S. Attorney for the Eastern District of New York.

A posting on the website of the U.S. Attorney’s Office for the Eastern District of New York.

Five complaints were unsealed June 26, in federal court in Brooklyn charging 11 defendants,  who prosecutors say, carried out an alleged  scheme to defraud banks by using fake, or “synthetic,” identities to obtain credit cards, and making approximately $3 million in charges that were never repaid to the issuing financial institutions, according to U.S. Attorney Richard P. Donoghue and other officials, who made the announcement in a June 27, press release from his office. Three of the defendants were also charged with money laundering conspiracy, designed to conceal the source of the proceeds of their scheme.

Nine defendants were arrested June 26.  Eight defendants made their initial appearances before United States Magistrate Judge Lois Bloom and were released on bond.  One defendant was scheduled to appear June 27, before Magistrate Judge Bloom.  Two defendants are not in custody, according to the press release.

Defendants, all of whom are from New York, include Bahader Thiara, 42, of Queens Village, N.Y.; Hafeez Ali, 54, of Fort Hamilton, Brooklyn; Mohammad Akhtar, 43, Flushing, N.Y.; Nadezhda Epshteyn, 44, Rockaway Park, N.Y.; Cyrus Shroff, 45, also of Rockaway Park, N.Y.; Anis Khan, 32, Sheepshead Bay, N.Y.; Daljeet Singh, 46, College Point, N.Y. (also known as “Akhtar Iqbal”; Zainoelbaks Karimbux, 50, Bellerose, N.Y.; and Gursimardeep Singh Rai, 34, Bronx, N.Y., are  charged with access device fraud.  Bahader Thiara, Perminder Thiara, 40, Queens Village, N.Y.; and Shaila Khondkar, 48, Jamaica, N.Y., are also charged with money laundering conspiracy.

The charges are allegations, and the defendants are presumed innocent unless and until convicted. If convicted, the defendants charged with access device fraud face up to 10 years’ in prison, and up to 20 years for money laundering conspiracy.

The documents filed in court allege that between January 2013 and December 2017, the defendants  used synthetic identities created by using various types of personal identification information (names, dates of birth and Social Security numbers) from different individuals to create a fake identity and obtain credit cards from financial institutions.  The court filings go on to allege that the accused then used those cards for expenditures that they had no intention to repay, including mortgages on three residential properties in Queens, New York.

Prosecutors allege that the defendants also used shell companies to record hundreds of thousands of dollars on those credit cards, and then received payment for the alleged sham transactions from financial institutions and credit card processors.

The government’s case is being handled by the Office’s General Crimes Section.  Assistant United States Attorneys Temidayo Aganga-Williams and David Lizmi are in charge of the prosecution.  Assistant United States Attorney Tanisha Payne of the Office’s Civil Division is handling forfeiture matters.