Irene Moves Into New England Leaving Millions in Dark, 11 Dead

Tropical Storm Irene moved into western Connecticut after killing 11 people, knocking out power to more than 4 million customers in 12 states and sending rivers to near-record heights.
Irene was 10 miles west of Danbury, Connecticut, with winds of 60 miles per hour and moving north-northeast at 26 mph as of the 11 a.m. National Hurricane Center update.
“Everyone who is still under a tropical storm warning shouldn’t let their guard down and shouldn’t venture outside,” said Dennis Feltgen, a spokesman for the National Hurricane Center in Miami. “I know everyone wants to sightsee but personal safety has to come first. It’s still a big rain event and there are still storm surge impacts on the south-facing coastline. Things will be much better tomorrow.”
Irene was a shadow of the storm that roared across the Caribbean with winds of up to 120 miles (194 kilometers) an hour and crashed into North Carolina’s Outer Banks as a Category 1 hurricane. It dropped to tropical storm status before making landfall in New York City at about 9 a.m. today.
People from South Carolina to New Hampshire lost power because of Irene, according to a report by the U.S. Department of Energy Office of Electricity Delivery & Energy Reliability released today.

Storm’s Costs

Insured losses in North and South Carolina are expected to range from $200 million to $400 Million, according to risk- modeling company Eqecat Inc. in Oakland, California. Irene may have caused between $500 million and $1.1 billion in damage to the Bahamas, according to estimates from AIR Worldwide in Boston.
If Irene’s losses exceed $1 billion in the U.S., it will be among the ten most costly natural disasters this year, according to the National Oceanic and Atmospheric Administration. The U.S. has suffered $35 billion in losses due to nine separate events so far in 2011, tying a record for disasters causing more than $1 billion damage, NOAA said.
Irene struck the Bahamas last week before making landfall in North Carolina yesterday. It made a second U.S. landfall early today along the New Jersey shore and then passed directly over New York about three hours later, according to the hurricane center in Miami.
Tornadoes have been reported in Delaware and Virginia, where they have damaged homes, according to the U.S. Storm Prediction Center in Norman, Oklahoma. Tornadoes are possible throughout Irene’s path, according to the hurricane center.

NYC Flooding

The National Weather Service issued a flood warning for the New York City area until 6 p.m.
Rivers and creeks throughout the Northeast are rising, according to weather service river gauges.
Water rose to 8.12 feet at the Sandy Hook, New Jersey, flood gauge as of 7:36 a.m., higher than the 7.7-foot threshold for moderate flooding.
The Millstone River in Blackwells Mills, New Jersey, rose 14.37 feet in the past 12 hours and is now considered at major stage flooding, according to the National Weather Service. The Raritan River’s south and north branches are also at major flood stage. The south branch rose 10.79 feet in the past 12 hours, while the north branch in Raritan has risen 14.99, according to weather service river gauges.
Brandywine Creek at Chadds Ford, Pennsylvania, rose 10.5 feet in the past 24 hours and is expected to surpass its all- time high flood stage of 17.15 feet, set in September 1999, when Hurricane Floyd swept through the Northeast, according to the weather service. Chadds Ford is about 25 miles west of Philadelphia.

Records Broken

The North River at Shattuckville, Rhode Island, rose 11 feet in 12 hours and set a flood record of 12.95 feet breaking the mark set in October 2005.
Many records set in the region when Floyd came through may be broken today, Bill Deger, a meteorologist for private forecaster AccuWeather in State College, Pennsylvania, said in an e-mailed statement.
All hurricane warnings for the Eastern Seaboard were dropped at 11 a.m. Storm warnings are in effect from Chincoteague, Virginia, northward Eastport, Maine, and into Canada.
“Continued gradual weakening will occur as the system moves over land today,” according to the hurricane center. “Significantly stronger winds are still possible over high-rise structures and areas of elevated terrain.”
Elsewhere, Tropical Storm Jose formed 75 miles south- southwest of Bermuda, where a storm warning has been issued, according to the hurricane center. Jose is expected to move north and start to deteriorate tomorrow.

Pizza Hut to serve wine and beer in all outlets

MUMBAI: Pizza Hut is all set to serve wine and beer at its outlets across the country, after pilot-testing in Delhi and Bangalore. "We have just started serving wine and beer to our customers at two Delhi stores and wine at five stores in Bangalore. We will be adding new such stores. The idea is to have this service across all our outlets," Pizza Hut Head (Marketing) Sunay Bhasin told PTI here.

The popular quick service restaurant (QSR) chain Pizza Hut had applied for permit to offer wine and beer at its outlets last October. Its parent, the American restaurant chain Yum Restaurants, also operates three other QSR brands: KFC, Taco Bell and Long John Silvers in the country.

Bhasin said the company would expand its presence into Tier-II and Tier-III cities by 2015, as demand is growing in small towns due to rising income levels and changing lifestyles and food habits.

"We have a goal of adding about 50% of our current base by 2015," he said, adding, "By then we would have 180-200 outlet."

The company currently runs 120 dining restaurants across 34 cities.

Bhasin said it is likely that the company will extend its footprint to around 16 locations by 2015.

"Wherever there is a demand for our dining experience, our endeavour would be to deliver that. Anywhere there is retail space and people demand for such experience, we would love to be there," he added.

The Rs 9,000-crore organised eating-out market is growing at 25%.

Bhasin said the current strategy was to change the concept of Pizza Hut from the traditional QSR to a casual dining restaurant.

Irene Wreaks Havoc On Long Island, Brings Major Flooding And Power Outages

HAMPTON BAYS, NY (CBSNewYork) – Irene wreaked havoc on parts of Long Island, but lost its hurricane strength by the time it reached New York City.
The National Hurricane Center said Irene’s winds dropped to 65 miles per hour when it hit Coney Island around 9 a.m. Sunday.
PHOTOS: Hurricane Irene | Facebook Fan Pics
But that didn’t stop the massive storm from dumping rain, flooding streets and creating dangerous storm surges along parts of the coast.
Nassau County executive Ed Mangano while the worst may be over, it’s still dangerous.
“I just want the public to understand there are still dangers out there,” he said in a news conference Sunday. “While it looks very nice out, the roads are still not passable.”
Mangano said cleaning up from the storm could take weeks and called it a “monumental task.” He added it could take about a month to assess what economic damage Irene may have done to the county.
Suffolk County executive Steve Levy said Long Islanders dodged a bullet with a less-fierce hurricane than what was originally estimated.
“We were expecting possibly much more a high Category 1 or low Category 2 and makes a very big difference,” said Levy. “Much less rain than we anticipated in Suffolk and wind gusts that reached 65 mph, 70 mph but was more manageable than the 90 mph, 95 mph, 100 mph that we might have otherwise have gotten.”

Heavy flooding was reported in Southampton. Waves crashed onto roads and surrounded homes along the coastline. Boats were also washed ashore in some spots.

Airline Cancellations Grow as Irene Shutters New York City-Area Airports

U.S. carriers including United Continental Holdings Inc. (UAL) and Delta Air Lines Inc. (DAL) scrubbed more than 8,000 flights as Hurricane Irene churned up the East Coast and shuttered airports in New York, the nation’s busiest travel market.

American Airlines halted New York City-area flights as of 10 a.m. local time, while United and Delta earlier scrubbed their full schedules. The Port Authority of New York and New Jersey closed John F. Kennedy and LaGuardia airports and three smaller facilities to arriving flights as of noon local time as the city awaited heavy rain and wind.

“We need to make sure that we give our customers and our employees ample time to get home” before mass transit systems are closed, said Andrea Huguely, an American spokeswoman.

The six biggest U.S. airlines canceled at least 8,037 flights today through Aug. 29 because of the storm. Another 332 were scrubbed earlier in the week as the hurricane approached. New York officials suspended train, bus and subway service at noon today, making it harder for workers and passengers to reach airports. Evacuations were ordered for low-lying areas.

Delta and United are the biggest airlines in the New York market, while American operates both domestic and international hubs from the city.
International Flights

Air France grounded 16 flights to New York and Washington today and 14 flights tomorrow, said Herve Erschler, a spokesman. British Airways canceled 15 flights today and 21 tomorrow from New York and other northeastern U.S. cities, while Virgin Atlantic scrubbed 10, according to their websites. Deutsche Lufthansa AG canceled 14 flights to and from New York airports today, and 22 tomorrow at New York, Boston and Philadelphia, said Boris Ogursky, a spokesman.

Philadelphia’s airport will close at 6 p.m. today, according to data tracker FlightAware.com.

US Airways Group Inc. (LCC) canceled 1,166 flights, including 256 today and 910 tomorrow, Andrew Christie, a spokesman, said in an e-mail. The scrubbed flights primarily are in the Washington area starting tonight and in New York, Philadelphia and Boston tomorrow.

“The number of cancellations may change as we are continuing to monitor the storm very closely,” Christie said.

United Continental scrubbed 2,300 flights today and tomorrow, and Delta is dropping 1,500 flights through Aug. 29. Delta stopped service at three Virginia airports today and won’t make flights tomorrow to New York, Philadelphia, Boston and four other smaller northeast cities, said Morgan Durrant, a spokesman.
JetBlue

JetBlue Airways Corp. (JBLU), the first major carrier to cancel weekend flights, is dropping 1,262 over the same period, said Mateo Lleras, a spokesman. The airline halted operations at its biggest base in Kennedy at 10 a.m. local time today and will do the same in Boston at 10 p.m., he said.

American, a unit of AMR Corp. (AMR), is grounding 1,103 flights and suspended service at Washington-area airports for about 24 hours starting at noon today, said Tim Smith, a spokesman.

Southwest Airlines Co. (LUV) will suspend service today in Norfolk, Virginia, and is scrapping 400 flights, in addition to 306 flights through Aug. 29 at its AirTran unit. The Dallas- based airline plans to suspend flights in Philadelphia starting at 2 p.m. local time today through tomorrow, and at LaGuardia and Newark all weekend.

Irene may cause $6.5 billion in overall economic losses, according to estimates by Kinetic Analysis Corp. A more easterly track and less intensity puts the company’s projected insured losses at $3.1 billion.
Busiest Market

The last storm of this magnitude to menace the Northeast was 1985’s Hurricane Gloria, which killed 11 people and caused $900 million in damage. Irene is on a similar track.

Like JetBlue, Delta has a hub at Kennedy, and United’s Continental Airlines flies from New Jersey’s Newark Liberty. Together with LaGuardia, the three airports form the busiest U.S. aviation market with almost 104 million passengers last year, according to Airports Council International.

Sandwiching that airspace is Philadelphia, where US Airways has a hub and Southwest is the second-biggest operator; Washington, home to United’s hub at Dulles airport and a US Airways base at Ronald Reagan National; and Boston, where JetBlue is the largest tenant.

Irene’s approach spurred carriers to begin letting fliers reschedule trips without penalty to and from storm-affected cities. Dropping fees for changing reservations helps airlines by getting passengers rebooked before any weather disruptions.

Aircraft are flying with record numbers of full seats, especially at the end of the U.S. summer vacation season, making it difficult for passengers on grounded flights to find new seats after the storm moves through.

To contact the reporters on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net; Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net 

Delta Air Lines Announces Plans to Buy 100 Planes

Delta Air Lines has now put all rumors to rest in regard to its plans to buy 100 Boeing 737 jets. Apparently, the airline has confirmed this rumor as true. The company went on to state that it is buying these jets as part of its fleet upgrade and will be taking delivery of these planes between the years of 2013 and 2018.

The order itself was finally confirmed on Thursday. It is said to be worth more than $8.5 billion at list price. However, it is important to note that Delta Air Lines probably got a discount for buying so many planes. It is a very common practice for airlines to get discounts off the list price when buying in bulk.

These newer planes offer a lot more perks for travelers over the ones that Delta Air Lines is currently using. For example, the cabins are a lot roomier. There is also less engine noise and more room in the overhead bins. However, the biggest improvement for the airline is the fact that these planes are far more fuel-efficient. This means that the airline will save money on fueling costs.

Delta Air Lines, which is actually based in Atlanta, Georgia, said in January that it was considering the possibility of ordering up to 200 jets. On top of this, it would have the option to buy 200 more. The airline said that the timing of its delivery would be announced later this year, and it would still keep the airline’s capital spending plan on target for this year.

With this new upgrade, Delta believes that it will save about 15 to 20 percent in fuel and maintenance costs. It is now more than halfway through a three-year, $2 billion plan to upgrade its fleet.

Hurricane Irene forces Delta Airlines to cancel 1,300 flights

In a ripple effect of hundreds of pro-active cancellations up and down the east coast, Detroit travelers will have to scramble to reschedule weekend flights.

Delta Air Lines will cancel 1,300 of 16,500 scheduled flights nationwide between Saturday and Monday, it announced late this afternoon.

It will cancel all Sunday flights at New York's airports .

It is not known all the flights Delta will cancel at Metro Airport, but anyone with a flight to New York Sunday should contact the airline.

Other affected flights will range from Boston south to the Carolinas.

The airline will notify customers and rebook them, or customers can go to www.delta.com and rebook on their own. They also can reach Delta agents through Twitter, @DeltaAssist.


As of this afternoon, there were no delays at Metro Airport, according to FlightStats.com, which tracks airport traffic.

Airline passengers should make sure they are signed up for their airline e-mail, text or phone message alert system, which will let them know if flights are canceled. If your flight is canceled, the airline will automatically rebook you.

However, many airlines are waiving fees to change tickets ahead of time.

Here’s a rundown:

Delta, Metro Airport’s largest airline, is offering travel waivers to allow passengers to change flights without penalty.

Those flying today through Monday to or from Baltimore, Newark, New York City, White Plains or Newburgh N.Y.; Norfolk or Richmond, Va.; Philadelphia or Washington, D.C. may reschedule to fly out anytime by Sept. 2.

Also, those flying today through Sunday to or from Jacksonville, New Bern, N.C., Wilmington, N.C., or Myrtle Beach can change without fee to fly out by Monday. (www.delta.com, 800-221-1212.)

Spirit is waiving fees for people scheduled Saturday, Sunday or Monday to fly in and out of Boston, New York LaGuardia, Washington Reagan and Atlantic City. Call them at 800-772-7117 to make the change. Rebooked flights must depart by Sept. 30 ( www.spiritair.com.)

Southwest is allowing changes for those flying Saturday, Sunday or Monday in or out of Albany, Baltimore, Boston, Hartford, Norfolk, Manchester (NH), Newark, LaGuardia, Philadelphia, Raleigh-Durham and Washington Dulles.

Cybersecurity expert hacked Medtronic insulin pump

A cybersecurity expert and diabetic who recently showed that his insulin pump is vulnerable to hacking has revealed the maker of his device: Fridley-based Medtronic Inc.

Jay Radcliffe, a 33-year-old Idaho man who hacked into his own pump at a cybersecurity conference earlier this month, said Thursday that he initially withheld the name of the manufacturer in an effort to work with the medical technology company on security issues.

Medtronic's $1.3 billion California-based diabetes business is the largest maker of insulin pumps in the world. But Radcliffe and others suspect the security vulnerabilities could extend to other devices, such as pacemakers and implantable heart defibrillators.

After he was repeatedly rebuffed by Medtronic officials, Radcliffe says he decided to go public with the company's name. "Blowing me off is not an ethical response," he said on a webcast organized by Black Hat, a Seattle-based organization of security researchers.

Medtronic CEO Omar Ishrak said at the company's annual meeting Thursday that the probability of a security breach is small but that Medtronic "takes security very seriously." Security systems on new pumps will improve going forward, he said.

He also said there's never been an incidence of pump hacking in the real world -- it's only occurred in controlled settings with skilled individuals.

Radcliffe gave a presentation about his pump at a Black Hat conference earlier this month. There he remotely disabled its lifesaving therapy by remotely turning it off.

Since then, Radcliffe claims that Medtronic has distributed inaccurate information about the hacking threat, including statements that the pump's wireless capabilities can be turned off to prevent security breaches. "Sadly, this is not possible," he said.

Radcliffe has never revealed how he hacked into his own device -- he has since switched to a competing pump made by Johnson & Johnson. He urged patients with Medtronic pumps to continue using the devices, and acknowledged that the threat of hacking is small.

But, he said, it's important for companies to take security issues seriously. "Saying it's never been done is no assurance that it can't be done in the future," he said. "Just because nobody's exploited your system doesn't make it secure."

Dollar Gains Slightly

TOKYO—The dollar gained slightly on its counterparts in Asia on Thursday, supported by growing speculation that Federal Reserve Chairman Ben Bernanke will not pledge any additional monetary easing in a speech at the central bank's gathering in Jackson Hole on Friday.
Some observers say the fact that Bernanke has not said anything to encourage the view that he will signal further action highlights the unlikelihood of such a move. A Wall Street Journal report said Bernanke's aides have also been quiet on the subject.
"This makes sense when you consider that in its meeting just a few weeks ago the Federal Open Market Committee already said it will keep short-term interest rates around zero for the next two years," said Satoshi Tate, a senior dealer at Mizuho Corporate Bank. "It's unlikely Bernanke would go beyond this now."
The absence of any additional monetary easing steps, which would weigh on interest rates, would be positive for the dollar ahead, dealers and analysts said.
The euro could suffer as a consequence, some said.
The common currency has failed to bounce back to the recent high of $1.4500 it touched on Tuesday. That means "it's important to suppose there's still the risk of it falling even more sharply ahead," said Junichi Ishikawa, FX analyst at IG Markets Securities. It could drop to around $1.4250 in coming sessions, he said.
At 1:50pm local time, the euro was at $1.4407, down from $1.4415 late on Wednesday in New York. The dollar was also up against the yen, at ¥76.98 from ¥76.97. The ICE Dollar Index was at 74.051, up from 74.031. The euro traded hands at ¥110.89 compared with ¥110.94.
Dealers in Tokyo continued to say they don't expect the Japanese government's new measures against the strong yen to have any major impact for now. Japan on Wednesday announced a two-pronged offensive aimed at curbing the currency's strength, creating a $100 billion fund to help spur investments by companies operating abroad and imposing new rules requiring financial firms to disclose their foreign exchange holdings.

Blackberry Bold 9900 spotted in the British wilderness, bang on schedule

A tipster just spotted the Bold 9900 at a Carphone Warehouse in the UK, days before operators there and in the US expect to launch the device on August 16th. We can't be sure if it's actually for sale or just a a window display that went up too early, but it certainly reassures us that the new Bold will be out on time. Alternatively, if you wanted to be harsh on RIM, you could describe this non-QNX release as being at least a year too late. (Oh, and it's good to see business chugging along as usual in ol' Blighty despite those nasty riots.)

Are you America's next millionaire? Winning Powerball numbers released

UPDATE:

The winning Powerball numbers for Wednesday night's drawing are: 11-18-36-41-46 and the Powerball number is 38.

EARLIER STORY:

Are you feeling lucky? You might be hours away from becoming a multi-millionaire! The drawing for the $220 million dollar Powerball jackpot is Wednesday night. People have been buying up their tickets all day long at lottery retailers around South Florida and plenty of people in Palm Beach County already have big plans for their Powerball winnings.

With $220 million up for grabs, Robert Keller of West Palm Beach is dreaming big.

"I'm going to share it with my family and I'm going to spend it on my hobbies which are boating, fishing and cars," he says.

However, Keller won’t be getting just one new boat and one new car.

"I'll get new cars and new boats!” he said, happily.

George Bostic has grander plans.

"I want to buy half of Peanut Island. All of it, if I can. $220 million? I'm going to do whatever I want," he says.

While Bostic scopes out his soon-to-be new island, lottery retailers like the 7-11 store on Congress Avenue in suburban West Palm Beach have been printing up potential prize winning tickets all day. The cash value is $118 million, but that’s more than enough for some people to make big changes.

“Quit. Quit my job,” laughed one woman.

Your odds of winning? According to lottery strategists, about 195 million to one. Still, someone has to win. Why not you?

"You never know. It could be this store," said Marilyn Davis of Lake Worth.

Some would-be millionaires, like Davis, have their own ways of increasing their chances.

"The Quick Picks seem to be the ones that work the best, as far as winning,” she said. “I do win, a hundred dollars here, a thousand dollars there."

Maybe Davis is holding the winning ticket, or any one of a number of lucky South Floridians.

"That's the winning ticket right here," said Keller, displaying his Powerball printout.

"This is it," insisted Bostic, holding on to his ticket.

Everyone will have to wait to see who is right.

If you are looking for a “lucky” store, a number of lottery retailers around South Florida have helped make people richer, including the 7-11 on Congress Avenue in suburban West Palm Beach. Ten years ago, someone bought the winning Fantasy Five ticket there. It was worth $500-thousand dollars.

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Updated: $229 Million Powerball Jackpot Numbers Announced

Updated at 11 p.m., Aug. 10: The $228.9 million Powerball prize, one of the largest ever, was announced tonight.

The winning numbers are: 46 - 41 - 36 - 18 - 11 - 38 (red ball).

Are you the big winner? Go ahead and announce it here for us.

Posted at 3:48 p.m., Aug. 10: It’s literally a numbers game.

The Powerball lottery drawing at 10:59 p.m. tonight may make one -- or a couple -- Americans very wealthy, as the jackpot has reached $220 million.

It’s one of the 10-largest Powerball pots ever, though it’s still $39.9 million less than Columbia’s Solomon Jackson Jr. won in August 2009.

Regardless, convenience stores and other lottery retailers are seeing some extra traffic as people take a stab at the 1-in-195 million odds.

“It does pick up, you know,” Midlands convenience store worker Naomi Hutson said about ticket sales. “When [the jackpot] gets up, everybody starts wanting one.”

She said that while activity is par for the course most of the day, as many people get off work they’ll stop by and buy a $1 Powerball ticket.

“Right now it’s slow, but later on this afternoon it’ll pick up," she said.

People can purchase a Powerball entry until 9:59 p.m., allowing an hour between the last sales and the public reveal of the winning numbers on local CBS televisions affiliate WLTX.

Once they get home with the metaphorical golden ticket, there isn’t anything else to do but wait on the numbers. Not that it’s stopped people from performing their own hoodoo to help them win.

Jackson’s 2009 win marked the last time a South Carolinian took home the jackpot.

But, S.C. Education Lottery executive director Paula Harper Bethea is hoping the next Powerball winner is located here.

“I know I will be watching Wednesday night’s drawing with my fingers crossed hoping a South Carolinian will be holding that winning ticket,” Bethea said in a statement.

“Obviously the winner benefits, but so does the state when a jackpot-winning ticket is sold here.”

If someone does have the winning ticket this evening, they will receive the cash value of the prize, estimated $118.8 million.

Predators pounce as politicians dither

EDNA O'Brien was right: August is indeed a wicked month. Humid air saps the energy. Everywhere is shut. Our leaders are on holidays. And that is when financial markets can do their greatest damage.
Markets never sleep and just as they did in August 2008, last Thursday they smelt blood and pounced: as US politicians were infighting and euro area leaders were firefighting, worries about the ability of politicians on both sides of the Atlantic to control spiralling public spending drove Italian and Spanish interest rates to over six per cent.
At those levels governments and banks find it almost impossible to fund themselves and a vicious circle dynamic kicks in. By Thursday afternoon that dynamic caused stock markets to experience falls the kind of which we hoped we'd seen the back of. Billions have been wiped off pension funds and bank capital. More seriously, the stability of the global economy is in doubt.
Like all hunters, financial markets like their prey to be big and juicy and weak. With a debt ratio of 116 per cent of GDP, Italy fits the bill perfectly. Though not as healthy as Ireland's, Italy's economy is sound enough but its debt is so high that its public sector will require a bailout if interest rates stay above 6 per cent for too long. Emergency spending cuts and tax hikes of €48 billion had passed through the Italian parliament three weeks ago and, together with the 'enhanced' European Financial Stability Fund agreed a few days later, the euro's problems seemed solved.
Unfortunately, governments forgot to actually implement the agreed measures and with one eye on this complacency and another on the Washington Muppet show, financial markets began doubting that the debt crisis was going to be solved.
But whereas the US can print money, the ECB cannot and the €440 billion ESFS fund is not large enough to bail Italy out should it need it. It may not. But wanting to prepare for the worst, financial markets assume the worst will happen and, in doing so, they make their own fears come true: by driving Italy's cost of borrowing above 6 per cent, its debt servicing becomes more onerous, making default -- and a possible collapse of the euro -- more possible.
Although our debt interest rates were falling and despite ECB President Trichet's praise for our adjustment efforts to date, Thursday's exchequer figures show that -- one-off revenues and a temporary boost from tax hikes aside -- our fiscal position is heading in a very Italian direction.
In one way, Silvio Berlusconi was right to claim this week that Italy's economy was sound. Sadly, a government that cannot rein in excessive spending and debt -- and which raises taxes instead -- can destroy even the strongest of economies. That is what is happening in Ireland right now.
The tax take in the year to July looks good, but flatters to deceive. On a no policy change basis -- that is, stripping out the Universal Social Charge and lowering of tax thresholds -- taxes performed poorly. VAT revenues fell and corporation taxes were stagnant. More ominously, the vicious feedback of income tax rises in the real economy is now very evident from Thursday's Live Register showing the third successive monthly rise in the dole count. With the Croke Park deal set in concrete and current spending still rising (up €800 million in the year to July compared with the same period of 2010), taxpayers know their incomes are going to fall through stealth taxation. This in turn is killing the spending and jobs needed to generate tax revenues and the growth needed to bring down our debt/GDP ratio.
It could be so different: a drastic rate cut in stamp duty has actually increased, not decreased, revenues. Between 1987 and 1990, this strategy boosted growth and revenues. It also worked in the December 2009 Budget when Brian Lenihan targeted wasteful spending and overpay, while keeping taxes unchanged.
Since Croke Park however, we have gone back to the strategy of 1982 to 1987 -- preserving excessive pay and spending waste -- while raising taxes. Copperfastened by the troika agreement that 'requires' the Government to introduce a property tax, this takes the pressure off pay cuts. In truth, the IMF and ECB would rather see us cut local authority waste and overpay. But just as bondholders got their wishes, so have vested interests. That we retain the highest pay and pensions of any local government system in Europe (except perhaps Denmark) not to mention 112 local authorities for only 4.5 million people, beggars belief. That is why taxes will rise. To fund needless duplication -- 33 separate motor tax offices, 33 separate arts officers, 112 local government chief accountants and so on -- the poorest citizen will pay a household charge.
As well as being illogical, this strategy is the most economically damaging one possible: it will do far more damage to demand, job creation and growth than would a policy of cutting overpay and waste. That in turn makes bringing down our debt/GDP ratio more difficult.
It is not too late for Ireland to turn back. Whether the same can be said of Italy is another story. If it cannot stave off default there will be other serious implications for Ireland. As EU Commission President Barrosso admitted, preserving the euro may require extending the bailout fund to the point where we create, de facto, a United States of Europe with a common fiscal policy. If this needs to be done to save the euro, so be it. But it goes against everything we were promised when we voted for the Lisbon treaty. Together with the inequity of the Croke Park deal, don't be surprised if this issue features in the Presidential election