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Antigua's bid to get big sanctions against the U.S. for its online gambling ban has for all intents and purposes failed

Last year saw the U.S. ban online gambling in its many sordid and popular forms.  Casinos and private firms felt the pinch as the feds started 2007 off with a campaign of arrests that threatened to completely destroy the online gambling industry as it exists in the U.S.  Most recently, the US government scored a jackpot settlement of millions of dollars from Google, Yahoo, and Microsoft, who admitted to aiding and abetting online gambling in the past.

Now the U.S.'s gambling-critical government has another victory, as it escaped any serious international sanctions from the World Trade Organization (WTO).  The WTO, which polices trade worldwide, investigated Antigua's accusations that the U.S. was holding domestic online gambling providers to a different and unfair standard from foreign gambling providers since casinos are legally owned and operated in parts of North America. 

The small island nation of Antigua invested heavily in online gambling and was rocked by the U.S.-lead WTO decision last year to curb and eventually ban it.  Antigua sought $3.4B USD in WTO sanctions against the U.S.

In the end, the U.S. got off with nothing more than a slap on the wrist.  The WTO announced a ruling of a paltry $21 million USD in sanctions against the United States.  The U.S.'s Trade Representative stated publicly that Antigua deserved more than $500,000, but also stated, "We're pleased that the figure arrived at is over 100 times lower" than Antigua had sought.

Banning online gambling outright is illegal under the current WTO-enforced international treaty.  In the coming months  the WTO will hear committees to rework the WTO main agreement to allow such bans. 

Sources close to the case speculate Antigua may try to fight back by allowing copyright-lax server farms; a move similar to the recent Chinese ban on U.S. movie imports.


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RE: Why?
By cochy on 12/27/2007 4:37:19 PM , Rating: 4
Maybe he's referring to America's nearly immeasurable debt.


RE: Why?
By mdogs444 on 12/27/2007 4:51:41 PM , Rating: 2
He must be, but he also must not know much about the national debt. There always has been and always will be a national debt. And its allowed to be a certain percentage of our GDP. It also doesnt necessarily have to be "repaid" - a common misconception.

I find humor in how people with no knowledge of how the debt works, try to compare it to a credit card that can cause bankruptcy.


RE: Why?
By giantpandaman2 on 12/27/2007 5:18:13 PM , Rating: 2
Apparently you don't understand how the national debt works either. It weakens the value of the dollar because it effectively increases the supply of the dollar while doing nothing for demand. Hmm, the value of the dollar keeps on dropping, big surprise!

National debt is repaid, in the form of government bonds going to whoever owns them. Who owns a lot of the bonds right now? China.

Now that's not to say a little debt is bad. It's actually a very useful way for the fed to manipulate the economy. However, given how bad it's risen over the last 7 years, it's not good for the economy. Debt increasing while economy is doing decent=bad news in the long term.


RE: Why?
By mdogs444 on 12/27/2007 5:23:09 PM , Rating: 2
Never did I say that the amount of debt we had was a good thing, nor did I say it was positively benefiting our economy or the value of the dollar. I merely was stating that it does not by any means infer that we are "broke" or that it actually has to be "repaid" like a credit card.

And yes, I'm fully aware of how the national debt works.


RE: Why?
By robertgu2k on 12/27/2007 5:41:43 PM , Rating: 2
While I agree with your analysis that China holds a considerable chunk of gov't debt assets (Japan is also a large holder), and I also agree that raising debt in general is not desirable. I will disagree with your assessment of increased national debt decreases the value of the US dollar because of more dollars in circulation.

Increased national debt directly affects national interest rates not how many dollars are in the global market. Remember, the gov’t is BORROWING money to spend on gov’t programs, and someone is GIVING them money for a note stating the gov’t will repay with interest. So the net effect on the dollar supply is a net zero.

The reason national debt directly affects national interest rates is because if the gov’t keeps issuing more debt than the market is willing to accept at a given interest rate, the gov’t then has to re-price the debt they are issuing at a higher interest rate to entice people to give the gov’t their money in return for future repayments. And since most financial instrument (credit card rates, mortgages, car loans, etc…) interest rates are based on the gov’t interest rate of certain gov’t bonds; the higher the interest rate on the gov’t bonds…generally speaking…the higher the interest rates for all other debt instruments.

Now of course when the deficit of a nation exceeds a certain % of GDP (this number various on a country by country basis) the national debt can have a “physiological” affect on the dollar. Since traders will equate out of control national deficits with an economy on the decline and a reduced potential for the nation to repay those debts…and thus they will dump the currency. However, that’s not what is happening to the US, the % of deficit to GDP is still in a very comfortable range.


RE: Why?
By giantpandaman2 on 12/27/2007 6:02:34 PM , Rating: 2
Take a macroeconomics course. Banks and the issuing of debt/savings are currency multipliers. The buying and selling of government bonds is a major way of manipulating currency valuation. The major reason why Japan holds so much of our debt is because they believe they need a high dollar valuation in order for their economy to thrive.

Some might reply that, that doesn't explain why China holds so much of our debt. They're doing it for political reasons more than economic. As the largest holder of American debt they have quite a bit of leverage on our government.


RE: Why?
By robertgu2k on 12/27/2007 6:28:08 PM , Rating: 2
Thanks for the suggestion for the economic classes. I have a degree in economics and I am a very successful trader in stocks, currency, options, and debt. Now that in no right makes me an expert and my logic infallible of course, global economics is not 100% understood and percepts are challengeable.

Now your suggestion that gov’t issued debt increases currency makes no sense to me, the gov’t is not a bank, it does not hold reserves like a national bank or commercial bank would do. So when you claim that the gov’t issuing more debt increases the money supply, I cannot agree with that. The transaction is a net zero on the money supply. Now debt can act like a multiplying factor for economic activity (which can increase GDP) but it does not in itself increase the money supply which is what I’m getting by reading your post.

China’s increasing holdings of US debt assets is for the same reason why Japan has such large holdings. It’s not political at least in US terms; the Chinese National bank has to buy US assets with the dollars it gains from its exports to the US in order to keep the dollar pumped up and the Yuan depressed. That way the Chinese exports enjoy additional competitive cost advantages, and that causes their export engine to keep booming, which employs increasing numbers of the rural population, which helps keep the Chinese people happy and not protesting their gov’t. An additional side effect of China “recycling” dollars back to the US by buying US debt, is that it helps keep US interest rates lower, which allows the US consumer to borrow more to potentially buy more Chinese goods.


RE: Why?
By giantpandaman2 on 12/27/2007 8:40:43 PM , Rating: 2
The Chinese Yuan is NOT a floating currency, so they don't have to buy US bonds to keep the dollar depressed.

But the mechanism that you're misapplying is the exact reason why the national debt is devaluing the greenback.


RE: Why?
By JustTom on 12/28/2007 10:30:10 AM , Rating: 1
The problem with you analysis is the US dollar is measured against other national currencies. And US public debt is not out of line with other major nations public debt. Low interest rates are probably a much bigger contributor to falling dollar prices than debt.

From CIA factbook
Russia 7.7% of GDP (2006 est.)
China 22.1% of GDP (2006 est.)
South Korea 25.2% of GDP (2006 est.)
Spain 39.9% of GDP (2006 est.)
UK 42.7% of GDP (2006 est.)
Brazil 46% of GDP (2006 est.)
France 64.2% of GDP (2006 est.)
United States 64.7% of GDP (2005 est.)
Germany 67.8% of GDP (2006 est.)
Canada 67.7% of GDP (2006 est.)
Italy 106.7% of GDP (2006 est.)
Japan 177.6% of GDP (2006 est.)


RE: Why?
By giantpandaman2 on 12/28/2007 7:41:16 PM , Rating: 2
National debt is but a piece of the currency valuation puzzle. Interest rates are definitely a big part of the pie, along with investment (corporate stocks and bonds), and trade deficit. My point is that the rising national debt does have some very negative effects, and one of them is its effect on the dollar valuation.


RE: Why?
By Ringold on 12/27/2007 9:24:29 PM , Rating: 2
quote:
is that it helps keep US interest rates lower, which allows the US consumer to borrow more to potentially buy more Chinese goods.


Not to mention as well this years buzz about sovereign wealth funds, where they're taking those dollars and dipping right in to the equity markets, buying stocks and shares in companies.

Nevermind the panda guy. I don't have the applied experience you do, except for my own investment account, currently fiddling with a transition-to-teaching program, but have the degree and in the bag and those two posts of yours above were one of the more informative posts I've seen lately. He's got the reactionary "debt is bad" chip on his shoulder; must not be aware other OECD nations have significantly more debt as a % of GDP than we do and yet nobody often talks about them. France and Italy by this guys standards would make the Euro worthless.


RE: Why?
By camped69 on 12/28/2007 2:02:20 PM , Rating: 2
You can talk about the gdp all you want. At the end of the day it doesn't mean squat. Debt in the US has been leveraged out to around 10,000:1. In a fiat system that spells an eventual collapse. Aside from the imminent depression that is looming The dollar is plummeting across the board against other currencies. Yet the World Bank sees fit to okay massive inflation to our economy. 43Billion was injected a few weeks ago and with the inflation our dollar buys less and less. No worries though, the Amero will be there to replace it in short order. This is by design so don't fret, get in line, and take your vaccinne. The collapse of the American dollar will usher in a "new" global fiat system. Barcode anyone? How about a chip? Wake UP!


RE: Why?
By mdogs444 on 12/28/2007 2:11:18 PM , Rating: 2
I think you've been reading or watching way too much Glen Beck. He talks about the "Amero" all the time. Don't get me wrong, I like him, and I am of conservative nature.

But the "Amero" isn't going to happen, nor is the combining of US & Mexican, or US & Canadian currencies. The only way that would happen is if we decide to roll over in our sleep one night, make one of them the 51st state, and take control of their oil. But then again - taking the oil would be a boost to the economy, and cause deflation.

:-)


RE: Why?
By Ringold on 12/28/2007 4:06:09 PM , Rating: 2
quote:
You can talk about the gdp all you want.


Removing the metric of debt as a % of GDP would be like removing the metric of distance from physics.

How fast does something go? Since a "mile" doesn't mean "squat", it must go "really fast" or "really slow".

It's clear you're not familiar with what you're talking about asides from what your fellow tin-foil hat buds have told you, unless you want to make a constructive argument based on accepted data and research from respected institutions -- you know, like how real economists and investors do. :P


RE: Why?
By Lightning III on 12/28/2007 8:54:21 AM , Rating: 2
Dumb Ass Pres Andrew Jackson totally paid off the national Debt so no we haven't always had it Mr talking out his ass.


RE: Why?
By mdogs444 on 12/28/2007 9:03:11 AM , Rating: 2
Why dont you also finish the story on Andrew Jackson's National Debt..."Mr. Talking Out His Ass"

In 1835, Jackson managed to reduce the federal debt to only $33,733.05, the lowest it has been since the first fiscal year of 1791. However, this accomplishment was short lived, and a severe depression from 1837 to 1844 caused a ten-fold increase in national debt within its first year.


RE: Why?
By mdogs444 on 12/28/2007 9:20:14 AM , Rating: 1
And just so you get a better idea of how wrong you are - $33,700 in 1835 is roughly $660,000 in 2006.

So while the National Debt was the lowest its been since 1791 in comparison and most considered the US to be "Debt Free" - however, it was not "Paid Off" to zero, and I am right in stating that there always has been a National Debt - regardless of its size.


RE: Why?
By hubajube on 12/27/2007 5:12:26 PM , Rating: 2
Yes!!! Tell me something. What exactly about our debt is a bad thing other than you just saying so? Give me some details here.


RE: Why?
By 8steve8 on 12/27/07, Rating: 0
RE: Why?
By jdun on 12/28/2007 12:08:01 AM , Rating: 2
GDP vs Debt ratio it is around the same when the USA was formed.


RE: Why?
By Targon on 12/28/2007 7:47:57 AM , Rating: 1
The public education system is a good reason for kids being "dumb and lazy" as well, so trying to pin this on smoking certain things isn't really fair. A big problem today is the culture which says that kids should get everything they want without doing anything to earn it.

On the topic on the economy, the problem most people have with the US debt is that the government is spending money on things that have zero benefits for the people in the USA. The government running at a deficit because of a slow economy is one thing, but the government running at a deficit because of poor spending policies is another. With that in mind, because the government in effect is broke(running at a deficit continually), the government as an entity should NOT be out there trying to save the world. Let the European nations be the ones to respond when there is a natural disaster in a third world country since their currency is worth more at this point, and the USA can throw in some tiny amount of money. The government can ASK the people of the USA to help those other countries, but the government itself isn't in a financial position to offer aid.

Gambling would be a source of revenues, but due to a lot of negatives(people gambling more than they can afford to lose), it really isn't a good idea to allow for online gambling without any way to make sure people are not spending more than they can afford to lose. In most casinos, those losing a lot of money are stopped after a while by the casino bosses.


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