Dutch bank rescue shows Europe's problems continue

Dutch finance minister Jeroen Dijsselbloem said the rescue will increase government debt

LONDON (CNNMoney)

The Dutch government was forced to rescue SNS REALL to protect savers' deposits after the banking and insurance group racked up huge losses on real estate lending. Attempts to find a private buyer or investor failed.

"I therefore had to use the instrument of last resort, which is nationalization," said Finance Minister Jeroen Dijsselbloem, in a statement. "Nationalization would safeguard financial stability and prevent serious damage to the economy."

The government's intervention comes a day after two of Europe's biggest banks -- Santander and Deutsche Bank -- announced huge writedowns in a bid to reduce their exposure to the region's economic woes and move on from past mistakes.

More banks cleaned house Friday. Spain's second biggest lender BBVA reported a 44% drop in earnings in 2012 due to hefty real estate provisions and rival CaixaBank's earnings fell 78%. France's Credit Agricole announced a €2.7 billion impairment charge, including €852 million related to retail banking in Italy.

Related: Jury still out on eurozone - Draghi

While the investments of shareholders and subordinated creditors at SNS REALL will be wiped out, the rescue will still cost the Dutch state about €3.7 billion in capital injections and writedowns, pushing its budget deficit further above EU targets.

That will embarrass Dijsselbloem as he takes over as chairman of the group of finance ministers charged with policing fiscal policy among the 17 eurozone nations, and anger taxpayers who paid for a €40-billion bailout of the Dutch financial sector in 2008.

"I can well understand the aversion many people will feel because once again, a large sum of taxpayers' money is required," Dijsselbloem said. "This is why I want the private sector to contribute as much as possible."

A one-time levy of €1 billion will be imposed on Dutch banks in 2014 to help pay for the rescue.

Dijsselbloem said the EU needed to legislate to ensure that banks could be broken up more easily and that the cost of future rescues be borne largely by the private sector.

Related: Scandal at world's oldest bank

A working group led by European Central Bank governing council member Erkki Liikanen last October recommended separating investment and retail banking activities to protect taxpayers and savers.

But France has since countered with its own proposal that would stop short of forcing legal separation. So far, the EU has made only small steps toward a banking union -- agreement on a eurozone mechanism for winding up failing banks and protecting depositors is probably years away.

The EU, U.S. and U.K. are all discussing different ways to regulate banks to avoid costly bailouts in the future, leading some industry figures to warn that policymakers are creating unnecessary complexity, and potentially risk, with a confused approach.

UBS Chairman Axel Weber said last week the industry needed a global standard on the issue of separating customer deposits from trading activities.

First Published: February 1, 2013: 2:17 PM ET

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Google stock hits all-time high

Click chart to see more information about Google's stock.

NEW YORK (CNNMoney)

Google's stock rose 2.6% to close at $775.60, topping the all-time high of $774.38 it reached in October 2012. The stock went as high as $776.60.

Google (GOOG, Fortune 500) has been the subject of a three-year European Union probe into its search business. Despite emerging scot free from a similar multi-year investigation in the United States last month, many industry analysts and antitrust experts had expected the European probe to be harder for Google to wriggle out of.

Antitrust laws are stricter in Europe, and Google maintains a 90% share of the search market there -- significantly higher than the two-thirds share it commands in the U.S.

The European Commission has only said that its reviewing Google's proposals that the company delivered to it on Friday, and no settlement has yet been reached. But if the solutions Google proposes are in any way similar to the voluntary concessions Google offered in the U.S., they won't have a noticeable impact on the company's business.

Google's stock has been on a tear during the past few months. The company continues to activate a million Android devices a day, has successfully expanded into the broadband, cable and wireless arenas and remains the dominant search engine. Despite more competition from Microsoft (MSFT, Fortune 500) and Facebook (FB), neither has yet threatened Google's top spot.

Google investors apparently also don't seem to be too nervous about any changes that ex-Googler Marissa Mayer might be making at Yahoo. Mayer left Google to become CEO of Yahoo (YHOO, Fortune 500) last year, and even though she has won praise for changes she's been making to try and turn around Yahoo, the company still has a long way to go before it challenges Google for the online advertising market lead.

The surging price of Google is also in stark contrast to the big decline in Apple (AAPL, Fortune 500). Shares of Apple have plunged more than 35% since hitting an all-time high last September.

Related story: 5 reasons why Google has its mojo back

But concerns remain about Google, particularly with its mobile business. The amount that advertisers pay Google for clicks has continued to slip, and Google keeps losing money on its Motorola unit.

Google CEO Larry Page has said that he doesn't expect the cost-per-click issue to be a "long-term problem," but he also hasn't indicated when he thinks this figure would be more closely aligned with overall click growth.

First Published: February 1, 2013: 1:14 PM ET

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Auto makers post strong sales in January

NEW YORK (CNNMoney)

The world's major car makers reported strong U.S. sales for the month of January on Friday, providing further indication that demand for new vehicles that lagged amid the weak economic recovery in the past few years is starting to return.

January vehicle sales came in at a seasonally adjusted annual rate of 15.3 million, according to Autodata, up from 14.0 million a year ago.

General Motors (GM, Fortune 500) led the way among the top four U.S. automakers with 194,699 vehicles sold, up 16% versus a year prior. Ford (F, Fortune 500) had 166,501, a 22% gain. Toyota (TM) sold 157,725 vehicles, up 27% versus a year prior, and Chrysler Group had 117,331, a gain of 16%.

Related: Consumer Reports says Toyota and Ford are best-liked car brands

Sales remained in high gear in January even after a strong December. Overall, industry sales rose 13% in 2012 to 14.5 million, the biggest increase since 1984.

CNNMoney's Chris Isidore contributed reporting.

First Published: February 1, 2013: 1:24 PM ET

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When taxes first hit the middle class

The Treasury Department mounted a World War II era PR campaign to alert Americans of their tax burdens.

Charlottesville, Va. (CNNMoney)

In the first six months of the year, as German armies swept across northern Europe, President Franklin D. Roosevelt sent Congress a series of military spending requests, each bigger than the last. On May 16, the president asked for $1.2 billion; on May 30, he asked for another $1.3 billion.

Congress began debating a variety of ways to pay for the country's military buildup, and the individual income tax quickly emerged as the most likely source of new money. Support for exempting less income, and thus imposing higher taxes, cut across the political spectrum; even many liberals, led by FDR, embraced the idea.

The enormous funding needs of World War II would soon transform the income tax from a "class tax" to a "mass tax." Throughout the New Deal, tax burdens had been very light or even non-existent on lower- and middle-income Americans, and Roosevelt emphasized income taxes on the very rich. Now he would push to raise taxes on a much broader swath of workers.

Revenue was one reason. But as the war became a reality for Americans, the notion of shared sacrifice emerged as another main justification for higher taxes.

"A part of the sacrifice means the payment of more money in taxes," Roosevelt warned in 1941.

The income tax, enacted 100 years ago, was the nation's most famous tax, and one deeply rooted in notions of social justice. Its annual filing requirement made a connection between the taxpayer and his government -- a connection absent from most sales and consumption taxes.

Related: The millionaire 'super tax'

Notions of fairness and sacrifice were also tied up with tax visibility. Tax experts had long contended that people should be aware of the taxes they paid. Such awareness encouraged scrutiny of public affairs and left taxpayers more attuned to the costs of democratic governance.

As America's involvement in World War II deepened, all taxpayers faced a heavier burden.

The average effective rate for the top 1% of taxpayers climbed from roughly 20% in 1940 to almost 60% in 1944. On the other end of the scale, the marginal tax rate in the bottom bracket in 1940 was 4.4% and it began after an $800 exemption for individuals. In 1944, the exemption was $500 and the rate was 23%.

Related: Presidents and their tax rates

The war years also brought the Victory Tax, a short-lived income tax that bolstered the regular income levy by taxing Americans near the bottom of the income scale.

The Victory Tax was most notable, however, for an innovation it brought to the federal tax system: withholding. The tax was deducted directly from both salaries and wages. That ensured that taxpayers would remain current with their obligations and gave the Treasury Department quick access to new revenue.

Until it became a "mass tax," the income tax was administered without withholding.

Treasury officials used a massive public relations campaign to advise new taxpayers of their fiscal responsibilities. Posters, radio announcements, popular songs and even a Donald Duck cartoon drove home the new tax filing requirements. Officials stressed that millions of previously exempt Americans now had to file returns.

Related: Taxing the rich - What's fair?

Withholding changed the income tax forever. It made the levy more responsive and flexible, both reflecting and facilitating its conversion into a powerful economic tool. Moreover, as one legal historian has pointed out, it helped create a taxpaying culture, getting Americans comfortable with regular deductions from their paychecks. No small feat in an era when such deductions were all but unknown.

In the end, the exemption cuts of World War II totaled just $500 for individuals, but they transformed the nature of the American state and society. Similarly, the rate changes, while often simply a matter of adjusting numbers in a table, were enormously important to the taxpayers who suddenly found themselves with marginal tax rates over 90%.

In many vital respects, the wartime tax regime broke with the history of New Deal revenue reform. Almost overnight, the income tax had "changed its morning coat for overalls." Millions of middle-class Americans unaccustomed to paying direct taxes to Washington joined the tax rolls for the first time.

Sunday marks the 100th anniversary of the ratification of the Constitution's 16th Amendment, which ushered in the modern federal income tax. This commentary by historian Joseph J. Thorndike is adapted from his new book, Their Fair Share: Taxing the Rich in the Age of FDR (Urban Institute Press).

First Published: February 1, 2013: 5:19 AM ET

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Stocks: Jobs to lead data heavy session

U.S. stocks drifted lower Thursday.

NEW YORK (CNNMoney)

The government will release its monthly jobs report at 8:30 a.m. ET. Economists surveyed by Briefing.com predict the economy added 180,000 jobs in January, up from 155,000 in December. The unemployment rate is expected to fall to 7.7% from 7.8%.

U.S. stock futures were firmer.

At 10:00, the Census Bureau will release data on December construction spending. The Institute for Supply Management will also publish its monthly manufacturing index, and the University of Michigan will release data on consumer sentiment.

Two separate purchasing managers' surveys on China showed manufacturing activity continued to expand in January but painted a mixed picture on the pace of recovery.

Fear & Greed Index

In corporate news, firms including oil giants Exxon Mobil (XOM, Fortune 500) and Chevron (CVX, Fortune 500) will report their quarterly results.

U.S. stocks drifted lower Thursday, ending a blockbuster January on a soft note.

European markets were higher in morning trading. Asian markets ended mostly firmer, led by gains on the Shanghai Composite which shrugged off the mixed news about China's manufacturing sector.

First Published: February 1, 2013: 5:26 AM ET

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U.S. can afford $500 billion in (smart) defense cuts -- opinion

If phased in and done in a smart way, defense cuts would not damage the nation's security, the authors argue.

NEW YORK (CNNMoney)

And make no mistake: The way the so-called sequestration would make the defense cuts -- $500 billion over 10 years -- would be damaging.

Every item in the defense budget except for military personnel accounts will have to be cut by the same percentage. That is no way to run a school board, let alone the world's largest organization and greatest military power.

Moreover, by the time sequestration would take effect, in March, the fiscal year will already be half over. Therefore, cuts in every defense budget item in the FY 2013 budget will have to be twice as drastic to get the roughly $50 billion in cuts in the remaining months of the fiscal year.

Related: Soaring disability benefits for veterans

The process and timing of sequestration as it stands today would take a serious toll on our military.

That's too bad. Because the idea of reducing defense spending by $500 billion over the next 10 years is a good one. Such a cut would represent only a 7% reduction to the defense budget in real terms and would bring defense spending back to where it was in 2006 in real dollars, at the height of the Iraq war. And defense spending would still be higher in inflation-adjusted dollars than the Cold War average.

Even if sequestration took effect, the United States would also still spend more than the next 14 nations in the world combined, most of whom are allies.

If these $500 billion in cuts are phased in and done in a smart way, they would not hurt our national security but will in fact have a positive impact.

Intelligent reductions would force the Pentagon's leaders to make the hard choices they avoided as the non-war, or baseline, defense budget doubled after the attacks on Sept. 11, 2001.

Related: Why debt threatens national security

Smart spending cuts could also be part of a legislative deal to reduce the federal deficit, which our military leaders argue is the greatest threat to our national security. Additionally, stopping the growth of defense spending would signal to our allies, particularly those in Europe who are cutting their defense budgets, that they must shoulder their share of the burden.

These reductions can be accomplished by reducing our nuclear weapons to 1,000 deployed warheads; cutting the size of the Army and Marine Corps to Sept. 11 levels; allowing the Navy to purchase more F/A-18 Super Hornets instead of the F-35 Joint Strike Fighter; cutting aircraft carriers to 9 from 11; and reducing the number of troops in Europe to 40,000 from 80,000.

Reductions of $500 billion in defense spending over the next decade would not hurt our national security if they are intelligently applied. After more than a decade of war, it is time to get real about reducing defense spending.

Lawrence Korb, a senior fellow at the Center for American Progress, served as assistant secretary of defense in the Reagan administration. Max Hoffman is a research assistant at the Center.

First Published: February 1, 2013: 5:32 AM ET

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Ex-commodities firm chief sentenced to 50 years

Russell Wasendorf Sr., the former CEO of commodities trading firm Peregrine Financial, was sentenced to 50 years for stealing clients' funds.

NEW YORK (CNNMoney)

The sentence, imposed in a Cedar Rapids, Iowa, courtroom, was the maximum he was facing for his crimes.

Wasendorf pleaded guilty in September to embezzling $215.5 million from more than 13,000 customers of the commodities futures firm over the course of 20 years. He prepared false documents that inflated the value of his firm.

"The lengthy prison sentence imposed today is just punishment for a con man who built a business on smoke and mirrors," said Acting U.S. Attorney for the Northern District of Iowa Sean Berry.

Authorities said Wasendorf had admitted to the fraud in a note found following a July 2012 suicide attempt. The police found him about a mile and a half from his Cedar Falls, Iowa, headquarters in his Chevrolet Cavalier with a hose running from the tailpipe into the car. The firm, which operated PFGBest and had offices in Cedar Rapids and Chicago, filed for bankruptcy right after his suicide attempt.

"I have committed fraud," read the note, which was written to his wife and eventually led federal authorities to charge him with the crimes. "For this I feel constant and intense guilt. I am very remorseful that my greatest transgressions have been to my fellow man."

He said in the note that he had been the only one involved in the scheme. His son, Russell Wasendorf Jr., was also a executive at the firm.

Wasendorf was represented in court by the federal public defender's office, which asked for a reduced sentence at Thursday's hearing. He has been in federal custody since the time of his arrest. A month from his 65th birthday, Wasendorf's sentence essentially represents a life term.

First Published: January 31, 2013: 3:29 PM ET

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Amazon back after rare site crash

According to data from Apica, Amazon's homepage went down at 2:32 p.m. and was back within 50 minutes.

NEW YORK (CNNMoney)

Around 2:30 p.m. ET, users began complaining that they weren't able to access Amazon.com's homepage. Some were able to get to other parts of Amazon's site, and the mobile app appeared to be unscathed. Amazon-owned properties like Zappos and IMDB were also unaffected.

Amazon (AMZN, Fortune 500) did not reply to a request for comment on the outage.

According to data from Web performance monitoring firm Apica, Amazon's homepage went down at 2:32 p.m. and was back within 50 minutes.

The outage was short, but it's extremely rare for Amazon.com to crash. Amazon depends on heavy e-commerce traffic, especially around the holidays, so it has famously massive server capacity to handle traffic spikes. Even a few minutes of downtime can cost the company millions.

Its powerful "elastic" infrastructure, called EC2, is designed to minimize downtime as much as possible. Amazon has so much spare server capacity, in fact, that it runs a sideline business, Amazon Web Services, hosting other websites. Amazon Web Services remained unaffected by Thursday's outage, according to Amazon's status dashboard.

It was a day of Internet glitches. Twitter also suffered intermittent outages for about three hours on Thursday.

First Published: January 31, 2013: 5:22 PM ET

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Neigh it ain't so: Burger King finds horse meat at European supplier

Burger King finds horse meat at European supplier, but says the meat in question never made it to stores.

NEW YORK (CNNMoney)

Burger King announced Thursday that it had terminated its relationship with European supplier Silvercrest Foods after finding traces of horse meat in beef patties at a Silvercrest facility.

Silvercrest provided beef for Burger King restaurants in the United Kingdom, Ireland and Denmark. Burger King said that while samples of beef from restaurants in these countries showed no evidence of contamination, four samples from a Silvercrest plant in Ireland showed "very small trace levels of equine DNA."

Burger King (BKW) said the tainted product was never sold in restaurants, and appeared to have originated from a sub-contracted supplier in Poland.

"[W]e are deeply troubled by the findings of our investigation and apologize to our guests, who trust us to source only the highest quality 100% beef burgers," Burger King's vice president for global quality, Diego Beamonte, said in a statement.

Burger King spokeswoman Kristen Hauser said in an email that Burger King's U.S. restaurants don't use meat from Silvercrest.

"We have stringent and overlapping controls to ensure that the products we sell to our customers meet our strict quality standards," she said.

Related: Yum Brands hit by slower China sales

Ireland's Food Safety Authority said earlier this month that the products in question did not pose a safety risk. Ireland's Department of Agriculture said its own tests of the Polish meat imported by Silvercrest for burger production showed that it was roughly 4% horse.

U.K.-based grocery chain Tesco also announced earlier this month that it had discovered horse DNA in beef products sourced from Silvercrest, and had terminated its relationship with the supplier.

Paul Finnerty, CEO of Silvercrest parent ABP Food Group, said in a statement that the company had implemented a "total management change" at the facility where the horse meat was discovered, and had established "comprehensive DNA testing procedures" to address the issue going forward.

"We are proud of our excellent reputation for quality and service throughout Europe and are determined not to allow the Silvercrest incident overshadow what is a great business," Finnerty said.

First Published: January 31, 2013: 7:04 PM ET

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Why secretary is still the top job for women

NEW YORK (CNNMoney)

The same as it was in the 1950s: secretary.

About 4 million workers in the United States fell under the category of "secretaries and administrative assistants" between 2006 and 2010, and 96% of them were women, according to the U.S. Census.

How secretary became women's work

The rise of the secretary began with the Industrial Revolution, which created an enormous amount of paperwork. In the early 20th century, it became a female job as companies realized they could pay women lower wages to do the work.

Secretarial schools offered professional training, which made it possible for many women to enter the career without a full college education.

It wasn't until 1950 that it became the most popular job among women. Back then, 1.7 million women worked in a category the Census defined as "stenographers, typists or secretaries."

While the title has evolved since then, it remains the top female job.

"It was out with the stenographers, and in with the data processing people. But many women are still employed in that large category," said Cindia Cameron, organizing director at 9to5, National Association of Working Women. Cameron worked as a secretary before joining the organization in 1983.

Why so little has changed

First, generalists tend to dominate the list of most common jobs, regardless of gender. The top job for American men, for example, is truck driver.

As workers become more specialized, either with years of experience or education, their job titles tend to become more specific to their industry.

So why are so many secretaries still around?

"Every time a major new technology showed up, there were always predictions that this would spell the end of secretaries," said Ray Weikal, spokesman for the International Association of Administrative Professionals. "You saw that with the development of electric typewriters, the personal computer, and the internet, but every time technology gets more efficient, the amount of business increases. You continue to need people who can use those tools."

Administrative assistant could very well continue to be the top job for women in 2020. The Labor Department projects the category will grow about 12% between 2010 and 2020, adding nearly 493,000 jobs during this decade.

How 'secretary' became a dirty word

The word "secretary," has been falling out of favor for decades, largely due to the feminist movement.

In the early 1970s, a group of secretaries at Harvard formed 9to5, a group with a mission to change the image and working conditions for women office workers. Their early demands included written job descriptions, overtime compensation, systematic procedures for filing a complaint, and regular salary reviews.

Sister organizations popped up in Chicago, San Francisco and New York and eventually, 9to5 turned into a national organization, with some affiliates joining unions.

Conventions and marches on National Secretaries Day included the slogan "Raises, not roses."

Related: Women earn $8,000 less than men after graduation

Along with those movements, workplaces started to rename the job "administrative assistant" or "office professional," to reflect the shifting perception of secretaries. The National Secretaries Association eventually changed its name to the International Association of Administrative Professionals.

"Increasingly women in the 1970s were demanding the opportunity to be treated as equals," Weikal said. "All of a sudden you have fewer secretaries and more executive assistants."

Even, after all that progress, the title "secretary" made a slight comeback in 2011, the first year in decades it had grown, according to an IAAP survey. The organization attributes it to the popularity of the show Mad Men and nostalgia for the 1960s.

"It's really hard to watch but it actually makes us think about how far we have come. Now you couldn't get away with half of the stuff men do in the show, and women fought really hard to change that," Cameron said. "It's a pretty hard time period to be nostalgic for, though."

Fighting for equal pay

9to5's main mission has since expanded to focus on women in low-wage jobs in general. The organization pushes for fair pay measures, paid sick days and maternity leave.

Across all industries and occupations, full-time female workers earned 78 cents to every dollar a man earned in 2010.

In the category of administrative assistants, women outnumber men more than 20 to 1, but still earn less than their male counterparts -- about 87 cents to the dollar.

Full-time female secretaries and administrative assistants earned an average salary of $34,304 in 2010.

For men, it was $39,641.

"The good news is over the past 40 years, there are very few jobs in which women have not broken through," Cameron said. "The glass ceiling is cracking in all different directions, but the bad news is, there is still a sticky floor. Most women still work in traditionally female jobs, like administrative support."

We're looking for men who work in female-dominated professions like nursing, elementary school teaching, cosmetology, child care and other fields. If you're a guy working in one of these fields, please email Annalyn.Kurtz@turner.com.

First Published: January 31, 2013: 5:18 AM ET

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