Econintersect: Here are some of the headlines we found to help you start your day. For more headlines see our afternoon feature for GEI members, What We Read Today, which has many more headlines and a number of article discussions to keep you abreast of what we have found interesting.
Asia markets lose ground, with Nikkei turning negative in topsy-turvy trade (CNBC) Most Asian markets lost ground Wednesday as traders moved their chips amid concerns the U.S. Federal Reserve may hike interest rates soon, with Japan's shares turning negative in topsy-turvy trade. The Federal Open Market Committee is scheduled to release its April meeting minutes at 2 p.m. ET Wednesday and many analysts are concerned the minutes could be more hawkish than the statement that followed April's meeting.
Clinton, Sanders split Democrat nominating contests in Oregon, Kentucky (Reuters) Democrat candidates Hillary Clinton and Bernie Sanders each picked up primary wins on Tuesday in yet another demonstration of how divided the party is in the drawn-out national race to win the nomination for November's general election. Clinton narrowly defeated Sanders in Kentucky, a state where she was not expected to win. Sanders bested her in Oregon, a state that played to his strengths. In Kentucky, the two candidates will likely split the 55 delegates up for grabs. In Oregon, Sanders will take only a handful more of the 61 delegates that were awarded.
Strong U.S. data bolsters second-quarter growth prospects (Reuters) U.S. consumer prices recorded their biggest increase in more than three years in April as gasoline and rents rose, pointing to a steady inflation build-up that could give the Federal Reserve ammunition to raise interest rates later this year. Other data on Tuesday showed housing starts and industrial production rebounded strongly last month, suggesting the economy was regaining steam early in the second quarter after almost stalling early in the year.
Why I (Belatedly) Blew the Whistle on the SEC's Failure to Properly Investigate Goldman Sachs (Watch the Circus) See also next article. Econintersect: It is our opinion that the single largest failing of the Obama presidency will be judged by future historians to have been the failure to take action against criminal activities by major banks and their executives. This article by a former SEC attorney represents an insider view of this failure. Here's an excerpt:
The details of the investigation into Abacus at my level as trial counsel, which I provided to Pro Publica earlier this year, compels the conclusion that the SEC, its chairman at the time, Mary Schapiro, and the leadership of the Division of Enforcement were more interested in a quick public relations hit than in pursuing a thorough investigation of Goldman, Bank of America, Citibank, JP Morgan and other large Wall Street firms.
Why Haven't Bankers Been Punished? Just Read These Insider SEC Emails (ProPublica) E-mails often tell a crisp story of the thinking in any episode followed by that communication medium when later reviewed. That is the case here. But without trials of those who committed crimes, emails simply scratch the surface and the detailed facts that would be determined by testimony and cross examination never come to light.
Greeks rally to help as EU-Turkey deal leaves migrants locked up in limbo (The Conversation) More than 50,000 refugees from Syria, Afghanistan and Iraq fleeing to safety along with various other migrants are now trapped in Greece, many on the Island of Lesbos, most living under inhumane conditions. The author thinks this is deliberate action by the EU and Greek government to deter further arrivals from Turkey
IMF Proposal on Greece Sets Up Battle With Germany (The Wall Street Journal) The International Monetary Fund is demanding that Europe free Greece from all payments on its bailout loans until 2040, in the opening bid of a struggle that pits IMF math against German muscle. A new IMF proposal shared with Europe late last week goes far beyond what Greece's eurozone creditors, led by Germany, have said they are willing to do to help the country regain its financial health. Germany is leading the pressure on the IMF to dilute its demands and rejoin the Greek bailout program as a lender. Econintersect: Short of actually writing down the Greek debt, this type of restructuring is a very rational way to realistically address the problem.
IMF's Call for a Greek Debt Holiday Goes Too Far (Bloomberg View) Mark Gilbert, a member of the Bloomberg View editorial board, doesn't like the IMF proposals regarding the unrepayable Greek debt. See payments due in graph below. Econintersect: We do like something like the IMF plan because it is rational. Here is what Gilbert says:
The International Monetary Fund is proposing that Greece's official creditors grant the nation an extended payment holiday on its debts, according to The Wall Street Journal. It's such a crazy idea that I hope it's just a negotiating tactic designed to drag Germany to the debating table so that debt relief can at least be discussed.
Mariano Rajoy risks Brussels showdown with tax-cut vow (Financial Times) Spain's Mariano Rajoy is promising a fresh round of tax cuts if he is re-elected prime minister next month, risking a showdown with Brussels over Madrid's chronic budget deficits as he courts voters eager to shrug off a long era of austerity.
Senate Passes Bill Exposing Saudi Arabia to 9/11 Legal Claims (The New York Times) A bill that would let the families of those killed in the Sept. 11 attacks sue Saudi Arabia for any role in the terrorist plot passed the Senate unanimously on Tuesday, bringing Congress closer to a showdown with the White House, which has threatened to veto the legislation. The Senate's passage of the bill, which will now be taken up in the House, is another sign of escalating tensions in a relationship between the United States and Saudi Arabia that once received little scrutiny from lawmakers. Econintersect: By parallel logic, would this imply liability for the U.S. government for military actions that produce collateral damage in some circumstances?
China will maintain tax rebate policy for steel exports (Reuters) China will maintain its tax rebate policy for steel exports as part of its efforts to help the sector tackle its longstanding overcapacity problems, the country's finance ministry said on Wednesday. Chinese steelmakers have relied on the overseas market to soak up excess production in the sector, prompting growing anti-dumping complaints from foreign competitors. The Ministry of Finance said in an announcement on its website that it would also maintain a low rate of value-added tax on coal in order to support the sector's restructuring efforts. Econintersect: So China is exporting its steel industry woes.
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