Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries (and sometimes longer ones) of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.
U.S., China Unveil Ambitious Climate Change Goals (Josh Lederman, Associated Press, Huffington Post) President Obama has increased his carbon cutting target to a reduction of 26% to 28% from 2005 levels by 2025. (Good luck getting Republican support for that! See below.) President Xi Jinping set a target for China's carbon emissions to peak by 2030 or earlier and pledged to increase non-fossil fuel share of energy (starting when?).
Incoming Senate Majority Leader Mitch McConnell:
"This unrealistic plan, that the president would dump on his successor, would ensure higher utility rates and far fewer jobs."
China and US in deal to curb emissions (Pilita Clark and Richard McGregor, Financial Times) The FT says this "unexpected joint announcement" sets aside "nearly 20 years of discord over how to combat climate change". Obama and Jinping are trying "to galvanise efforts to seal a global climate pact at the end of next year in Paris". Observers criticized the announcement for not being aggressive enough. See Econintersect assessment of U.S. target in next article discussion.
Total Carbon Dioxide Emissions from the Consumption of Energy (Million Metric Tons) (U.S. Energy Information Administration) The U.S. reduced total carbon dioxide emissions from 2005 to 2012 by 12% (5.999 billion metric tons down to 5.270 metric tons). (Note: More than half of that reduction came in 2010, 2011 and 2012.) The decline from 2005 to 2012 was what would have occurred if there had been a 1.6% reduction per year. To get to a 28% reduction by 2025 will require an additional reduction of 961 million metric tons above the 719 million already realized. That would take the equivalent of 1.3% every year. Memo to McConnell: What is wrong with that as a target? Oh, will it reduce the number of black lung cases in Kentucky and cost you votes in 2020?
Obama administration dramatically lowers insurance sign-up projections (Naom N. Levey, McClatchy-Tribune, Personal Liberty) The Obama administration is now projecting that between 1.5 and 2.5 million additional people will be covered by Obamacare policies in 2015. Their new estimate is that after the 2015 enrollment is completed between 9 and 9.9 million will be covered. This is much below the estimate of 13 million by the CBO (Congressional Budget Office). These numbers do not include the expanded Medicaid coverage which was also authorized by the ACA (Affordable Healthcare Act). See also 5 reasons to shrug off the 2015 HHS exchange plan forecast (Allison Bell, LifeHealthPro). More Obamacare discussion 'behind the wall'.
There are 12 articles discussed today 'behind the wall'.
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Here's The Single Force That Could Set Off Inflation (Shane Ferro, Business Insider) With housing costs about 40% of the CPI (Consumer Price Index), a declining rental vacancy rate and a labor market starting to lose some of its slack, the first inflation surge may come from rising rents. The article suggests that any pick-up in wages is likely to go largely into paying increased rents and thereby directly into an increased CPI.
One Speed Politics, Two Speed Economics (Paul Laudicina, Forbes) Very well written summary of an economic world which is experiencing bifurcation and a political world which is oblivious to that. Laudicina raises the very important question of sustainability. How can the rich keep on getting richer if the poor keep being able to buy less and less of what the rich would sell?
Disinflation Expectations (Walter Kurtz, The Daily Shot email, no url) Five year forward inflation expectations have come down to 2.3% and the Treasury yield curve is flattening, although it is still steep compared to much of the time in recent years. Part of the inflation expectation decline reflects the movement in oil prices and the yield curve slope is still quite expansionary.
Five banks fined $3.2bn in global forex probe (Daniel Schäfer, Caroline Binham and James Shotter, Financial Times) More pay to play and still no criminal trials. No settlement has been reached with Barclays as investigation continues.
Can’t Catch a Cab? Blame Economics (Nicole Pugilese, The New York Observer) Don't blame your bad luck when you can't catch a cab on a rainy day. It's simply supply and demand at play. When it rains there are 4.8% more calls for cabs and 7.1% fewer cabs on the streets. We needed and economic study to tell us that?
The Bailout Created the Debt, Not Vice-Versa (The Polemicist) Hat tip to Roger Erickson. The point here is that the rise in national debts came after the bailouts, not before. But the problem with this graph is that the denominator, GDP, declined significantly from 2007 to 2010. For the UK the decline was 18%, from $2.8 trillion to $2.3 trillion. To illustrate his point the author should have used debt numbers directly. Another point is that the evidence here does not prove causation without further analysis. The evidence is "circumstantial", to use a legal term.
ECB’s Balance-Sheet Goal Takes a Hit (Todd Buell, The Wall Street Journal) Mario Draghi wants to expand the ECB (European Central Bank) balance sheet. But last week it shrank. Banks are repaying loans faster than the ECB is buying covered bonds in it's new expansionary effort.
Grand Central: Time for Some Tough Love? (Paul Hannon, The Wall Street Journal) When should central bankers give some tough love and withhold monetary easing until there is some fiscal expansion to lift the other end of the boat? Hannon suggests that central bankers are carrying out policy in such a way that "timid" politicians are enabled from facing reality. But the fiscal action that Hannon seems to be envisioning is fiscal austerity. Isn't that what there has been too much of? Has pot been legalized where Hannon lives or is he stoned illegally?
Continuing Proof of Structural Changes in the U.S. Workforce (Doug Short, Advisor Perspectives dshort.com) Part of this dramatic graph can be explained by demographics. The increasing share of the population which is over 65 will account for some of the current peak, but probably not more than half (or so). The high share from 1947 to 1957 can be at least partly (perhaps largely?) explained by the reduced numbers of workers under 40 following WW II (men lost in the war) and the high level of draft for those who would have been younger workers during the Korean War. However there is only a slight distortion of the curve 1967-1971 during the Viet Nam War, probably because of increasing numbers of women starting to come in to the work force about that time.
Other Economics and Business Items of Note and Miscellanea
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