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What We Read Today 05 March 2015

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.

This feature is published every day late afternoon New York time. For early morning review of headlines see "The Early Bird" published every day in the early am at GEI News (membership not required for access to "The Early Bird".).

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Autism appears 'largely genetic' (Michelle Roberts, BBC News) A study conducted by a King's College medical research team for the Medical Research Council have found that genetic make-up is responsible for 74-98% of all autism cases. The range is defined by uncertainty due to the sample size in the experiment. The experimental sample was all twins born in England and Wales during the three years starting 01 January 1994 and 31 December 1996. Of a total 6423 pairs included in the sturdy, 516 were identical (monozygotic twins) and the remainder fraternal (dizygotic twins). All twins in the study were raised together by their parents to maximize the coincidence of environmental factors for each pair.

The research found that 181 individual teenagers in the study were diagnosed with autism. This is approximately one case for every 71 individuals, higher than the generally accepted rate of 1 in 88. See Autism Fact Sheet (National Institute of Neurological Disorders and Stroke, NIH). The research found that the incidence of autism in identical twins was "far higher".

The researchers say that the study suggests that a complex set of genes may be involved and that environmental influences cannot be ruled out entirely. A quote from one of the researchers, Dr. Francesca Happe:

"Our findings suggest environmental factors are smaller, which is important because some parents are concerned whether things like high pollution might be causing autism.

"Some people think there might be a big environmental component because autism has become more common in recent years but that's happened too fast for genetics to be a probable cause.

"The main consensus now is that the rise in diagnosis has more to do with increased awareness of the condition."

The research paper: Heritability of Autism Spectrum Disorder in a UK Population-Based Twin Sample ( Emma Colvert et al, JAMA Psychiatry).


Articles about events, conflicts and disease around the world

U.S.

UE

Greece

Turkey

Iraq

Ukraine

Russia

Brazil

Venezuela


China-ASEAN Wage Comparisons and the 70 Percent Production Capacity Benchmark (Chris Devonshire-Ellis, China Briefing) Total cost of labor (using minimum wage plus cost of welfare) is comparable in China, Thailand and Malaysia. But other countries are far cheaper. Those with costs less than half of the first three are Indonesia, Philippines and Vietnam. And India is less than a quarter. This article says that both Taiwan and Hong Kong have had significant jobs movement to lower cost countries but China has been less affected because China's manufacturing has been turning more to supply internal domestic demand and to some extent "those factories are staying put."

Countries in Asia other than the mentioned above have very cheap labor but have such large infrastructure deficits that they are not competitive.

Some examples of how China is losing out on manufacturing that 5-10 years ago it would have gotten include:

se.asia.labor.costs


Mapping China's Income Inequality (Matt Schiavenza, The Atlantic) There are two big income inequality divides in China:

  • Urban vs. rural
  • East vs. west

Income inequality in China is worse (but only slightly) than in the U.S. But it is also worse than other countries, such as the Philippines and Peru. The question is how much progress has to be made on this disparity to maintain social harmony in such a large country which actually contains a number of different ethnic groups. And the ethnicity question is what makes the east-west divergence troubling. The urban-rural divide is one that can evolve positively through natural socio-economic progression. The old Rudyard Kipling couplet "East is east and west is west, And never the twain shall meet" is what needs to be modified.

china.income.inequality.map


Huge Drop In New Job Ads For Oil-Related Occupations (Gad Levanon, Michael Paterra, Ben Cheng and Jeanne Shu, The Conference Board)

Between November 2014 and January 2015, there was a whopping 42 percent decrease in ads for five extraction occupations (derrick operators, rotary drill operators, service unit operators, wellhead pumpers, and roustabout operators). The decline also hit related high-education occupations, with a 38 percent decrease in ads for petroleum engineers, geoscientists (except hydrologists and geographers), and geological and petroleum technicians.

new.job.ads.oil


Chinese ownership of American bonds and stocks (Derek M. Scissors, American Enterprise Institute) The author thinks that China is making significant investments in U.S. securities (stocks and bonds) through third party countries:

Ranking foreign holders of US securities shows an obvious problem. The totals for Japan, China, Britain, Canada, and Taiwan are sensible given their populations and economic relationships with the US. The other half of the top 10 holders are global capital centers, where national investors place money for various reasons. Someone else is investing in the US through the Caymans and Luxembourg.

us.securities.abroad


Stocks And Economics: The Herd Can Be Blind (Peter Schiff, ValueWalk) Schiff suggests that such "abnormal" activities such as share buybacks, extremely low interest rates and accounting magic have elevated earnings to a level inconsistent with the real productivity of companies. Since PE ratios are at historically high levels in many cases he thinks that the PE ratios in markets like the U.S. are actually misleading because they would be higher absent the "abnormal" events. Schiff suggests:

To factor out these short-term earnings distortions, we suggest that investors should look past current P/E ratios and instead look at Cyclically-Adjusted-Price-to-Earnings (CAPE), which is also known as the Shiller Ratio, a metric that looks at earnings over a 10-year period thereby smoothing out cyclical and economic anomalies. Looked through a lens of CAPE ratios, the U.S. markets begin to look very expensive in comparison to other global markets. The graph below tells the tale:

stocks.cape.dividends.global.schiff

Econintersect: Note the general trend of dividend yields to rise as the CAPE value decreases. Notable exceptions are Singapore and, especially, South Korea. We do not know the exact significance of this observation but it a reason we would look extra closely at any investment in either of those markets.


Other Economics and Business Items of Note and Miscellanea

El Nino Forms, but Forecasters See Little Weather Impact (The New York Times) The NYT had this today but Econintersect weather and climate economist Sig Silber was discussing this all last month in his weekly articles every Monday night.

After Net Neutrality (The Baffler) So the recent FCC ruling preserved the internet. But what if it isn't worth saving? U.S. internet service is among the worst in the world.

Why has the Nobel Peace Prize chairman been demoted? (BBC News) Was it ill-timed nominees (Obama, the EU and Chinese dissident Liu Xiaobo? Or simply a change from a liberal government to right-wing control in the last election?

Obamacare Increases Insurance-Rate by 87.7%/85.4%, or 2.7% Since 2008 (Washington's Blog) Author says Obama promised 100% coverage.

Krugman's Priceless Economics (Library of Economics and Liberty) If there was a Nobel Prize in starting contentious discussion Paul Krugman shoulkd win it. At times it seems to us Prof. K goes out of his way to distort empirical observatiions into metophorical barbs.

Daily diary reveals how cannabis use affects people with bipolar (The Conversation)

Mars Had an Ocean, Scientists Say, Pointing to New Data (The New York Times) Early in the history of the solar system Mars was much warmer and had an extensive water ocean.

Hunters Find a Frozen 10,000-Year-Old Baby Woolly Rhino (Wired) Aside from the fact that the author is numerically challenged (he refers to 10,000 years as ten centuries) this is a very informative article about a baby wooly rhino recovered largely intact from thawing permafrost, and containing apparently viable DNA. (Okay, we should not be so unkind - we make typos like the one mentioned above.)

Astronomers Observe Supernova and Find They're Watching Reruns (The New York Times) What is seen today happened billions of years ago.


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