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.
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Articles about events, conflicts and disease around the world
The Devastation in Global Commodity Currencies Is Far From Over (Bloomberg) The Canadian, Australian and New Zealand dollars are off to the worst start to a year since the financial crisis. The nations are grappling with a 29 percent drop in raw-material prices amid swelling supplies and slowing demand in China that may wipe out as much as 14 percent of the Canadian dollar's value in the next three years.
Can the bull market keep going without Apple? (CNBC) The recent pullback in Apple shares (NASDAQ:AAPL) may have bigger implications for a stock market already struggling to break out of a trading range, according to investors.
Google’s hypocritical move on European privacy (Al Jazeera) The corporation's response to France’s data-protection ultimatum demonstrates its real clout. In the popular imagination, the state is seen as the most dangerous enemy of expressive liberties and access to information. But Google has shown what free speech theorists have known all along — that nonstate actors can wield just as much power as states, if not more.
How Spain Fixed Its Economy (Bloomberg) Here is an analysis that finds reasons to support a pre-dawn conclusion. Econintersect: We will try to discuss the overlooked data analysis of this editorial in the near future.
In 2014, the government said it would gradually lower the corporate tax rate to 25 percent from 30 percent. The top marginal rate on personal income will fall to 45 percent from 52 percent. The government is limiting deductions, broadening the tax base and making a serious effort to curb evasion.
Companies have been given more flexibility to set wages and working conditions. Wage growth that had run ahead of productivity has moderated. The barriers that created Spain's notorious two-tier labor market, with its underclass of workers on temporary contracts, have begun to fall.
Be under no illusion: The job is far from finished. Structural unemployment -- what's left when growing demand has done all it can -- might still be as high as 18 percent, more than triple the U.S. figure. Tax and labor-market reforms need to go further. The government could do more to help to match job seekers, many of them high-school dropouts, to work or training. Above all, to avoid repeating the errors of the past, it will need to be careful about maintaining fiscal discipline as the recovery boosts revenues and financial pressure subsides.
Russia makes renewed bid for contentious Arctic regions (BBC News) Russia has renewed its efforts to get the United Nations to recognise 1.2 million sq km (463,000 sq miles) of the Arctic shelf that it lays claim to. It made a similar move for the resource-rich territory in 2001, but that was rejected by a UN commission because of insufficient evidence. Russia's foreign ministry said the fresh bid is backed by scientific data. But all other countries bordering the Arctic - Norway, Denmark, Canada and the US - reject Moscow's claim.
The Oil Crash Has Caused a $1.3 Trillion Wipeout (Bloomberg Business) Energy stocks have lost about 1/3 of their value in the past 14 months. That's about as big a percentage loss as for the crashing Shanghai Composite Index in China, although the Chinese decline has occurred over about 14 weeks, 4-5x faster. Dividends have held up relatively well with some big oil companies now paying out 4-5%. Can these dividends be maintained as pressure on oil prices seems to be continuing? How soon should you consider buying these beaten down stocks? Econintersect: We are watching for another wave of selling should dividend cuts be announced for an opportunity to get a better entry point.
Obama Didn't Kill Coal, the Market Did (Michael Bloomberg, Bloomberg View) Bloomberg echoes a view often stated previously by Econintersect, economics is killing coal, not politics. For reference, we include the chart for the coal ETF (Market Vectors Coal, NYSE:KOL) which is down 80% since February 2011:
Other Economics and Business Items of Note and Miscellanea
Avoid These Beneficiary Blunders (Financial Planning) The most common problems arise because an individual fails to change beneficiaries after significant life events such as births, deaths and divorces. You should have a will, but estate planning shouldn't stop there. Many assets pass to designated beneficiaries, so a periodic review of those selections can be crucial. A faulty designation can tarnish a decedent's legacy.
University Bureaucracy as Organized Crime (Counterpunch) Hat tip to Roger Erickson. This is a sweeping condemnation of the current status of American universities by an Ohio State University professor. A private comment to Econintersect by a professor at a private college indicated he thought that some points made in the article were valid but the sweeping conclusions drawn were reaching too far.
What Makes Scandinavia Different? (Jacobin Mag) Hat tip to Roger Erickson. The author argues that the social-welfare states existing in the strong capitalistic societies of Scandinavia derive from the threat of communism for neighboring (former) Soviet Union. Since the fall of the Soviets there has been a weakening of socialist elements in these countries. But the extent of the socialism-capitalism "collaboration" is still greater than elsewhere in Europe:
There’s a reason the Scandinavian welfare states are still the envy of many across the world. Even decades into a neoliberal project to reform them, Scandinavia sports relatively high income equality, large, tax-financed welfare programs, powerful unions, and relatively low unemployment rates.
Neoliberal textbooks tell us that the only way to societal prosperity is through low tax rates, deregulated business, and cut-throat competitive labor markets. Yet despite failing to meet the metrics of the Anglo-American variety of capitalism, Scandinavian countries stubbornly continue to prosper, and regularly come out on top of the global indexes of happiness and quality of life.
It is no surprise, therefore, to find neoliberals and conservatives devoting considerable intellectual energy to delegitimizing the “Nordic Model” of public welfare.
The Question I Wanted to Ask (JD Alt, New EconomicPerspectives) The panel discussion called by Bernie Sanders last week in Washington involving Stephanie Kelton (Democratic Staff Chief Economist for the Senate Budget Committee), Jacob Kirkegaarde (Peterson Foundation), Joseph Stiglitz (Columbia University) and James K. Galbraith (University of Texas) is the session that JD Alt wishes he had been sufficiently organized and prepared to ask the quetsion below. Note: All parties named above except Bernie Sanders and Jacob Kirkegaarde have contributed to GEI. Note: If videos and/or transcripts of theis panel discussion become available we will post them. The question:
“Does it strike anyone as odd that the discussion today has been only about money? Is it important at all what the real resources are that Greeks have within their own borders? Is it rational for Greece to borrow money in order to buy things the Greek people already own by right—their own labor, their own agriculture, for example? Or is it the case that Greece is so lacking in her own resources that she has to buy most everything her citizens consume from other countries? And, if that’s true, isn’t at least part of the solution for Greece to intentionally and systematically become more self-sufficient? Isn’t it possible, in fact, that if every nation strived intentionally to become more self-sufficient in food and energy—go “off-grid” so-to-speak—that a great chunk of the anthropogenic CO2 (which is threatening our very survival) would be eliminated? Or is the globalization of capital a more important goal than the well-being of seven billion people?”
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