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What We Read Today 31 October 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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Articles about events, conflicts and disease around the world


  • Cyclone Chapala, Gathering Strength, Heads Toward Oman and Yemen (The New York Times)  Another case of  "one of the most powerful storms ever recorded in the region", this time in one of the most arid parts of the world.  The storm, called Chapala, intensified to the equivalent of a powerful Category 4 hurricane on Thursday and Friday, packing maximum sustained wind speeds of almost 150 miles per hour and gusts of over 180 miles per hour.  Both wind strength and rainfall totals are expected to set records as the desert floods.  See also Extremely rare cyclone Chapala threatens floods, damage in Yemen and Oman (Reuters)

  • A Special Moment for Special Drawing Rights (Project Syndicate)   The problem that emerging and developing economies are facing stems from the fact that their capital inflows follow a strongly pro-cyclical pattern. When they were growing rapidly – especially compared to the advanced economies – they attracted massive amounts of capital. But as risks multiplied, capital started to flow back toward a reserve-issuing country – namely, the United States. After all, the US is set to raise interest rates, and the dollar has appreciated against virtually all of the world’s currencies.  This pattern of pro-cyclical weakness could be dampened by replacing the U.S. dollar with a basket of currencies as the global reserve, according to José Antonio Ocampo, former United Nations Under-Secretary-General for Economic and Social Affairs, former Finance Minister of Colombia, and Professor of Professional Practice and Member of the Committee on Global Thought at Columbia University.


The Internet is a potential weapon of mass destruction, accessible to many of this country’s enemies. It is surely time that the vulnerability of our power grids to cyberattacks and the absence of a national plan to deal with the consequences become a part of our national conversation.


  • Ending EU citizens' bank secrecy in Switzerland (European Parliament News)  The EU parliament adopted its stance on a deal with Switzerland to make it harder for EU citizens to hide cash from the tax man in Swiss bank accounts, in a vote on Tuesday (27 October 2015). Under the deal, the EU and Switzerland will automatically exchange information on the bank accounts of each other's residents, starting in 2018.  This follows the agreement the EU and Switzerland signed in May 2015 to clamp down on tax fraud and tax evasion. Information to be exchanged includes not only income, such as interest and dividends, but also account balances and proceeds from the sale of financial assets.  The resolution was passed by 593 votes to 37, with 58 abstentions.  The Swiss parliament must approve the final arrangement.  A statemnent from a spolesman:

 "We will not tolerate that persons or companies hide assets for the purpose of avoiding paying taxes. Whenever people commit tax fraud, they take away money that could be spent on schools and healthcare. Ending bank secrecy is a very important step in this fight against tax fraud and for tax justice."

  • Europe’s Politics of Dystopia (Nouriel Roubinin, Project Syndicate)  The recent victory of the conservative Law and Justice (PiS) party in Poland confirms a recent trend in Europe: the rise of illiberal state capitalism, led by populist right-wing authoritarians. Call it Putinomics in Russia, Órbanomics in Hungary, Erdoğanomics in Turkey, or a decade of Berlusconomics from which Italy is still recovering. Soon we will no doubt be seeing Kaczyńskinomics in Poland.  All are variations on the same discordant theme: a nationalist leader comes to power when economic malaise gives way to chronic and secular stagnation. This elected authoritarian then starts to reduce political freedoms through tight-fisted control of the media, especially television.  Roubini says action must emerge to defuse these rising tides of nationalism.  Failure to act decisively now will lead to the eventual failure of the peaceful, integrated, globalized, supra-national state that is the EU, and the rise of dystopian nationalist regimes. The contours of such places have been reflected in literary work such as George Orwell’s 1984, Aldous Huxley’s Brave New World, and Michel Houellebecq’s latest novel Submission. Let us hope that they remain confined to the printed page.

  • Seeking a Fair Distribution of Migrants in Europe (The New York Times)  See also next two articles.   European Union ministers approved a plan on Sept. 22 to share the burden of relocating up to 120,000 people from Greece and Italy, two of the three countries where the most migrants have arrived in Europe.  The plan assigns each member state a number of people based on its economic strength, population, unemployment and the number of asylum applications it has approved over the last five years.  Here is how countries are doing so far:

Click for larger image at The New York Times.


  • German Village of 102 Braces for 750 Asylum Seekers (The New York Times)  The small farming village of Sumte has become a showcase of the extreme pressures bearing down on Germany as it scrambles to find shelter for what, by the end of the year, could be well over a million people seeking refuge from poverty or wars in Africa, Syria, Iraq, Afghanistan and elsewhere.  See also article on refugees under EU, above.


  • Greek PM Tsipras says shamed by Europe's handling of migrant crisis (Thompson Reuters)  Greece's prime minister said on Friday he was ashamed to be a member of a European Union that he said was sidestepping responsibilities over the migrant crisis and crying hypocritical tears for children who have drowned trying to reach its shores.  Alexis Tsipras told parliament Greece didn't want a "single euro" for saving lives as thousands of refugees continued to arrive daily on its shores, and the EU remained at odds on how to deal with the influx.


  • Russian jet carrying 224 people crashes in Sinai. No survivors found. (The Washington Post)  A Russian airliner carrying more than 200 passengers crashed in Egypt’s Sinai Peninsula on Saturday morning, Egypt’s government and Russia’s Federal Aviation Agency said. No one survived the crash, the Russian Embassy in Egypt said.  Egyptian military planes first spotted the wreckage in a mountainous area in the central part of Sinai, about 180 miles east of Cairo, Egypt’s cabinet said in a statement Saturday. Civil Aviation Minister Mohamed Hossam Kamel said the cause of the crash had not been determined.  An Islamic State affiliate in the Sinai Peninsula claims to have brought down the plane in a statement circulated online on Saturday.



  • Guest Post: Truth, Lies, & Venezuela (Zero Hedge)  Ricardo Hausmann,  a former minister of planning of Venezuela and former Chief Economist of the Inter-American Development Bank, is Professor of the Practice of Economic Development at Harvard University, describes how the government tried to frame him for a crime with an illegally taped and doctored telephone conversation when he proposed proposed a study to explore how to rescue the Venezuelan economy by leveraging the support of the international community.   rticle originally posted at Project Syndicate.


Have Commodities Reached an Inflection Point? (Frank Holmes, U.S. Global Investors)  FH has contributed to GEI.  High spkies in the dollar are associated with international currency crises.  See first graph below.  Once such crises break affected currencies have a tendency to bottom (and so the dollar reverses lower) and opportunities in commodities open up.  The tight correlation are many between many currencies and commodities for which they are exporting producers.  Two of them are displayed in the second and third graphs below.




The Earnings Enigma (Pension Partners)  Over half of companies in the S&P 500 have now reported earnings and we’re observing a familiar theme. For the fourth consecutive quarter, earnings have declined on a year-over-basis.  Can stocks maintain levels near all-time highs when earnings and revenues are declining?


Other Economics and Business Items of Note and Miscellanea


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