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 dayin the early am at GEI News (membership not required for access to "The Early Bird".).
How ISIS Suckered the West (The Daily Beast) This columnist (Maajid Nawaz) proposes a western-Kurdish alliance to defeat ISIS and wants greater involvement of Great Britain and others. He sees the Islamic State as a continuation of the strategy of Osama bin Laden and says the West was suckered into under-reacting to IS as an over-reaction to the over-reach of George W. Bush in Iraq. Here is Nawaz's view:
Over a decade ago Osama bin Laden, the late founding father of this global jihadist insurgency, predicted our coming political paralysis in the West.
Bin Laden’s world view was not informed by any addiction to random savagery, but by something more akin to calculated sociopathy. He divided his enemy into the “near” and the “far.” His decision to globalize his “jihad” was informed by his belief that Arab rulers, the “near enemy”— and his real target—could not be overthrown until their Western backers, the “far enemy,” abandoned them.
How we can reduce emissions without hurting growth (City A.M.) Florian Haslauer, global head of A.T. Kearney's utility practice, says markets can't do it alone. While President Obama and Putin argued yesterday that economic growth and protecting the environment are not in conflict, we are yet to witness this trend on a global scale. Research by A.T. Kearney has identified three solutions to enable sustainable economic growth for nations while also reducing emissions. The plan, if implemented, has the potential to meet environmental targets and bring down emissions of greenhouse gasses by more than 900m tonnes in the EU alone. Greenhouse gas intensity needs to be reduced by 80 percent on a global scale by 2050 to meet the target set to counter global warming. There are three important solutions to help achieve this goal:
Obama, the president who lost his voice (The Washington Post) The U.S. presidency can be a destroyer of men, sapping away their strength, vitality and health. Examples are Woodrow Wilson, FDR, Reagan -- and now Obama? Besides FDR, several died in office, including William Harrison, Lincoln, McKinley, Harding and Kennedy. Remember the 2008 election of "Hope" and "Change"? Here's where we are now:
The presidency has changed Barack Obama. His hair has gone gray, which is to be expected, and he looks older, which is also to be expected, but his eloquence has been replaced by petulance and he has lost the power to persuade, which is something of a surprise. You can speculate that if the Obama of today and not Winston Churchill had led Britain in World War II, the Old Vic theater would now be doing “Hamlet” in German.
The president has lost his voice, that is certain. The numbers say so. Obama has the approval of only 44 percent of the American people. During his time in office, Congress and much of the nation have gone Republican — statehouse after statehouse, governor after governor (soon to be 32) — an astounding feat when you consider that the GOP has become the Know-Nothing Party in all its meanings.
It’s not that Obama has lost his gift of eloquence. His problem is that he often has nothing to say.
Rouzer speaks to JCC students (Raleigh News & Observer) A congressman has told a junior college government class that the way to improve services for U.S. veterans is to cut funding of the Department of Veterans Affairs by 2/3. U.S. Rep. David Rouzer (R, NC) said cutting the U.S. Department of Veterans Affairs’ spending would remove unnecessary bureaucracy and give vets the service they deserve. He proposes simply distributing the funds directly to the vets to go to any doctor or hospital they chose.
U.S. deploying elite force to boost fight against Islamic State (Reuters) The United States said on Tuesday it was deploying an elite new force of special operations troops to Iraq to conduct raids, free hostages, capture Islamic State leaders and carry out "unilateral operations" in neighboring Syria. Defense Secretary Ash Carter offered few details on the new expeditionary group. It is separate from a previously announced deployment of up to 50 U.S. special operations troops in Syria to coordinate on the ground with U.S.-backed rebels fighting in a civil war raging since 2011. Carter said the new force will be larger than the one being sent into Syria, but did not specify how many troops it will include.
On Ukraine’s front lines, U.S.-supplied equipment is falling apart (The Washington Post) The United States has delivered more than $260 million in nonlethal military equipment to help the government of Ukraine in its fight against a Russian-backed insurgency, but some of the U.S.-supplied gear meant to protect and transport Ukrainian military forces is little more than junk. The junk includes motorized vehicles 25-30 years old and bullet-proof vests declared obsolete more than two decades ago.
Forget Syria: Putin is on the verge of victory in Ukraine (City A.M.) The Russian President is at heart a Gaullist: a committed Russian nationalist, determined to restore pride to his battered country following its humiliating collapse at the end of the Cold War. Like Charles De Gaulle, Putin sees anti-Americanism as part of his narrative of national rebirth, expertly taking advantage of the mistakes and follies of the global superpower as an instrument in unifying his country. By skilfully contrasting his swashbuckling decisiveness in Syria and Ukraine with western dithering, Putin has found a way of re-projecting Russian national might onto the global stage:
By the end of September, it was becoming clear that the conflict in Ukraine had produced another frozen war – similar to the earlier results in both Georgia and Transnistria – with Russian proxies emerging to castrate challengers to its regional might.
In southeastern Ukraine, the Russian-backed separatists have stopped extending their territorial gains, mainly due to the fact that the Kremlin has stopped sending them heavy weapons and other aid. At the same time, the Ukrainian army has stopped trying to defeat them. This result suits the Russian President to the ground, as it ensures that a pro-western Kiev will neither formally join the West (in the guise of EU membership) or emerge as a successful regional counter-model, imperilling Putin’s hold on his own country.
Earlier this month, two little-commented-upon events confirmed this assessment. First, the French and the Germans basically threw in the towel in terms of actively resisting the Russian President’s intervention in Ukraine. Instead, they imposed an election plan upon hapless President Poroshenko of Ukraine.
Russia: Moscow Delays Enforcing Ban on Turkish Produce to Avoid Inflation (The New York Times) Is Russia cutting off its nose to spite its face? Although Russia has said it would ban fruits and vegetables from Turkey in response to the shooting down of a Russian warplane, it will wait several weeks to enforce the sanctions to avoid creating sudden shortages that could fuel inflation, Arkady Dvorkovich, a deputy prime minister, said Monday. The delay will enable Russian importers to identify alternative suppliers, he said.
Nearly 20% of 25- to 34-year-old men live with their parents (Myles Udland, Business Insider) The increase in 25-34 year old results still living with their parents started shortly after the turn of the century. For men the previous peak in the mif 1990s was surpassed only with the onst of the Great Financial Crisis in 2008. For women a new high was reached in 2006. For women the current level is about 50% higher than for the average for the period 1083-2005; for men the increase is less, about 30%.
Other Economics and Business Items of Note and Miscellanea
... several factors unrelated to economic growth should keep rates from rising above the 3% threshold: an aging population, a dearth of supply of bonds and persistent institutional demand for fixed income instruments. All of these either increase demand or reduce supply, which supports prices and, therefore, keeps yields low.
What could change that scenario? Two potential catalysts: a much more dramatic acceleration in the global economy, which at this point seems difficult to imagine, or more likely, some firming in inflation expectations.
Indeed, we would expect some stabilization in inflation and inflation expectations given declining slack in the labor market, structural inefficiencies and ambiguous productivity gains. Also, U.S. inflation should firm as the one-off impact of a stronger dollar and lower energy prices start to fade from the Consumer Price Index calculations.
No, we do not envision a significant surge in inflation. But we do think inflation expectations may be too sanguine. As such, we prefer TIPS to plain-vanilla Treasuries in our bond portfolio.
Bill Gates plots a surprise attack on the energy sector (Reuters) Bill Gates wants the world to live off the current enormous energy production of the sun and abandon the stored past energy in fossil fuels. He believes Gates believes the energy sector suffers from a dearth of funding to devekop the new technology and that is the reason much of the world is still burning coal for its power. From this article:
Bill Gates grows most animated when the talk turns to the "cool" new energy technologies that have yet to leave the lab.
Gates was a rare civilian sharing the limelight alongside presidents and prime ministers at the opening session of Paris climate talks on Monday.
Offstage, in a barren conference room, he excitedly described the possibility of generating energy through the long-speculated process of artificial photosynthesis, using the energy of sunshine to produce liquid hydrocarbons that could challenge the supremacy of fossil fuels.
“If it works it would be magical,” says Gates, hugging his elbows to his side and rocking lightly in his seat.
“Because with liquids you don’t have the intermittency problem [that] batteries [do]. You can put the liquid into a big tank and burn it whenever you want.
“There are dozens of things like that that are high risk but huge impact if they are successful.”
Book Review: How the Very Gullible Describe the New Deal (John Tamny, Real Clear Markets) This is a very critical review of The Money Makers: How Roosevelt and Keynes Ended the Depression, Defeated Fascism, and Secured a Prosperous Peace by Eric Rauchway. Below are some excerpted assertions by Tamny. Perhaps some readers will want to discuss one or more of them? Econintersect will add a comment for #5. Tamny (as is so often the case in this article) makes statements without context. In 1934 the number of unemployed (from The Statistical History of the United States) was 11.3 million; in 1935, 10.6 million; in 1936, 9.0 million; 1937, 7.7 million; and 1938, 10.4 million. What happened that cause a huge 35% decline in employment? The first decline in government expenditures in 11 years occurred just before 1938 ($7.7 billion in 1936 to $6.8 billion in 1937, down almost 13%). This context is not convenient for the Tamny argument.
Governments can only spend what they've extracted from the real economy first, so during economic slowdowns the ideal strategy is for politicians to reduce the governmental spending burden in order to leave economic resources in the market-disciplined private sector.
Demand is always and everywhere an effect of production, so the goal among politicians should be to leave recovery to a private sector focused on allocating resources as expertly as possible to those most prone to deploying them in productive ways.
Recessions, to be blunt, are the necessary economic cure. That's plainly why recessions, when left alone, lead to booming economic growth. Recessions signal the growth ahead. Recessions are misnamed. They should be called economic recovery.
Put simply, politicians only have money to spend insofar as the private sector produces taxable wealth first.
Rauchway noted that as of 1935, "as many as 10 million workers remained without a job." Notable about 1935 is that in 1934 Roosevelt and Congress boosted spending to the tune of a $7 billion deficit. Rauchway never mentioned it.
...there are two sides to every transaction. For every borrower, there's a lender first. Devaluation by his very analysis chills the desire of lenders to be intrepid with their savings.
Thinking about companies and jobs, it bears repeating again that both are the clear result of investment first. There's no economic school that can disprove the latter.
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