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What We Read Today 20 December 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

U.S.

  • Trump, Sanders say U.S. should not try to topple dictators (Reuters)  U.S. presidential candidates Bernie Sanders and Donald Trump said separately on Sunday that the United States should not try to topple dictators such as Syria's Bashar al-Assad, highlighting a skepticism over foreign wars that transcends party lines.  Both candidates said the Middle East would be less tumultuous today if Libya's Muammar Gaddafi and Iraq's Saddam Hussein were still in charge, arguing that the United States faces a greater threat from Islamic State and other extremist groups that have flourished in their wake.

Spain

  • Spanish Exit Poll Shows No Clear Winner as Rajoy's Vote Slumps (Bloomberg)  The exit poll results showed Spaniards voted to disrupt a two-party system that has seen the conservative People's Party (PP) and the Socialists alternate in power for the past 33 years.  Spain was left with no clear governing majority after Prime Minister Mariano Rajoy’s People’s Party lost more than a third of its support in Sunday’s election, as voters deserted the two main parties for new political groups.  The PP is on course to take the most seats, with 124 lawmakers in Spain’s 350-strong parliament, the Interior Ministry said with 72% of votes counted. The PP won 28% of the vote, while the Socialists were second with 22.6% and 94 seats. Anti-austerity party Podemos won 68 seats and 20.5%. The liberal Ciudadanos party had 36 seats and 13.4%.

Lebanon

  • Lebanese militant leader killed in Israeli raid in Syria: Hezbollah (Reuters)   An Israeli air strike killed Samir Qantar, a Hezbollah militant leader, in Damascus on Saturday evening, the Lebanese group and Syrian state media said on Sunday.  Israel welcomed Qantar's death, saying he had been preparing attacks on it from Syrian soil, but stopped short of confirming responsibility for the strike that killed him.  A former national security adviser to Israel said he doubted the strike would escalate hostilities between Israel and Iranian-backed Hezbollah, whose last major confrontation was in 2006.  Israel has formally kept out of Syria's civil war which started almost five years ago but has bombed Hezbollah targets there without publicly acknowledging these sorties.

Syria

  • Suspected Russian warplanes kill scores in Syrian city: rescue workers (Reuters)  Air strikes believed to have been carried out by Russian warplanes killed scores of people in the center of the rebel-held city of Idlib in northwest Syria on Sunday, rescue workers and residents said.  They said at least six strikes had hit a busy market place in the heart of the city, several government buildings and residential areas. Rescue workers said they had confirmed 43 dead but that at least 30 more bodies had been retrieved that had still to be identified. Over 150 people were wounded with some of the serious cases sent to hospitals in Turkey.

Russia

  • Siberian Surprise: Russian Oil Patch Just Keeps Pumping (Bloomberg)  Russia has joined the U.S. shale production in not succumbing to the Saudi Arabian price war in crude oil.  The world’s No. 3 producer has been pumping at the fastest pace since the collapse of the Soviet Union, adding to the flood on an already-swamped market and helping push prices to the lowest levels since 2009.  Russia’s unexpected oil bounty this year is the result not of a new Kremlin campaign but of dozens of modest productivity improvements across the sprawling sector.

China

  • China landslide: Many missing after buildings collapse in Shenzhen (BBC News)   Dozens of people are missing after a landslide engulfed 22 buildings at an industrial park in the southern Chinese city of Shenzhen.  About 900 people were evacuated, and four were pulled from rubble with minor or no injuries, the local government said. No fatalities have been reported.  Shenzhen's fire brigade said it was working to free other trapped people - state media say 59 remain missing.  Two workers' dormitories are among the affected buildings. The city is one of China's biggest and is a major industrial centre.

Brazil

  • Brazil's New Finance Minister Faces a Big Test After Friday's Rout (Bloomberg)  Nelson Barbosa could, of course, turn out to be the man who fixes Brazil’s finances, tames soaring inflation and revives the sinking economy, but investors sure aren’t betting on it.  As word spread across Sao Paulo trading floors Friday that Barbosa would be the country’s next finance minister, replacing the beleaguered Joaquim Levy, markets plunged. By day’s end, the currency was down 2.6%, stocks 3%.


Fed Hike:  Past Rate Hikes Offer Clue on Future Tightening (Nikkei Asian Review)  Looking at economic conditions -- namely unemployment and inflation -- at the time of the country's three previous rate hikes could help shed light on how things will play out this time around.  The following is available as an interactive, data rich graphic at the source site.  Click on the graphic image to go there.

inflation.fed.funds.inemployment.20.years.600x360

Other Economics and Business Items of Note and Miscellanea

  • The 25 Best Books of 2015 (Scribd)  The Scribd staff picks their 25 favorite books for 2015.

  • Does Your IQ Predict How Rich You Will Be? (Evonomics)  Are country incomes and IQs correlated?  A recent study using a sample of 157 countries finds a high and statistically significant correlation between the two.  One might conclude, then, that it is the lower IQs of their people that explains the lower average incomes of people in the world’s poorer countries.  In a newly published paper titled “Does the intelligence of populations determine the wealth of nations?” Vittorio Daniele, who teaches economics at Magna Graecia University in Catanzaro, Italy, provides an explanation.  New Zealand political scientist J. R. Flynn has famously found that in mostly rich countries in which IQ test data have been available for sufficient periods of time, average IQ scores have been steadily rising.  Some studies also show that at a given point in time, IQ tends to be higher for the young than for the old.  These results suggest that higher IQ may be the result of greater wealth and IQ increases over time that a socisety is wealthy.  Econintersect:  Our paraphrase is that it is possible that wealth in a society increases intelligence of that cohort.

  • Republicans using la la land economics to justify tax cuts (Mississippi Business Journal)  Here is an excerpt which speaks for itself and we will not comment:

Here we go again, using la la land economics to justify tax cuts.

That’s not to say tax cuts are bad. But tax cuts that aren’t paid for are. And when they jack up the national debt that’s pathetic… far worse when they come from leaders supposedly dedicated to reducing that debt.

You would have thought that congressional Republicans learned a lesson from the 2001 and 2003 Bush Tax cuts. Based on actions last week, they didn’t.

Here’s a primer on la la land economics.  

Researchers with the Heritage Foundation in 2001 proclaimed that Bush’s 2001 tax cuts would completely eliminate our $5 trillion national debt by 2010. Instead, over that period, the national debt jumped $7.7 trillion. Of that, about $1.6 trillion came from the unpaid for Bush tax cuts, according to a 2012 Congressional Budget Office report. 

Just four months ago, the new Republican-appointed director of the CBO, Keith Hall emasculated la la land economics saying, “The evidence is that tax cuts do not pay for themselves.  And our models that we’re doing, our macroeconomic effects, show that.”

Now comes the supposedly conservative, anti-deficit, Republican-controlled House of Representatives passing $650 million in tax perks with no attempt at all to offset the cost. 

These unpaid for tax cuts are projected to add another one-half trillion dollars to the national debt.

“Republicans have instituted rules that block such measures unless they’re paid for,” reported Politico.com, “restrictions they will waive for themselves on this particular occasion.”

“Spending and tax cuts shouldn’t be treated differently,” said Maya MacGuineas, president of the bi-partisan Committee for a Responsible Budget, “they should both be paid for.”

  • The most economically destructive question: “Who will pay for it?” (Rodger Malcolm Mitchell, Monetary Sovereignty)  RMM contributes to GEI.  Consider this article ( a criticism of last night's Democratic Party debate) as counterpoint in a debate with the preceding article.

  • The following is from an unknown internet source.  It is posted in response to Hillary's closing remark:  "May the Force Be Eith You!"

the.force.saving.the.world.600px


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