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What We Read Today 25 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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First, we hope that all of you are joining with family and friends today.  For those celebrating Christmas, may it look something like this for everyone:


Articles about events, conflicts and disease around the world



  • Congress gives Americans a lump of coal for Christmas (Al Jazeera)   Congress used the tax and spending bill enacted this holiday month to wrap a lot of valuable presents. Lawmakers did not work from a list of who was naughty and nice. Instead they delivered big gifts to the political donor class, especially the big corporations enjoying record profits, while finding clever ways to mislead or mollify voters about what they were doing.  An examination of the list of tax favors shows that unlike the jolly fellow in the red suit who gives selflessly, Capitol Hill’s Santas are calculating investors.  The rising influence of corporate values, especially marketing and advertising, in setting government policy is evident in the misleading name of the bill: the Protecting Americans from Tax Hikes Act of 2015, or PATH.  Several tax-rate hikes are built into the new law, hidden in the fine print of the bill and some official pronouncements.

  • One and a Half Cheers for Obamacare (Bloomberg)  Three cheers would be the full compliment (or complement, if you would rather).  Politics aside, the success of Obamacare has always depended mainly on economics: If it can’t attract the right mix of customers, the program is doomed. On this score, the latest figures from the Department of Health and Human Services are encouraging, even if it's too soon to declare victory.  More young people -- who on average are in good health, and who help defray the cost of insuring the sick -- are enrolling in Obamacare. Almost 1 million new customers age 34 or younger had signed up for coverage starting Jan. 1, 2016, an increase of almost 50% compared with the same period last year. That age group made up 41%t of first-time enrollees, up from 38% a year ago.  But total enrollments are lagging at 8.3 million - the CBO (Congressional Budget Office) had projected 21 million for 2016 when the law was passed.  Econintersect:  That is actually a relatively accurate porojection for the CBO. :-o-


  • Indian PM Modi makes surprise visit to Pakistan (Al Jazeera)  Indian Prime Minister Narendra Modi made a surprise stopover in Pakistan on Friday to meet his counterpart, Nawaz Sharif, the first time an Indian premier has visited the rival nation in over a decade.  Sharif hugged Modi after he landed at the airport in the eastern city of Lahore, state television showed. A spokesman at the Pakistani prime minister's office said the two leaders would discuss a range of bilateral issues, including the disputed Himalayan region of Kashmir.  Modi was on his way home after a visit to Russia. He stopped off in the Afghanistan capital Kabul earlier on Friday.


  • Okinawa sues Tokyo in bid to stop move of US air base (Al Jazeera)  Many residents want the U.S. base on the southern Japanese island of Okinawa want the U.S. military base there closed.

  • Without Energy's Drag, Inflation in Japan Is Approaching Target (Bloomberg)  Prices rose more than 1% for a fourth month in Japan in November, according to an index that the Bank of Japan is emphasizing as it attempts to reach its 2% inflation goal.  Inflation was 1.2% in November compared with a year earlier, according to a consumer price index the BOJ released Friday in Tokyo that excludes fresh food and energy. The central bank calculates the number, basing it on the government’s data. Total CPI, which includes energy costs, rose only 0.1% in the same period.



  • In Canada's far north, warm weather threatens vital ice road (Reuters)  Each winter, in the far reaches of Canada's north, a highway of ice built atop frozen lakes and tundra acts as a supply lifeline to remote diamond mines, bustling with traffic for a couple of months before melting away in the spring.  This year, the world's busiest ice road is running late. Unseasonably warm weather has set back ice formation on the Tibbitt to Contwoyto Winter Road, named after the first and last of hundreds of lakes on the route.  The road is still expected to open on schedule in late January, but if current weather patterns continue that could mean more work for crews trying to build the ice or cut the road's already short period of operation.

MBS Day Ahead: Early Close and Big Picture Considerations (Matthew Graham, Mortgage News Daily)  Does the graphic below signify any more than increasing anxiety?

A Contrarian Currency ETF Play for 2016 (Tom Lydon, EFT Trends)  While many anticipate the U.S. dollar to continue to strengthen against foreign currencies, especially with the Federal Reserve targeting higher rates, the Canadian dollar and currency-related exchange traded fund may outperform the greenback.  However, the road toward a stronger loonie may still be filled with hurdles, with Steven Englander, head of G10 FX strategy at Citigroup, warning that “there is a high risk that USDCAD will have to go well above 1.40 in the first half.”  Econintersect:  To save you punching numbers in a calculator, 1.40 corresponds to $0.71 U.S. for one loonie, exactly where it is today: 

Other Economics and Business Items of Note and Miscellanea

  • What Are Economies Of Scale? (Investopedia)  When more units of a good or a service can be produced on a larger scale, yet with (on average) less input costs, economies of scale (ES) are said to be achieved.  These "economies" are generally increased efficiencies for labor and use of machines plus lowered costs when materials are purchased and transported in large quantities.  But there can also be "diseconomies of scale" when diversity grows with size and core efficiencies become diluted.  Econintersect:  The article says "bigger is not always better".  A current day example of this is in banking - there are mixed results in analysis of economies of scale.  A number of studies show that profitability of banks can grow with scale.  For example see Do Large Banks have Lower Costs? New Estimates of Returns to Scale for U.S. Banks (St. Louis Fed).  But when functions other than profit are considered there can be diseconomies of scale.  See for example Does Size Matter? Economies Of Scale In The Banking Industry (Journal of Business & Economics Research).

  • 15 Things that Went Right in 2015 (Foundation for Economic Research)

  1. Extreme poverty falls below 10% in 2015

  2. Elon Musk steps up race to find fifth model of transport

  3. Women vote for the first time in Saudi Arabia, electing a number of female councillors too

  4. Aung San Suu Kyi wins an out-right majority in Myanmar’s national elections

  5. Scientists find a vaccine that is 100% effective against Ebola

  6. Literacy amongst women at an all time high

  7. Solar power becomes cheaper than imported coal in India

  8. Google’s autonomous vehicles have travelled over 1m miles in San Francisco and Texas without crashing

  9. Large steps made towards 3D-printed organs

  10. MIT launches virtual ‘semi-degrees’ in step to life-long learning

  11. Nigerian election results in the country’s first ever democratic transfer of power

  12. World’s youngest double hand transplant succeeds

  13. Breakthrough could make super-material graphene 100 times cheaper

  14. Hundreds of South Koreans are reunited with family members in North Korea

  15. Humanity gets its first close up glimpse of Pluto

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