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What We Read Today 31 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

Global

  • New Year revelers unfazed by attack worries - in most places (Associated Press)  In Paris, residents recovering from their city's own deadly attacks will enjoy scaled-back celebrations. And in Belgium's capital, authorities anxious after thwarting what they say was a holiday terror plot have canceled festivities altogether.  But many other cities around the world are proceeding with New Year's celebration plans as scheduled.

U.S.

  • Worst Year for Rigs in Quarter Century Closes With a Whimper (Bloomberg)  Analsysts have been surprised that U.S. drillers have tapered rig count declines toward the end of the year.  But oil explorers still did shut down more rigs in U.S. fields to finish out the worst year for drilling cutbacks in almost three decades.  Rigs targeting crude in the U.S. fell by 2 to 536 in the past week, Baker Hughes Inc. said on its website Thursday. Natural gas rigs were unchanged at 162, bringing the total of working rigs to 698. Drillers searching for oil this year idled the largest proportion of their rig fleet since at least 1988.  In the 14 oil- and gas-rich regions tracked by Baker Hughes, rig counts declined or remained the same in all but two. Drillers in the Permian Basin of west Texas and New Mexico added five rigs in the last week to boost the total to 217, according to the report. In the Haynesville shale, a source of gas in east Texas and Louisiana, one additional rig was put to work.

  • Obama may expand background checks on gun sales: news reports (Reuters)  U.S. President Barack Obama is expected to announce executive actions expanding background checks on gun sales, media outlets reported on Thursday, citing people familiar with White House proposals and planning.  The changes, which could come as soon as next week, would include requiring more small-scale gun sellers to be licensed and to conduct a background check whenever selling a weapon, Politico reported.  Additional measures would impose tighter rules for reporting guns that are lost or stolen on their way to a buyer

  • Thanks, Obama: Highest Earners’ Tax Rates Rose Sharply in 2013 (The New York Times)  Data released by the I.R.S. on Wednesday shows that tax rates on the income of America’s 400 wealthiest taxpayers rose sharply to 22.9% in 2013, erasing a majority of the last two decades’ decline in their effective tax rate.  As described in an article in The New York Times on Wednesday, tax rates on America’s 400 wealthiest taxpayers fell sharply from the late 1990s through 2012, when their average effective income tax rate fell to 16.7% from 26.4%.  Most of the increase came from closing income sheltering loopholes.  See also next article.

  • For the Wealthiest, a Private Tax System That Saves Them Billions (The New York Times)   With inequality at its highest levels in nearly a century and public debate rising over whether the government should respond to it through higher taxes on the wealthy, the very richest Americans have financed a sophisticated and astonishingly effective apparatus for shielding their fortunes. Some call it the “income defense industry,” consisting of a high-priced phalanx of lawyers, estate planners, lobbyists and anti-tax activists who exploit and defend a dizzying array of tax maneuvers, virtually none of them available to taxpayers of more modest means.  In recent years, this apparatus has become one of the most powerful avenues of influence for wealthy Americans of all political stripes.  Econintersect:  The income tax code is one of the most powerful income redistribution mechanisms that exists.  See discussion later in today's post, below.

lower.taxes.for.rich.1990.2012

EU

  • North Sea storms: 'Disastrous' barge collision averted (BBC News)   A potential major disaster in the North Sea has been narrowly averted after a large, unmanned barge went adrift in stormy high seas and came close to colliding with offshore oil platforms.  The Eide Barge 33 missed the Valhall field by at least 1km (0.6 miles).  More than 300 oil workers were airlifted from the Norwegian sector of the North Sea after the high winds broke the barge's anchor.  Stormy weather in the area has seen waves topping 15m (50ft).  A man died when a huge wave hit another rig earlier in the Troll field off Norway.

north.sea.oil.rigs.storm.2015.dec

Hungary

  • Hungary awaits Muslim tourists while promoting anti-refugee rhetoric (Al Jazeera)  The recent discovery of what researchers believe is the tomb of Suleiman the Magnificent, the greatest ruler of the Ottoman Empire, could have Muslim tourists flocking to Hungary — just as its government is accused of fueling Islamophobia with its virulent reaction to Europe’s refugee crisis.  The 450-year-old tomb is thought to lie beneath a hilltop vineyard near the sleepy town of Szigetvar, 20 miles from Hungary’s border with Croatia, which the government sealed with razor wire two months ago after doing the same on the frontier with Serbia.  The fences keep most refugees out of Hungary; inside the country, Muslims complain of rising abuse and suspicion, which community leaders blame on the firebrand rhetoric of a leader who has become a scourge of Europe’s liberals.

United Arab Emirates 

Russia

  • Russia Deploys Advanced Cruise Missiles in Major Navy Reboot (Bloomberg)  The Russian military intends to expand deployment of its most sophisticated non-nuclear cruise missiles for attacks at land and sea under a sweeping naval modernization, according to an analysis by the U.S. Office of Naval Intelligence.  Plans to install the Russian navy’s new KALIBR-class missiles even on vessels such as corvettes, or small warships, “is profoundly changing its ability to deter, threaten or destroy adversary targets”, the U.S. agency, known as ONI, said in a report posted on its website:

With the use of the land attack missile, all platforms have a significant ability to hold distant fixed ground targets at risk using conventional warheads.”

Bangladesh

  • Death for Bangladesh blogger killers (BBC News)   Two students have been sentenced to death in Bangladesh for the killing of an atheist blogger there in 2013.  Six others were convicted of involvement in the murder of Ahmed Rajib Haider, who was hacked to death as he was returning home from a rally in the capital, Dhaka.  A five-year sentence was given to the head of Ansarullah Bangla, the group suspected of carrying out the attack.  Five more secular bloggers and writers were killed in Bangladesh in 2015.


Summary of Latest Federal Income Tax Data (Tax Foundation)  The Internal Revenue Service has recently released new data on individual income taxes for calendar year 2012, showing the number of taxpayers, adjusted gross income, and income tax shares by income percentiles.  See table below.  Econintersect:  The wealthy do not pay more income federal income tax, on a percentage of income basis.  Many in the top 10% pay less.  See graph below table.  If you include FICA, which is 15.3% at $100,000 and only about 6% at $400,000, decreasing to slightly more than 3.3% for very high incomes, everyone in the 90% is paying a higher rate than the top 10%.  All in the 50% to 90% window is paying much more, roughly 35% to 40%.  For the bottom 50% the number is still higher than the top 10% groups, coming in around 26%.  If you want a cause for the hollowing out of the middle class, here is a good place to start. 

income.tax.data.2012

 income.tax.data.graph.2012

Other Economics and Business Items of Note and Miscellanea

  • Luxury home prices finally getting too high? (CNBC)  The tables have turned in the real estate industry as luxury listing prices fell for the first time since 2012, according to a Redfin report. The brokerage firm suggests that the drop in prices stems from wealthy buyers and foreign investors refusing to buy at the top of the market.  Prices for luxury homes fell by 2.2% in the third quarter, compared to a year ago, according to the report.

  • Should you stick with 2015 winners? (CNBC, Yahoo Finance)  Some of the year's strongest stocks rallied again Tuesday and could continue their runs into next year despite huge gains, some "Fast Money" traders said.  Shares of popular tech companies Netflix (NASDAQ: NFLX), Amazon (NASDAQ: AMZN) and Microsoft (NASDAQ: MSFT) all rose more than 1 percent on the day. That brought their gains for the year to about 144%, 123% and 21%, respectively.  But Pete Najarian says he still worries about the very high PE ratios for some stocks, like Amazon and Netflix.

  • Why many restaurants actually don’t want you to order dessert (The Washington Post)  Generally speaking, when diners extend their meal with slices of chocolate cake, cups of ice cream, and servings of crème brûlée, it can come at restaurants' expense.  According to Tyler Cowen, an economics professor at George Mason University who has written extensively about the economics of eating out:

  "It's hard to make money on desserts in the restaurant business today.  I don't think many [restaurants] benefit when people order them anymore."

  • Deleted: FINRA Erases Many Broker Disciplinary Records (Financial Planning)  If a prospective broker appears on the FINRA (Financial Industry Regulatory Authority) BrokerCheck list for those who have a disciplinary record it should raise a red flag for further investigation.  But if a broker's name does not appear, the red flag should not be taken down.  That is because many disciplinary records have been expunged by FINRA.  It is all part of the arbitration process for settling investor complaints against brokers which forces investors to "seek justice from a group composed of industry players".  This corrupt system has been the subject of many GEI articles over the years. 

  • Top 25 mid-size employers (Employee Benefit Advisor)  A slide show presents the top 25 mid-sized company employee benefit plans.

  • Half a Million Bank Jobs Have Vanished Since 2008 Crisis: Chart (Bloomberg)  Jobs lost from mega banks from peak employment total more than than half a million jobs as of 30 September 2015.  According to this article job cuts have only started for some of the banks.

bank.jobs.lost


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