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What We Read Today 04 January 2016

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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Topics today:

  • Debt Deleveraging Myth

  • Global Stocks Plummet

  • China Markets Close Early

  • Obama’s New Gun Rules

  • Oregon Militia Protest

  • Toddler is First Refugee Death of 2016

  • Refugee Squalor in France

  • Yen Surges

  • The Great John Stuart Mill

  • Marijuana Economics

  • Genetics and Beef Cattle

  • And More

Articles about events, conflicts and disease around the world


  • Global Stocks Sink on China, U.S. Growth Concerns (Bloomberg)  Stocks were pummeled on the first trading day of the year, sending the Dow Jones Industrial Average down as much as 467 points before recouping some of those losses as a selloff in Chinese equities spread amid anxiety over the outlook for global growth.  The MSCI All-Country World Index fell 2.1% by 4:56 p.m. in New York, topping its slide of 1.5% at the start of 2001.  The Stoxx Europe 600 Index fell 2.5%, capping the worst start of the year ever as almost 580 of its companies fell. Germany’s DAX Index, among the best performers in 2015, dropped 4.3%, the biggest slide for the export-driven gauge since the China-led rout in August.  In Asia, Japan’s Topix index slid 2.4% to drive a 2.4% slump in the MSCI Asia Pacific Index as China’s CSI 300 Index slid 7%, spurring a trading halt.


  • House to vote on killing major PPACA provisions (LifeHealthPro)  Republicans are inching closer to getting a bill that would repeal major parts of the Patient Protection and Affordable Care Act (PPACA) on President Obama’s desk — where it will almost certainly be vetoed.  The Senate passed the partial repeal bill, H.R. 3762, last month through the budget “reconciliation” process.  Supporters of a bill normally need at least 60 votes to get a bill through the Senate, to avoid the threat of a filibuster, or endless round of debate. But, under Senate budget reconciliation process rules, Senate leaders can get a budget reconciliation measure through with just 51 votes.

  • Obama: confident new gun initiatives are constitutionally sound (Reuters)  President Barack Obama said on Monday he was confident his new executive actions to tighten U.S. gun rules were consistent with the constitutional right to bear arms and said the initiatives would be rolled out over the next several days.

  • FBI seeks peaceful end to Oregon militia occupation (Al Jazeera)  Federal law enforcement officials on Monday sought to bring a peaceful end to the weekend occupation of the headquarters of a U.S. wildlife refuge in Oregon by self-styled militiamen, while authorities said all staff at the facility were safe.  The occupation, which began on Saturday, is the latest skirmish over federal land management in the western United States.


  • Toddler becomes first refugee to drown in 2016 (Al Jazeera)  A two-year-old boy has become the first known refugee in 2016 to drown trying to reach Europe after the dinghy he was traveling on crashed into rocks, Greek coastguard says.  The other 39 passengers on board were rescued on Sunday after fishermen alerted coastguard, but at least 10 were taken to hospital to be treated for hypothermia after the boat got into trouble near the island of Agathonisi.


  • The SNP’s economic case is draining away (Prospect)  With the oil price at its current low, an independent Scotland would face a fiscal “chasm”.  But the problems between Saudi Arabia and Iran could change that.  If oil production in the Middle East is curtailed and the price rises significantly, it could change the outcome of the May 5 election in favor of those who are promoting Scottish independence.


  • Refugees living in squalor in northern France (Al Jazeera)   Thousands of refugees in northern France are living in squalid conditions inside camps with little to no official help, activists say.  Volunteers helping residents of a camp near Dunkirk told Al Jazeera that conditions are deteriorating as hundreds of new arrivals make their way to the settlements.  The sprawling tent city is currently home to 2,500 people who want to head north across the English Channel to the UK.  An even larger camp exists to the north of Dunkirk in Calais, where the refugees have formed a settlement known as The Jungle.  The Calais camp has taken on a semi-permanent feel, with wooden structures, churches, bars, and schools popping up.


  • Surging yen is bad omen for stock-market bulls (MarketWatch)  The Japanese yen might just be the overall winner of the haven sweepstakes that accompanied the China-led global stock-market rout on Monday.  The dollar slumped 0.8% versus the Japanese yen USDJPY, -1.04%  Monday, while the euro EURJPY, -0.96%  lost nearly 1% versus its Japanese rival.  The Australian dollar was down even more (-2.7%).  But a happy first trading day of 2016 for yen bulls might mean more rough tumult for equity-market bulls trying to find their bearings in what’s shaped up as the roughest start to a new year for the Dow since 1932.  Many global stock markets have a negative correlation with the yen.


Debt and (not much) deleveraging (McKinsey)  The idea that we are in a period of debt deleveraging is a myth.  Seven years after the bursting of a global credit bubble resulted in the worst financial crisis since the Great Depression, debt continues to grow. In fact, rather than reducing indebtedness, or deleveraging, all major economies today have higher levels of borrowing relative to GDP than they did in 2007. Global debt in these years has grown by $57 trillion, raising the ratio of debt to GDP by 17% points (Exhibit 1). That poses new risks to financial stability and may undermine global economic growth.



Other Economics and Business Items of Note and Miscellanea

  • Right Again (The New Yorker)  John Stuart Mill was a force-fed prodigy who actually turned out to be a wise and well-adjusted philosopher.  Two excerpts from this excellent piece from 2008:

He was born in 1806 to a driven Scottish writer, James Mill, and a passive and mostly invisible mother. Chosen for an experiment in education, he was crammed with learning by his father and his father’s mentor, the utilitarian philosopher Jeremy Bentham. The aim was to produce a mind distended out of all proportion—force-fed facts, as unlucky geese are force-fed corn. The foie gras of the boy’s mind was then to be dined on by a grateful nation; the boy’s life, like the goose’s comfort, was secondary. Latin, Greek, ancient history, political economy: “By the age of six,” Reeves notes, “young Mill had written a history of Rome; by seven he was reading Plato in Greek; at eight soaking up Sophocles.” By twelve, he more or less sat his examinations for university entrance.

... no one has ever been so right about so many things so much of the time as John Stuart Mill, the nineteenth-century English philosopher, politician, and know-it-all nonpareil who is the subject of a fine new biography by the British journalist Richard Reeves, “John Stuart Mill: Victorian Firebrand” (Overlook; $40). The book’s subtitle, meant to be excitingly commercial, is ill chosen; a firebrand should flame and then die out, while Mill burned for half a century with a steady heat so well regulated that it continues to warm his causes today—“Victorian Low-Simmering Hot Plate” might be closer to it.

  • Marijuana Economics – All Eyes Should Be On The Oregon/Washington Border (The Weed Blog)  Two of the four states with legalized recreational marijuana (Oregon and Washington) share a border.  But the laws in the two states are different and will continue to undergo significant changes going forward.  This creates a fertile economics laboratory.  From the article:

Colorado is usually the first place that people look to when it comes to recreational marijuana industry statistics and facts, and rightfully so since it was the first place to allow sales and is considered by most to be the ‘top state’ for marijuana. However, there’s something particularly intriguing about Washington and Oregon to me. Unlike Colorado and Alaska, Washington and Oregon both share a border with another legal recreational state (each other, obviously).

To me, that presents some very interesting learning opportunities. We get to see in real time how one state’s marijuana law and industry rule changes affect another state’s industry. The state’s that border Colorado likely won’t be changing their marijuana laws in the immediate future, and Alaska is bordered by Canada and water, so the Washington/Oregon border is the first and only place where we will see a lot of things happen. It’s like getting a glimpse into the future.

A very, very brief history lesson. Washington and Oregon both have had some of the best marijuana around for several decades. The ‘black market web’ if you will is very old and established in the Pacific Northwest. Washington sales started, and prices were ASTRONOMICALLY high at recreational stores. As more stores opened, and more supply hit those stores, prices dropped a lot in Washington, from as high as $30 per gram, to the current average of just over $10 per gram. Part of the price drop is also attributed to changes in taxes on marijuana in Washington.

In October things got very interesting along the border, as Oregon started allowing limited recreational marijuana sales of flower, seeds, and clones. The flower in Oregon was sold tax free, which made it much cheaper on average compared to on the other side of the Columbia River in Washington. So much cheaper that once very prosperous Washington recreational marijuana stores along the Washington/Oregon border started to feel the pinch from customers going to/remaining in Oregon rather than making their purchases in Washington.

That dynamic is going to shift once again tomorrow when a temporary 25% sales tax goes into effect in Oregon, raising the prices on flower. Oregon still does not allow recreational sales of concentrates, topicals, edibles, consumables, etc. whereas Washington does. Oregon allows home cultivation of recreational marijuana, whereas Washington doesn’t. Expanded sales will be coming to Oregon in 2016, and there’s going to be a big push to allow recreational cultivation in Washington in 2016. Whether it will happen or not depends on a lot of things. Hopefully it does, since Washington is the only legal state that doesn’t allow home cultivation.

  • Genetics and economics finally crossing paths (Drovers Cattle Network)  Two recent economic studies from agricultural economists at Oklahoma State University indicate there is added value in knowing and selecting for the proper genetics in the production of beef cattle.

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