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".).
We are not in recession right now (Edward Harrison, Creditwritedowns) EH has contributed to GEI. A flattening of growth does not predict a contraction, but simply indicate that awareness of recession potential should monitored. Edward says:
I have yet to close the door to the Goldilocks mid-cycle pause scenario that sees re-acceleration of growth beyond stall speed as new areas of the economy take the growth baton from energy. At the same time, I believe the decline in energy capital expenditure and in job formation growth is pronounced and long enough to have the hallmarks of the end of cycle dynamics. And while this downshift could take a long while to play out, the downside risks become greater if policy errors that exacerbate the fall in credit and employment creep in.
BlackRock's Fink Says 400 Energy Firms May Not Survive Cheap Oil (Bloomberg) Laurence D. Fink, chairman of BlackRock Inc., the world’s largest money manager, said as many as 400 energy companies may not survive because oil prices are not high enough for them to meet their debt obligations. “Carbons are going to be cheaper for longer,” Fink said in a presentation to the New Jersey Pension Investment Council in Trenton today. He did not make a forecast for oil prices or name specific companies.
Here's what Clinton's tax policies could do to the US economy (The Street) Clinton's tax plan would lead to slight dip in after-tax income for all taxpayers, according to an analysis from The Tax Foundation. The Washington, D.C.-based think tank and tax research group estimates that when accounting for reduced GDP by about 1% over the long-term due to slightly higher marginal tax rates on capital and labor, Americans would see their take-home pay fall by at least 0.9%. The top 10% of taxpayers would see a 1.7% drop in after-tax income, and the top 1% would see a 2.7% drop. The plan would raise tax revenue by $498 billion over the next decade on a static basis, but on a dynamic basis, the foundation estimates it would collect $191 billion. Econintersect: There are so many questionable assumptions in analysis like this that we place little value on it. Both the economic impact and the estimation of tax revenue increases could be much too high or much too low.
Few US neighborhoods affordable, walkable with good schools (Associated Press) Across the country, just 14% of neighborhoods manage to be at once affordably priced, walkable and near decent schools. And many of those neighborhoods exist in only two cities: Washington DC and Seattle, according to a new analysis released Wednesday by the real estate brokerage Redfin. More than half of cities do not have a single neighborhood satisying the criteria. The findings suggest a substantial mismatch between the neighborhoods where people say they want to live and the homes actually available to them. For more see Why You Should Buy the Cheapest Home on the Best Block (Redfin).
Moldovans unite in bid to oust government and find missing $1 billion (Al Jazeera) Both the U.S. and Russia keep watch as unprecedented protests rock Europe's poorest country. Chiril Gaburici pledged to be a new kind of leader for Moldova, an impoverished country pulled between Russia and the West, and now rocked by protests over rampant corruption and the unsolved theft of $1 billion from its banks. Young, multilingual, and a former CEO of two big telecoms firms, Gaburici became Moldova’s prime minister last February and vowed to run the country like an efficient business, eschewing political intrigue, fighting graft and reviving its push to join the European Union. But four months later, Gaburici was finished — just days after urging prosecutors to step down for failing to crack the case of the “missing billion,” they launched an investigation into forgery of his academic record, and he resigned. Since then there has been no progress on resolving the bank shortfall and Moldovans are engaging in ever-larger demonstration events. Complicating the situation is a long-standing Russian occupation of part of the country.
Israel Says ISIL Funded with Turkish Money (FARS News Agency) Hat tip to Roger Erikson. Russia and Greece have made similar charges. Of great irony here is that Israel buys oil from Turkey and therefore likely funds ISIS.
U.N. says Syria ignored most of its requests to deliver aid (Reuters) The Syrian government in 2015 ignored most United Nations requests to deliver humanitarian aid to some of the 4.6 million people in hard-to-reach and besieged areas and only 620,000 received help, the U.N. aid chief said on Wednesday.
U.S. Banks Cut Off Mexican Clients, as Regulatory Pressure Increases (The Wall Street Journal) U.S. banks are cutting off a growing number of customers in Mexico, deciding that business south of the border might not be worth the risks in the wake of mounting regulatory warnings. At issue are correspondent-banking relationships that allow Mexican banks to facilitate cross-border transactions and meet their clients’ needs for dealing in dollars—in effect, giving them access to the U.S. financial system. The global firms that provide those services are increasingly wary of dealing with Mexican banks as well as their customers who may have drug cartel connections. See also How the Drug War Hurts Development (Foundaton for Economic Education).
Other Economics and Business Items of Note and Miscellanea
Hawking's Latest Black Hole Paper Splits Physicists (Scientific American) Almost a month after Stephen Hawking and his colleagues posted a paper about black holes online, physicists still cannot agree on what it means. Some support the preprint’s claim—that it provides a promising way to tackle a conundrum known as the black hole information paradox, which Hawking identified more than 40 years ago. The key element of the new hypothesis is that empty space can contain information. Why this is important is seen in this excerpt, which explains what has been called the "Hawking Paradox":
Others are not so sure that the approach can solve the paradox, although some say that the work illuminates various problems in physics. In the mid-1970s, Hawking discovered that black holes are not truly black, and in fact emit some radiation. According to quantum physics, pairs of particles must appear out of quantum fluctuations just outside the event horizon—the black hole’s point of no return. Some of these particles escape the pull of the black hole but take a portion of its mass with them, causing the black hole to slowly shrink and eventually disappear.
In a paper published in 1976, Hawking pointed out that the outflowing particles—now known as Hawking radiation—would have completely random properties. As a result, once the black hole was gone, the information carried by anything that had previously fallen into the hole would be lost to the Universe. But this result clashes with laws of physics that say that information, like energy, is conserved, creating the paradox.
Economics make renewable energy good for business and the environment (West Central Tribune) The driving force behind wind and solar energy is no longer environmental activism. With ever lowering costs making these competitive with fossil fuels, economics has become the primary motivating factor. But sources are quoted who say that 20% of U.S. electricity from renewables by 2030 is just not realistic.
The Missing Startup Recovery (The Wall Street Journal) Even though there has been a steady growth of jobs since the Great Recession, America’s entrepreneurs still haven’t regained their footing six years after the recession ended, a troubling sign for an economy that once counted on fast-growing startups for employment and ideas. A new report by the Labor Department shows 232,000 establishment “births” in the second quarter of 2015, a slight decline from the prior quarter. Those accounted for 831,000 jobs. As a share of the overall labor market, the number of jobs attributed to such births has fallen noticeably since before the recession, from about 12.5% of the total to a little more than 11%. Commerce Department data, which isn’t as current but reaches back to the 1970s, shows the trend stretching back decades.
Obama Calls for Rapid Zika Virus Research (Scientific American) As the mosquito-borne disease spreads top health and national security officials are discussing lack of studies, vaccine. President Barack Obama on Tuesday called for the rapid development of tests, vaccines and treatments to fight the mosquito-transmitted Zika virus, which has been linked to birth defects and could spread to the United States in warmer months. See the next article and a section on Zika in WWRT yesterday.
Zika virus: US scientists say vaccine '10 years away' (BBC News) American scientists studying the Zika virus have warned that it could be a decade before a vaccine is publicly available. The virus is linked to shrunken brains in unborn children, leading to severe brain damage or death. It has spread to more than 20 countries, and has caused panic in Brazil where thousands of people have been infected. There is currently no vaccine or cure, and diagnostic testing is difficult. The search for a vaccine is being led by scientists at the University of Texas Medical Branch.
Zika virus: What you need to know (LifeHealthPro) This year, the Zika virus is the microbe causing panic and threatening to cause a widespread epidemic. The disease is spread by mosquitoes. For most adult patients, Zika symptoms seem to be less severe than dengue fever symptoms, but some doctors fear that the virus may hurt unborn babies, by causing problems — such as "microcephaly," or an unusually small head — that could kill a baby or leave a baby with severe developmental issues.
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