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What We Read Today 19 February 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 include:

  • Oil Industry's Existential Crisis

  • Why is $38 a Critical price for Oil?

  • With OPEC Talks Ongoing, Why Did Oil Fall 4% Today?

  • $666 Billion Suit Against U.S. for "Works of the Devil" (Yes, this is real!)

  • Can Big Banks Be Made Safe?

  • Cameron's Deal to Avoid Brexit

  • U.S. Bombs IS in Libya

  • Pakistan Charges Attackers of Indian Base

  • China's Empty Malls

  • Coffee Repairs Liver Damage from Alcohol

  • Many Views of Bernie's Economic Plans

  • Big Tech Backs Apple Against U.S.

  • Get More from Social Security

  • And More

Articles about events, conflicts and disease around the world

Global

  • Oil down 4 percent as U.S. glut overshadows producer talks (Reuters)   Oil prices were down 4 percent on Friday, with Brent on track to a third straight week of losses as record high U.S. crude stockpiles intensified worries that a plan to freeze world output will do little or nothing to reduce massive supplies already in the market.  A slide in the U.S. equity markets, which have for weeks been trading in tandem with oil, also weighed on crude, traders said.  Brent crude was down $1.35, or 4%, at $32.93 a barrel by 1:18 p.m. EST (1718 GMT).  U.S. crude fell $1.07, or 3.4%, to $29.70.  More data available in Gary's Live Market Commentaries.  See also next article.

  • Trader who called for $26 oil now predicts this (CNBC)  The critical price level is $38 for WTI crude.  Watch video to understand why.

U.S.

  • Communist Imperialism to the Rescue (Bloomberg Op Ed)  One of those squatters from that Oregon preserve that has been in the news reportedly sued the U.S. for $666 billion this week, contending the government had engaged in the "works of the devil".  The alleged works of the devil include forcing "socialism, communism and imperialism types of government onto the people of the United States of America", according to NPR.  The author, Michael P. Regan, comments:

"So far, the lawsuit doesn't seem to be affecting the bond market too much. Treasury yields are down since the suit was filed on Wednesday, but they say the devil works in mysterious ways. (They say the same thing about bond markets, at least on equity desks). This obviously sounds like a long shot for a lawsuit to show proof of the "works of the devil," but then again one of our leading presidential candidates is in a big fight with the Pope, so who knows what to think anymore?  It's probably prudent to keep an eye on this suit just in case. After all, the plaintiff does plan to subpoena "various law professors." If the government decides to do a quickie nondisclosure settlement for like $500 billion, it might be time to start worrying. "

  • Kashkari's Big Plan for the Banks (Bloomberg Editors)  The new president of the Federal Reserve Bank of Minneapolis, Neel Kashkari, has gotten off to a bold start. In a speech this week, he warned that almost eight years after the financial crisis, the largest U.S. banks still pose a grave risk to taxpayers and the broader economy. Dealing with this problem, he said, will require a “transformational restructuring".  Bloomberg doesn;t agree that the big banks need to be broken up:

He’s right that the financial system needs further reform, and it’s good that he’s open to radical proposals. But one thing should be clear at the outset: The best way to make banks safer is also the simplest. Require them to finance themselves with more capital and less debt.

UK

  • Cameron Wins EU Deal to Avert ‘Brexit’ After Two-Day Summit (Bloomberg)  European Union leaders reached a deal aimed at keeping the U.K. in the bloc, freeing Prime Minister David Cameron to call a referendum on EU membership as soon as June.  The final draft of an EU communique prepared for the dinner gives the U.K. a seven-year “emergency-brake” period allowing it to impose welfare curbs on other EU citizens working in Britain, according to a copy seen by Bloomberg. Cameron had been pressing for 13 years; the original proposal had been for five years.

  • U.K. retail sales 2.3% vs. 0.8% forecast (Investing.com)  Retail sales in the U.K. rose more-than-expected in January, official data showed on Friday.   In a report, U.K. Office for National Statistics said that retail sales rose to 2.3% last month, from -1.4% in December (revised down from -1.0%).  Analysts had expected retail sales to rise 0.8% in January.

Libya

  • U.S. strikes Islamic State in Libya, killing 40 people (Reuters)   U.S. warplanes carried out air strikes against Islamic State-linked militants in western Libya on Friday, killing as many as 40 people in an operation targeting a suspect linked to two deadly attacks last year in neighbouring Tunisia.  It was the second U.S. air strike in three months against Islamic State in Libya, where the hardline Islamist militants have exploited years of chaos following Muammar Gaddafi's 2011 overthrow to build up a presence on the southern shores of the Mediterranean Sea.  The Pentagon said it had targeted an Islamic State training camp and killed a Tunisian militant, Noureddine Chouchane, a Tunisian blamed by his native country for attacks last year on a Tunis museum and the Sousse beach resort, which killed dozens of tourists.

Pakistan

  • Pakistan lodges case against alleged perpetrators of Pathankot air base attack (Reuters)   A Pakistan police spokesman said on Friday a case has been lodged against unnamed perpetrators of a deadly attack on an Indian air base last month that has renewed tensions between the rivals.  The Jan. 2 attack on the Pathankot air base, in which seven Indian security personnel were killed, has stalled hopes of revived peace talks between the nations after Prime Minister Narendra Modi made a surprise visit to his counterpart Nawaz Sharif in December.  India said it gave actionable intelligence to Pakistan in the weeks following the attack, but Defence Minister Manohar Parrikar suggested on Thursday Pakistan was slow to act.

China

  • China's Empty Malls Get Weirder (Bloomberg)  Chinese shoppers, once seemingly in endless supply, are no longer turning up at brick-and-mortar outlets. In August, Dalian Wanda, the country's biggest mall developer, announced it was shutting 40 of its 600 malls, sounding an ominous note for a once-buoyant sector.  That's a global trend, of course, but in China much of luxury item purchases are made overseas to avoid the country's high taxes.  But China's urban planners have long made malls central to their designs, both to meet growing demand and to symbolize the aspirations of a rapidly urbanizing middle class.  And now these new edifices are often empty.  But they keep on building:

In 2014, 44 percent of the world's newly completed malls, and nine of the 10 top cities for mall space under construction, were in China, according to real-estate consultancy CBRE. Deloitte still predicts that China will have 10,000 malls by 2025, up from 4,000 today. 


Very Wide Spreads Warn of Danger Ahead (Moody's Analytics)

In addition to the warning implicit to a wider-than-800 bp spread, the now rising trend of the high-yield spread’s moving 12-month average suggests that complacency is ill advised. Recessions were either present or less than a year away each time the high-yield bond spread’s moving 12-month average topped 600 bp two years after the cycle bottomed. Thus, the nearness of a possible downturn deserves consideration in view of how the high-yield spread’s latest yearlong average was 573 bp and rising.

 high.yield.spreads.warning


A history of oil's booms and busts (CNN Money)  Oil has one of the most volatile price histories of any commodity.

Other Scientific, Health, Political, Economics and Business Items of Note and Miscellanea

  • Drinking more coffee may undo liver damage from booze (Reuters)  Drinking more coffee might help reduce the kind of liver damage that’s associated with overindulging in food and alcohol, a review of existing studies suggests.  Compared to no coffee consumption, researchers estimated one cup a day was tied to a 22% lower risk of cirrhosis. With two cups, the risk dropped by 43%, while it declined 57% for three cups and 65% with four cups.  Researchers analyzed data from nine previously published studies with a total of more than 430,000 participants, including 1,990 patients with cirrhosis.  Cirrhosis kills more than one million people every year worldwide. It can be caused by hepatitis infections, excessive alcohol consumption, immune disorders, and fatty liver disease, which is tied to obesity and diabetes.  Lead study author Dr. Oliver Kennedy of Southampton University in the U.K. said in an email:
    “Cirrhosis is potentially fatal and there is no cure as such.  Therefore, it is significant that the risk of developing cirrhosis may be reduced by consumption of coffee, a cheap, ubiquitous and well-tolerated beverage.” 

  • The Pious Attacks on Bernie Sanders’s “Fuzzy” Economics (New Republic)  Far too much of the Democratic primary has been consumed with determining the boundaries of what is and is not serious. Four former chairs of the Council of Economic Advisers under Presidents Clinton and Obama provided the latest example this week, writing an open letter to castigate a fellow economist, Gerald Friedman of the University of Massachusetts-Amherst.  In this article the past economic forecasts of these critics are reviewed.  The author writes:

I don’t feel it necessary to defend Friedman, though it’s worth pointing out that his economic growth numbers would simply eliminate the GDP gap that was created by the Great Recession and was never filled in the subsequent years of slow growth—which should be the goal of public policy, however “extreme” it sounds. What I do want to challenge is the idea that there’s one serious, evidence-based way to perform economic forecasting.

The truth is that most economic forecasts that look several years into the future are flawed, almost by definition. This is a sprawling country with countless different economic inputs and knock-on effects that are incredibly difficult to accurately predict with a model.  Unexpected exogenous events and misinterpreted implications can make forecasts vary sharply with reality, no matter how carefully they’re constructed. There’s no right or wrong way to divine results from policies, and saying so actually makes you look far less evidence-based than you think. The best example of this comes from the reports of these four CEA chairs themselves.

  • Bernie Sanders Told To Stop Saying Bernie's Economic Plans Will Be Terrific (Tim Worstall, Forbes)  The author says the Democratic economists criticizing Bernie Sanders' optimistic projections for his economic plans are  based on a concern he has already documented:  Bernie's Favorite Economist Predicts Lovely Things From Bernie's Economic Plans.

  • Paul Krugman: Sanders Needs to Distance Himself from ‘Fantasy Economics’ (Truth in Media)  Nobel Prize winning progressive economist Paul Krugman said that he worries that the Sanders campaign's embracing of "deep voodoo" predictions regarding the outcomes of his economic policies will make Republican economic promises look more realistic by comparison.

  • Big tech companies are joining Apple in its encryption fight (The Washington Post)   The tech industry is starting to line up with Apple in its fight against the federal government over the encryption it uses to keep iPhones secure.  Earlier this week, a U.S. magistrate ordered Apple to help investigators break into an iPhone used by one of the San Bernardino mass shooters. Apple was given until Tuesday to challenge that ruling, but a person familiar with the case says Apple has been granted an extension until next Friday.  The court order sets the stage for a legal clash that could determine whether tech companies or government authorities get the final say on just how secure devices like smartphones can be.  Twitter, Facebook, Yahoo! and Google have voiced support for Apple.

  • The Most Common Questions Asked by Home Buyers—Answered! (Realtor.com)  Two of the most important questions involve home inspections and conditions for forfeiting earnest money deposits. 

  • 14 Ways to Get Bigger Checks From Social Security (Money Talks News)  Small decisions you make now can be worth tens of thousands of dollars in your golden years. Find out how to make the most profitable choices.  No matter how much you know about Social Security there are probably several new things for you here,


Some Friday humor forwarded by Ron Gall:

Price of Gas in France

A thief in Paris planned to steal some paintings from the Louvre.

https://sites.google.com/site/humoursix/sunday-family-humour-10th-february/f1.jpe?attredirects=0

After careful planning, he got past security, 

stole the paintings, and made it safely to his van.

However, he was captured only two 

blocks away when his van ran out of gas.

  When asked how he could mastermind 

such a crime and then make such an 

obvious error, he replied, 

  'Monsieur, that is the reason I stole 

the paintings.'

https://sites.google.com/site/humoursix/sunday-family-humour-10th-february/f2.jpe?attredirects=02

I had no Monet

https://sites.google.com/site/humoursix/sunday-family-humour-10th-february/f3.jpe?attredirects=0

To buy Degas

https://sites.google.com/site/humoursix/sunday-family-humour-10th-february/f4.jpe?attredirects=0

To make the Van Gogh.'

https://sites.google.com/site/humoursix/sunday-family-humour-10th-february/f5.jpe?attredirects=0

See if you have De Gaulle to send this on to 

someone else....

https://sites.google.com/site/humoursix/sunday-family-humour-10th-february/f6.jpe?attredirects=0

I sent it to you because I figured I had nothing Toulouse.

MAY YOUR DAY BE FILLED WITH SUNSHINE, SMILES & LAUGHTER!

No extra charge and you don't have to thank me...


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