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What We Read Today 04 March 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:

  • 200 Million Years Closer to the Big Bang

  • Has Oil Market Stabilized?

  • Government Accounting Office to Probe Fed Bank Supervision

  • Jim Rogers:  Recession a Sure Thing this Year

  • Citigroup Executives are not Criminals (According to the FHA)

  • Good Week for European Stocks

  • Turkey Seizes Opposition Newspaper

  • What Country Saw GDP Shrink by 20% Last Year?

  • Mystery Madoff Victims Fail to Claim $2.5 Billion

  • Several Articles about Obamacare and Health Care Costs

  • And More

Articles about events, conflicts and disease around the world

Global

  • Astronomers just saw farther back in time than they ever have before (The Washington Post)   On Thursday, astronomers at the Hubble Space Telescope announced that they’d seen back farther than they ever have before, to a galaxy 13.4 billion light years away in a time when the universe was just past its infancy.  The finding shattered what’s known as the “cosmic distance record”, illuminating a point in time that scientists once thought could never be seen with current technology.  By measuring a phenomenon known as redshift, Oesch and his colleagues were able to look back in time to when the galaxy was brilliantly blue and incredibly hot, bursting with brand new stars that formed at a frenetic rate.  The new light was emitted when only 3% of the history of the universe had passed (about 400 million years) and was 200 million years older than the previous record.

  • Oil Market Storm Clears as Prices Stabilize on Output Deal (Bloomberg)   Oil is pulling away from the market’s biggest storm in seven years.  A measure of price volatility has tumbled from the highest level since January 2009 as the market frenzy eases amid a potential pact between the world’s largest producers to freeze output.  Investors in February fixated on how and when Saudi Arabia would engage other producers clamoring for a way to boost prices. Crude in New York crashed by about half since the biggest producer in the Organization of Petroleum Exporting Countries led the group’s 2014 decision to not to cut output in the face of a global glut, opting instead to keep taps open to force out higher-cost rivals.  U.S. benchmark West Texas Intermediate crude has climbed more than 30% since dropping to the lowest level in 12 years last month, and was at $34.45 a barrel at 9:20 a.m. London time. Aggregate trading volumes have declined from a record high reached Feb. 11 while aggregate open interest has decreased from a February peak.

oil.price.volatility.2015.dec.2016.feb

U.S.

A U.S. watchdog agency is preparing to investigate whether the Federal Reserve and other regulators are too soft on the banks they are meant to police, after a written request from Democratic lawmakers that marks the latest sign of distrust between Congress and the central bank.

Ranking representatives Maxine Waters of the House Financial Services Committee and Al Green of the Subcommittee on Oversight and Investigations asked the Government Accountability Office on Oct. 8 to launch the "evaluation of regulatory capture" and to focus on the New York Fed, according to a letter obtained by Reuters.

In an interview, the GAO said it has begun planning its approach.

The probe, which had not been previously reported or made public, is the first by an outside agency into the perception that government regulators are "captured" by and too deferential toward the bankers they supervise, so that Wall Street benefits at the public's expense.

"It's been seven years, eight years since we had the last recession in the U.S., and normally, historically we have them every four to seven years for whatever reason—at least we always have.  It doesn't have to happen in four to seven years, but look at the debt, the debt is staggering."

U.S. authorities have decided not to pursue criminal charges against any Citigroup Inc (C.N) executives or employees involved in packaging and selling mortgage-backed securities at the heart of the 2008 financial crisis, a government report shows.

The decision, which followed Citigroup's $7-billion settlement in 2014 resolving federal and state civil claims related to mortgage bonds, was described in a November report obtained by Reuters in response to a Freedom of Information Act request.

Its release marked the first public acknowledgement by U.S. authorities that executives at a major bank linked to the financial crisis would face no criminal charges for their involvement in selling billions of dollars of toxic mortgage bonds.

The report, by the Federal Housing Finance Agency's Office of Inspector General, one of the agencies in the Citigroup probe, said following the settlement, prosecutors reviewed the evidence to see if any individuals could be charged and determined "there was not enough compelling evidence."

EU

europe.stocks.friday.2016.mar.04

Turkey

  • Turkey seizes control of Zaman newspaper linked to Gulen (BBC News)   A Turkish court has put Zaman newspaper - a vocal critic of President Recep Tayyip Erdogan - under state control.  Administrators have been appointed to run the newspaper. There is no explanation for the court's decision.  Zaman is closely linked to the Hizmet movement of influential US-based cleric Fethullah Gulen, a former Erdogan ally.  Turkey describes Hizmet as a "terrorist organisation" aiming to overthrow the government. Many of its supporters have been arrested.  Mr Erdogan's government has come under increasing international criticism over its treatment of journalists. 

Syria

  • Syria conflict: Truce 'boosts peace talks', leaders agree (BBC News)   The truce broadly holding in Syria will create momentum behind peace talks, major European powers say.  The leaders of Russia, Germany, France, Italy and the UK had a telephone conversation on Friday after which they agreed to use the "positive dynamic", said the office of UK PM David Cameron.  EU countries asked Russia to exert influence over Syria's government to respect the truce, Germany said.  Scattered attacks have not threatened the truce, which began last Saturday.  However, both the opposition and the government have accused each other of violating the cessation of hostilities agreement brokered by the US and Russia.  The truce does not include the jihadist groups Islamic State (IS) and al-Nusra Front.

Macau

  • Macau's Economy Shrinks 20% in 2015 Amid Casino Gaming Slump (Bloomberg)   Macau’s economic output contracted 20.3% in 2015 as the world’s largest center of gambling was hurt by falling casino revenue and fewer visitors amid China’s anti-corruption campaign and slowing economy.  The Chinese city’s economy shrank 14.4% in the fourth quarter due to the continued decline in exports of tourism and gaming services, the local statistics bureau said in an e-mailed statement, easing from a fall of 24.2% drop in the three months through September.

macau.economy.2010.2015

Brazil

  • Lula's Detention Rattles Brazil as Heat on Rousseff Increases (Bloomberg)  The second term of President Dilma Rousseff has been overwhelmed by twin crises -- an economy crippled by recession and a political establishment under siege by a massive corruption investigation. The probe of former Brazil President Luiz Inacio Lula da Silva, an iconic figure who chose Rousseff as his successor, escalates almost two years of mounting tension.  Rousseff isn’t directly implicated in the latest investigation, which focuses on favors Lula and his family allegedly received from companies involved with Petrobras, the state oil company at the heart of the corruption probe. But she is under intense attack for a range of reasons and Lula remains the soul of her Workers’ Party, known as the PT. His questioning raises the temperature a week before pro-impeachment protests scheduled for March 13.

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

  • The Mystery Madoff Victims Who Left $2.5 Billion on the Table (Bloomberg)  There were $20 billion dollars invested with Bernie Madoff.  Yet claims were submitted by victims for only $17.5 billion.  Almost half of the unclaimed money can be traced to a couple of Caribbean-based hedge funds. Their reason, while unknown, may have amounted to a calculated decision that any recovery on their $1.2 billion of claims would be tiny compared with what they might be forced to give back if they got tangled up in U.S. courts.  The remaining $1.3 billion in unclaimed money likely belong to individual investors who had a variety of reasons to shy away from the claims process, especially at a time when victims were expecting to recover only 4 or 5 cents on the dollar, legal experts say.  Now it appears that the recovery may be close to the $17.5 billion invested for which claims have been filed. 

  • Obamacare Debate Continues  Below are three videos with statements about the Patient Protection and Affordable Care Act of 2010 (aka Obamacare).  First is a statement by John McCain in late 2015 arguing for the repeal of the 2010 law.  Second is a formal debate about whether Obamacare shouldb be repealed.  Third is the appearance by President Obama yesterday in Milwaukee, Wisconsin.  The program starts at 17:10 (move the timeline "button" to that point to bypass the "program will start shortly" message screen).

 

  • Preliminary estimates suggest that national health spending grew by 5.9% in 2015. 

  • National health spending in December 2015 was 4.9% higher than health spending in December 2014.

  • The December 2015 nominal gross domestic product (GDP) growth over a 12-month period was 2.9%.

  • The health spending share of GDP was 18.1% in December. This is the third time in recent years that spending has been estimated to exceed this benchmark share due to revisions either in health care spending or GDP.

  • The December health spending share of potential GDP (PGDP) was 17.6% and is gradually approaching the health spending share of GDP as the economy approaches full employment.

  • Spending in December 2015, year over year, increased in all major categories. Home health care grew the fastest, by 10.3%. Prescription drug spending growth has moderated considerably in the past year and now stands at 6.6%, down from a peak growth rate of 14.3% a year ago

.         Graphics:

AltarumCharts_AnnualGrowthPriceIndex

health.spending.yoy.growth.2013.2015

health.spendinggdp.2007.2015

health.spendinggdp.1990.2015.600x400

health.spendinggdp.1990.2015.annotated.600x400

.         Econintersect:  We have some specific observations:

  • The increases of health care spending as a share of GDP has grown over the last 25 years from less than 12% of GDP to more than 17% entirely as a result of increases during the time surrounding the 3 recessions.

  • The only previous rises in health care spending in the past 25 years similar to those in late 2014 and 2015 have occurred in the 6 -24 months preceding the start of a recession.

  • The implementation of Obamacare has not produced cost behavior any different from the two immediately preceding expansionary periods in the economy.


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