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What We Read Today 12 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:

  • Obama's Final Three for the SCOTUS

  • Central Banks Don't Understand Inflation

  • Chickens With Dinosaur Legs and Feet

  • Assault on the Iditarod Trail

  • Best Cities to Live in the U.S.

  • Best Cities to Get Rich in the U.S.

  • Poland Government Claims Mandate to Weaken Country's Courts

  • Both Koreas Belligerent

  • Syria Government Won't Discuss Elections

  • Skip the Primaries, Let Goon Squads Settle It

  • And More

Articles about events, conflicts and disease around the world

U.S.

Health Care Service Corp.'s financial losses in its individual business, which includes ACA plans, worsened in 2015. The company, which owns Blue Cross affiliates in Illinois and four other states, said it lost $1.5 billion in its individual business, up from $767 million in 2014, the first year of the health law's state exchanges for buying coverage.

In anticipation of ACA-related losses in 2015, HCSC set aside nearly $400 million in 2014 to boost reserves to $680.9 million. The company spent $657.3 million of those reserves to cover the medical expenses associated with ACA plans in 2015.

HCSC is the latest large insurer to report losses on 2015 ACA business, a troubling sign for the state exchanges that are the heart of President Barack Obama's health care overhaul. The far-reaching legislation has increased access to insurance coverage by expanding Medicaid and providing tax credits to subsidize the cost of insurance. Though the law has brought new customers to many insurers, much of that growth has been unprofitable, reflecting higher-than-expected medical expenses, regulatory challenges and unexpected shortfalls in federal risk-sharing programs.

  • Trump Pins Rally Chaos on Sanders's Supporters, Defends Own (Bloomberg)  A day after violent protests prompted Donald Trump to cancel a rally, the Republican presidential front-runner blamed the activist group MoveOn.Org and supporters of Senator Bernie Sanders for the chaos, while defending his own “harassed” supporters.  Trump said at an event in Dayton, Ohio:

“When they have organized, professionally staged wise-guys -- we’ve got to fight back. We’ve got to fight back.  With Bernie, he should really get up and say to his people, ‘Stop. Stop.’ Not me.”

.         Sanders said in an e-mailed response:

“As is the case virtually every day, Donald Trump is showing the American people that he is a pathological liar.  Obviously, while I appreciate that we had supporters at Trump’s rally in Chicago, our campaign did not organize the protests.”

Poland

  • Poles protest as govt refuses to accept adverse court ruling (Associated Press)  Thousands rallied in Warsaw and other Polish cities Saturday to protest the conservative government's refusal to accept a constitutional court ruling that strikes down government changes that have paralyzed the court.  The protests come amid a deepening political crisis, with international organizations and the Constitutional Tribunal faulting Poland's new government for centralizing its power. The Law and Justice party government, however, insists it has a mandate from voters for its actions.

Turkey

  • Migrant crisis: Turkish guards hit migrant boat with sticks (BBC News)   The BBC has been given a video showing Turkish coastguard using sticks against a boat full of migrants as they sail to Greece in the Aegean Sea.  The incident is said to have happened in Turkish waters as the migrants were on their way to the island of Lesbos.  The migrants accused the coastguard of attacking them, but the coastguard say they were trying to stop the boat without harming the occupants.  The EU and Turkey are discussing new moves to curb the flow of refugees.

Syria

  • Syria's government says won't discuss presidency at talks (Reuters)   Syria's government on Saturday ruled out any discussion of the presidency or presidential elections at peace talks and criticised the U.N. envoy overseeing next week's negotiations.  The opposition in turn accused Damascus of trying to stop the talks before they had started - an exchange that reflected the huge challenges facing diplomats trying to build on a ceasefire deal that has cut violence since Feb. 27. 

Iraq

  • Iraqi officials: IS chemical attacks kill child, wound 600 (Associated Press)  The Islamic State group has launched two chemical attacks near the northern Iraqi city of Kirkuk, killing a three-year-old girl, wounding some 600 people and causing hundreds more to flee, Iraqi officials said Saturday.

Koreas

  • U.S., South Korea stage assault drill; North threatens to wipe out enemies (Reuters)  U.S. and South Korean troops staged a big amphibious landing exercise on Saturday, storming simulated North Korean beach defenses amid heightened tension and threats by the North to annihilate its enemies.  The landing and assault drills on South Korea's east coast were part of eight weeks of joint exercises between the allies which the South has said are the largest ever. The North has denounced the exercises as "nuclear war moves" and threatened to respond with an all-out offensive.  Tension on the Korean peninsula has been high since the North conducted its fourth nuclear test in January and followed that with a long-range rocket launch last month, triggering new U.N. sanctions.


A huge new discovery in economics: The zero bound *is* absolute, after all (Business Insider UKYahoo! Finance)  People stopped talking about the "zero bound" several months ago, as central banks breezed through 0% to set negative interest rates far below zero. Zero wasn't a "bound" for anything, it turned out.  But in recent weeks, there has been a shift in the tides among economists. People have slowly come round to the realization that negative rates don't have their intended effect. They may in fact do the opposite of what they are supposed to.   The zero bound, in other words, really may be the lowest a central bank can seriously set rates and retain influence over macroeconomic liquidity. If that is the case, basic economics textbooks will have to be rewritten. 

Economists used to talk about the "zero bound" as if it were a theoretical scenario that would never happen in real life. Central banks would never set interest rates at zero because it would look so desperate, sending a strong signal to the market that the bank could go no lower and was out of extra liquidity to stimulate the economy.

Today, of course, zero interest actually looks high.

In Sweden, where the Riksbank has a policy rate of -0.5%, zero would be considered a dramatic tightening of the money supply.

The theory behind negative rates is that if depositing banks are charged costs for leaving cash at the central bank, they will prefer to lend it out at cheap rates to investors and consumers. Thus extra money will be flushed into the economy, raising inflation and triggering growth.

But that has not happened.

Growth in Europe — which has five central banks offering negative rates — is sluggish and in decline. Inflation is nowhere to be seen. Deflation is a bigger worry.

What appears to have happened is that banks have treated negative interest charges as an increase in the cost of doing business. In order to protect their profits, they have made loans more expensive, not cheaper, in order to recoup those charges.

 

The chart indicates that the cost to European banks of the ECB  moving to minus 1% would be about €20 billion ($22 billion).  Banks won't lend more money to avoid the expense.  They will charge more for loans to recover it.  Negative rates will be deflationary in and of themselves.  This article says:

... central bankers may currently misunderstand how inflation works.

Econintersect:  No sh*t !!!! 

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

iditerod.attack

  • Daylight Saving Time: Why Does It Exist? (It’s Not for Farming) (The New York Times)  This topic seems to come up much more in the spring when everyone loses an hour of sleep and not in the fall when it is gained.  Maybe we should just set back our clocks every fall and skip the distasteful set ahead in the spring?  Oh-oh, we  think we see a potential problem with that.

  • Region’s clean energy getting ‘greener (West Central Tribune)  More than ever before, the “green’’ in clean energy stands for greenbacks.  West central Minnesota is seeing increased activity in the area of energy efficiency and renewables due to economic drivers. That’s according to over 30 clean energy enthusiasts, many of them entrepreneurs, who gathered Tuesday, March 8 in Sunburg as part of a West Central Clean Energy Resource Team networking event.

  • Scientist grow a dinosaur leg on a CHICKEN in bizarre 'reverse evolution' experiment (Daily Mail)  Hat tip to Sig Silber.  Chicken embrios have a fibula shape the same as dinosaurs, which connects with ankle.  But with maturation chicken's have DNA elements that produce a short and splinter-like fibula instead of continuing to grow long and tubular like a dinosaur.  Scientists have inhibited the gene that makes the maturation change; this has produced a chicken with a dinosaur-like leg and foot. 


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