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What We Read Today 17 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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Topic today include:

  • How Much Growth Would We Get from Less Government?

  • How Can 800,000 to 1.1 million Barrels of Oil Disappear Every Day?

  • If the Internet Disappeared Would Humans Be Able to Think?

  • Does Tax Avoidance Cause Corporations to Lose Money?

  • U.S. Long Term Decline in Capital Investment

  • Nobody is Sure Who Won the Missouri Primaries

  • Syria's Kurds Declare Autonomous Region

  • Ashton Carter:  Iran Broke International Law When They Siezed U.S. Sailors

  • India Stocks Having a Good Year

  • China's Alternating Cycles of Bubbles

  • Brazilian Judge Stops Lula from Taking Office

  • And More

Articles about events, conflicts and disease around the world

U.S.

  • The Mystery of America’s Missing Capital Investment (Bloomberg)  Companies are adding to the national stock of capital at an historically slow pace. In a separate calculation, the U.S. Bureau of Labor Statistics says that what it calls “capital intensity”—the ratio of capital used to hours worked—was so weak that it actually subtracted from workers’ productivity from 2010 through 2014.  Econintersect:  While the increase in share buybacks by corporations is mentioned in the article, the general question is not discussed of increased financialization in the economy and possible effects on reducing capital investment.  We would raise the question:  Could it be that capital holders are asking why should we work for money when we can just create money with paper?  

investment.us.1954.2015

  • We Oppose Judge Garland’s Confirmation (The Wall Street Journal)  After studying his extensive record, the National Federation of Independent Business (NFIB) believes that Judge Garland would be a strong ally of the regulatory bureaucracy, big labor and trial lawyers. On behalf of the hundreds of thousands of members we represent, the NFIB opposes Judge Garland’s confirmation.

  • Obama Plans to Take Nuclear Launch Codes With Him When He Leaves Office (The New Yorker)  According to Andy Borowitz, President Obama announced in a nationally televised address today that he would take the nation’s nuclear launch codes with him when he leaves office, in January of 2017, "if necessary" and would hold on to them "for the foreseeable future".   The president said "there has been a rising level of alarm about who might have access to these codes going forward".

  • Who won Missouri? (CNN)  

    Thirty-six hours after the polls closed on Tuesday night, it's still not clear who will win in Missouri, either for the Democrats or the Republicans.

    Hillary Clinton and Donald Trump lead their respective party primaries there by less than half a percentage point. Since the margin of victory in each case is less than 1 percentage point, CNN has not projected a winner in either contest.

Syria

  • Syria's Kurds declare de-facto federal region in north (Assoicated Press)  Syria's Kurds on Thursday declared a de-facto federal region in Kurdish-controlled areas of northern Syria, drawing sharp condemnation from both the Damascus government and its opponents who decried the unilateral move as unconstitutional and setting a dangerous precedent.  The declaration further complicates the situation on the ground in Syria even as peace talks press ahead in Geneva. The main Syrian Kurdish party has been excluded from those talks — perhaps an indication of why the Kurds chose this particular moment for their move.

Iran

  • Iran seen escaping U.N. sanctions over missiles due to ambiguous resolution (Reuters)  Iran will likely escape new United Nations sanctions, though the U.N. Security Council could issue a public reprimand for recent launches of what Western officials described as ballistic missiles capable of carrying a nuclear warhead, diplomats said.  Council diplomats said the case for sanctions was weak, hinging on interpretation of ambiguous language in a resolution adopted by the 15-member body last July, part of an historic deal to curb Iran's nuclear work. 

  • Pentagon chief: Iran went against law in sailors' detention (The Hill)   In what appear to be his strongest public statements against Iran’s behavior in January, U.S. Defense Secretary Ash Carter said Thursday that Iran’s detention and treatment of 10 U.S. sailors earlier this year was inconsistent with international law.  Carter told the Senate Armed Services Committee:

“As I made clear then, Iran’s actions were outrageous, unprofessional and inconsistent with international law, and nothing we’ve learned about the circumstances of this incident since then changes that fact.” 

India

  • Most Indian Stocks Climb as Energy Shares Gain; Drugmakers Drop (Bloomberg)  The Sensex has risen on all but two days in March after Finance Minister Arun Jaitley in his Feb. 29 federal budget pledged to further cut the fiscal deficit, stoking speculation of a interest-rate cut by the central bank in its April 5 policy meeting. Foreign funds bought $1.8 billion of local shares this month as risk appetite returned after global central banks indicated a willingness to continue measures to support growth and stabilize markets.

China

  • China's New Age of Economic Anxiety (The New Yorker)  China's highly liquid economy has been alternating between stock bubbles and real estate bubbles.  Is it real estate's turn again?

Brazil

  • Brazil: judge halts Lula's appointment to cabinet amid corruption scandal (The Guardian)  A judge has prevented former president Luiz Inácio Lula da Silva from taking office amid fears his appointment could compromise police inquiry.  The decision on Wednesday by president Dilma Rousseff to appoint Lula as her new chief of staff prompted anti-government demonstrations across Brazil, as a secretly recorded phone call between the two suggested his appointment to a ministerial position was motivated by a desire to avoid prosecution in Brazil’s worst corruption scandal.

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

  • Look at the Growth We'd Get from Less Government (Foundation for Economic Research)  Robert Murphy counters the 5% growth modeled by George Friedman for Bernie Sanders' economic program with his own model of the economy with 25% less government.  But nowhere does he discuss where the money would come from or how the velocity of money would increase continuously to support the growth (the  economy would double approximately every 14 years, which means spending would also double).  Econintersect:  Prof Murphy, where do babies dollars come from?  And, no, we will not accept storks as an answer.

  • Crude Mystery: Where Did 800,000 Barrels of Oil Go? (The Wall Street Journal)  Last year, there were 800,000 barrels of oil a day unaccounted for by the International Energy Agency, the energy monitor that puts together data on crude supply and demand. Where these barrels ended up, or if they even existed, is key to an oil market that remains under pressure from the glut in crude.  Some analysts say the barrels may be in China. Others believe the barrels were created by flawed accounting and they don’t actually exist. If they don’t exist then the oversupply that has driven crude prices to decade lows could be much smaller than estimated and prices could rebound faster.  Barrels have gone missing before, but last year the tally of unaccounted for oil grew to its highest level in 17 years. At a time when the issue of oversupply dominates the oil industry, this matters.  In the fourth quarter, the number of missing barrels reached as high as 1.1 million barrels a day, or 43% of the estimated oversupply.

  • After the Fact (The New Yorker)  Theme:  We have become so dependent on the internet where Google can provide facts on anything under the sun that we have forgotten how to think.  The author suggests that if we were now to lose the internet we would be hopelessly lost intellectually.

  • Odd Economics Of The Day - Corporate Tax Avoidance Reduces Corporate Profits (Forbes)  Research supports the proposition that corporate tax avoidance actually reduces the profit that companies make. The mechanism is that the tax avoidance increases the cost of capital to the firms. How that happens is that the variance of corporate tax flows increases as a result of the tax avoidance and this increased variance makes investors desire higher returns: or, the same thing, only willing to supply capital at higher costs (which, for the company, is at a lower valuation).  The author here (Tim Worstall) questions just how important the effect is, saying the abstract of the research (full paper not available) doesn't address that issue.


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