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What We Read Today 24 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".).


Every day most of this column ("What We Read Today") is available only to GEI members.

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Topics today include:

  • Five Countries, Five Beleaguered Leaders

  • First U.S. Natural Gas exports Arrive in Norway

  • U.S. Rig Counts Still Dropping

  • Recent U.S. Oil Well Production Still Rising

  • Well Count Reduction in U.S. May be Over

  • Saudi Construction Conglomerate is On the Ropes

  • The Chemical Weapons Threat

  • Financial Parasites

  • Why the National Debt Doesn't Need Fixing

  • Peer-to-peer Lending is Running into Some Problems

  • Trump Has a Difficult but Plausible Path to the White House

  • The ISIS-Turkey Oil Connection

  • More on China's Debt Conundrum

  • And More

Articles about events, conflicts and disease around the world


  • Five Countries, Five Beleaguered Leaders (Bloomberg)  Scandals, turbulent economies, tarnished legacies or simply uncertain futures: It’s testing times for the leaders of some of the world’s most prominent countries.  Discussion covers South Africa, Brazil, UK, Germany and the U.S.


  • Donald Trump’s Tough But Plausible Path to Winning the White House (Bloomberg)  For months, Democratic strategists viewed Donald Trump as a dream opponent in the 2016 presidential race—a clownish political novice who would gift their front-runner, Hillary Clinton, the White House in a landslide.  But the glee has given way to some pangs of anxiety as the Republican candidate marches to the nomination. Trump's unexpected success in the primary has revealed his uncanny ability to appeal to the fears of working-class Americans, which some Democratic and Republican operatives say could scramble the electoral map by putting in play Midwestern states that have voted Democrat in recent elections.

  • Wisconsin’s Voter ID Law Requires an Education Campaign, Which the State Hasn’t Funded  (ProPublica)   On April 5, when voters cast ballots in Wisconsin’s Republican and Democratic primaries, the state’s controversial voter ID bill will face its biggest test since Governor Scott Walker signed it into law in 2011. For the first time in a major election, citizens will be required to show approved forms of identification in order to vote. The law mandates that the state run a public-service campaign “in conjunction with the first regularly scheduled primary and election” to educate voters on what forms of ID are acceptable.  But Wisconsin has failed to appropriate funds for the public education campaign. The result is that thousands of citizens may be turned away from the polls simply because they did not understand what form of identification they needed to vote.  Econintersect:  We think this is consistent with the motivation of many backers of voter ID law:  They are not interested in eliminating voter fraud as much as controlling who votes. 

  • 2016 Gulf Of Mexico Central Lease Sale Bids Drop 70% From 2015 (Oil Pro)   The U.S. Bureau of Ocean Energy Management (BOEM) released the results from their Central OCS Lease Sale 241 held March 23rd in New Orleans.  Thirty companies submitted 148 bids totaling $179.1 million and attracting $156.4 million in high bids on 128 blocks. This was the fewest number of bids the lease sale has attracted in two decades. And the sum of the high bids (down 70% y/y) was also the fourth lowest total on record.  Eastern OCS Lease Sale 226, which was held at the same time and offered 162 blocks spanning 595,475 acres, did not receive any bids.  Even though bids are falling precipitously, protesters were present disrupting the auction.



  • First-Ever U.S. Shale Gas Arrives In Europe (OilPro)   The delivery arrived on Wednesday at the INEOS petrochemical plant in Rafnes in Norway. The shale gas was sourced from the Marcellus shale play and shipped on the INEOS Intrepid, the world's largest multi gas carrier.  This is the first time that ethane from US shale gas has ever been exported from the US and the first time it has been imported into Europe.  This is the culmination of a $2 billion investment by INEOS which plans to use 8 of its multi gas carriers to provide "a virtual pipeline" sending U.S. shale gas to its two petrochemical sites in Scotland and Norway, as "US shale gas replaces the reducing gas feed from the North Sea". 

  • Brussels bomber brothers were on U.S. watch lists before attack: sources (Reuters)  Two brothers who carried out suicide bombings in Brussels this week were known to U.S. government agencies before the attacks, according to two sources familiar with the matter.  The sources said that Khalid El Bakraoui and Brahim El Bakraoui were both on U.S. government counter-terrorism watch lists before the attacks.


  • EU referendum: Brexit support growing - but Remain retains lead in new Survation poll (City A.M.)  Some 35% of its respondents said they would vote to leave the European Union. This was up from 33% when the poll was last carried out on 20 February.  Remain retained an advantage, though, with 46% of people saying they would vote to stay in the EU. This was down from 48% in February.  Some 19% of those surveyed said they were undecided.  Excluding the undecided, Remain was leading with 57% compared with Leave's 43%.


  • New Documentary Claims To Prove ISIS-Turkey Oil Link [Video] (Oil Pro)  A documentary crew of filming in northern Syria has reportedly seen ISIS documents abandoned by retreating terrorists, and discovered by the Kurds that, together with captured ISIS recruits, shed new, important insight into alleged Turkey-ISIS oil trade links.

Saudi Arabia

  • Oil’s Decline Takes Toll on Saudi Conglomerate (The Wall Street Journal)  A construction conglomerate at the center of Saudi Arabia’s petrodollar-fueled economic boom is teetering under billions of dollars of debt, bankers and financial advisers familiar with the matter said, showing the strain of cheap oil on the kingdom and its companies.  The Saudi Binladin Group was once among the biggest beneficiaries of Saudi Arabia’s massive spending at home, paid for by the kingdom’s growing oil wealth. But in the past half year, it has hit hard times.  Debt repayments have been defaulted and sub-contractor employees are protesting unpaid wages.


  • Mounting debts could derail China plans to cut steel, coal glut (Reuters)  More financial trouble in China - China's campaign to slim down its bloated industries could be derailed by more than $1.5 trillion of debt in its steel, coal, cement and non-ferrous metal sectors, which threatens to overwhelm local banks.  Tackling industrial overcapacity has become a priority for Beijing to make its slowing economy more efficient and address a supply glut that has hammered coal and steel prices.  China is providing more than 100 billion yuan ($15 billion) in the next two years to handle layoffs from coal and steel, but that will only be made available once debts have been settled.  Critics say there is no clear mechanism for tackling the debt burden, which will put huge strain on the weakest sections of the banking sector.

  • How the Chinese See U.S. Elections:  Three Myths (New America Weekly)

Myth 1: The Chinese agree China is the winner in terms of trade.

Reality: Many Chinese consider trade with the U.S. to be unequal, unfair, and even harmful to their country.

Myth 2: The Chinese also see China as an aggressor in the foreign policy arena.

Reality: Many Chinese see China as a victim and believe their government is not tough enough on foreign policy.

Myth 3: The Chinese admire the U.S. electoral system.

Reality: Not exactly. Many Chinese people actually consider U.S. elections to be rather unsophisticated and ineffective.

BHI: Another double-digit decline for US rig count (Oil & Gas Journal)  The overall US drilling rig count dropped 12 units to 464 units working during a week ended Mar. 24 shortened by the Good Friday holiday, according to Baker Hughes Inc. data.  During this year’s first 12 weeks, the count has dropped by double digits in all but two weeks (OGJ Online, Mar. 18, 2016).  The overall count has now fallen for the 29th time in the past 31 weeks, continuing a slide that has resulted in new lows in recorded data (OGJ Online, Mar. 11, 2016).  Since a predrilling-dive peak of 1,920 on Dec. 5, 2014, the count has plunged 1,456 units (OGJ Online, Dec. 5, 2014).  (See first graph below.)  Production was still increasing from more recently drilled wells as of year-end 2015.  (See second graph below.)



The Worst US Drilling Drops For 2016 Have Now Passed (Oil Pro)  This downturn is about 67 weeks old. In only 12 of those 67 weeks has the US onshore oil rig count registered an increase. Last week was one of those with the onshore oil rig count leaning into the wind and rising by one unit. This was the first weekly increase seen since December 2015.  While we try not to read too much into the weekly changes (rig moves and other factors can add noise), it does appear that largest weekly declines of the year are now behind us. The recent rally in oil prices doesn't hurt.


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

  • Public Information is Key to Countering the New Chemical Weapons Threat (New America Weekly)  Over the past two years, the use of chemical weapons, including chlorine and mustard gas, has been documented by international observers in Syria and, more recently, on the Iraqi battlefront.  US and European governments are failing to prepare western civilians for the possibility of chemical attacks in the near future. Chemical weapons weren’t employed in the most recent ISIS attack in Belgium, but we must understand how the infusion of chemical agents could amplify the terrorists’ impact. Whereas conventional attacks can kill dozens or hundreds, chemical agents can kill thousands if cunningly deployed. And even when used incompetently, they can stoke panic and complicate access to bombed sites, and thereby sabotage rescue operations, putting the wounded at greater risk of dying. Proper preparations, of the kind that Israel has had to undertake ever since the 1991 Gulf War, can make an enormous difference. But preparedness takes time. It involves building dissemination centers for gas masks and circulating manuals for how to isolate one room in a building should the news of a nearby chemical attack break.  Attacks involving chemical agents have a high enough probability of occurring now that our leaders need to tell us how to best prepare for them.

  • Junk Economics and the Parasites of Global Finance (Counter Punch)  In the book, Killing the Host: How Financial Parasites and Debt Bondage Destroy the Local Economy, a metaphor of parasites and global finance is used.  In this interview of author Michael Hudson (who has contributed to GEI) is asked to explain what he means by this.

  • Finding a better way to do economic forecasting (CNBC)   Steve Liesman has published a report on the government's quarterly GDP report. Summed up, he found a large, persistent error in GDP between initial and final GDP reports. Not only is it off significantly, the government even gets the direction of growth wrong 30% of the time!  Why is economic forecasting still so bad? Many feel that the tools being used to make the forecasts are simply inadequate. There are people trying to bring economics into the 21st century. They're using big data to make "the dismal science" less dismal.  One of them is Giselle Guzman, CEO of Now-Cast Data Corp, which is applying machine learning, big data and crowd sourcing to economic forecasting. They are trying to fuse economics and computer science.

  • Mainstream Economics Has Been a Dismal Failure (The Street, Real Money)  Mike Norman answers a multitude of objections to an article he wrote recently (The National Debt Doesn't Need Fixing).  Below is part of his latest:

    The National Debt is not a debt, at least not in the way we view debt. It's dollars, and dollars are a simple public monopoly of the United States. Moreover, the dollars are nothing more than a tax credit, and that's really what gives the dollar its value. People find value in paying their taxes as opposed to not paying and having bad things happen to you. Does this mean fiat money is coercive in a sense? Yes, but that's the way it works.

    If there really is a national debt, then that debt is merely in the promise that the government will accept those dollars for payment of taxes. That's it. That's always a debt it can meet. Those trillions of Treasuries in the hands of investors here and around the world can always be turned into cash dollars. The government will never run out.

  • A ripple of fear (The Economist)  In a financial landscape that ranges from the dreary to the disliked, peer-to-peer (P2P) lending stands out. P2P firms, also called marketplace lenders, channel loans directly from institutional investors and individuals to borrowers, for a fee. In the process, they have lowered interest rates for many and expanded access to credit. They have been growing pell-mell (see graph below), in part because their structure allows them to escape much of the regulation being heaped on banks. But recent months have shown that they are not immune to the burdens that weigh down their conventional rivals - namely default risk.  As a result rates are going up.

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