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 dayin the early am at GEI News (membership not required for access to "The Early Bird".).
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Topics today include:
Why Economists Should be Humble
Global Recession is Coming
American Exceptionalism with Guns
Terror Arrests in Brussels
Fear in Belgium
A tale of two firms: Alergan and Valient
Articles about events, conflicts and disease around the world
Note: We are reading less than usual this holdiay weekend.
Chart Of The Day: Global Recession Is Coming (Seeking Alpha) Going by the collapse in the Purchasing Managers Index for February 2016, it is entirely likely that the world is headed towards recession sooner than expected. The chart below gives the manufacturing, services and composite PMI for February 2016 and it's clear that services sector activity has slumped.
How Allergan Rose and Valeant Fell (CNBC) A tale of two firms. Allergan's shares are up 308% since buying Actavis in 2012 (and briefly taking that company's name in 2013). It is now selling itself to Pfizer for $160 billion, the biggest pharmaceutical deal of all time. Valeant's share price has fallen nearly 90% from its peak last summer after a series of controversies. Allergan is arguably on top of the pharma world, while Valeant is scrambling for survival.
Belgium charges 3 more attacks suspects for terror offenses (Associated Press) Belgian prosecutors announced Saturday they have charged three men with terror offenses over the suicide attacks on the Brussels airport and subway, as organizers cancelled a solidarity rally at the government's request because police are too strapped to cope. See next article.
Stratfor: Afghanistan’s Inexhaustible Insurgency (Fabius Maximus) FM has contributed to GEI. Yet again we get rumors of serious peace talks in Afghanistan, as almost ten thousand US troops remain there (3 dead YTD). Here Stratfor assesses their odds of success, and evaluates the strength of the Taliban’s insurgency.
Despite rate cut, Taiwan's economy could contract in H1: bank (Focus Taiwan News Channel) Although the central bank cut its key interest rates again earlier this week, a Standard Chartered Bank economist expects that the Taiwan's economy will continue to struggle and post negative growth in the first half of the year. Tony Phoo, a senior economist with Standard Chartered Bank, said the stimulus polices announced by the central bank are unlikely to help the economy get out of its current doldrums, and Taiwan will have to wait until the second half of the year to return to a growth path.
Manufacturing output in Taiwan down over 10% in 2015 (Focus Taiwan News Channel) The production value of Taiwan's manufacturing sector fell by more than 10% in 2015 from the previous year, reversing a year-on-year increase of 3.59% recorded a year earlier, amid declining global demand, according to the Ministry of Economic Affairs (MOEA). Citing data, the MOEA said that output of the local manufacturing sector totaled NT$12.86 trillion last year, down NT$1.56 trillion or 10.84% from a year earlier. The year-on-year decline in output value was the second steepest decline after a NT$2.53 trillion drop seen in 2009. In terms of percentages, the year-on-year drop for 2015 was the third steepest after a 19.08% fall in 2009 and a 12.60% decline in 2001.
Economists have this outdated notion that economics advances through a progression of ever-better theories, with empirical testing serving to reject wrong models and confirm valid ones. In reality, we are really bad at formulating general models as social reality is malleable and contextual. Our theories — such as the theory of value or the theory of comparative advantage — are just scaffoldings, which need a lot of context-specific detail to become usable. Too often economists debate a policy question as if one or the other theory has to be universally correct. Is the Keynesian or the Classical model right? In fact, which model works better depends on setting and context. Only empirical diagnostics can help us know which works better at any given time — and that is more of a craft than a science, certainly when it is done in real time. If we economists understood this, it would make us more humble, less dogmatic, and more syncretic.
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