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What We Read Today 07 April 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:

WEDNESDAY

  • Large variations in Precipitation over the Last 1,000 Years

  • Who Built the Immense Panama Papers Data Base?

  • Has Corporatism Hijacked Capitalism?

  • How Many New Jobs are Needed to Maintain Current Employment Percentage?

  • New Corporate Tax Rules Addressing Symptoms, Not Disease

  • Western Civilization Studies Return

  • Massachusetts $10 Minimum Wage Costing Jobs

  • Political Positions on Minimum Wage and Free Trade are Self-Contradictory

  • ISIS Abducts Factory Workers

  • Bad Loans Remain a Burden for China 

  • And More

Articles about events, conflicts and disease around the world

U.S.

  • Low-Key Lew Becomes Sledgehammer With $160 Billion Deal Breakup (Bloomberg)  Just 37 hours after U.S. Treasury secretary Jacob J. Lew announced unexpectedly tough  guidelines aimed at deterring corporate inversions -- deals in which U.S.-based companies use an overseas acquisition to relocate their tax addresses to cut their bills -- Pfizer Inc. and Allergan Plc said they would end their $160 billion merger, terminating the largest-ever pharmaceuticals transaction.  The Treasury action fits with President Barack Obama’s efforts to create an economic system that benefits more than just those at the top of the income ladder, an issue that has been at the forefront of a bruising presidential campaign.  But some say the action is not addressing basic problems.  Phillip Swagel, who was an assistant secretary under Treasury Secretary Henry Paulson and is now a professor at the University of Maryland said:

“It’s a sledgehammer approach, attacking the symptoms of a non-competitive tax code rather than the root causes.”  

...we [Russians] are like a blind, one-armed cripple on crutches fighting with a strong and healthy boxer. The struggle is unequal, the U.S. is really in control of the entire world, and not only just eavesdropping on terrorist conversations, but they control, primarily, all financial flows. Their intelligence from the very beginning was built as a branch of Wall Street. If you look at who created the CIA – they are the people from Wall street, so, naturally, owing to their habits they always left intelligence for large corporations.

Their intelligence is closely intertwined with financial sector, and in this respect, I think they are no match for the entire world.

  • Warning: Massachusetts losing jobs with its $10 minimum wage (Investor's Business Daily)  The Bay State, which hiked its minimum wage from $8 to $9 at the start of 2015 and to $10 on the first day of 2016, is now mired in its longest stretch of net job losses since the recession in both the retail and the leisure and hospitality sectors, Labor Department data show.  Retail sector employment in February was down 2,200 from its post-recession peak of 354,100 in July, seasonally adjusted data show. In fact, retail employment is below its level in November 2014, before the first step of the state's wage hike went into effect.  Econintersect:  We have been unable to find GDP data by state more recent than 3Q 2015 so the attempt to determine whether economic growth has been engatively affected or not has been unsuccessful.  See also next article.

  • The $15 Minimum Wage Will Kill Jobs. Should You Care? (Bloomberg)   Raising the minimum wage to $15 an hour, as some states are doing, will create both winners and losers. The winners will be workers who get paid more, of course. The losers will be low-skilled workers who don't get paid at all, because employers couldn't afford to keep them on.  Should you care that a measure intended to make people better off will actually make some worse off? That's a deep question that has exercised such greats as John Stuart MillVilfredo Pareto, andJohn Rawls. Before you answer it, though, please consider the case of free trade, which involves a similar conundrum. Like raising the wage floor, lowering barriers to cheap foreign imports makes a lot of Americans better off (by cutting the cost of baby clothes, toys, televisions, etc.) while undeniably hurting others (by closing down their factories).  This article discussess why the contrasts between liberals and conservatives are stark, and the fact that both positions are self-contradictory. 

EU

  • Air Force wants to improve airfields in eastern Europe with more defense dollars (Stars and Stripes)  Hat tip to Roger Erickson.   Suitable airfields in eastern Europe would need infrastructure, such as weapons storage, fueling capabilities and maintenance facilities, Gen. Frank Gorenc said. “It needs to be an environment that can generate sorties and combat power from the air as part of the joint campaign.”  Gorenc said NATO was also looking at upgrading its air patrols over the Baltic states into a wider air-defense mission that would integrate aircraft, surface-to-air systems and air-space-control measures.

UK

The City is the world's biggest financial centre because US banks choose London as an English-speaking city with the right to sell financial services freely across the entire EU.

This right is secure if we stay in, but would be lost if we left. Paris and Frankfurt are set to gain at London's expense if all the banks based in London lose passporting of financial services and euro clearing rights following Brexit.

Syria

  • Syria conflict: IS 'abducts hundreds of factory workers' (Reuters)   At least 200 people are reported missing after a suspected attack by the so-called Islamic State (IS) on a cement factory near Damascus.  Workers were reportedly taken from a dormitory where they were staying on the outskirts of the town of Dumeir.  A factory administrator said no-one had been able to contact the workers since the assault on Monday.  The area around Dumeir has seen fierce fighting between government forces and IS militants in recent days.  See also ISIS captures hundreds of Syrian cement factory workers, report says (CNN).

China

  • HSBC's Gulliver Says Bad Loans Will Remain a Challenge for China (Bloomberg) China will need a combination of measures to resolve the ongoing challenge of mounting bad loans at the nation’s banks, said Stuart Gulliver, chief executive officer of HSBC Holdings Plc.  The conversion of soured debt into equity and the securitization of nonperforming loans will play a part in a “slow and steady” resolution process, Gulliver said at a forum in Hong Kong on Thursday, without providing details.


Large variations in precipitation over the past millennium (Science Daily) Hat tip to Sig Silber. According to a new study, the Northern Hemisphere has experienced considerably larger variations in precipitation during the past twelve centuries than in the twentieth century. Researchers from Sweden, Germany, and Switzerland have found that climate models overestimated the increase in wet and dry extremes as temperatures increased during the twentieth century. The new results will enable us to improve the accuracy of climate models and to better predict future precipitation changes. Econintersect: The maps below show that large areas of the U.S. and Canada were much wetter in the 20th century than in several earlier centuries.

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

  • Panama? Forget the reporter collective -- Who built the database? (Fort Russ)  Hat tip to Roger Erickson.  The immense size of the data base researched by the large cadre of reporters around the world raises the questions:  By whom, why and how was this monumental data base collected in the first place?  This article:

The case involves a selection of public persons whose social status requires us to look at the causes and the source of the revelations, to say nothing of journalistic ethics.  11.5 million documents, even supposing each is just one page, would stack more than a kilometer high. It is impossible to deal with such a volume with simple humans, even for super journalists. The work had to be done by other people fully equipped.

In our country, the postal service and fire departments are among many institutions dating from the foundation of the republic that are socialist in nature and set up by the likes of Benjamin Franklin. Our armed forces are set up on a communist model established by Baron von Steuben and George Washington during the Revolutionary War. The Shakers were and are religious communists as are the monks at Gethsemane and the nuns at Nazareth. We put our emphasis on free enterprise.

Here's our real problem: More and more, free enterprise is being hijacked and suppressed by corporate capitalism. How many small business people are daily put out of business by the international megacorporations, most only nominally American, which constantly undercut their business? Until this reality is effectively addressed, wealth will continue to accumulate in the hands of the few and the needs of the many will go unanswered.

  • The New Magic Number for Monthly Job Growth: 145,000 (The Wall Street Journal)  The U.S. economy needs to add 145,000 jobs per month just to hold the unemployment rate steady and absorb the flow of new workers into the labor force, according to estimates in the latest Wall Street Journal survey of economists.  But that is the average - there is a wide range of opinion on the matter.

jobs.break.even


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