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What We Read Today 10 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:

  • Biosimilars May Revolutionize Pharma

  • Skyscraper Index Meets Shipping Indexes

  • Why Some Leaders Can't Write

  • Geography of Financial Secrecy

  • Pillaging America's State Universities

  • Obama's Biggest Mistake

  • IS Seizes Two Villages Near Turkey

  • Iraq Oil Production at Record High

  • Central Asia Border Fences

  • Indian Fireworks Display Kill More than 100

  • Taiwan Exports in 14 Month Freefall

  • And More

Articles about events, conflicts and disease around the world

Global

“Holding money in an offshore company is generally not illegal, although such financial arrangements can be used in illegal ways—for example, to facilitate tax evasion or money laundering.” 

U.S.

  • Budget crunch time for GOP (The Hill)  Senate Republican leaders are facing budget crunch time.  They need to decide in the next ten days whether to move a budget, something they promised prior to winning the majority, or skip it and face charges of hypocrisy from Democrats.  GOP senators say they will only move a budget if the House passes one and privately acknowledge that few think the lower chamber can do that.

  • Poll: Sanders closes gap in NY (The Hill)  Hillary still leads by 18 points but previously it had been 48.

  • The Pillaging of America's State Universities (The Atlantic)  The financial struggle of public research institutions may be a matter of choice—not necessity, as public leaders say.  America’s great public research universities, which produce path-breaking discoveries and train some of the country’s most talented young students, are under siege. The result may be a significant weakening of the nation’s preeminence in higher education. Dramatic cuts in public spending for state flagship universities seem to be at odds with widespread public sentiment. Nonetheless, many state legislators seem to be ignoring public opinion as they essentially starve some of the best universities—those that educate about two-thirds of American college students. 

Turkey

  • Turkey’s economic development sets aside future problems: OECD chair (Hurriyet Daily)  Turkey’s economic development, which has been “looking quite good”, hampers the exposure of “real problems,” according to OECD Working Group on Bribery chair Drago Kos, who urged that the low level of transparency should be higher on the agenda.  Lack of visibility is creating current growth at the expense of future prosperity, according to the OECD (Organization for Economic Cooperation and Development).

Lybia

  • Obama Cites Lack of `Day After' Plan in Libya as Biggest Mistake (Bloomberg)  A failure to adequately plan for the aid and governing of Libya after the U.S.-led NATO attacks in 2011 “probably” was his biggest error in office, President Barack Obama said in an interview on Fox News Sunday.  Econintersect:  We nominate the failure to hold TBTF banks accountable for mismanagement that contributed to the Great Financial Crisis. as the biggest failure of the Obama presidency.

Syria

  • Syrian cease-fire strained by new clashes ahead of talks (Associated Press)   Government forces and rebels clashed Sunday across northern and western Syria, imperiling a monthlong cease-fire ahead of peace talks in Geneva, while airstrikes pounded the Islamic State group's de facto capital of Raqqa, killing dozens.  Over the past two days IS has seized control of two villages along the Syrian border with Turkey, north of Aleppo.is.map.2016.apr.10

Iraq

  • Iraq Boosts Oil Production to Record Before Talks to Cap Output (Bloomberg)   Iraq increased crude output to a record level in March, ahead of a meeting in Qatar of OPEC members and other producers on capping production to curb a global glut.  Crude output in OPEC’s second-biggest producer rose to 4.55 million barrels a day last month from 4.46 million barrels in February, according to the state-run Oil Marketing Co. Exports increased to 3.81 million barrels a day in March from 3.23 million the previous month, the company, known as Somo, said in an e-mailed statement.

Kyrgyzstan

  • Kyrgyzstan’s border trouble between crime and economics (The Times of Central Asia)  The EU and U.S> are not the only places that border fences are being proposed and built.  In the southwest of Kyrgyzstan, with its important Uzbek minority and arguable borders there is a potential cause for confrontation with Uzbekistan and Tajikistan. At stake are precious irrigation water and mineral resources.  Disputes over grazing rights for the cattle breeders on the Kyrgyz side and water supplies for petty farmers in the plains, which are Uzbek territory, regularly lead to deadly shootouts. There is little that authorities on either side can do, since both countries dispute the course of the border line.  So Kyrgyzstan is building fences where it wants the border to be.

India

  • Kollam temple: Inquiry ordered into fireworks blast (BBC News)   Indian authorities have ordered a judicial inquiry into an explosion and fire at a Hindu temple in Kerala that killed more than 100 people.  Nearly 400 others were injured at the Puttingal temple in Paravur when a faulty firework fell onto a large stockpile of fireworks.  A building at the temple then collapsed, causing many of the deaths.  Thousands had gathered to watch the fireworks display as part of a local new year festival. 

Taiwan

  • Taiwan's exports fall for 14th consecutive month in March (Focus Taiwan)  Taiwan's exports continued to post a double-digit drop in March, following double-digit falls in the first two months of this year and registering a 14-month losing streak, as long as during the 2008 financial tsunami.  Taiwan will continue to register a decline in exports in reflection of falling global oil prices, China's economic slowdown and a weaker-than-expected global recovery.  Taiwan will report a double-digit export decline for the tenth consecutive month in March.  (Declines reported above are year-over-year.)

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

  • The Skyscraper Index Meets the Supertanker Index (mises.org)  Hat tips to John O'Donnell and Mark Thornton.  Many people familiar with Austrian economics are familiar with the Skyscraper Index, popularized by Mark Thornton. And while there may not be a perfect correlation between the building of large skyscrapers and business cycles, it is still the case that the same conditions that lead to the building of mega-skyscrapers are those that lead to the boom and bust of the business cycle. Easy central bank money makes long-term, capital-intensive projects cheaper and incentivizes the misallocation of resources into those projects. Of course, it isn’t just skyscrapers that can be indicative of a central bank-induced business cycle. The same can be said of other sectors as well.  So, as the Skyscraper Index has been increasing in recent years, another index has been declining, the Baltic Dry Index, which tracks the cost of shipping dry goods by ship.  This has dropped to all-time lows as shipbuilding has far exceeded demand.  Both indexes reflect poor investment decisons, described by the author:

Ships aren’t cheap to purchase, nor are they easy to dispose of. But when financing is abnormally cheap and expectations of future business are rosy, it stands to reason that shipping companies would put in a raft of orders. Now that the positive economic outlook has been shown to be ephemeral, shippers realize that they got caught in a bubble economy. Because of cheap financing they placed orders for ships that they now realize they won’t need. And it isn’t just bulk carriers that are facing a glut. Container ships are in much the same position. But consumer and business demand just isn’t there to support the amount of shipping capacity.

There is no underlying economic strength because whatever demand was there was just being supported by central bank money printing. Take away the easy money and you’re left with the reality that the post-financial crisis economy is still weak and has not been allowed to reallocate malinvested resources. Until that happens, which would require central banks to get out of the way, there will be no real recovery. Ship owners and shipyards will learn that the hard way, with losses in the billions of dollars not outside the realm of possibility.

  • New drugs that could save the US billions just got an approval that will change the face of Big Pharma (Business Insider)  A new class of drugs called "biosimilars" may change the way big pharma operates by increasing competition and lowering prices.  Last week, the US Food and Drug Administration (FDA) approved its second such drug. The newest biosimilar, called Inflectra, is a version of Remicade or infliximab, a drug used to treat autoimmune diseases like Crohn's disease and rheumatoid arthritis.  These are not a one-for-one replacement, as in the case of generics, but have caveats that can limit applicability.  But the array of treatment options can explode with biosimilars and the days of mass-produced and mass-prescribed high profit margin drugs may be numbered.  Econintersect:  Not mentioned in this article is the potential for improved outcomes when variations of treatments are available to match individual needs.  One size fits all may give way to tailored "clothing" for treating many diseases.   

  • Writing Can Be Brilliant (sonnenhof-ve.de)  Here is how we train the future leaders of commerce, industry and state:  Write their essays for them.

  • Sweeping Wealth Under The Mat (Steven Hansen, Seeking Alpha)  You can read the article at GEI, but go to SA to read the comment stream.

  • The Era of Global Migration (Forwarded by Roger Erickson)

migration.money.people.cartoon


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