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What We Read Today 21 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".).


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

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Topics today include:

  • How Intel's Huge Mistake Destroyed 11% of the Company

  • The Treasury Bond Rally Still has a Long Way to Go

  • People are Making Big Profits on Selling Their Homes

  • Scientists Unveil New 'Tree of Life'

  • A Loophole Could Cost Donald Trump the Nomination

  • GM Profits Double

  • Explosive Growth for SunEdison Results in Bankruptcy

  • Regulators Want to Control Wall Street Bonuses

  • VW Settles with U.S.

  • Edward Snowden Sues Norway for Safe Passage

  • Russia Military Buildup in Syria

  • Saudi Arabia's $2 Trillion Economic Makeover

  • Obama Puts Conditions of Money for Iraq

  • Mexico to Relax Marijuana Laws

  • And More

Articles about events, conflicts and disease around the world


  • The Loophole That Could Cost Donald Trump the Nomination (The New York Times, MSN News)  Pennsylvania, which holds its primary next Tuesday, uses a nonbinding “loophole” primary — and that could cost Donald Trump the Republican nomination.  If the state adopted the delegate rules of any other primary, he would probably be an even-money favorite, or better, to amass the 1,237 delegates needed before the convention.  Instead, his chances may come down to the whims of 54 unpledged Pennsylvania delegates.  These delegates are selected from a longer list on the ballot with no indication what presidential candidate they migh support.  So Trump could convincingly win the primary and the 17 pledged delegates but get little or no convention votes from the 54 others.  Econintersect:  Will of the people?  No, control of the bosses.

  • GM profit doubles in first quarter (BBC News)  General Motors has reported a $1.95 billion profit for first quarter, more than double the figure from the same period last year.  North America, its most important market, saw strong sales of trucks and sports utility vehicles.  In Europe GM broke even, reversing a loss of $200 million a year earlier. In South America it cut its losses to $100 million.  The profit growth came despite an industry-wide decline of car sales by 2.5% globally. 

  • Once fast-growing solar company SunEdison files for bankruptcy (Reuters)  SunEdison Inc (SUNE.N), once the fastest-growing U.S. renewable energy company, filed for Chapter 11 bankruptcy protection on Thursday as years of debt-fueled acquisitions proved unsustainable.  In its bankruptcy filing, the company said it had assets of $20.7 billion and liabilities of $16.1 billion as of Sept. 30.  The company said its two publicly traded subsidiaries, TerraForm Power Inc (TERP.O) and TerraForm Global Inc (GLBL.O), were not part of the bankruptcy.  The company said it secured up to $300 million in new financing from its first-lien and second-lien lenders, which is subject to court approval. The money will be used to support SunEdison's operations during its bankruptcy, such as paying wages and vendors, and proceeding with ongoing projects.  "Our decision to initiate a court-supervised restructuring was a difficult but important step to address our immediate liquidity issues," said Ahmad Chatila, SunEdison chief executive officer.  He said the company planned to use Chapter 11 to reduce debt, shed non-core operations and take steps to get the most value out of its technology and intellectual property.  This is one of the largest non-financial firm bankruptcy filings in the past ten years. 

  • Wall Street Bonus Pay Restricted Under U.S. Regulators' Proposal (Bloomberg)   Wall Street executives would have to wait at least four years to collect most of their bonus pay and could be forced to return money if their companies lose big under rules being proposed to install one of the last major planks of the Dodd-Frank Act.  Financial companies with more than $250 billion in assets would face the toughest restrictions on pay for senior executives and other employees in a position to have major impact on the firm’s bottom line, according to the long-delayed incentive compensation measures released by the National Credit Union Administration. NCUA, one of the six agencies that must adopt the rules, is meeting Thursday for a vote that would release them for public comment. The other regulators, including the Federal Reserve and Securities and Exchange Commission, are expected to follow.  The proposal would allow companies to take back bonuses -- even those already vested -- if the employee took inappropriate risks, drew an enforcement action or exceeded a firm’s risk limits and caused a loss. Clawbacks of bonuses could happen for as long as seven years, including for those who have left the company, according to the proposal, which represents six years of combined work from regulators to interpret one of the core provisions of the 2010 law.  Econintersect:  This goes part of the way toward a policy that we have proposed, achieved preferably by shareholder and Board of Director actions, to defer bonuses up to ten years and then pay based on performance of the corporation over those ten years.  We feel that there are severe distortions introduced to the economy by incentivizing short-term performance measured by such things as quarterly and annual stock price performance, revenue growth or increased earnings.

  • Trump: Tubman on the $20 bill is 'pure political correctness' (CNN)  Donald Trump thinks anti-slavery icon Harriet Tubman is "fantastic" -- but he says the move to have her replace seventh president Andrew Jackson on the $20 bill is "pure political correctness".


  • EU threatens sanctions over Macedonian crisis (Reuters)  The European Union threatened sanctions on Thursday against Macedonian politicians who it says have have obstructed efforts to end a long-running crisis after a push for EU-mediated talks failed.  Macedonia, a poor Balkan country on the frontline of the migrant crisis, has been in turmoil since the opposition accused then Prime Minister Nikola Gruevski and his counter-intelligence chief in February 2015 of wiretapping more than 20,000 people.  Under an EU-brokered agreement, Macedonian politicians agreed last year to appoint a special prosecutor to investigate the scandal and to hold early elections, but the process is on the brink of collapse.


  • VW reaches US deal in emissions scandal (BBC News)  Volkswagen will pay "substantial compensation" and buy back cars in US as part of a deal to settle the diesel emissions scandal.  The details were announced in a California court after a federal judge gave VW and regulators a deadline to agree a fix for the cars.  Last year, US regulators discovered that VW cars were fitted with software that could distort emissions tests.  The German giant subsequently said 11 million cars worldwide were affected.  US district court Judge Charles Breyer said the settlement was expected to include a buyback offer for nearly 500,000 2.0-litre vehicles. 


  • Snowden to take Norway to court to secure free passage (Reuters)  Edward Snowden will sue the Norwegian state in a bid to secure free passage to the Scandinavian country, a Norwegian law firm representing the former U.S. spy contractor said on Thursday.  Snowden has been invited to Norway to receive a freedom of speech award from the Norwegian branch of writers' group PEN International, but according to his lawyers he is worried that he would be handed over to the United States.  The law firm, Schjoedt, said in a statement:

"The purpose is to get legally established that Norway has no right to extradite Snowden to the U.S.."


  • White House concerned Russia moving military equipment into Syria (Reuters)  The United States said on Thursday it was concerned about reports that Russia is moving more military equipment into Syria to bolster President Bashar al-Assad with a truce in tatters and peace talks in meltdown.  Fighting raged across Syria after the truce, brokered by Washington and Moscow to allow talks to take place, ended and both sides geared up for more war. Russian intervention late last year swayed the conflict in Assad's favor.

Saudi Arabia

  • The $2 Trillion Project to Get Saudi Arabia’s Economy Off Oil (Bloomberg)  Saudi Arabia must fundamentally change, or else face ruin in a world that is trying to leave oil behind.  The mission to make those changes is in the hands of 31-year-old deputy crown prince (second in line to the throne) Prince Mohammed bin Salman.  The result of his work over the past year is scheduled to be unveiled Monday, 25 April, in a report entitled “Vision for the Kingdom of Saudi Arabia".  The plan includes the creation of the world’s largest sovereign wealth fund, which will eventually hold more than $2 trillion in assets—enough to buy all of Apple, Google, Microsoft, and Berkshire Hathaway, the world’s four largest public companies. The prince plans an IPO that could sell off “less than 5 percent” of Saudi Aramco, the national oil producer, which will be turned into the world’s biggest industrial conglomerate. The fund will diversify into non-petroleum assets, hedging the kingdom’s nearly total dependence on oil for revenue. The tectonic moves, says the prince:

“will technically make investments the source of Saudi government revenue, not oil.  So within 20 years, we will be an economy or state that doesn’t depend mainly on oil.”


  • Obama says political progress needed before more Iraq aid (Associated Press)  President Barack Obama said Thursday that the U.S. and its Gulf partners should wait to see whether Iraq can resolve its political crisis before committing more financial aid, arguing that the paralysis is impeding U.S.-led efforts to defeat the Islamic State group and reconstruct the war-torn country.


  • In major shift, Mexico president proposes relaxing marijuana laws (Reuters)  Mexican President Enrique Pena Nieto on Thursday proposed legalizing marijuana-based medicines, raising the amount users can carry and freeing inmates on minor weed charges, in a major shift amid regional efforts to reboot drug policy.  Pena Nieto, who is grappling with deadly drug cartel violence, said he will send to Congress a proposal to permit the use and importation of marijuana-based medicines, and raise the amount that weed users can legally carry to 28 grams from 5 grams.  Growing and selling marijuana is illegal in Mexico and a mainstay business of violent drug gangs. Pena Nieto did not say where consumers would be able to obtain the weed they are then allowed to carry.

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

  • Intel made a huge mistake 10 years ago. Now 12,000 workers are paying the price. (Vox)   June 6, 2005, seemed to be a triumphant moment for Intel. The chipmaker was already dominating the market for processors that powered Windows-based PCs. Then Steve Jobs took the stage at Apple's World Wide Developers Conference to announce that he was switching the main Windows alternative, Macintosh computers, to Intel chips as well. The announcement cemented Intel's status as the leading company of the PC era.  There was just one problem: The PC era was about to end. Apple was already working on the iPhone, which would usher in the modern smartphone era. Intel turned down an opportunity to provide the processor for the iPhone, believing that Apple was unlikely to sell enough of them to justify the development costs.  The result today is a layoff of 12,000 employees by Intel (11% of its workforce) as smartphone technology has been eroding the old PC formats and Intel does not have a central role in the low-power consumption ARM chips used in mobile devices.  This technology has exploded by a factor of 7 since Intel said "no thanks".

  • Long Bond Rally Has Legs, U.S.'s Top Government Fund Says (Bloomberg)  Hoisington Investment Management Co. has been riding the rally in long-term Treasuries for more than two decades, and it sees no bottom in sight for yields.  In a year when U.S. government debt is proving a haven for investors, the longest-dated Treasuries have delivered the biggest winnings. Thirty-year bonds have earned about 10% in 2016, almost double the gain on 10-year notes and triple the return for the Standard & Poor’s 500 Index, based on data compiled by Bank of America Merrill Lynch and Bloomberg.  So far in 2016 the 30-year-old Wasatch-Hoisington U.S. Treasury Fund (up 10%) is the top performing fund among it's peers, according to Bloomberg.  Bloomberg quotes former Fedreal Reserve Bank of Dallas economist and Hoisington VP Lacy Hunt (Hunt and President Van R, Hoisington write a quarterly market report posted on GEI): 

“We do not believe the secular low in rates is at hand.  The economy is weak and inflation is contained, and as long as that continues we will make our mistakes from being on the long side of the Treasury market.  We expect the current 30-year-bond yield low to be eclipsed over the next several years.  The yield is going to sub-2 percent and may go down there and hold for a while.”


  • U.S. Home Sellers in March 2016 Realized Highest Home Price Gains Since December 2007 (Reaalty Trac)  U.S. home sellers in March on average sold for $30,500 more than they purchases for, a 17 percent average gain in price — the highest average price gain for home sellers in any month since December 2007 at the onset of the Great Recession.  Of the 125 metropolitan statistical areas with at least 300 sales in March only 19 saw average sellers losing money from purchase price.  For the other 106 markets the the biggest average gains compared to purchase price were in San Francisco (72% average gain); San Jose, California (60%); Boulder, Colorado (53%); Prescott, Arizona (51%); and Los Angeles (48%).

  • Scientists Unveil New ‘Tree of Life’ (The New York Times)  A team of scientists unveiled a new tree of life on Monday, a diagram outlining the evolution of all living things. The researchers found that bacteria make up most of life’s branches. And they found that much of that diversity has been waiting in plain sight to be discovered, dwelling in river mud and meadow soils.  See A new view of the tree of life (Nature Microbiology).  Click on figure below for large image with description.

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