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What We Read Today 23 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:

  • 2016 is a Bad Presidential Cycle Year for Stocks

  • What is the Secret Shame of the American Middle Class?

  • Orthodox Economics:  Dead Visions and Banished Hopes

  • Sears Holdings Trying to Cut Its Way to Profitability

  • Asia Markets Had a So-So Week, Europe Did Better

  • Are Google and Obama Joined at the Hip?

  • One of the Most Famous Brokered Conventions of All

  • North Carolina Wants Some Bearded Men to Use Ladies' Restrooms

  • Germans Rally Against Transatlantic Trade Partnership

  • Abe is Seizing Defeat from the Jaws of Victory

  • China is Bubbling Again, While the New Silk Road Falters

  • Ecuador Death Toll is Still Rising

  • And More

Articles about events, conflicts and disease around the world


  • Asia markets mixed; ASX, Nikkei and HSI advance for the week (CNBC)  Asia markets finished mixed on the final trading day of the week, but the major indexes in Australia, Japan and Hong Kong eked out weekly gains.  The Australian ASX 200 closed down 36.31 points, or -0.69%, at 5,236.40, led by over 1% declines in the energy and materials sub-indexes. For the week, the ASX 200 was up 1.53%.  In Japan, the Nikkei 225 advanced 208.87 points, or +1.2%, to 17,572.49 on the back of a relatively weaker yen. The index has posted gains in four of the last five sessions, rising 4.3 percent for the week. Across the Korean Strait, the Kospi finished down 6.61 points, or- 0.33%, at 2,015.49 on Friday, but advanced for the week.  Chinese mainland markets finished up, with the Shanghai composite up 6.78 points ( +0.23%) at 2,959.67, while the Shenzhen composite added 19.02 points +(1.03%) at 1,867.55. Earlier in the week, the indexes came under pressure, with the Shanghai benchmark selling off as much as 4% at one point, which analysts said was due to a liquidity shortage in the country this month.  In Hong Kong, the Hang Seng index closed down 155.21 points (-0.72%) at 21,467.04.  Friday's summary:




  • The Android Administration (The Intercept)  Two charts explain the extraordinary relationship that Google has had with the Obama White House.  The first shows high visit counts for Google employees - 169 Google employees and 182 White House staff attended 427 meetings.  The second shows the revolving door as the government and Google have been exchanging employees at a very high velocity (252 job changes).  The article points out that some of these may be related to technology issues for White House operations but the question is:  How much other "exchange" is going on?  Go to the Intercept article for large, interactive versions of these graphics, showing names of all involved.



  • Riots, Guns, Bribes: TR's Contested Convention (The Atlantic)  In 1912 Teddy Roosevelt's supporters "tried to wrest the nomination from William Howard Taft, there were plans for riots, plenty of guns, and more than a few attempted and perhaps actual bribes".  The end result was a 3-way presidential election after Roosevelt failed to get the Republican nomination, then ran as the candidate of the Bull Moose Party.  The election resulted in a win for Democrat Woodrow Wilson, only the second man of his party to be elected president since before the Civil War (54 years).

  • North Carolina GOP's careful plan could be in jeopardy (Associated Press, MSN News)  A decade ago, GOP leaders developed a strategy to take over North Carolina's state government for the first time since 1870: Aggressively pursue the seats of vulnerable Democratic lawmakers and win House and Senate majorities by 2010; use those majorities to redistrict the state in Republicans' favor; and push a business-friendly, socially conservative agenda in a Southern state where progressive policies once held sway.  The formula worked. With both houses and the governor's office under their control, Republicans can do what they want in Raleigh.  Whatever they want that is, except for what the courts take away from them.  They have lost a number of cases, most widely publicized on gerrymandering'   where redistricting removed several competitive districts to safe Republican ones by packing huge Democratic majorities into a couple of other districts which had already had Democratic majorities.  The next challenge may come on the recently enacted anti LGBT law which removes many civil rights protections and requires transgender people to use public restrooms of their birth sex.  Econintersect:  In an obvious attempt to publicly embarrass such people, the lawmakers are apparently willing to require certain bearded men to use the ladies' room and some in stiletto heels and short skirts to use the men's room. The justification offered for the law is to protect children from predators.  Has anyone ever heard of a documented transgender predator situation involving a public bathroom? 


  • Europe shares close lower as autos weigh; up 1.5% on the week (CNBC)   European stocks finished in negative territory on Friday as sharp losses in the autos and basic resources sectors dragged the wider benchmarks lower.  The pan-European STOXX 600 finished 0.47% lower provisionally. On the week, the STOXX 600 however was up some 1.5%.  Friday's results below.



  • Obama tells British youth: Don't pull back from the world (Reuters)  U.S. President Barack Obama implored young British people on Saturday not to pull back from the world, a day after sparking a row by bluntly telling Britain it should remain in the European Union to preserve its remaining global clout.  Obama angered critics of the EU on Friday by warning that Britain would be at "the back of the cue" for a trade deal if it left the club - one of the strongest U.S. interventions in the affairs of a western European democracy since the Cold War.  Econintersect:  Did he mean queue?  Or was he taking about snooker, billiards or eight ball?


  • TTIP trade deal: Germans rally in Hannover against US-EU talks (BBC News)  Thousands of people have marched in the German city of Hannover against a proposed Transatlantic Trade and Investment Partnership (TTIP) deal.  They say the deal would drive down wages, and weaken environmental protection and labor rights.  US President Barack Obama - who is pushing hard for the agreement - says it would create millions of jobs and increase trade by lowering tariffs.  On Sunday, he will visit the northern city to open a huge trade fair.


  • Bangladeshi professor hacked to death near his home (CNN)   Assailants hacked a Bangladeshi professor to death early Saturday near his home in Rajshahi city, authorities said.  Rezaul Karim Siddique, 58, was an English professor at Rajshahi University.  He was waiting for a bus to take him to campus when two or three people attacked him from behind and stabbed him in the neck , said Sadhir Haider Chowdhury, a city police commissioner.  The professor died on the spot.  It's unclear whether his attack was related to the recent hacking deaths of bloggers in the nation. An investigation is ongoing.  Siddique is the latest of a series of now 5 professors murdered at Rajshahi University.


  • How Abe Is Making a Failure of Success (Bloomberg)   Prime Minister Shinzo Abe has had a great run since assuming power in 2012. His Liberal Democratic Party-led coalition government was reelected in 2014 with a comfortable majority in the Diet. Polls suggest it would probably win again if Abe calls lower house elections in the near future, as some expect. He could be in power through 2020, becoming Japan’s longest-serving prime minister. No politician in Japan poses a serious threat.  Surprisingly, the electoral clout hasn’t given him free rein to push his signature economic program forward. Launched with great fanfare three years ago, Abenomics aimed to revive Japan with a three-pronged strategy of aggressive monetary easing, fiscal spending, and structural reforms. Instead, the International Monetary Fund in April halved its 2016 growth forecast for Japan to 0.5%, deflation remains a worry, real wages have fallen for four consecutive years, and the Nikkei is down 11% this year as foreign investors head for the exits.



  • China’s ‘New Silk Road’ facing difficulties: former official (South China Morning Post)   China may be facing big financial losses from its high-profile program of overseas investment but the policy is necessary as an outlet for excess industrial capacity, a former top government tax official has said.  The comments from Xu Shanda mark a rare public airing by a Chinese official, current or retired, of difficulties facing the “New Silk Road” program, a key policy of President Xi Jinping aimed at helping countries build energy and transport links with the Middle East and Europe.

  • Meanwhile In China, More Bubble Insanity (Zero Hedge)  The gains in industrial metals are not a "sign of strength in China's and the world's economic recovery" but merely the next rotation of fast-money slooshing from Chinese equities to Chinese corporate bonds to Chinese real estate and now to Chinese commodity futures.  See next article.

  • The Stunning Chart Showing Where All The Commodity Gains Have Come From (Zero Hedge)  The argument here is the astounding 50% rise in steel prices this year has nothing to do with economic strengthening - it's just rotation of money out of Chinese stocks.  However, ZH does observe that the pick-up in infrastructure stimulus in China is driving some demand for steel, just not nearly enough to account for the moonshot price rise.



  • Ecuador quake death toll rises to nearly 650 (Reuters)  The death toll from Ecuador's devastating 7.8 magnitude earthquake last week has risen to 646 people, President Rafael Correa said during a TV broadcast on Saturday.  Last Saturday's quake, the worst in nearly seven decades, injured around 12,500 people and left 130 missing along the country's ravaged Pacific coast.

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

  • 8th Year Presidential Cycle Predicts Trouble for the Rest of 2016 (Financial Sense)  The 8th Year Presidential Cycle, as it is commonly referred to, shows a tendency for stocks to decline immediately in the first couple months, rally into April, and then further decline heading into the election and the remainder of that 8th year.  So far, both the S&P 500 and the Dow Jones Industrial Average have followed the pattern quite closely. If the pattern continues, it shows that US stocks should be in the process of forming a peak right now with double-digit losses by year-end.  Click graphic below for larger image.


  • The Secret Shame of Middle-Class Americans (The Atlantic)  Hat tip to LL.  A survey by the Federal Reserve found that 47% of Americans said the way they would pay for a $400 emergency would be to borrow or sell something, otherwise they would not be able to find $400 at all.  This article is written by one of that 47%

  • Orthodox Economics Has Become a Place Where Visions Die and Hopes Are Banished (Gerald Friedman, Evonomics)  Hat tip to Rob Carter.  Gerald Friedman became a national figure when his assessment of Bernie Sanders' economic plan predicted high GDP growth rates (4.5% to 6% per year).  (Incidentally, Friedman is a declared support of Hillary Clinton.)  His study was attacked and ridiculed by other Clinton supporters in the economics community, and of course by Republicans.  Friedman has responded to his critics specifically on their objections to his analysis and analytical methods.  This article is not part of that.  Here Friedman discusses a broader philosophical concern centered on the widely accepted "economic theory that government can do little more than fuss around the edges".  He laments the narrow closed mindedness that has come to dominate economic thinking.  He starts his essay as follows:

The angry reaction to my report revealed that by some combination of rationalization and the dominance of neoclassical microeconomics since the 1970s, liberal economists have virtually abandoned Keynesian economics, which supported the notion that governments can and must intervene in the economy to ensure the best results for society. These economists went back to pre-Keynesian thinking, where price fluctuations are supposed to equilibrate supply and demand at full employment with an optimal distribution of good and services. The very suggestion that government action can result in increases in growth rates or wages is now taken to be obviously wrong. Adopting the language of neoclassical micro welfare economics, everything is already as good as can be — all that government can do is to make it worse. Criticisms of the orthodox model and its policies are deemed worthy of scorn, to be dismissed tout court because they are obviously at variance not only with textbook economics, but with what we need to believe to rationalize failure.

  • Uber will pay up to $100 million to settle suits with drivers seeking employee status (Los Angeles Times)  Uber will pay up to $100 million to drivers who had sought to be classified as employees, settling two lawsuits that posed a threat to the company’s on-demand business model, which relies on independent contractors.  The company has not compromised its operational theme that drivers are contractors.

  • List: 78 Sears, Kmart stores closing (USA Today)  Closing Sears stores start their liquidation sales April 29 and the closing Kmarts start their liquidation sales May 12. The stores will close in late July, except those marked with an asterisk (*), which close in mid-September.  Full list is at USA Today, following the map graphic copied below.

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