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.
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Topics today include:
Has the Way Universities Teach Economics Changed Enough?
Investors May Need to Lower Expectations
Are the Fed and Bank of Japan Failing to 'Save the World'?
Facebook Crushes Best Estimates
Facebook Proposes New Class of Non-voting Benficial Shares
Oil Still Climbing
Supreme Court on Verge of Further Embracing of Corruption Tolerance
A Hedge Fund 'Killing Field'
Trump Struggles to Explain Foreign Policy
Austria 'Abolishes' the Existence of Refugees
Brexit Debate is Hiding Economic Problems
Turkey Has Been Taking Actions Against Jihadists
China Restricting and Controling Foreign Non-Government Organizations
Content today includes items in yesterday's WWRT. 'What We Read Today did not appear in yesterday's newsletter (publish time was too late for newsletter content "grab").
Articles about events, conflicts and disease around the world
Why investors may need to lower their sights (McKinsey) The forces that have driven exceptional investment returns over the past 30 years are weakening, and even reversing. It may be time for investors to lower their expectations.
Soft data in the US and Japan was not enough to spur central banks in either country into action over the last two days. For me, it highlights first how vulnerable the global economy is. But, more than that, it points to the ineffectiveness of present monetary policy as a way of delivering sustainable economic growth.
Facebook revenue smashes expectations as mobile ad sales surge(Reuters) Facebook Inc's (FB.O) quarterly revenue rose more than 50%, handily beating Wall Street expectations as its wildly popular mobile app and a push into live video lured new advertisers and encouraged existing ones to boost spending. Facebook also announced a proposal to create a new class of non-voting shares, which would be given as a dividend to existing shareholders. The company's shares rose 9.5% in after-hours trading on Wednesday. The dividend of non-voting shares would allow Chief Executive Mark Zuckerberg, who plans to give away the majority of his wealth, to sell part of his stake in Facebook without giving up any of his voting control. That way, Facebook said, Zuckerberg could remain in an "active leadership role".
Oil Climbs Above $45 Amid U.S. Crude Output Drop, Fed Statement (Bloomberg) Wednesday, oil closed above $45 a barrel in New York for the first time since November after U.S. crude output dropped and Federal Reserve policy makers signaled they’re open to raising interest rates in June. Crude production fell to 8.94 million barrels a day last week, the least since October 2014. U.S. production is down almost 7% from its peak at the end of May last year.
Supreme Court justices seem skeptical of McDonnell’s conviction (The Washington Post) Supreme Court justices on Wednesday seemed highly skeptical of former Virginia governor Robert F. McDonnell’s 2014 corruption conviction for actions he took on behalf of a businessman who provided his family with more than $175,000 in benefits. Chief Justice John G. Roberts Jr. suggested that the law used to convict McDonnell might be unconstitutionally vague. Justice Stephen G. Breyer said he worried about prosecutors having too much power in deciding when politicians cross the line from political favors to criminal acts, even if it “will leave some corrupt behavior unprosecuted”. Econintersect: This is the age of corruption tolerance. The outcome of continuing will be the complete institutionalizing of corruption and, by a generalization of Gresham's Law, uncorrupted behavior will be driven out and extinguished.
Daniel Loeb warns of hedge fund ‘killing field’ (Financial Times) The first quarter was “one of the most catastrophic periods of hedge fund performance that we can remember since the inception of this fund,” in December 1996, Mr Loeb said. “There is no doubt that we are in the first innings of a washout in hedge funds and certain strategies.”
Trump struggles to explain 'America first' foreign policy (Associated Press) Donald Trump strained to lay out a clear vision of his "America first" foreign policy on Wednesday, vowing to substitute hard-headed realism for what he called a post-Cold War era replete with U.S. national security failures. Yet the Republican presidential front-runner outlined no strategy for how he'd make the United States at the same time a "consistent" and "unpredictable" force in the world.
Migrant crisis: Austria passes controversial new asylum law (BBC News) Austria has passed a controversial new law that restricts the right of asylum and allows most claimants to be rejected directly at the border. Rights groups say the law undermines the principle of protection from war and persecution. It comes days after Austria's far-right came top in the first round of a presidential election. Austrian officials say they are also considering building a fence at the main border crossing with Italy.
Fact Check: how much does the UK actually pay to the EU?(The Conversation) It turns out this fact is not so easy to check, but the net government transfer to the EU seems to be about 1% of the national budget. This article does not compare this amount to the size of economic benefit the private sector gains from being a member of the free trade area.
Brexit Shadow Hides Deeper Cracks in U.K. Economic Firmament(Bloomberg) Britain’s vote on its future in the European Union is diverting attention from deeper economic problems. As the country thrashes about in an identity crisis, risking a schism with its main trading partner, growth is losing momentum and continues to be lop-sided. Services, the engine of the economy’s recovery, expanded at the weakest pace in almost a year in the first quarter, while industrial production extended its decline. That underscores the fragility of the economy at a time when the Bank of England is warning uncertainty stemming from the June 23 referendum may already be having an effect. Added to that, some of the nation’s biggest companies are in crisis, with two retailing stalwarts appointing administrators in the past week and Tata Steel’s move to sell its U.K. business raising questions about the future of British industry.
Turkey says it has deported 3,300 suspected jihadi fighters (Associated Press) Turkey is cracking down on extremism. Turkey has deported more than 3,300 foreigners suspected of links to jihadi groups, particularly Islamic State militants, and another 41,000 foreigners have been barred from entering the country as part of its fight against the militant group, a top official said Monday. Turkish profiling teams have also interviewed 9,500 people upon their arrival in Turkey, Ibrahim Kalin, a spokesman for President Recep Tayyip Erdogan, told reporters. Some 2,000 of them were denied entry as a result. Around 2,770 suspects, including 1,232 foreigners, have been caught in police sweeps and 954 of them are being prosecuted, Kalin said.
China passes new laws on foreign NGOs amid international criticism (BBC News) China has passed new laws on foreign non-governmental organizations (NGOs) state media said, amid criticism. The full text was not immediately available, but previous drafts stated that NGOs would have to submit to police supervision and declare sources of funding. Critics say the laws amount to a crackdown, but China has argued that such regulation is long overdue. There are currently more than 7,000 foreign NGOs operating in China. Amnesty International said on Thursday that the law was aimed at "further smothering civil society", and called on China to scrap it.
Other Scientific, Health, Political, Economics and Business Items of Note - plus Miscellanea
How Americans Blow $1.7 Trillion in Retirement Savings (Bloomberg) This is a bizarre example of linear thinking in a non-linear situation. The author comes up with $1.7 trillion by stating that Americans don't save enough. If they did save more and received a market rate of return they would have collectively $1.7 trillion more inretirement savings. But if they saved more then they would spend less and the assumed average return on investment would have to decline. because economic growth would decline by the amount of money that would have otherwise been spent. And over the long haul there is a positive relationship between spending and economic growth, and then between economic growth and return on investments ( actually, should say savings).
Bizarre fourth state of water discovered (gizmag) Interstitial water exists trapped in crystal and those water molecules exhibit physical properties different from bulk water that exists in solid (ice), liquid and gaseous (water vapor) forms. The particular property displayed by single water molecules trapped in beryl crystal cages shows a phenomenon known as "tunneling". This refers to the property that some of the time the water molecule is seen in one cage and some other interval in time in an adjacent cage. This is also expressed in terms of position probability: A single water molecule has some probability of being in cage 1, another for cage 2, a third for cage 3, etc., with the sum of all probabilities equaling one - which means the water molecule has a 100% probability of existing somewhere. Since the energy barrier between cells is much larger than the energy of the water molecule the sharing of such multiple spaces by one molecule is said to be due to tunneling. This is all related to the Heisenberg Uncertainty Principle which requires when the energy of a particle is know quite exactly (the temperature is known) the spatial position must be relatively uncertain.
UAF School of Management suspends Economics major (The Sun Star) The UAF School of Management ceased admitting undergraduate students to its Economics program, due to continued budget reductions. Students currently enrolled in the economics program will be “taught out.” Classes supporting the major will be available until they graduate. The choice to suspend the program was made by Mark Hermann, dean of the school of Management. He was looking into whether the School of Management should make cuts to all of its programs equally or to a few specific programs.
Has the way universities teach economics changed enough? (The Guardian) n the years following the global financial crisis, the academic study and teaching of economics has come in for a bashing. In fact, it has faced the kind of fundamental criticism rarely directed towards entire disciplines. The apparent failure of economists to predict, let alone prevent, the 2008 crash has led to accusations that conventional economic teaching cannot adequately explain the complex dynamics and risks of modern economies. Among those championing reform have been disgruntled students, who have demanded that a more “pluralist”, diverse, range of theories be taught on their undergraduate degrees. What success have they had so far? After years of campaigning, universities are making modifications to their courses, or adding new ones. This article says there has been some progress (Steve Keen's program at Kingston University London is one of the few programs mentioned) but a great deal remains to be done.
Millennials are increasingly rejecting voodoo economics (The Washington Post) As my colleague Max Ehrenfreund noted, the latest youth poll from Harvard’s Institute of Politics suggests that young people are becoming more liberal. Compared with responses from the past few years, today’s 18-to-29-year-olds are more likely to believe “basic health insurance is a right for all people,” “basic necessities, such as food and shelter, are a right that government should provide to those unable to afford them,” and “the government should spend more to reduce poverty.” Supply side approaches to taxing and spending are also losing support.
Cartoon from Public Banking Institute E-mail
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