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What We Read Today 16 May 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:

  • Do You Want Withdraw the U.S. Savings?

  • Is Mankiw 'Unprincipled and Unethical'?

  • Goldman Say the Sell in May for 2016

  • S&P 500 is not Overvalued as in 2007

  • Buffett Takes Billion Dollar Stake in Apple

  • GOP Lawyer Says Military Acted Properly in Benghazi

  • Former Fed Governor Has Questions for Hillary Clinton

  • Trump Says:  Don't Need No Data

  • Many U.S. Investors Do Not Pay Taxes on Gains

  • Millennial Voters Outnumber Boomers, But Will They Go to the Polls?

  • Time to Arm the Government of Lawless Libya?

  • Saudi Arabia Holds Less Than 0.1% of U.S. 'Debt'

  • Brazil's Left Has Destroyed Itself

  • And More

Articles about events, conflicts and disease around the world

U.S.

  • Former GOP lawyer: Military acted properly on Benghazi  (Associated Press)   The U.S. military acted properly on the night of the deadly 2012 attacks in Benghazi, Libya, according to leaked testimony from a retired, three-star Army general who served as chief lawyer for Republicans on the House committee investigating the attacks.  Retired Army Lt. Gen. Dana Chipman "repeatedly commended the military's actions on the night of the attacks during closed interviews with Defense Department officials," including a Jan. 8 interview with former Defense Secretary Leon Panetta, Democrats on the committee say.  Chipman, a former judge advocate general for the Army, served as chief counsel for Republicans on the House Benghazi panel from August 2014 until January.  Top Democrats on the committee — Reps. Elijah Cummings of Maryland and Adam Smith of Washington — released the testimony Sunday in a letter to the panel's chairman, Rep. Trey Gowdy, R-S.C. The letter is the latest volley in an escalating, election-year fight over the House Benghazi investigation, which has lasted more than two years.

  • Two Questions for Clinton About the Fed (Bloomberg)  Narayana Kocherlakota, University of Rochester, who served as president of the Federal Reserve Bank of Minneapolis from 2009 through 2015, wants to know:  (1) "Would Clinton want Fed governors who would tolerate below-target inflation in order to keep the unemployment rate from falling too far?"  This would keep people out of work when inflation is not an issue.  (2) "When Clinton says that she doesn’t want bankers [on Fed boards], does she mean to include representatives of institutions with less than, say, $10 billion in assets?  While keeping the "big boys" away from the Fed makes sense, small bank representation  is a "relationship that helps the Fed make policy for the benefit of all Americans".

  • Trump's questioning of the value of data worries Republicans (Associiated Press)  Donald Trump says he plans to win the White House largely on the strength of his personality, not by leaning heavily on complex voter data operations that have become a behind-the-scenes staple in modern presidential campaigns.  Shortly after Trump explained his approach in an Associated Press interview — data is "overrated," he said — one of the presumptive Republican nominee's top advisers tried to clarify the remarks. Rick Wiley told AP the Trump campaign will indeed tap the Republican Party's massive cache of voter information.

  • Most US stock investors don't pay taxes on gains: Report (CNBC)  Only about a quarter of U.S. stocks are owned by people who pay taxes on their gains, down from more than 80 percent in the 1960s, according to new analysis.  That shift, outlined in a paper by the nonpartisan Tax Policy Center, means the government is collecting far less revenue from stock market gains than it used to. As a result, any potential changes in the capital gains tax may not have as great an impact on government revenue as many might expect. 

  • Millennials match Baby Boomers as largest generation in U.S. electorate, but will they vote? (Pew Research Center)  Millennials, who already have surpassed Baby Boomers as the United States’ largest living generation, now have caught up to the Boomers when it comes to their share of the American electorate.

UK

Libya

  • Libya: US backs arming of government for IS fight (BBC News)   The US and other world powers have said they are ready to arm Libya's UN-backed unity government to help it fight the self-styled Islamic State (IS) group.  Speaking in Vienna, US Secretary of State John Kerry said world powers would back Libya in seeking exemption from a UN arms embargo.  He said IS was a "new threat" to Libya and it was "imperative" it was stopped.  Last month, the Libyan government warned that IS could seize most of the country if it was not halted soon.

  • Why is Libya so lawless? (BBC News)  Basically, because there is no effective government authority.  Libya has been beset by chaos since Nato-backed forces overthrew long-serving ruler Col Muammar Gaddafi in October 2011.  US President Barack Obama has partly blamed David Cameron for "the mess", saying the UK leader has not done enough to support the North African nation whose instability is threatening its neighbors and been a factor in Europe's migrant crisis.  Only Libya's myriad of armed militias really wield power - and it is felt they often hold the politicians they supposedly back to ransom.  During the uprising, anyone with a gun could command respect, and lots of armed groups emerged - up to 1,700, according to some estimates.

Saudi Arabia

  • U.S. Discloses Saudi Holdings of Treasuries for First Time (Bloomberg)  The Treasury Department has released a breakdown of Saudi Arabia’s holdings of U.S. debt, after keeping the figures secret for more than four decades.  The stockpile of the world’s biggest oil exporter stood at $116.8 billion as of March, down almost 6% from a record in January, according to data the Treasury disclosed Monday in response to a Freedom-of-Information Act request. The tally ranks Saudi Arabia among the top dozen foreign nations in terms of holdings of U.S. debt, and compares with China’s $1.3 trillion trove, and $1.1 trillion for Japan. 

Brazil

  • How Brazil’s Left Destroyed Itself (Foreign Policy)  Once upon a time, the Workers’ Party promised clean government. Now it’s squarely at the center of the biggest corruption scandal in the country’s history.  The Senate in Brasilia has voted for the impeachment of President Dilma Rousseff. This moment marks the final fall from grace not only of the president but also of her ruling Workers’ Party, which has run the country for 13 years.  Now, however, the biggest corruption scandal in national history is revealing the extent to which Rousseff and her allies actively contributed to the rot of Brazil’s democratic institutions. It has taken the impeachment of the country’s first female president — who once stood as a champion of the fight for clean government — to lay bare this dispiriting reality.

  • White male cabinet raises fears of backsliding in diverse Brazil (Reuters)  To the people who benefited most from the long, recently truncated rule of Brazil's leftist Workers Party, the look of the successor government could not be more disheartening.  Whereas cabinet posts over the past 13 years were often filled by women and blacks, new Interim President Michel Temer last week presented a group of 23 ministers that looked a lot like him – white, male and mostly old. 

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

  • Isn’t it Time to Stop Calling it “The National Debt”? (Steve Roth, Evonomics)  Roth explains why "government issued securities" have nothing to do with debt obligation and everything to do with citizen savings.  Perhaps in the days when the government was obligated to pay the holder of U.S. bonds in gold "or equivalent" and the currency of the nation was redeemable in gold (or silver) there was a basis for considering securities issued by the U.S. governnment as an obligation.  Here is part of what Steve Roth (very correctly in our opinion) says:
     "The U.S. issues money by deficit spending. It puts more money into private accounts than it takes out via taxes. The private sector has more balance-sheet assets (but no more liabilities, so it has more “net worth,” the balancing item on the righthand side of its balance sheet). The treasury has made no promises to redeem that new money for…anything (except maybe…different government-issued assets). It’s just out there.

    Now it’s true that the U.S. et al operate under an arguably archaic and purely self-imposed rule: their treasuries are required to issue bonds equal to that deficit spending. This is a straightforward asset swap: the private sector gives checking-account deposits (back) to the government, and the government gives bonds in return. Private sector assets and net worth are unaffected by that accounting swap; it just changes the private-sector portfolio mix — more bonds, less “cash.” (Treasury “forces” the private sector to make that collective portfolio-adjusting swap through the simple expedient of selling bonds at an attractive price — a point or two below similar deals in the private sector.)

    The same kind of asset swap happens when the Fed “prints money” for quantitative easing. The private sector gives bonds (back) to the government, and the Fed gives “reserves” in return — deposits in banks’ Fed accounts. Sure, the Fed creates those reserves ab nihilo, but they’re not a money injection into the private sector, like deficit spending. They’re just swapped for bonds. That accounting event doesn’t increase private-sector assets or net worth. It just changes the private-sector portfolio mix (more reserves, less bonds)."

  • The Unprincipled and Mythical Mankiw Principles of Economics (William K. Black, New Economic Perspectives)  WKB contributes to GEI.  Greg Mankiw (Harvard) is the author  of leading introductory economics textboooks.  Prof. Black criticizes the premises espoused by Mankiew with great vigor.  Among the items discussed are the following:

  •  The representation of economics as science when "As it is preached by Mankiw, theoclassical economics is a dogma that repeatedly violates the most basic tenets of science."

  • The misrepresentation, according to Black, that "Economics is a subject in which a little knowledge goes a long way. "  Black asks " How is it possible for a subject as massively complicated as economic life, much less all the fields such as the family that theoclassical economists now purport to study and devise proper public policies, that a brief introduction in a freshman course “goes a long way” to actually understanding proper policy choices in such enormous spheres of life?"

  • Black says that Mankiw displays "sheer arrogance" of contradiction by claiming that "economists are “unique” among scientists" while also claiming that “science was analytic, systematic, and objective.”

  • Black criticizes the implicit assumption expressed by Mankiew that "economists all “think” the same way."

  • Black says that the uniqueness of economists is not mentioned by Mankiew, that being "the frequency, severity, and persistence of their errors."  Black says that no other field awards Nobel prizes to practitioners "for preaching critical policy issues and predictions that have proved dead wrong".

  • Black points out that students selecting to study economics score lower in altruism and that "After they major in economics students score even lower in altruism."

  • Black concludes that Mankiew, via his textbooks, "is a leading contributor to what makes theoclassical economics so dogmatic, false, and immoral."

sell.in.may.2016

  • Moec: S&P Valuation a Monetary Policy Wealth Effect (Bloomberg)  Stocks are not overvalued compared to the years 2002-2007.  Gilles Moec, chief European economist at Bank of America Merrill Lynch, examines the S&P valuation compared to the 2002-2007 bull-run and how it was controlled and created via monetary policy. He speaks with Francine Lacqua on "Bloomberg Surveillance".

 

  • Buffett's Berkshire Declares $1.07 Billion Stake in Apple (Bloomberg)  Jonathan Adams reports on "Bloomberg ‹GO›.":   Warren Buffett bet on Apple's rebound as Berkshire Hathaway disclosed a holding of 9.81 million shares valued at $1.07 billion at the end of the first quarter.   Econintersect:  At today's price ($94) the position is worth $922 million. 


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