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What We Read Today 18 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".).


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

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Topics today include:

  • The Mysterious 'Real Interest Rate' of Economic Theory

  • Economists Discover Quasi-Equilibriated Economic Sub-Particle

  • The Bond Market Believed the Fed Today

  • New Record Diamond Sale Price

  • Dems Squabble, Trump Advances

  • Clinton and Trump Even in Georgia, Sanders Beats Both

  • Trump's All-White, Mostly Male, Conservative SCOTUS Nominee List

  • EU Not Distributing Refugees According to Plan

  • First of the Missing Nigerian School Girls Recovered, Alive, With Baby

  • Australia's Tax Cut Brouhaha

  • And More

Articles about events, conflicts and disease around the world


  • Record crushed, diamond intact: Oppenheimer Blue draws $58M (Reuters)   The "Oppenheimer Blue" diamond sold Wednesday for more than 56.8 million Swiss francs ($57.6 million) including fees, crushing the previous record for the most expensive diamond ever sold at auction.  Capping a lively and even laughter-filled auction at Christie's, the hammer came down to applause as the 14.62-carat stone, billed as the largest Vivid Blue diamond ever put up for auction, went to an unidentified buyer for a hammer price of 50.6 million Swiss francs — which excluded fees and the buyer's premium.  The final tally also blew away the previous record for a diamond sold at auction by nearly $10 million: The 12.03-carat polished "Blue Moon" diamond went for $48.5 million in Geneva in November.

  • 2016 is likely to be the world’s hottest year: here’s why (The Conversation)  With February, March and April having broken all-time temperature records, the odds for 2016 being the hottest year ever have increased.  Even a strong La Niña event (the cooler opposite of El Niño), which some analysts are forecasting, is unlikely to produce cold enough temperatures to overcome the strong start to the year.


  • Amid Democratic infighting, polls are improving for Trump (The Hill)  See next article for "infighting" details.  An NBC News/SurveyMonkey poll released Tuesday morning showed Trump and Clinton performing at exactly the same level within their respective parties. Each commanded 87% support.  The poll also suggested that hopes among Democrats of an easy win over Trump are misplaced. Tuesday’s poll had Clinton with an edge of just 3 points in a hypothetical match-up: The former secretary of State led Trump 48% to 45%.

  • DNC Rips Off Sanders: Wasserman Schultz is Untrustworthy and Must Go (Observer)  Not only Republicans have serious internal party squabbles, Democrats are equal-opportunity quarrelers, as well.  This column accuses Debbie Wasserman Schultz, the Chair of the Democratic National Committee of overtly favoring one candidate for the presidential nomination.

  • The Bernie Sanders Trainwreck (Bloomberg)  This columnist says that Bernie Sanders is leading his followers over a cliff.  He says:

Hillary Clinton long ago wrapped up the nomination. Tuesday’s results -- her narrow victory in Kentucky and his win by about 10 percentage points in Oregon -- doesn't change anything: It's over. 

  • Poll: Clinton vs. Trump a tossup in Georgia (The Atlanta Constitution)  Democrat Hillary Clinton and Republican Donald Trump are locked in a statistical tie in Georgia, according to an Atlanta Journal-Constitution poll that laid bare the deep divide over the presidential race.  Trump’s 4-point lead over Clinton — he’s at 45% — is within the poll’s margin of error, meaning neither can confidently claim a state that’s voted for the GOP nominee since 1996. Sprinkled throughout are reminders of the challenges both face in capturing Georgia: dim voter enthusiasm, high unfavorability ratings and deep skepticism from voters.  Perhaps the most telling sign of all: Vermont U.S. Sen. Bernie Sanders polled higher than both in one-on-one matchups, winning a potential contest with Trump 47% to 42%. Although Clinton seems poised to win her party’s nomination, the AJC poll is among a string of surveys bolstering Sanders’ case that he poses the bigger threat to Trump.  So this poll shows Sanders running nine percentage points better than Clinton against Trump.

  • Trump unveils list of 11 potential Supreme Court nominees (The Hill)  Donald Trump has released a list of 11 potential Supreme Court nominees.  The list was prepared with the help of the conservative think tank, The Heritage Foundation.  The list includes a handful of judges typically found on conservative wish lists, including appellate judges Diane Sykes and William Pryor, two names previously floated by the presumptive GOP presidential nominee as model jurists.  The list includes names of those who have criticized Trump during his campaign.  See also Trump Reveals All-White List of Potential SCOTUS Nominees and Donald Trump’s Supreme Court Hates Gays, Loves Police-Dog Brutality (The Daily Beast).


  • The Latest: Greek police repel migrants on Macedonia border (Reuters)  Greek authorities say four of the nearly 55,000 refugees and other migrants trapped there after a series of border closures further north have been returned to Turkey, from which they initially entered the country.  A police statement Wednesday said the four people returned Wednesday were a Syrian couple and their two children. That brings to just under 1,500 the number of people Greece has sent back to Turkey since the beginning of the year.  European countries are not fulfilling their refugee acceptance quotas, which adds to the crisis.


  • Chibok girls: Kidnapped Amina reunited with family (BBC News)  The first of the missing Nigerian schoolgirls to be rescued since her capture two years ago has had an emotional reunion with her mother.  Amina Ali Nkeki, 19, was found with a baby by an army-backed vigilante group on Tuesday in the huge Sambisa Forest, close to the border with Cameroon.  She was one of 219 pupils missing since they were abducted from a secondary school in eastern Chibok in April 2014.  They were taken by the Islamist militant group Boko Haram.


  • Chinese aircraft intercept U.S. reconnaissance plane over South China Sea: Pentagon (Reuters)  Two Chinese tactical aircraft carried out an "unsafe" intercept of a U.S. military aircraft on May 17, the Pentagon said in a statement on Wednesday.  The incident took place in "international airspace" as the U.S. maritime patrol reconnaissance aircraft carried out "a routine U.S. patrol" in the South China Sea, the statement said.  Washington has accused Beijing of militarizing the South China Sea after creating artificial islands while Beijing, in turn, has criticized increased U.S. naval patrols and exercises in Asia.  The statement added that the Department of Defense was addressing the issue through military and diplomatic channels.


  • The full story on company tax cuts and your hip pocket (The Conversation)  Using the data supplied by the government and used in the Coalition economic plan for jobs and growth, the authors come to a different conclusion.  A long-term plan to cut the company tax rate from 30% to 25% is the centerpiece of the Coalition’s economic plan for jobs and growth. The Coalition maintains the change will boost GDP by more than 1% in the long-term, at a budgetary cost of $48.2 billion over the next 10 years.  Their results indicate that the benefit to Australians is much less than the Coalition indicated and that the plan amounts to a windfall for foreign investors.  At the top this analysis finds that the long-term benefit to GDP is only 1.2 %, not the 4% claimed by the Coalition.  And then only half of that accrues to incomes.

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

  • The mysterious real interest rate of economic theory (Cameron K. Murray, Fresh economic thinking)  The mysterious real interest rate - the one typically denoted as r in economic theory - does not have a real life counterpart. This is a problem for economic theory. And it is a major problem for policy makers relying on monetary policy to boost economic activity.   While we think of the nominal interest rate minus inflation as getting close to the theoretical concept of real interest rates, changing this value in practice through central bank operations does not actually change the real return on capital and stimulate investment through that channel.  See a related discussion:  The Unnatural Rate Of Interest.  The reason for interest rate variation by a central bank not having an effect on investment is explained:

[Monetary policy is ineefective] because the price of capital is determined by the interest rate! We have known this for a long time. Joan Robinson wrote about the circularity of reasoning when we measure the quantity of capital by its price. She was ignored. As I expect to be.

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