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What We Read Today 30 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:

  • Moral and Ethical Dilemmas of Soldiers - Reflections on All Citizens

  • Why Management Creates Fabricated Earnings

  • The Worst Financial Idea Ever:  Maximizing Shareholder Value

  • Space-X Mission to Mars in 2018

  • Indus Valley Civilization Older than Egypt and Mesopotamia

  • Eric Holder Says Edward Snowden Performed a Public Service (For Which He Should Be Punished)

  • Crackdown on OxyContin Created a New Heroin Crisis

  • Another Drowned Baby Picture:  Does Europe Care Anymore?

  • Why No One Smiles in Russia

  • India Clamps Down on Ponzi Schemes

  • When China Sneezes Neighbors Catch Colds

  • And More

Articles about events, conflicts and disease around the world


  • SpaceX has a radical plan to reach Mars that's unlike anything anyone has tried before (Business Insider)  Elon Musk's private company SpaceX has big plans to usher in a new era of reusable rockets that could send the first humans to Mars and return them home. Here's how the company plans to land on the Red Planet as soon as 2018, years ahead of when NASA plans to accomplish the feat.  The first part of the video below describes the NASA plans for Mars.  The Space-X portion starts at 5:30.

  • The Indus Valley civilisation is 2,500 years older than previously believed (Quartz)  A group of researchers in India have used carbon dating techniques on animal remains and pottery fragments to conclude that the Indus Valley settlements could be 8,000 years old—2,500 years older than previously believed.  That could make the Indus Valley settlements, which spread across Pakistan and northern India, even older than the Mesopotamian and Egyptian civilizations.  Click below for larger image at Quartz.


  • Eric Holder says Edward Snowden performed 'public service' with NSA leak (The Guardian)  The former US attorney general Eric Holder has said the National Security Agency whistleblower Edward Snowden performed a “public service” by starting a debate over government surveillance techniques.  Speaking on a podcast hosted by David Axelrod, a former campaign strategist for Barack Obama, Holder emphasized, however, that Snowden must still be punished.  Econintersect:  So he should have followed the "internal reporting to superiors" mode and never have been heard by the public?

  • The challenge for Trump in states that supported Obama in 2012 (CBS News)  Donald Trump calls his presidential campaign a mass movement, but he must show he can coax enough support from voters who twice delivered the White House to Barack Obama.  The billionaire businessman depended almost exclusively on conservative and GOP-leaning whites - a majority of them men - to secure the Republican nomination. Now he must look ahead to a wider, more diverse voting population in his likely general election matchup with Democratic front-runner Hillary Clinton.  His ability to seize on marginal shifts in the electorate may determine whether he can pull off a victory once unthinkable. Trump's task is critical to flipping back into the GOP column some of the most contested states that Obama won twice.

  • How cracking down on America's painkiller capital led to a heroin crisis (The Guardian)  Florida was the crucible of the opioid epidemic now gripping the US. Before deaths from opiates spiked nationwide, the state’s south corridor earned the name “Oxy Express” for its liberal access to the extraordinarily powerful synthetic heroin painkiller, OxyContin.  But after Florida spent years trying to shake off its reputation by driving out of business the worst of the notorious “pill mills”, the twist came that state officials hadn’t predicted.  When the addicts Florida facilitated could not get prescription opioids any more, they turned to heroin.

Click for large, interactive map at The Guardian.

  • Long-range stand-off does not make sense, nor do its proposed numbers (Brookings)  The U.S. military will carry out a major modernization of its strategic nuclear forces in the 2020s.  It will cover all three legs of the strategic triad.  According to the author, much of the planned program makes sense.  But, he says, the long-range standoff (LRSO) — a new nuclear-armed cruise missile to outfit strategic bombers — does not.


  • Drowned baby picture captures week of tragedy in Mediterranean (Reuters)  A photograph of a drowned migrant baby in the arms of a German rescuer was distributed on Monday by a humanitarian organization aiming to persuade European authorities to ensure safe passage to migrants, after hundreds are feared to have drowned in the Mediterranean last week.  The baby, who appears to be no more than a year old, was pulled from the sea on Friday after the capsizing of a wooden boat. Forty-five bodies arrived in the southern Italian port of Reggio Calabria on Sunday aboard an Italian navy ship, which picked up 135 survivors from the same incident.  Econintersect:  Are Europeans becoming inured to these tragic images?


  • Here's why Russians don't smile (Business Insider)  Grinning without cause is not a skill Russians possess or feel compelled to cultivate. There’s even a Russian proverb that translates, roughly, to “laughing for no reason is a sign of stupidity.”


  • India will finally clamp down on Ponzi schemes that dupe millions of poor investors (Quartz)   The Narendra Modi government is planning to pass a bill in July that will apply stringent regulations to govern credit cooperatives in the country, Reuters reported on May 30. Credit cooperatives in India are typically formed to provide finance and investment opportunities to low-income earners without access to the formal banking system.  The bill will be applicable to cooperatives with operations in more than one state.  In the past, savings schemes have duped millions of individuals and cooperatives haven’t been able to return the money thanks to the absence of strict rules. Two such schemes run by the Sahara group and the West Bengal’s Saradha group have between themselves duped investors of over Rs67,300 crore ($10 billion).


  • China produced nearly eight times more steel than any other nation in 2015 (Business Insider)  In April, China produced more crude steel that the rest of the world combined, the second month in a row that this had eventuated.  In 2015 China produced 803.8 million tonnes of steel during the year, close to eight times more than second placed Japan with 105.2 million tonnes.  India was third with 89 million tonnes; the U.S. fourth with 79 million tonnes; and Russia fifth,  71 million tonnes.

  • When China Sneezes, Those Closest Catch the Worst Colds (Bloomberg)  Those nearest to China are among the hardest hit as growth in the world's second-largest economy grinds to the slowest pace in a quarter century.  Hong Kong, Macau, and Taiwan all saw their economies shrink in the first quarter, while Mongolia's commodities-fueled boom has faltered. And the bad news doesn't stop there.  According to Frederic Neumann, co-head of Asian economic research at HSBC Holdings Plc in Hong Kong:

 "The economic malaise currently experienced by China's immediate neighbors, therefore, is only a portend of a milder version to afflict economies elsewhere as China comes off the boil."


  • Bodies of US climbers found in Tibet left untouched 'out of respect', says witness (The Guardian)  The bodies of two renowned US climbers, found in Tibet 16 years after they died on one of the world’s tallest mountains, have been left untouched out of respect, one of the mountaineers who found the remains said on Monday.  Alex Lowe and David Bridges were swept away by an avalanche in 1999, during their attempt to scale the world’s 14th highest peak, Shishapangma.  Ueli Steck of Switzerland and David Goettler of Germany, who were attempting the same South Face route to the 26,291ft peak, stumbled upon the bodies of the pair, encased in ice, at an altitude of 19,356ft.


  • Gone in Four Hours: LendLease Sells All 391 Sydney Apartments (BloombergMSN News)   All 391 apartments offered by LendLease Group at a project in Sydney were snapped up in just four hours on Saturday, indicating demand for inner-city homes remains buoyant despite looming oversupply.  More than 400 potential buyers turned up from 8 a.m. in Darling Square, a development on the western edge of Sydney’s central business district, for the apartments that were priced from A $630,000 ($452,000 U.S.) for a studio to A$3.5 million for a three-bedroom penthouse, LendLease said in an e-mailed statement.  The sellout at the project, the final stage of LendLease’s 1,500-apartment development, comes amid renewed investor confidence after a regulatory clampdown led to stiffer lending standards for landlords. About 47% of new home loans were to investors in March, the highest in seven months, according to government data. The nation’s biggest lenders reduced their mortgage rates after the central bank cut its benchmark on May 3 to 1.75%.

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

  • The Citizen-Soldier (Brookings)  The author has written a lengthy essay on the moral and ethical dilemmas faced by those in the military.  These, he says, extend to all citizens who are not in the armed forces.  He concludes:

No civilian can assume the moral burdens felt at a gut level by participants in war, but all can show an equal commitment to their country, an equal assumption of the obligations inherent in citizenship, and an equal bias for action. Ideals are one thing—the messy business of putting them into practice is another. That means giving up on any claim to moral purity. That means getting your hands dirty.

  • Why Management Is Incentivized To Fabricate Earnings: It's All About non-GAAP Bonuses (Zero Hedge)  GAAP stands for Generally Approved Accounting Procedures.  When it comes to the stock market, there is no single greater observable divergence right now than that between GAAP and non-GAAP earnings. As the chart below shows, while on a non-GAAP basis earnings have been hurting in recent years, with the LTM EPS of the S&P has declined to 116.4, down from 118.1 as of December 31, 2014, the real surprise is in GAAP EPS, which are back down to 88, a level last seen in 2007 when the market was about 500 points lower.  And, depending on whether one believes in adjusting EPS and giving companies the full credit of addbacks, pro forma numbers, and other various fudges, the P/E of the S&P as of this moment, is either 18x on a non-GAAP basis, or a ludicrous 23.7x if GAAP earnings are used.  What is happening is that executives have been incentivized to "maximize shareholder value" by any tricks available.  The idea that executive pay should be based on stock price has changed the goal of management from building their business to maximizing the extraction that can be stripped from it.  See next article.

  • Shareholder Value Maximization: The World’s Dumbest Idea? (CFA European Investment Conference)  According to James Montier, a distinguished investment professional and behavioural finance writer, shareholder value maximization is “a bad idea.” He believes it has not added any value for shareholders and has contributed to such major economic and social problems as short-termism and rising inequality.  The introduction ends and Montier's presentation starts at 4:20.

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