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What We Read Today 19 July 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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Every day most of this column ("What We Read Today") is available only to GEI members.

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Topics today include:

  • World's Top Coworking Entrepreneurial City is in the Colorado Rockies

  • 8 of 10 Top Coworking Entrepreneurial Cities are in Emerging Markets

  • Puerto Rico's Debt Crisis has Parallels to Payday Loans

  • TSA Inhumanity

  • Democratic Candidates Take Page from Republican Playbook:  Don't Attend Party Convention

  • Detroit Free Press Says Governor's Appointment is a 'Sick Joke'

  • After Brexit Should Brits Recognize They Line on a European Peninsula?

  • Can Italy Avoid Disastrous Bank Bail-ins?  Court Decision Seems to Say So

  • Will China's 'One Belt, One Road' Reshape Global Trade?

  • New Anthropology Research on the Philistines

  • The 25 U.S. Companies that Pay the Best Wages

  • Glass Steagall Repeal Did Us In - A New Discussion

  • Fed's Bias Returns to Tightening

  • And More

Articles about events, conflicts and disease around the world

Global

  • Where To Work? The 10 Best Coworking Spaces On Earth (Forbes)  Any city vying to stand up a tech or innovation hub has to have coworking spaces for budding entrepreneurs, remote workers, and freelancers. Beyond forgoing conventional office spaces and lengthy lease contracts, coworking spaces offer like-minded individuals a sense of community; a place to learn from others; and valuable networking potential. The top city for coworking space in Montrose, Colorado in the heart of the west slope of the Rocky Mountains, near Black Canyon National Park.  That may be a surprise, but an even bigger surprise is that 7 of the remaining 9 cities are in emerging markets.

U.S.

Puerto Rico's Payday Loans by Roosevelt Institute on Scribd

  • Debts Not Payable: Puerto Rico’s Payday Loan Crisis (Roosevelt Institute)  This crisis has been labeled a "payday loan crisis" because of the similarity to the unconscionable interest rates which accrue on such loans.  This article and the preceding one reveal that the unpayable mountain of debt on the books in Puerto Rico is not money that Puerto Rico borrowed but compounded interest on a much smaller amount.  The numbers given are "$4.3 billion" borrowed and "$33.5 billion" interest, much of it still not accrued.  The author points out that amounts to interest of 785%, hence the comparison to payday loans.  In addition, the author claims that

" some of the bondholders who now own the debt bought it for 5% of its face value, but they still want to be paid back the full face value. The reason why they were able to buy the debt at such steep discounts was that the previous bondholders had already written down the loans as bad debt. They did not expect to be paid more than 5% of the principal, so they sold it to vulture hedge funds and other creditors who are now looking to make a large profit of as much as 1,900%."

  • The TSA Descends from Incompetence to Inhumanity (Foundation for Economic Education)  This author claims the incident detailed below is not isolated.  Far too many sick, elderly, and otherwise vulnerable victims have endured similar horrors at American airports. Worse, not all of them have lived to tell about it.  The details of one incident:

Hannah Cohen, 18 years old and severely disabled from a brain tumor, sued the TSA and local cops for beating her bloody. Hannah’s “crime”? She had neither understood nor complied with their orders when trying to board a flight the year before.

In June 2015, Hannah and her mother, Shirley, were returning home from St Jude’s Medical Center. Hannah’s tumor and the radiation treating it have left her “partially deaf, blind in one eye, paralyzed, and easily confused…” Not surprisingly, such “substantial limitation[s are] obvious on sight.” No one could have mistaken Hannah for a healthy passenger as the Cohens approached the Transportation Security Administration’s checkpoint in Memphis, TN.

Hannah wore a shirt with sequins on it. Those metallic bits triggered the TSA's scanner. “‘You could see on the screen what it was pointing out,’ Shirley said. …Agents told Hannah they needed to take her to a ‘sterile area’ where they could search her further. She was afraid, Shirley said, and offered to take off the sequined shirt as she was wearing another underneath, but a female agent laughed at her. … Shirley … [explained to] a supervisor standing nearby. ‘She is a St Jude’s patient, and she can get confused…’” In response, the TSA summoned “’armed guards.’”

Those “guards” grabbed Hannah’s arms, further scaring her. “’I tried to push away,’ she said. ‘I tried to get away.’”

But “…in the next instant,” Shirley recalled, “one of them had her down on the ground and hit her head on the floor. There was blood everywhere…” The heartrending picture Mrs. Cohen snapped of her daughter documents the bloody scene as well as Hannah’s terror and anguish.

In the wake of the Flint water crisis, amid profound concerns over an aging oil pipeline under the Great Lakes, with an ongoing, urgent need to decrease pollution and improve air quality and public health in southwest Detroit, Gov. Rick Snyder has appointed ... wait for it ... a former oil-industry lobbyist, Heidi Grether, to head the state's Department of Environmental Quality.

It's a stunning look into the way the governor views the state's responsibility to protect Michigan's environment, and Michiganders' health.

And in the aftermath of the Flint water crisis, it's like Snyder is rubbing the noses of his constituents in his own mess. The move is astoundingly tone-deaf to Michiganders, who rely on the state's environmental regulatory agency to keep us safe.

UK

  • Brexit and Beyond (Foreign Affairs)  This is a collection of articles about the strange often ambivalent relationship between Great Britain and the continent of Europe.  It is hard to believe that a people with common ancestry are not better "connected".  In the Stone Age, eight and more millennia ago, the British Isles were not islands at all but a peninsula connected to the rest of the continent by a land mass now submerged under the North Sea.  The following graphic is from Wikipedia (click for larger image):

France

Italy

  • Did the European Court of Justice Just Rescue Italy’s Banks? (Yves Smith, Naked Capitalism)  YS has contributed to GEI.  Unlike banks in most other European countries, Italy’s got sick the old fashioned way: by lending to businesses in its own market, and then having the loans go bad, in large measure to how lousy the post-crisis economy has been.  New Euronzone-wide banking rules took effect in January. They require bank bail-ins as the remedy for sick banks, with only narrow exceptions. “Bail-in” means wiping out shareholders, and then wiping out bondholders and converting bondholders to equity holders to the degree necessary to replenish the bank's equity cushion.  That may have changed, there may be more flexibility than initially appeared to be the case - see next article.

  • EU court says bail-in legal but bank rescues need not hit investors (Reuters)  The European Union's top court ruled on Tuesday that junior creditors and investors need not necessarily suffer losses before a bank is rescued, a judgment that could affect Italy's plans to bail out its banks.  The ruling, in a case brought by investors whose savings were wiped out in Slovenia's 2013 rescue of local banks, is crucial to understanding how new EU "bail-in" rules are rolled out across the region.  While the judges in Luxembourg made clear that imposing losses on investors was legally sound, they appeared not to require that this happen automatically.

In a statement, the court said a member state "is not compelled to impose on banks in distress, prior to the grant of any State aid, an obligation to convert subordinated debt into equity or to effect a write-down of the principal of that debt".

But governments and rescued banks "take the risk that there will be a decision by the Commission declaring that aid to be incompatible with the internal market", it warned.

The EU's executive Commission said the court decision would not affect talks with Rome over its plans to pump public funds into Italy's weakest lenders, including Monte dei Paschi di Siena (BMPS.MI), which holds 47 billion euros of bad loans.

Rome wants to rescue its banks while protecting investors, big and small. 

China

  • China’s One Belt, One Road: Will it reshape global trade? (McKinsey)  Post includes a podcast debate, a video summary and the podcast transcript concerning just what China is attempting with its "one belt, one road" trading initiative, likened to a recreation of the "ancient" Silk Road of 700 - 900 yeras ago.  The project is more than just a "trade route" creation; it is an ambitious plan to develop far-reaching regional cooperation.

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

  • Discovery of 3,000-Year-Old Philistine Cemetery May Change History (Ancient Origins)  A team of researchers have unearthed the first known cemetery of the Philistines in southern Israel, which may reveal the origins of the famous Hebrew Biblical villains, who made up one of the tribes of Sea Peoples. Due to the discovery, many answers have finally been found regarding these mysterious people.  A thorough examination of the burials provides further support to the view that the Philistines came from the Aegean Sea region. Moreover, they had very close ties with the Phoenicians.  The burial practices were very similar to those of that time in the Aegean cultures and very different from those of other peoples in the region, such as the Canaanites and highlanders to the east, as well as other Middle Eastern tribes.

  • 25 companies that pay the best wages (Employee Benefit News)  Number 25 is Broadcom with a median total compensation package of $140,000 ($130,000 base).  Number 1 is A.T. Kearney Group (median comp package $167,534 and base $143,620).  Follow link to view slide show.  The list is heavy on technology companies.

  • Repeal of Glass-Steagall Caused the Financial Crisis (James Rickards, U.S. News & World Report)  Hat tip to Rob Carter.  JR has contributed to GEI.  (Econintersect:  Rickards is not the first to point this out.)  He writes:

The oldest propaganda technique is to repeat a lie emphatically and often until it is taken for the truth. Something like this is going on now with regard to banks and the financial crisis. The big bank boosters and analysts who should know better are repeating the falsehood that repeal of Glass-Steagall had nothing to do with the Panic of 2008.

In fact, the financial crisis might not have happened at all but for the 1999 repeal of the Glass-Steagall law that separated commercial and investment banking for seven decades. If there is any hope of avoiding another meltdown, it's critical to understand why Glass-Steagall repeal helped to cause the crisis. Without a return to something like Glass-Steagall, another greater catastrophe is just a matter of time.


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