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What We Read Today 25 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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Topics today include:

  • Education is Failing and Why

  • Resource Limitations Hurt Lowest Economic Classes but The Highest Continue to Grow

  • Millionaires May Bail from Stocks Because of Election

  • What the New GOP Means for Wall Street

  • How Marisa Mayer Earned Her Millions

  • Big Oil Has Lost Upstream Income, Downstream is Next

  • Assessment:  Clinton and Trump on National Security and Foreign Policy

  • Guantanamo:  Another Obama Failure

  • The Fed has Low Cred

  • Munich Bomber was Pledged to Islamic State

  • How Putin Weaponized WikiLeaks

  • China:  No More Independent News on the Internet

  • Rio Olympic Facilities are "Unlivable"

  • And More

Articles about events, conflicts and disease around the world

Global

  • Big Oil's Downstream Upside Is Fading Fast (Bloomberg)   The upstream bit of the major oil companies -- the business of exploring for reserves and producing them -- usually dominates proceedings, the downstream refining, marketing and chemicals operations have moved into the spotlight. The crash in oil prices has sent upstream profits tumbling (see graph below), leaving the downstream businesses to (try to) pick up the slack.  But now, this article asserts, the downstream is also sputtering. Refining and marketing churned out profits last year as the collapse in oil prices spurred extra demand for fuels like gasoline. This year, while hopes for a repeat ran high through much of the first half, they were dashed amid a persistent glut in inventories of refined products and weak margins:.

oil.upstream.profits.2011.2016

U.S.

  • Here’s How Clinton and Trump Stack Up on National Security, Russia, ISIS and More (Defense One)  With foreign policy now central to the 2016 election, the Council on Foreign Relations offers this nonpartisan guide to the candidates’ positions on a range of issues.  Econintersect:  Our summary - Clinton would learn from and extend policies of the past; Trump would increase military, learn from and reject the past to stand alone.  Our question:  Does either one have the best strategy?

  • What the New GOP Means for Wall Street (The Wall Street Journal)  (Econintersect:  Indeed, this article puts the GOP to the left of the Dems on financial regulation, and it points to an apparent dragging of the Democrats back to the left as well.)

The Republican Party of 2016 isn’t the same as the Republican Party of 2012. Its new platform signals investors should be mindful of the differences.

During the primary fight, it became clear Republican voters had become less friendly toward Wall Street, more skeptical of the benefits of trade and less focused on the budget deficit. So even before the GOP convention began in Cleveland this week, it seemed the stocks and sectors that might benefit, or be hurt, by a Donald Trump presidency were probably different than those under a more generic Republican president.

But the platform adopted late Monday shows the breadth of the shifts. Most strikingly, the document supports “reinstating the Glass-Steagall Act”—the Depression-era law, since undone, that separated investment and commercial banking. Restoring Glass-Steagall is a position more typical of liberal Democrats such as Sens.Elizabeth Warren and Bernie Sanders. Indeed, the latest draft of the Democratic Party platform supports adopting “an updated and modernized version” of the act.

  • Bush: 'I'm worried that I will be the last Republican president' (CNN)  Former President George W. Bush fretted to a group of former aides and advisers in April that he was worried he could be the "last Republican president".  The 43rd president's remark, at a gathering in Dallas of his administration's staffers, reflected a dim view of the party's prospects at a time when the primary contest was realistically down to Donald Trump and Texas Sen. Ted Cruz.  Econintersect:  In our opinion, if Trump wins Bush could be right.  Too bad he will probably rank as one of the worst 2 or 3 (or 4?) presidents for the GOP.  However, if Hillary wins the GOP will still have a chance at life.

  • Why Obama has Failed to Close Guantanamo (The New Yorker)  The author says that blaming Congress for keeping the Cuban prison open is not telling the whole story.  Obama may yet close Guantánamo before he leaves office, but his failure to do so in nearly eight years as President has drawn criticism from a vast number of people who otherwise support him: liberals, centrists, officials in his own Administration.  But this article suggests that Obama has simply been "outplayed" by the military.  What will happen if Obama leaves office with Gitmo still open?  It will probably stay open if Hillary wins (she has "vacillated on Guantánamo").  It will definitely stay open if Trump wins, as he will “load it up with some bad dudes”, probably including some Muslim Americans suspected of being ISIS supporters.  Econintersect:  Will Gitmo become a new version of the WWII Japanese detainment camps?

  • Is the Trans-Pacific Partnership President Obama's Vietnam? (TruthOut)  (Econintersect:  Maybe a defeat in terms of political prestige, but certainly not the same as 50,000 American and hundreds of thousands of Vietnamese lives lost.)  From the article:

The prospects for the Trans-Pacific Partnership (TPP) are not looking very good right now. Both parties' presidential candidates have come out against the deal. Donald Trump has placed it at the top of his list of bad trade deals that he wants to stop or reverse. Hillary Clinton had been a supporter as secretary of state, but has since joined the opposition in response to overwhelming pressure from the Democratic base.

As a concession to President Obama, the Democratic platform does not explicitly oppose the TPP. However it does include unambiguous language opposing investor-state dispute settlement mechanisms -- the extra-judicial tribunals that are an integral part of the TPP.

If the political prospects look bleak there also is not much that can be said for the economic merits of the pact. The classic story of gaining from free trade by removing trade barriers doesn't really apply to the TPP primarily because we have already removed most of the barriers between the countries in the pact.

  • Federal Reserve with low credibility gets ready to talk policy (CNBC)   Federal Reserve officials this week likely will point to growing signs that the economy is improving enough that at least one rate hike will be warranted by year's end.   But it might not matter what they say. Investors increasingly are tuning out the central bank.  2016 has been a rough year for monetary policymaking, with the Fed's credibility strained enough that the market has become more prone to take a "we'll believe it when we see it" attitude when it comes to moves in interest rates.

 

UK

  • U.S. trade chief: Too soon to start bilateral UK trade talks (Reuters)  U.S. Trade Representative Michael Froman told his new British counterpart on Monday the two countries cannot launch negotiations on any bilateral trade and investment deals until more is known about Britain's future relationship with the European Union.

Germany

  • Bavarian bomber pledged allegiance to Islamic State: minister (Reuters)  The Syrian who blew himself up in southern Germany, wounding 15 people, had pledged allegiance to Islamic State on a video found on his mobile phone, the Bavarian Interior Minister said on Monday.  On searching the bomber's room, Nuremberg police found diesel, hydrochloric acid, alcohol, batteries, paint thinner and pebbles - the same materials used in the bomb - and computer images and film clips linked to the militant group, they said.

Russia

China

  • China Bans Internet News Reporting as Media Crackdown Widens (Bloomberg)   China’s top internet regulator ordered major online companies including Sina Corp. and Tencent Holdings Ltd. to stop original news reporting, the latest effort by the government to tighten its grip over the country’s web and information industries.  The Cyberspace Administration of China imposed the ban on several major news portals, including Sohu.com Inc. and NetEase Inc., Chinese media reported in identically worded articles citing an unidentified official from the agency’s Beijing office. The companies have “seriously violated” internet regulations by carrying plenty of news content obtained through original reporting, causing “huge negative effects”, according to a report that appeared in The Paper on Sunday.

Brazil

  • Leaky Toilets at Athlete Village Add to Rio 2016 Budget Woes (Bloomberg)   Already strapped for cash, Rio 2016 organizers are now on the hook for last-minute repairs to the athlete village, which at least one arriving delegation has called "unlivable."  When the first contingents from Australia, the Netherlands, Great Britain and the U.S. discovered leaking bathrooms, faulty wiring and unlit common areas in the athlete village, they complained quickly and publicly. Italian delegation head Carlo Mornati described the situation as "chaos." The Australian delegation said the accommodations are uninhabitable, and Argentina expects only three of its five allocated floors will be "liveable." The Netherlands Olympic Committee decided to fly staff to Rio earlier than expected to help deal with the fallout of the problems and to minimize disruption for its athletes.

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

"Our kids are so drowned in disconnected information that it becomes quite random what they do and don’t remember, and they’re so overburdened with endless homework and tests that they have little time or energy to pay attention to what’s happening in the world around them."

So many of us, but not yet enough, keep coming to this conclusion, i.e., that we've systematically thrown out what got us here. It's another FALLACY OF SCALE.

It's easier to train kids if you make 'em sit still & pay attention. 

Therefore, we'll have a 'better' electorate if we make ALL citizens simultaneously sit still & pay attention to the same things. ... Right? :(

Do the distributed negatives counter many of the aggregate benefits? Do we even have the cultural instrumentation to find out?

Is there a better way? Can we have our public initiative and educate it too? 

  • Overly Simple Energy-Economy Models Give Misleading Answers (Gail Tverberg, Our Finite World)  GT has contributed to GEI.  Gail says that we develop models for many uses, without realizing that a simple model may not provide all the information we really need. Many people are convinced that Hubbert's curve is an accurate representation of what energy production we can expect in the future, or that the 1972 Limits to Growth model can be relied on regarding the shape of how the downturn will take place.  She explains why this is not true in this post.  One key factor which emerges from Tverberg's data:  The lowest economic classes are being squeezed by resource limitations while the highest classes continue to prosper:

  • Nervous millionaires may bail on stocks after election (CNBC)  Nearly half of millionaire investors are considering selling some of their stock holdings, and nearly a third may withdraw from the market entirely depending on the results of the presidential election, according to the findings of a new poll.  The survey, conducted by UBS, found that 47% of Americans with at least $1 million in investable assets may reduce their market exposure because of uncertainty over the election. Another 9% have already done so, UBS found.  Depending on the results, a quarter of millionaire investors said they will pull out of the market entirely, and 5% have already done so.  Millionaire investors also continue to hold large amounts of cash. The survey found these wealthy Americans are keeping around 20% of their portfolios in cash, in line with their post-2008 average.  But the millionaires have big disagreements about which outcome is good and which is bad:

  • Marissa Mayer's 9-figure compensation put in perspective (CNBC)   Marissa Mayer has millions of reasons to celebrate her job at Yahoo. The CEO's future may be in question, but she's already earned over $100 million in reported compensation from the search giant over the past four years at the helm. (And that doesn't include the $55 million she's due if she steps down.)  But is "earned" the right word? Verizon's purchase of Yahoo offers a good opportunity to see how Mayer's tenure as CEO compared on a pay-for-performance basis to past Yahoo chiefs.  Econintersect:  Cumulative gains since 2000:

  • Marisa Mayer, 4 years: +147%

  • Carol Bartz, 3 years:  -15%

  • Chih-Yuan Yang, 2 years:  -42%

  • Terry Semel, 5 years:  -12%


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