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What We Read Today 28 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".).


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

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Topics today include:

  • Amazon Blows Away Earnings and Revenue Estimates

  • What Keeps Monsanto's Technology Chief Awake at Night?  And What Should?

  • Get Ready for Some Cheap Pork Chops

  • Deutsche Bank Says We Should Give Up Hope of Economic Growth (Is This Peak Despair?)

  • Helicopters to the Rescue?

  • Bank of Japan May Give  Hint on the Next Stage Tomorrow

  • Oil Refiners Have Worked Themselves Out of Business

  • Republicans and Democrats Have Big Disagreements on Trade

  • Russia to Trump:  Sort Out Your Own Mess

  • Russia and China to Conduct Military Exercises in the South China Sea

  • And More

Articles about events, conflicts and disease around the world


  • Deutsche Bank: Not Even Fiscal Stimulus Will Save Global Growth (Bloomberg)   While monetary policy may be at — or beyond — the limits of its usefulness in stoking global growth, economists at Deutsche Bank AG say fiscal stimulus is unlikely to be much more effective. At least, not the kind that is politically possible.   The fight against sluggish growth rates and low inflation has seen central banks from Europe to Japan buy up swaths of the bond market, and experiment with negative interest rates. Yet with growth still stubbornly slow, these efforts are seen either as ineffective or counterproductive, spurring calls for more active fiscal policy, whether it take the form of tax cuts or 'helicopter money' transfers to the private sector.  See next article.

  • Helicopter Money: Why Some Economists Are Talking About Dropping Money From the Sky (The New York Times)   For years, central banks have been doing everything they can think of to try to get higher inflation and stronger growth. The next step just may be a metaphorical helicopter, high above Tokyo.  The Bank of Japan meets Friday to decide on the next steps in its long battle against deflation, or falling prices — and may well pursue some coordinated effort with the Japanese government using an idea with a long historical lineage.  (See next article.)

  • What tools does the Fed have left? Part 3: Helicopter money (Ben Bernanke, Brookings Institute)  Bernanke says the idea started with an allegory by Milton Friedman in 1969 (Optimum Quantity of Money).  Bernanke calls 'helicopter money' to be 'presumably the last resort' of monetary policy.  Bernanke defines the helicopter process thusly (which is effectually equivalent to the Treasury issuing a $100 billion platinum coin):

... a “helicopter drop” of money is an expansionary fiscal policy—an increase in public spending or a tax cut—financed by a permanent increase in the money stock. [4] To get away from the fanciful imagery, for the rest of this post I will call such a policy a Money-Financed Fiscal Program, or MFFP.

To illustrate, imagine that the U.S. economy is operating well below potential and with below-target inflation, and monetary policy alone appears inadequate to address the problem. [5]Assume that, in response, Congress approves a $100 billion one-time fiscal program, which consists of a $50 billion increase in public works spending and a $50 billion one-time tax rebate. In the first instance, this program raises the federal budget deficit by $100 billion. However, unlike standard fiscal programs, the increase in the deficit is not paid for by issuance of new government debt to the public. Instead, the Fed credits the Treasury with $100 billion in the Treasury’s “checking account” at the central bank, and those funds are used to pay for the new spending and the tax rebate. Alternatively and equivalently, the Treasury could issue $100 billion in debt, which the Fed agrees to purchase and hold indefinitely, rebating any interest received to the Treasury. In either case, the Fed must pledge that it will not reverse the effects of the MMFP on the money supply


  • Here's Why It's All Downhill for Oil Refiners (Bloomberg)  As earnings season gets into full swing, a casual glance at the fundamentals shows there is little for refiners to be excited about. Excessive production in the first half on the back of wider margins has resulted in a glut of refined product that is now coming back to bite. Whatever numbers are issued, it is likely to be all downhill from here.

  • Exclusive: Billionaire Republican donors urge Kochs to back Trump (Reuters)  A group of at least six wealthy Republican donors is urging the billionaire Koch brothers to step off the sidelines of the U.S. presidential election to back Donald Trump, arguing they will want influence with the New York businessman they have harshly criticized if he wins the White House in November.  The financiers, prominent members of the sprawling 700-member Koch donor network, have been making their case in emails and phone calls to Charles and David Koch ahead of their bi-annual donor seminar, which begins Saturday in Colorado, according to four donors involved in the loosely-coordinated effort and advisors representing two others.  The Kochs have been railing against Trump's "monstrous" rhetoric and protectionist policies on immigration and trade. They have said they will not get involved in the presidential election and will instead focus on Senate races.

  • Republicans Get Behind Trump, But Not All of His Policies (The Chicago Council on Global Affairs)  Here are the leading Republican positions highlighted on globalization (compare to Democrats, next article):


  • Russia to U.S., Trump: Sort out your own pre-election hacking scandal (Reuters)  Russia told the United States on Thursday to get to the bottom of a hacking scandal involving Democratic Party emails itself and rejected what Donald Trump said was a sarcastic suggestion that Moscow should dig up Hillary Clinton's "missing" emails.  Trump, the Republican Party's presidential candidate, angered Democrats on Wednesday by inviting Russia to unearth tens of thousands of emails from rival Clinton's tenure as U.S. secretary of state.


  • Under government pressure, Bank of Japan mulling specific steps for easing: Sources (CNBC)  The Bank of Japan, under pressure from the government, is considering specific steps for expanding monetary stimulus on Friday to address signs of weakness in inflation, people familiar with the central bank's thinking said.  By timing its action with the government's big fiscal spending package, the bank would aim to maximize the boost of its measures on the world's third-biggest economy, which is struggling to escape decades of deflation, the sources said.  See the discussion on this under Global, above.


  • China says to hold drills with Russia in South China Sea (Reuters)  China and Russia will hold "routine" naval exercises in the South China Sea in September, China's Defense Ministry said on Thursday, adding that the drills were aimed at strengthening their cooperation and were not aimed at any other country.  The exercises come at a time of heightened tension in the contested waters after an arbitration court in The Hague ruled this month that China did not have historic rights to the South China Sea and criticized its environmental destruction there.  China rejected the ruling and refused to participate in the case.

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



  • This is the problem that keeps Monsanto's technology chief up at night (Business Insider)  While the technology used to create genetically modified crops has gotten dramatically better over the last 30 years, public perception can't get much worse. In a recent reputation ranking of the 100 most visible companies in the US, Monsanto — the king of GMO tech — landed in 96th place, sandwiched between companies like Goldman Sachs, BP, and Halliburton.  Robb Fraley, Monsanto's CTO, says this ongoing issue with gaining the public's approval is constantly on his mind.  Econintersect:  Perhaps what should be keeping him awake is loss of genetic diversity and reduced hybrid vigor.

  • Chart: Lean hogs futures; US wholesale pork prices down 7.4% in a week (Walter Kurtz, Sober Look, Twitter)  What is down 20% in a month?  Econintersect:  Looks like unhedged hog farmers won't be buying any new cars this year.


  • Amazon earnings: $1.78 per share, vs expected EPS of $1.11 (CNBC)  Amazon shares swung higher after the retail giant posted its fifth-straight period of profitability, and handily beat Wall Street's forecasts.  The online retailer reported earnings per share of $1.78 adjusted, easily sweeping past expectations for $1.11, according to a Thomson Reuters consensus estimate. Revenues came in at $30.4 billion, also beating forecasts of $29.55 billion.  That compared with net income of $92 million, or $0.19 per diluted share, in second quarter 2015.

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