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What We Read Today 30 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:

  • 50 Foods You Should Never Eat

  • Americans Getting More Financially Literate - Sort Of

  • Why Some People Will Lose Money with Solar Panels on Their Roofs

  • The $2.8 Trillion Debt Maturity Bubble Possibility

  • Trump Unloads on Clinton; Clinton Hits Trump

  • Why You Shouldn't Trust a Post-Convention Bounce

  • The 50 Worst U.S. Cities to Line In

  • Two Onion Articles on the Candidates

  • Courts Continue to Knock Down Voter Restrictions Laws

  • Terror in Europe:  The New Normal

  • Families Leave Aleppo

  • Is Russia Trying to Control Elections in U.S. and Europe?

  • Venezuela Institutes Forced Labor

  • And More

Articles about events, conflicts and disease around the world

Global

  • Pope condemns 'wave of terror,' urges young people to shun indifference (Reuters)  Pope Francis on Saturday condemned the "devastating wave of terrorism" and war that has hit the world and urged a huge crowd of young people not to be indifferent to the suffering of others.  The pope, who ends his five-day trip to Poland on Sunday, made an unscheduled stop at the church of St. Francis of Assisi in Krakow to recite a prayer for peace.

U.S.

  • Trump unloads on Clinton after speech (The Hill)  Donald Trump attacked Hilary Clinton with a rapid-fire string of tweets moments after her speech at the Democratic National Convention Thursday night.  "Hillary's refusal to mention radical Islam, as she pushes a 550% increase in refugees, is more proof that she is unfit to lead the country," Trump tweeted minutes after Clinton wrapped up her speech accepting the Democratic presidential nomination.  He hit Clinton repeatedly for being soft on terror, a favorite attack by Republicans.  The GOP nominee added that Americans’ "way of life is under threat by Radical Islam and Hillary Clinton cannot even bring herself to say the words."  Clinton faced protests during her speech, though they were frequently drowned out by chants of "Hillary."   Trump also hit Clinton over her role in the Obama administration, saying, "Hillary's wars have unleashed destruction, terrorism and ISIS across the world."

  • Clinton to hit Trump over outsourcing on Rust Belt bus tour (The Hill)   Democratic presidential nominee Hillary Clinton will hit on Donald Trump on outsourcing jobs and promote her own job-creation plan during a bus tour through Pennsylvania and Ohio.  Clinton and running mate Sen. Tim Kaine (D-Va.) will outline their proposals to bolster U.S. industry, according to a Clinton aide. They'll also knock Trump’s history of manufacturing products sporting his name in foreign countries, not the U.S.

  • Why You Shouldn't Necessarily Trust the Convention Bounce (Bloomberg)  Trump's claim of enjoying “one of the biggest bounces in decades" is overstated—and most convention bounces are deceptive.

  • WikiLeaks grabs election spotlight (The Hill)  The anti-secrecy organization WikiLeaks is making its presence felt in the presidential election, leaking a trove of stolen Democratic National Committee (DNC) emails last week that rocked the political world.  The emails released by WikiLeaks created a political storm for the Democratic Party, seemingly validating suspicions of Bernie Sanders and his supporters that the DNC worked against his candidacy. DNC Chairman Debbie Wasserman Schultz (U.S. Rep. - Fla.) was forced to resign.  The furor has put the national spotlight on WikiLeaks, a site that claims to be:

“a giant library of the world’s most persecuted documents,” [specializing] in “the publication of large datasets of censored or otherwise restricted official materials involving war, spying and corruption.”

  1. Miami, FL

  2. Detroit , MI

  3. Patterson, NJ

  4. Hawthorne, CA

  5. Fall River, MA

  • Trump Sick And Tired Of Mainstream Media Always Trying To Put His Words Into Some Sort Of Context (The Onion)

  • Hillary Clinton: ‘When I Was A Child, Most Special Interest Groups Wouldn’t Even Consider Donating Large Sums Of Money To A Woman’ (The Onion)

  • Courts strike blows to GOP voter restrictions in 3 states (Associated Press)   Courts dealt setbacks on Friday to Republican efforts in three states to restrict voting, blocking a North Carolina law requiring photo identification, loosening a similar measure in Wisconsin and halting strict citizenship requirements in Kansas.  The rulings came as the 2016 election moves into its final phase, with Republican Donald Trump and Democrat Hillary Clinton locked in a high-stakes presidential race and control of the U.S. Senate possibly hanging in the balance. North Carolina is one of about a dozen swing states in the presidential race, while Wisconsin has voted Democratic in recent presidential elections and Kansas has been solidly Republican.  The decisions followed a similar blow earlier this month to what critics said was one of the nation's most restrictive voting laws in Texas. The New Orleans-based U.S. 5th Circuit Court of Appeals said Texas' voter ID law is discriminatory and must be weakened before the November election.  On Friday, a three-judge panel of the Virginia-based 4th Circuit Court of Appeals blocked North Carolina's law that limited to six the number of acceptable photo IDs. The law also curtailed early voting and eliminated same-day registration.

The court said the North Carolina provisions targeted African Americans with "almost surgical precision."

EU

  • Europe on the edge: The new normal (CNN)  The attacks in Belgium, France and Germany amplify anxieties over Brexit, Frexit, an unraveling of an order dictated by the European Union.  The fabric of cohesion offering peace, prosperity and security patiently woven over decades suddenly feels like a paper bag in a summer storm. Ready to rip.

Turkey

  • Turkey-PKK conflict: Dozens killed in south-east clashes (BBC News)  The Turkish military has killed 35 Kurdish militants who tried to storm a base in the south-east, officials say.  The overnight attack, in the Cukurca district of Hakkari province near the Iraqi border, came hours after clashes between soldiers and militants left eight soldiers dead in the area.  A ceasefire between Turkey's military and the banned Kurdistan Workers' Party (PKK) broke down in July last year.  The army is reeling from a huge purge following a coup attempt two weeks ago.

Syria

  • Syria conflict: 'Families leave' besieged Aleppo (BBC News)   Dozens of families have left besieged eastern areas of the city of Aleppo along a humanitarian corridor, Syrian state media says.  The civilians boarded buses and were taken to temporary shelters, state news agency Sana said.  Some rebels had also surrendered to government forces, the report said.  Russia, an ally of the Syrian government, announced on Thursday that four exit corridors would be opened in Aleppo for civilians and rebels.  The move was welcomed cautiously by the UN, the US and some aid agencies.

Russia

  • Is Russia trying to influence U.S. election? (CNN)  In Germany, Chancellor Angela Merkel has reportedly ordered her intelligence agencies to investigate a possible Kremlin-led campaign to destabilize and weaken her government, focusing mostly on a media disinformation campaign.  Others are alarmed as well:

The Hungarian consultancy Political Capital, meanwhile, has been tracking the Kremlin's alleged ties with mostly far-right political parties across Europe. It has identified strong support from Moscow for France's radical anti-EU, anti-immigration National Party. Russian-owned banks have helped finance FN's work, even as Marine Le Pen supports Putin's actions before European audiences. (Le Pen, incidentally, is leading in early polls for the French presidential race).

Political Capital also says it has found evidence of the Kremlin's efforts to alter the political balance in Hungary, Slovakia and Greece. Hungary's powerful far-right Jobbik party, it says, has become an "uncritical servant" of "the current Russian regime's interests." 

The review reflects mounting concerns in Washington over Moscow’s determination to exploit European disunity in order to undermine NATO, block US missile defence programmes and revoke the punitive economic sanctions regime imposed after the annexation of Crimea.

The US move came as senior British government officials told The Telegraph of growing fears that “a new cold war” was now unfolding in Europe, with Russian meddling taking on a breadth, range and depth far greater than previously thought.

Venezuela

  • Venezuela calls for mandatory labor in farm sector (CNBC)  The government of Venezuela has issued a decree that "effectively amounts to forced labor" in an attempt to fix a spiraling food crisis, according to a new report from Amnesty International.  A Venezuelan ministry last week announced Resolution No. 9855, which calls for the establishment of a "transitory labor regime" in order to relaunch the agricultural and food sector. The decree says that the government must do what is "necessary to achieve strategic levels of self-sufficiency", and states that workers can be forcefully moved from their jobs to work in farm fields or elsewhere in the agricultural sector for periods of 60 days.

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

  • 50 Foods You Should Never Eat (Rodale Press, MSN News)  Problems cited arise from genetic modifications, components that don't exist in nature (including modified oils and artificial colorings and flavors), unnaturally high levels of high-fructose sweeteners, artificial sweeteners, food which contacts bisphenol-A (BPA) plastics (a synthetic estrogen), sprouts of any kind (high incidence of bacterial contamination), chicken wings (multiple days of fat per serving), many non-organic foods (high levels of pesticides), butter-flavored popcorn (disease causing additives) and 40 more foods we didn't get to yet.  Econintersect:  Makes our editor thankful that he  had little to eat in the first 12 years of life that wasn't grown on a family farm operated by his parents, even though many of the problems identified are new over the most recent decades.  In this Rodale article each problem food is accompanied by non-problem alternative suggestions. 

  • Americans’ Financial Capability Growing Stronger, but Not for All Groups: FINRA Foundation Study (Financial Industry Regulatory Authority)  Hat tip to Barry Ritholtz, The Big Picture.  One important detail:  Americans do not appear to be getting smarter about financial issues - see graphic below.  Among the study's most significant findings (data is available by state in the full report):

  • More than one in five Americans (21%) have unpaid medical debt, and women are more likely than men to put off medical services due to cost, such as seeing a doctor, buying needed prescriptions or undergoing a medical procedure;

  • Nearly half of respondents with a high school education or less could not come up with $2,000 in 30 days in the event of an emergency (45%) compared to only 18% for respondents with a college degree;

  • Of 18 to 34-year olds with a mortgage, 29% have been late with a mortgage payment, compared with 7% for the 55+ age group;

  • Hispanics and African-Americans are much more likely to use high-cost forms of borrowing like pawn shops and payday loans compared to whites—39% for African-Americans, 34% for Hispanics and 21% for whites; and

  • Only 37% of respondents are considered to have high financial literacy, meaning they could answer four or more questions on a five-question financial literacy quiz—down from 39% in 2012 and 42% in 2009.

financial.literacy.2016.jul.30

  • Why Home Solar Panels No Longer Pay in Some States (The New York Times)  As more widespread use of rooftop solar panels became implemented, regulators started changing the rules for charging for electricity from the grid and for paying homeowners for excess power they sold back to the grid.  The basic idea behind these moves was to minimize rates paid by the largest number of customers.  Part of that formula is to assure that utilities continue to be profitable.  Such reasoning has led some regulators to essentially issue rulings that make owners of solar panels subsidize operation of the electrical grid.  As a result, for some who have installed panels on their roofs, they will never get their costs returned.  They have ended up subsidizing the lower rates paid by their many neighbors who did not install solar panels.  Econintersect:  As we have reported before, another factor arrayed against rooftop solar is the economy of scale for solar farm production of electricity which can be as much as 50% less than distributed rooftop panels.  See, for example, Comparative Generation Costs of Utility Scale and Residential-Scale PV in Xcel Energy Colorado’s Service Area (The Brattle Group)

rooftop.vs.utility.solar.costs

  • Shared National Credits Program 1s t Quarter 2016 Review (Federal Reserve Board of Governors)  The SNC Program assesses credit risk and trends as well as risk management practices associated with the largest and most complex credits shared by multiple regulated financial institutions. The program provides for uniform treatment and increased efficiency in shared credit risk analysis and classification.  Econintersect:  After reading the executive summary below and looking at the two graphics below that, we see that there appears to be a risk bubble peaking 2018-2020.  This probably will not be a significant issue for the banking sector provided the loans "in the blue" stay there.  But if there is a recession between now and 2020, and if the price of oil remains depressed much below $50 for much of the next 3 1/2 years what is "passing" now may not be so well situated when the  maturity bubble peaks.  There is more than $2.8 trillion debt maturing in the years 2018-2020 so there is a lot of potential toxicity in a significant economic downturn.  The executive summary:

The level of adversely rated (i.e., special mention2 and classified3 ) assets in the SNC portfolio continues to be higher than observed in previous periods of economic expansion (see Exhibit 3), leading to concern that losses could rise considerably in the next downturn. The high level of credit risk stems from a large share of risky leveraged finance loans underwritten based on weak practices, and the significant decline in oil prices since mid-2014 that has reduced the repayment capacity of obligors in the oil and gas (O&G) sector. Notwithstanding the riskiness of the existing portfolio, the agencies noted improved underwriting and risk management practices related to the most recent leveraged loan originations as underwriters continued to better align practices with regulatory expectations, and as investor risk appetite moderated away from transactions at the lower end of the credit spectrum.

risky.loan.issuance.trend

maturity.profile.risky.loans


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