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What We Read Today 06 August 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:

  • The False Promise of Negative Interest Rates

  • Three Student Loan Crises

  • Why Americans are so Angry

  • America is Third World in Health and Wellness, Basic Nutrition,Environmental Quality and Access to Basic Knowledge

  • Historic Population Losses in Puerto Rico

  • American Gets First Olympic Gold

  • Latest on the Hillary and Donald Show

  • Third Party Scramble for Debate Presence

  • Obamacare Double Digit Increases in New York

  • Russia Inflation Plunges

  • China's Military Actions in South China Sea

  • Brazil's Markets Lead the BRICS Higher

  • And More

Articles about events, conflicts and disease around the world

U.S.

  • As Donald Trump Incites Feuds, Other G.O.P. Candidates Flee His Shadow (The New York Times)  After a disastrous week of feuds and plummeting poll numbers, Republican leaders have concluded that Donald J. Trump is a threat to the party’s fortunes and have begun discussing how soon their endangered candidates should explicitly distance themselves from the presidential nominee.

  • Trump suggests Clinton is 'brainwashed' (The Hill)  Clinton on Friday acknowledged she may have mischaracterized FBI Director James Comey's statements about her truthfulness during the investigation into her email server, saying she may have "short-circuited it".  Trump lunged at the phrasing Saturday, saying it's proof she is not fit to be president.

  • Clinton's lead over Trump narrows to less than three points: Reuters/Ipsos poll (Reuters)  Democratic presidential nominee Hillary Clinton's lead over Republican rival Donald Trump narrowed to less than 3 percentage points, according to a Reuters/Ipsos opinion poll released on Friday, down from nearly eight points on Monday.  About 42% of likely voters favored Clinton, to Trump's 39%, according to the July 31-Aug. 4 online poll of 1,154 likely voters. The poll had a credibility interval of plus or minus 3 percentage points, meaning that the results suggest the race is roughly even.  Econintersect:  This is terrible reporting:  There is just as much a chance that Clinton leads by 6 percentage points as there is the two candidates are even.  That's what +/-3% means.  Even the headline is misleading:  42 to 39 is not less than 3 points difference.  Is Reuter's staff numerically illiterate?

  • Police union: Clinton snubbed us (The Hill)  Top officials at the biggest police union in the country are upset with Hillary Clinton, saying she snubbed them.  The leader of the National Fraternal Order of Police told The Hill that the Democrat sent a signal through her staff that she wouldn’t be seeking the union’s endorsement.  Chuck Canterbury, the president of the National Fraternal Order of Police, said: 

 "It sends a powerful message. To be honest with you, I was disappointed and shocked.  You would think with law enforcement issues so much in the news that even if she had disagreements with our positions, that she would’ve been willing to say that."

  • Third-party candidates in late push for debate stage (The Hill)  Third-party candidates are racing against the clock to meet the threshold to qualify for the presidential debate stage.  The first debate isn’t until Sept. 26 at Hostra University in Hempstead, N.Y., but the campaigns expect a decision on who makes the cut in early September, giving Libertarian Party nominee Gary Johnson and Green Party candidate Jill Stein about one month to hit the 15% national polling threshold.

  • Obamacare users in New York brace for double-digit 2017 premium hikes (CNBC)   Come 2017, thousands of New York's Obamacare users will wake up to double-digit premium hikes, the latest group of consumers affected by Affordable Care Act cost increases as insurers hemorrhage money from healthcare exchanges.  In a statement on Friday announcing 2017 premiums, NY's Department of Financial Services (DFS) said after weighing insurer requests, the state settled on an average hike of 16.6% for individual exchange users in the state, while small group users will see a lower average increase of over 8%.  Overall, about 350,000 individual plan consumers will be affected by the price hike, while more than a million users will be hit by higher small group fees.

  • Rio Olympics Today: The  First Gold Medal Goes to American Shooter Virginia Thrasher  (The New York Times)  The U.S. already has a gold medalist, and it’s a 19-year-old West Virginia University sophomore, Virginia Thrasher.  Thrasher has only been shooting for five years, after she asked her father to take her deer hunting. She was N.C.A.A. champion as a freshman and surprisingly qualified for the U.S. team at the Olympic Trials. 

Russia

China

  • China conducts 'combat patrols' over contested islands (Reuters)  China's air force sent bombers and fighter jets on "combat patrols" near contested islands in the South China Sea, in a move a senior colonel said was part of an effort to normalize such drills and respond to security threats.  The exercises come at a time of heightened tension in the disputed waters after an arbitration court in The Hague ruled last month that China did not have historic rights to the South China Sea.  The air force sent several H-6 bombers and Su-30 fighter jets to inspect the airspace around the Spratly Islands and Scarborough Shoal

Brazil

  • No One Told Brazil Markets That Rio Olympics Would Be a Disaster (Bloomberg)  The gloom surrounding the Olympic Games getting underway Friday in Rio de Janeiro is nowhere to be seen in the country’s financial markets.  Credit risk in the country has been falling (see first graph below); Brazil's stock has led the BRICS, up more than 35% in 2016 (second graph below).

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

Negative interest rates are the latest attempt to overcome the mismatch of incentives for lenders and borrowers. Making it more costly for commercial banks to park their money with the central bank should lower the cost of commercial loans. The calculation is that it will make more sense for a commercial bank to put money into circulation, whether by making loans or buying government and other securities, than to pay the central bank for holding that money.

But, as the World Bank has pointed out, negative rates can have undesirable effects. They can erode bank profitability by narrowing interest-rate margins. They can also encourage banks to take excessive risks, leading to asset bubbles. Lower interest rates on deposits may cause large sections of the economy to become cash-based, while pension and insurance companies may struggle to meet long-term liabilities at a fixed nominal rate.

But, quite apart from these problems, the real case against negative interest rates is the folly of relying on monetary policy alone to rescue economies from depressed conditions. Keynes put it in a nutshell: “If we are tempted to assert that money is the drink which stimulates the system into activity, we must remind ourselves that there may be several slips between the cup and the drink.” His list of “slips” is well worth recalling:

“For whilst an increase in the quantity of money may be expected...to reduce the rate of interest, this will not happen if the liquidity-preferences of the public are increasing more than the quantity of money; and whilst a decline in the rate of interest may be expected...to increase the volume of investment, this will not happen if [profit expectations] are falling faster than the rate of interest; and whilst an increase in the volume of investment may be expected...to increase employment, this may not happen if the propensity to consume is falling off.”

  • the three student loan crises (orgthrory.net)  Hat tip to Mike Konzcal.  The start of this article says that among higher ed policy folks, there’s a counter-conventional wisdom that there is no student loan crisis. For the most part (the story goes), student loans are a good investment that will increase future wages, and students could borrow quite a bit more before the value of the debt might be called into question. Indeed, some have argued that many students are too reluctant to borrow, and should take on more debt.  The author contests this proposition.

  • Why Americans Are So Angry Despite America’s Strong Economy (Harvard Business Review)  The U.S. ranks 4th in the world in GDP per capita but only 19th in social progress, according to the Social Progress Imperative.  Econintersect:  We suggest anything below 35 would rank with developing countries or even approaching third world status.

  • Lyme disease: 'Torturous' symptoms make sufferer feel like her body is 'shutting down' (Express)   A woman who described her battle with Lyme disease is as ‘being in a torture chamber’ said she feels like her body is shutting down.   

  • Historic population losses continue across Puerto Rico (Pew Research Center)  Population losses in Puerto Rico have accelerated in recent years, affecting every corner of the island and continuing the largest outmigration in more than 50 years, according to a Pew Research Center analysis of newly released county-level Census Bureau data.  Among Puerto Rico’s counties that saw the largest population losses between 2010 and 2015 was San Juan, home to the island’s capital city and largest metro area. That county’s population declined by 40,000 people (-10%) to 355,000, by far the largest numeric drop of any county. Nine other counties saw population declines of at least 10% during this time.  Only one of the island’s counties, or municipios, saw a significant population increase between 2010 and 2015: Gurabo, in eastern Puerto Rico, grew by 1,900 people (4%) to 47,000.


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