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What We Read Today 08 September 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 Solution to Homelessness:  Homes

  • Massive Left Over Mortgage Problem from the Bubble

  • Bank Foxes Guarding the Chicken Coop

  • America Has Jobs Open, They are Not Being Filled

  • Climate Change is Changing the World, and Not for the Better

  • History of Terrorism Deaths in the 'West'

  • Wells Fargo Pays for Cheating Customers

  • Fed Wants to Separate Mercantile and Credit Banking

  • Presidential Forum Mess

  • What is Aleppo?

  • How is Planned Parenthood Connected to the Zika Virus?

  • An EU Army?

  • Ghost Cargo Ships May Steal Your Christmas

  • And More

Articles about events, conflicts and disease around the world

Global

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U.S.

  • Wells Fargo will pay $190 million to settle customer fraud case (Reuters)  Wells Fargo will pay $185 million in penalties and $5 million to customers that regulators say were pushed into fee-generating accounts that they never requested, officials said on Thursday.  Econintersect:  Does this sound like racketeering?

  • Fed Urges U.S. Ban on Wall Street Buying Stakes in Companies (Bloomberg)   Goldman Sachs Group Inc. and other banks that invest in companies are officially on notice: The Federal Reserve wants that ability taken away.  Among several recommendations issued by U.S. banking regulators, one from the Fed urged Congress to prohibit merchant banking, in which firms buy stakes in companies rather than lend them money. In a report released Thursday, the agency also pushed for limits on Wall Street’s ownership of physical commodities after lawmakers accused Goldman Sachs and other banks of seizing unfair advantages in metal and energy markets in recent years.  Econintersect:  Sounds like Glass-Steagall is coming back?

  • Hillary Clinton and Donald Trump Self-Destruct at Commander-in-Chief Forum (The Daily Beast)  Econintersect:  This pathetic piece is the best we found on last night's forum.  See also next article.

  • Gary Johnson: 'What is Aleppo?' (CNN)  After Hillary Clinton and Donald Trump attempted self-destructions Wednesday night, Gary Johnson showed how to do it big time on Thursday morning.

  • Ryan refuses to back down on Zika fight over Planned Parenthood (The Hill)  House Speaker Paul Ryan (R-Wis.) on Thursday again dismissed concerns that the GOP’s funding bill to fight the Zika virus intentionally targets Planned Parenthood, even as members of his party call for the controversial language to be removed.  “First of all, there’s no Planned Parenthood [provision] in this bill, and to put an earmark for Planned Parenthood is something that we won’t do,” Ryan said at his weekly briefing.  Ryan’s strong stance against changing the language to appease Democrats comes as Senate Republican leaders inch toward a deal that would likely take the Planned Parenthood fight out of the bill to fund Zika relief altogether.  Several Senate Republicans, as well as multiple House Republicans from Florida, have said this week that they believe GOP leaders should back down from the fight on Planned Parenthood to fast-track Zika efforts in their home state, which has been hit hard by the mosquito-borne virus.

  • There are 2 reasons why millennials are way more confident than older Americans (Business Insider)  The difference in the Conference Board's consumer-confidence index between the young and the old has been widening for years and hit a record high of 58.8 points in June 2016.  The author suggests that this difference might be related to millennials being way farther away from retirement than Baby Boomers.  But Deutsche Bank's Chief International Economist Torsten Sløk had also previously noted the two age groups' difference in outlook:

EU

  • EU reveals plans for military cooperation following Brexit vote (The Guardian)   The EU’s foreign policy chief has outlined her vision of closer European military cooperation following the UK’s vote to leave the union.  Federica Mogherini has proposed setting up a Brussels headquarters for European “battlegroups” capable of mounting military interventions in crises. A headquarters was one of four priority proposals to be presented to EU governments after the Brexit vote, she told Italian newspaper La Repubblica.  EU defense policy remains in the hands of European governments, rather than the EU executive.  While insisting she was not proposing an EU army, Mogherini said the UK’s impending departure had left other EU governments with no excuse for not moving forward on giving the EU a defense capacity. The idea has long been cherished by European federalists, but categorically resisted by London.

Syria

  • Aid groups suspend cooperation with UN in Syria because of Assad 'influence' (The Guardian)  More than 70 aid groups have suspended cooperation with the UN in Syria and have demanded an immediate and transparent investigation into its operations in the country because of concerns the Syrian president, Bashar al-Assad, has gained “significant and substantial” influence over the relief effort.  The coalition, which includes some of Syria’s most widely known aid organizations, told the UN it intends to withdraw from the UN’s information-sharing programme in protest at the way some of its agencies are functioning within the country.

Iraq

  • Iraq gears up for late-year push to retake Mosul from Islamic State (Reuters)  The U.S.-led war on Islamic State has depleted the group's funds, leadership and foreign fighters, but the biggest battle yet is expected later this year in Iraq's northern city of Mosul, where Abu Bakr al-Baghdadi declared his "caliphate" two years ago.  The jihadist insurgents have lost more than half the territory they seized in Iraq and nearly as much in neighboring Syria, but still manage to control their twin capitals of Mosul and Raqqa, symbols of the state they sought to build at the heart of the Middle East.  Military and humanitarian preparations are now in full swing to retake Mosul, the largest city under the ultra-hardline group's control. American troops are establishing a logistics hub to the south, while the United Nations warns of the world's most complex humanitarian operation this year.

South Korea

China

  • Abide with Mao (The Economist)  China still struggles with the legacy of Mao Zedong as summarized by the excerpt below.  For the view of a Chinese American who grew up in China during the reign of Mao, and who lived through a purge that included his family, read this week's article by Frank Li:  Understanding China, Truly!

18 years after the death of Mao Zedong, it was possible for a notable Sinologist to give his book on Chinese reforms the title of “Burying Mao”. And who was to quibble? The point of all the market-led economic change that Deng Xiaoping had promoted seemed to be to put as much distance as possible between his China and the era of Mao’s rule, so full of violence, trauma and human suffering. And yet. With the 40th anniversary of Mao’s death this month, a Sinologist now would think twice before choosing a similar title. “Mao Unburied” is more like it.

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

In the US, studies carried out by Pathways to Housing, US Department of Housing and Urban Development, and the Seattle authorities have all demonstrated that Housing First can reduce homelessness and save money at the same time. Over here in the UK, a report by housing expert Nicholas Pleace estimates that the potential overall savings to public expenditure could be in excess of $20,000 per person each year.

But the problem, as Pleace’s report makes clear, is funding (isn’t it always?). If Housing First is to progress, it’s going to need political will and money behind it. Spending on housing for the homeless is essential if we want to allow this most vulnerable group of people to regain their lives. Public money spent on preventing homelessness should be seen as an investment, not a cost.

  • Art of the lie (The Economist)  Politicians have always played loose with the truth.  But modern social media has taken the "game" to a whole new level.  Have 'fact based' political campaigns been lost forever?

  • Massive Left Over Mortgage Problem from the Bubble (Private communictaion from Keith Jurow)  Keith has tabulated delinquency data from Fitch Ratings to provide the ten worst delinquency status states as of the end of last month.  From 2008 to date mortgages have been 94-96% agency issued (Fannie, Freddie, FHA) so most of the delinquencies are from 2007 and earlier.  Keith advised he is pretty sure they are mostly 2005-2007, as "nearly all the pre-2005 have been liquidated or were refinanced".  Why should we be concerned about this?  These defaulting mortgages amount to about $600 billion, according to Keith, with 1/3 held by institutions (mainly public pension funds, but also insurance companies).  Some hedge funds and bond funds such as those at DoubleLine and PIMCO may also have some exposure, as well as some mortgage REITs.  

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In this last week’s World Finance, reporter Gretchen Cashen highlights Eric Ben-Artzi’s bold gesture in refusing a Whistleblower reward and why he did so, his experience at Deutsche, and the parallels with mine at Citigroup.

Most importantly, it takes a hard look at one of the most egregious issues in government: that of the regulators, most specifically, the Securities and Exchange Commission (SEC). My own experience is indicative of their lack of accountability. When I could not persuade Citigroup’s Board of Directors to conduct an internal investigation of the bank’s financial malpractices, I turned to the SEC.

Turns out it was all in vain, as the 1,000 pages of fraudulent activity I had documented was not only buried, it was locked up. The SEC classified my testimony as “confidential and trade secrets” and has repeatedly refused to release it, despite much of it being public information.

Like Ben-Artzi, I believe, there is an “incestuous” revolving door relationship between Wall Street banks and the regulators. Anyone who leaves the SEC has a ready-made position within the banks or those who support them. As Ms. Cashen says in the article, ”In the years since the crisis, the absence of any significant convictions has come to show the worrying extent of corporate impunity on Wall Street…. Individuals at the highest echelons of “Corporate America” have been largely unaffected by their own financial gambling.”

  • Here Is the Proof that Foreigners Are Not Stealing American Jobs (Foundation for Economic Education)  Foreigners are not stealing American jobs; the jobs are there and Americans simply are not taking them.  There is a well established relationship, called the Beveridge Curve, between the job vacancy rate and the unemployment rate:  the higher the unemployment rate the fewer the number of jobs available (ie, lower job vacancy rate).  Before the Great Recession the data fit the curve defined by the red data points in the graph below.  But after 2010 the data has fit a different curve (blue points) - for every level of unemployment there have been about 25% more jobs available than was the case earlier.  The jobs are waiting but hirees are not coming.  Econintersect:  The author offers possible reasons which simply make no sense because they would only be valid if jobs were not open:

Perhaps growing regulatory burdens and wasteful government spending and borrowing have caused employers to delay hiring plans. Perhaps the sheer complexity or uncertainty regarding regulations has caused hesitancy among employers.


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