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.
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Topics today include:
Global Cross Asset Correlations are Rising
Energy Consumption by Fuel Source 1950 - 2040
EIA Projects Slower Fossil Fuel Reductions for Next 25 Years than for Last 50
Fossil Fuels are Subsidized by More than $5 Trillion per Year
Key Facts on More than 60 Million Refugees
Why Automation Impact on Employment May Be Overestimated
A Big Hole in Obamacare - No Insurers for Some Markets was Not Envisioned
Poland Wages are Rising
U.S. Backed Coalition Mistakenly Attacks Syrian Army
Mexican Peso Drops to New Low
Articles about events, conflicts and disease around the world
Fossil fuels subsidized by $10m a minute, says IMF (The Guardian) ‘Shocking’ revelation finds $5.3 trillion subsidy estimate by the International Monetary Fund (IMF) for 2015 is greater than the total health spending of all the world’s governments. The vast sum is largely due to polluters not paying the costs imposed on governments by the burning of coal, oil and gas. These include the harm caused to local populations by air pollution as well as to people across the globe affected by the floods, droughts and storms being driven by climate change. See How Large Are Global Energy Subsidies? (IMF) Correcting this would be difficult because cost to consumers is large. (Econintersect: At least initially - this is a static study and does not include futute consumer savings directly but only as "welfare" gains.) The first graphic below shows a projection of how much fossil fuel costs to consumers would rise if environmental damage were included in the price and how much demand for fossil fuels would decline. The second graphic shows the distribution of unrecognized costs in current prices (the subsidies) for each source. Coal and petroleum are the "big boys".
The losses in consumer surplus, indicated by the area to the left of the demand curve between Pe and Pr, can be large relative to the net welfare gains. This suggests that subsidy reform could potentially lead to a large redistribution of welfare, which may be why it has proven to be so difficult in practice.
Key facts about the world’s refugees (Pew Research Center) With the number of displaced people in the world at more than 60 million in 2015 – a total that counts both those living inside and outside of their home countries – the plight of refugees has gained new prominence as countries, including the U.S., have taken in displaced people. To address the issue, the United Nations General Assembly will host a summit on refugees and migrants on Sept. 19, and President Barack Obama will hold his own Leaders’ Summit on the topic the following day.
Conway: After 4 Days' Rest, Hillary Comes Out With the Same Negativity (Fox News) Tonight on Hannity, Donald Trump's campaign manager contrasted her candidate with Hillary Clinton. She said the former secretary of state didn't perform well at last week's Commander in Chief Forum, describing her as "very defensive, a bit off-kilter, little bit angry."
"She got seven questions, Donald Trump got 16. You know why? Because her answers are so lengthy and lawyerly. His are very concise and confident."
Canary in the Obamacare Coal Mine (Cato Institute) An example is presented of a county in Arizona where there is no longer any carrier offering insurance under Obamacare. Under the ACA these people are still required to have insurance or pay a penalty even though there are no longer any subsidies available for them based on income.
East Europe on Alert to Old Foe as Wages Jolt Central Banks (Bloomberg) Like central banks elsewhere, policy makers in eastern Europe haven’t been too adept at fighting deflation. A burst of wage growth suggests they may not have to worry about that much longer. A bonanza for workers among the former communist members of the European Union has sent paychecks soaring at a pace unseen for years, with Romanian salaries growing faster than 10% for nine months. Average gross wages in Poland, the EU’s biggest eastern economy, jumped 4.7% from a year earlier in August, near a four-year high of 5.3% in June, data from the Warsaw-based statistics office showed. For Morgan Stanley, that signals inflation risks in the region are “skewed to the upside” for the first time since 2013.
'Coalition raid' hits Syria army as truce wavers (AFP, MSN News) Air strikes blamed by Moscow and Damascus on the US-led coalition hit a Syrian army position in the east Saturday, killing dozens of soldiers, the Russian army and a monitor said. American officials said the US-led coalition fighting the Islamic State (IS) group in Syria may have hit Syrian military positions. A Pentagon statement said, using an Arabic acronym for the IS group:
"Coalition forces believed they were striking a Daesh fighting position. The coalition air strike was halted immediately when coalition officials were informed by Russian officials that it was possible the personnel and vehicles targeted were part of the Syrian military."
Other Scientific, Health, Political, Economics and Business Items of Note - plus Miscellanea
Rising cross-asset correlations = macro traders' market (Twitter) Worth Wray advises the chart is from Morgan Stanley (no link provided). Econintersect: Unusually high cross asset correlations have been associated with crashes. This is occasional, not often. We haven't done exhaustive research, but we think it may be a necessary condition. We have seen emough to be sure it is not a sufficient condition - evidence in that regard is shown in this graph.
Energy Consumption by Fuel Source, 1949-2040 (Twitter) MJP has contributed to GEI. Econintersect: Using the graph for estimates: Fifty years from 1965 to 2015 fossil fuel usage declined by an average of just over 0.2% a year; From 2015 to 2040 projection is just under 0.2% a year for 25 years. Is it credible that rate of reduction of fossil fuels will actually slow slightly over the next 25 years?
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