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What We Read Today 23 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".).


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

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Topics today include:

  • The Second Automotive Revolution

  • Twitter May be Bought Out

  • The Most Underrated Jobs

  • Hillary's Huge Estate Tax Gambit

  • Why Hillary's Estate Tax Hike Would Not Increase Taxes

  • Rural America is Vanishing - Not the Land, The People

  • Oil Slumps on Diminished OPEC Meeting Prospects

  • The Fed Holds Tight, The World Lowers Rates

  • Cruz Endorses Trump

  • Dakota Pipeline Operator Has Bad Spill History

  • Millenials Have Serious Retirement Challenges

  • Jim O'Neill Resigns UK Treasury Post and Tory Whip Position

  • Bernie Sanders' Brother Seeks David Cameron's Parliament Seat

  • Killed in Aleppo Last Night - You Won't Forget this Picture

  • Local Governments Cook FDI Books in China - Perverse Nature of Performance Incentives

  • China Sees Increased Real Estate Development Investment

  • Colombia's FARC Ends 5-Decade Civil War

  • And More

Articles about events, conflicts and disease around the world


  • Oil slumps 4% on report Saudis do not see output deal (CNBC)   Oil prices fell 4% on Friday, paring weekly gains, on a report that Saudi Arabia did not expect an agreement at talks next week among major crude exporters aimed at freezing production.  Crude futures slumped after Bloomberg reported that Saudi Arabia did not expect a decision at Algiers, the capital of Algeria where the biggest oil producers are expected to convene next week for talks, traders said. Bloomberg cited a "delegate" as source, said traders who saw the report.

  • The Morning After:  World Sovereign Yields Mostly Decline after Fed Holds Tight (Confounded Interest)   The morning after The Federal Reserve held tight on raising their key rate, the Fed Funds Target rate (which has only been raised ONCE since 2006 and that was at last December’s FOMC meeting) and most global yields declined.  The implied probability of an interest rate change remains about 60% for the December meeting, according to Fed Funds Futures data.  For example, the German 5-year bund declined 5 bps to -0.056%.



My goal is to achieve a long and durable recovery – a sustainable expansion. For the reasons articulated above, I believe a significant overshoot of the full employment level could shorten, rather than lengthen, the duration of this recovery.

It is important to note that even with a gradual increase in interest rates, monetary policy’s stance would be accommodative and as such would lead to further improvement of labor market conditions. This would allow policymakers to continue testing to find the level of full employment – but gently, not sharply.

As a result I am arguing for modest, gradual tightening now, out of concern that not doing so today will put the recovery’s duration and sustainability at greater risk, by generating the sorts of significant imbalances that historically have led to a recession.

  • In reversal, Cruz endorses Trump (The Hill)  Sen. Ted Cruz (R-Texas) has endorsed Donald Trump for president, a stunning reversal after Cruz for months refused to back the GOP presidential nominee.  Cruz wrote in a Facebook post:

 “Our country is in crisis. Hillary Clinton is manifestly unfit to be president, and her policies would harm millions of Americans. And Donald Trump is the only thing standing in her way,” 

  • Sunoco, behind protested Dakota pipeline, tops U.S. crude spill charts (Reuters)   Sunoco Logistics (SXL.N), the future operator of the oil pipeline delayed this month after Native American protests in North Dakota, spills crude more often than any of its competitors with more than 200 leaks since 2010, according to a Reuters analysis of government data.  The lands of the Standing Rock Sioux Tribe sit a half mile south of the proposed route of the Dakota Access pipeline. The tribe fears the line could destroy sacred sites during construction and that a future oil spill might pollute its drinking water.  A tribal protest over the $3.7 billion project drew broad support from other Native American tribes, domestic and international environmental groups and Hollywood celebrities.  In response to the tribe's objections, the U.S. government earlier this month called for a temporary halt to construction along a section of the 1,100 mile line in North Dakota near the Missouri River.

  • BOOM! Clinton just threw Trump a softball with her whopping 65% tax rate (CNBC)  This article doesn't think much of this idea.  However, it probably would have little impact on taxes collected - see item in last section, below.

Clinton's campaign just issued a press release calling for a whopping new top rate of 65 percent on the richest estates and 50 percent or 55 percent on smaller estates. Clinton had previously been backing a top rate of 45 percent, so this is a major shift.

Why would she do such a thing just 47 days before the election?

It's a clear sign that she's trying to rally her party's growing progressive base by chasing that Bernie Sanders/Elizabeth Warren train as it pulls out of the station.

She did successfully rally a base — but it was Trump's base rallying against such a ridiculous idea!

Such a massive estate-tax hike would wreak havoc among many small and medium-sized business owners who don't have the means or don't qualify for the many loopholes available to the richest Americans. But Clinton is clearly not interested in their votes. This is all about trying to win over the Sanders/Warren voters.

  • N.Y. Fed lowers outlook on U.S. GDP growth for third and fourth quarters (Reuters)  The New York Federal Reserve on Friday lowered its forecast on U.S. economic growth in the third quarter and fourth quarters from what it estimated a week earlier following weaker-than-expected housing starts data for August.  The regional central bank said it saw gross domestic product in the third quarter growing at 2.26% on Sept. 20, compared with 2.38% as of Sept. 16. It downgraded its fourth-quarter GDP outlook to 1.22% from 1.37%.

  • Oil price rebound could create headaches for bankrupt drillers (CNBC)  Higher oil prices would threaten bankruptcy deals worked out to date.  Most oil producers would welcome higher crude prices, after a two-year downturn has pushed more than 100 U.S. energy companies into bankruptcy. But for some distressed drillers, a rebound could actually make things worse.  Throughout the rout in oil prices, senior lenders have largely been able to dictate the terms of energy bankruptcy proceedings as drillers' assets have fallen in value. But when oil prices rise, so does the value of a company's reserves. That can in turn can prompt so-called junior creditors to challenge restructuring plans in a bid to get a bigger piece of what's left of the pie.

  • Overcoming the Unique Retirement Challenges Facing Millennials (Advisor Perspectives)  The author points out the obvious:  The millennial generation is the first to be burdened with substantial college loan debt.  But after that there are more serious obstacles to successful retirement planning.  Two graphics are telling:


  • Jim O'Neill resigns Treasury post and Tory whip (The Guardian)   Jim O’Neill, the former Goldman Sachs chief economist, has stepped down as a Treasury minister and resigned the Conservative whip amid reported tensions over Theresa May’s approach to China.  The high-profile businessman was given a peerage and appointed to George Osborne’s Treasury team last year with responsibility for the “northern powerhouse” project.  He is known for coining the phrase “BRICS”, an acronym for the emerging economies of Brazil, Russia, India, China and South Africa.  However, he resigned his post as commercial secretary to the Treasury on Friday without giving a reason for his departure, apart from saying he had successfully completed a review of antimicrobial resistance, which he started before he was a minister.

  • Bernie Sanders' brother to fight David Cameron's seat for Green party (The Guardian)  Larry Sanders, the older brother of Democrat politician Bernie Sanders, is hoping to emulate his sibling’s success by standing for the Green party in David Cameron’s Oxfordshire seat.  Bernie Sanders gave Hillary Clinton an unexpectedly tough fight in the Democratic presidential primaries, riding a wave of idealism among a predominantly young voter base.  Now his brother Larry, 82, a former social worker and Green party councillor, plans to attempt a similar feat for the Greens in the byelection for the rock-solid Conservative constituency of Witney.  It will be a tall order. To become MP for Witney, he would have to overturn Cameron’s 22,700-vote majority in a seat where the last Green candidate won just 5.1% of the vote.



  • Cooking the books on FDI: fraud ring shows depths officials will descend for almighty growth (South China Morning Post)  At least 31 local governments in Huaian, Jiangsu province, cooked the books on foreign investment inflow levels to meet unrealistic targets set by higher-level governments, according to reports from mainland media.  The fraud underlines the mindset still prevalent among lower officials that GDP growth must be achieved at all costs.

  • Upbeat data point to August recovery (The Economist)  On September 13th the National Bureau of Statistics released data for industrial production, fixed-asset investment (FAI) and retail sales. The most upbeat data came from the increase in real estate development investment.



  • Colombia's FARC ratifies peace accord to end five-decade war (Reuters)  Colombia's FARC rebel group voted unanimously to approve a peace deal with the government and form a new political party, a top commander said on Friday at the close of a guerrilla congress on the southern Yari Plains.  After four years of negotiations in Havana, the government and the Revolutionary Armed Forces of Colombia reached a final peace accord last month that will end a five-decade war that has left a quarter of a million people dead.  As part of the agreement, the FARC will continue to push for social change as a political party, receiving 10 unelected seats in congress until 2026. The leadership of the FARC has so far been coy on policy details but are expected soon to transition to a party rooted in Marxist ideals.

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

  • The Second Automotive Revolution is Coming (Peter J. Treadway, The Dismal Optimist)  This is an excellent review of the second automotive revolution, with comparison the the first (1864-1930).  There will be new joint ventures plus corporate mergers and acquisitions as we move from the cars of today to a ubiquitous autonomous (driverless) car lifestyle.

  • Twitter may soon get formal bid, suitors said to include Salesforce and Google (CNBC)  Twitter shares surged Friday after sources said the ailing social media company moved closer to being sold.  The sources said the company has received expressions of interest from several technology or media companies and may receive a formal bid shortly.  The potential suitors reportedly include Google  and, among other technology companies.  Twitter stock has been struggling as the news-rich site has struggled to grow ad revenues.  Shares were up 20% for the day as this was written.

  • The most underrated jobs of 2016 (Employee Benefit News)  There are some fast-growing areas where employees can make significant changes at a company. These jobs are CareerCast’s most underrated for 2016, based on compensation, stress levels and satisfaction of those who hold them.  Filling these jobs may be a challenge for employers, but are great for jobseekers who want to make an impact. Ranging from healthcare to personnel, these opportunities are endless.  Go to slide show.

  • How the rich are paying less in estate taxes (CNBC)  Estate taxes are far less today that in past decades and, because of advanced financial planning techniques, any increase in estate tax rates are not likely to increase taxes collected.  See Hillary Clinton estate tax proposal under U.S. section, above.

Donald Trump and Hillary Clinton have polar opposite plans for the country's estate tax: Clinton wants to hike it, and Trump wants to kill it.

Yet behind the political noise, which escalated Thursday when Clinton detailed her proposal for the tax, its contribution to revenue has diminished over the years. As a result, any changes made to the policy are likely to have a minimal impact on tax receipts.

According to the IRS, the estate tax generated $16.4 billion in 2014, the latest year available. That's down roughly a third from 2006, when collections totaled $24.6 billion.

Receipts have fallen even more dramatically when looking farther back. In 1976, nearly 8 percent of all deaths resulted in an estate tax. In 2011, the latest year analyzed, that number was only 0.13 percent.

The estate tax now accounts for less than 1 percent of federal revenue, according to the nonpartisan Tax Foundation. That drop is surprising given the surging number of millionaires and billionaires over the past two decades, and the trillions of dollars supposedly being passed on to the next generation.

The main reason behind the decline is a higher number of exemptions. In 1976, estates had to pay a tax on a value of more than $60,000. Today, the threshold is $5.5 million for individual estates — meaning anyone who leaves their heirs less than that amount is excluded.

The top estate tax rate has also come down, from 70 percent in 1981, to 55 percent in 2000, to 40 percent today.

Another reason the estate tax is quietly dying is that the rich have become better at avoiding it. A vast array of trusts and estate-planning tools have made it easier for wealthy families to pass down assets without being subjected to the tax.

Only half as many households as normal choose to live in rural areas these days. Using our definitions (to be released in our upcoming book Big Shifts Ahead: Demographic Clarity for Businesses), only 8% of household growth occurred in rural areas over the last five years, compared to the usual 17% of growth over the prior 30 years. Over the last five years, urban captured 21% of growth compared to the 30-year norm of 8%.


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