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:
Inequality and Unearned Income Kill an Economy
Joseph Stiglitz: Standard Economics is Wrong
Burton Malkiel: Random Walking 43 Years Later
How an Economics Student Found His Way to Complexity, Dynamic Systems and Radical Thinking
A Great Adirondack Fish Story - and Lessons about Life
The OPEC Production Cut Will Lose Them Market Share
Another Case Study of Corporate Looting
Bill Black Describes the Wells Fargo Scam
Computer Voting Systems are Already Crappy, Buggy, Inaccurate and Obsolete
Half of Trump Voters Don't Trust Election Process
Deutsche Bank Defrauded Italian Bank
U.S. and EU Sanctions are Devastating Syrian Citizens
Russia Warns Against U.S. Military Aggression in Syria
Just What is the Relationship between the U.S. and Saudi Arabia?
Russian Government is Taking over the Country's Companies
Articles about events, conflicts and disease around the world
OPEC Production Cut Could Be Big for Top Oilfield Services Stocks (24/7 Wall Street) The sustained low price of oil finally has gotten to the OPEC member nations, and Wednesday they did something about it. In an unexpected move, the cartel agreed on a preliminary 750,000 barrel-a-day production cut. The actual details of the agreement are expected to be worked out at the official OPEC meeting in Vienna in November. A new Merrill Lynch research report notes that this effectively will end the Saudi-led production-at-will era that marked the two-year policy switch of defending markets share. For years the Saudis had a longstanding policy of defending oil prices, but the U.S. shale boom blew holes in that. Now non-OPEC producers are likely to start taking market share, according to this article, and that would provide a boost to oil services stocks.
Cerberus Uses Private Equity Looting Strategy With Scandal-Ridden Steward Health Care Hospitals (Yves Smith, Naked Capitalism) YS has contributed to GEI. This is a story about an example of corporate looting: The acquisition of a successfully operating business (in this case a non-profit healthcare system) by a mergers and acquisition (M&A) company which then splits all the real estate into a separate company, which properties it leases back to itself with unsustainably high rents. That makes the real estate company look more valuable than it is so it can be sold at an inflated price. The M&A company now has a handsome profit on its original investment so it can afford to standby while the healthcare company is unable to pay its rents and goes goes, while the real estate buyers are left holding a big loss.
... this bank keeps breaking the law, but if no one goes to jail, nothing changes.
Poll: Half of Trump supporters don't trust integrity of election (The Hill) Half of those who view Trump favorably say they have little or no confidence in the integrity of the election, according to an Associated Press-NORC Center for Public Affairs Research poll released Saturday. Econintersect: This should not be a surprise - it is what Trump himself has been saying.
The presidential race between the two most unpopular presidential candidates in modern times is sliding into the gutter.
The dominant topic on the campaign trail has become pornography, after Donald Trumpaccused a newfound Hillary Clinton ally and former Miss Universe of having a sex tape in a Twitter rant in the early hours of the morning on Friday, only to have footage of his cameo in a softcore porn film surface the same day.
And considering a former DNC chair's unfounded accusations of Trump using cocaine at the debate and the GOP nominee's threats to go all in on using Bill Clinton's sex scandals against his opponent, the next few weeks are shaping up to be a crude final showdown before Election Day.
The Computer Voting Revolution Is Already Crappy, Buggy, and Obsolete (Bloomberg) In 2015 Shelby County, Tennessee (Memphis) had systematically under-reported vote totals from all predominantly black voting districts. Tennessee has electronic voting with no paper trail so it appears that the Republican controlled state somehow "disappeared" many thousands of opposition votes. This is one of the situations documented in this lengthy article. See second article above about lack of trust in elections by voters.
Deutsche Bank Charged Over Paschi Accounts as Legal Hits Mount (Bloomberg) Deutsche Bank AG was dealt a fresh blow on Saturday when an Italian court charged the company, an employee and five former executives for colluding with Banca Monte dei Paschi di Siena SpA to falsify the Italian lender’s accounts in 2008. Michele Faissola, who oversaw global rates at the time, and Ivor Dunbar, former co-head of global capital markets, were among those indicted in a Milan court. Both were top deputies to former Deutsche Bank co-chief executive officer Anshu Jain, and both have left the company. See more in article under Italy, below.
Saudi Arabia Is a Partner, Not a Friend (The Atlantic) With the passage of the 9/11 Liability Bill (targeting Saudi Arabia), this article tries to specify just exactly how is that country related to the U.S.
Before the terrorist attacks of September 11, 2001, and really until al-Qaeda began to attack the kingdom directly in May 2003, Saudi Arabia was often uncooperative on counterterrorism, and more part of the problem than part of the solution. Since 2003, the Saudi regime has emerged as a vital counterterrorism partner, and several important successes against al-Qaeda in particular are due in large part to its cooperation. Yet it’s not a simple story of progress: The kingdom engages in many troubling behaviors today that make the terrorism problem worse. In the end, policymakers would do well to remember that Saudi Arabia is a key partner but not a friend: The United States and Saudi Arabia share many common interests, but they do not share common values or a common worldview.
The Professor Who Was Right About Index Funds All Along (Bloomberg) Burton Malkiel has been saying the same thing about investing for more than 40 years. What’s new is that a big chunk of the financial industry now admits he was right all along. In 1973, Malkiel, a Princeton professor, published the first version of his investment guide, A Random Walk Down Wall Street. He wrote that “a blindfolded monkey throwing darts at the stock listings could select a portfolio that would do just as well as one selected by the experts". Since most investors can’t beat the market average over time, he argued, they’d be better off in some kind of low-fee fund that simply held all of the stocks on a widely followed index. Problem was, no such retail fund existed. Three years later Vanguard started the first index fund and index investing was born. Econintersect: Be careful no to confuse average of all stock pickers with performance of all individual stock pickers. There have been investors who have exceeded market averages over decades. Of course, there is the little problem of how they can be identified in advance.
I decided to study economics at Dartmouth rather than science. But one of the great benefits of a liberal arts education is I could still continue to take courses in science while I was studying economics. Two particularly influential courses were one on artificial intelligence, where I learned how real human intelligence and AI systems trying to imitate it were profoundly different from the rational models of my econ courses, and system dynamics (taught by the late Barry Richmond) where I learned that non-linear dynamical systems behaved nothing like the equilibrium models I was studying in econ. Both of these courses left me with profound cognitive dissonance – the theories I was learning in economics seemed to have little to do with the real world, while the ideas I was learning in these courses seemed much more descriptive of how a system like the economy worked.
The Adirondack Experience (The Drake) You can't find many better reading experiences than this for a Saturday or Sunday afternoon. Below: (1) Fly fishing for Adirondack brookies (native Adirondack brook trout), back from near extinction from acid rain; (2) a handsome Adirondack trout experiencing catch-and-release; and (3) the Great Camp Sagamore, back from near razing in 1970 to a home for the non-profit Sagamore Institute today.
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