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What We Read Today 02 October 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:

  • Should We Chose Between Democracy, Capitalization or Socialism?

  • What Will Be the Next Economic Paradigm?

  • A Majority of Those 18-29 Do Not Vote

  • Why is it that Young Americans Do Not Vote?

  • Is Lowering Cost of Offshore Wind Electricity Sustainable?

  • Offshore Wind Dominant Energy Investment for the UK

  • U.S. Presidential Campaign Nonsense

  • Dismal U.S. Child and Youth Fitness

  • European Banking is Broken

  • Deutsche Bank in Race for Survival

  • Hungarians Reject Migrants in Vote, but Fail to Turnout 50% Required Quorum

  • Philippines President Says China and Russia Supportive against U.S.

  • Fed Sanctions Large Chinese Bank

  • And More

Articles about events, conflicts and disease around the world

Global

For years the complaint against offshore wind was prohibitive cost.  The new worry is that it is suddenly becoming too beguilingly cheap.

The world’s biggest wind companies are driving down power contracts so fast in their coat-throat battle for market share that they may be making impossible commitments. The sums of money at play are huge, and the stresses may not come to light until the financial cycle turns.

A string of tenders this year have slashed strike prices to once unthinkable levels.  The Danish giant Dong Energy stunned the industry in July by clinching an offshore deal in the Netherlands at a strike price of €72.5 per megawatt hour (MWh), half the sorts of levels agreed less than five years ago.

U.S.

Every week Campaign 2016 becomes more obviously Circus 2016, as the latest smear of Trump shows. We must understanding how and why this happened in order to retake the reins of America. Ratings are one reason, the needs of the 1% is another. The second is obvious, the latter is hidden.

  1.  It wasn’t Hillary up there; it was her body double, Helen Scaffler. 

  2.  Hillary wore a wire.

  3.  Hillary wore a cough-suppressing suit.

  4. Hillary’s microphone was louder than Trump’s.

  5. The debate didn’t actually happen.

  • 50-country comparison of child and youth fitness levels: US near the bottom (Science Daily)  An international research team co-led from the Children's Hospital of Eastern Ontario (CHEO) and the University of North Dakota studied the aerobic fitness levels of children and youth across 50 countries.The results are available now in the British Journal of Sports Medicine.  The study involved analyzing 20-meter shuttle data, also called the beep test, from 1.1 million kids aged 9 to 17 years old from 50 countries. The beep test is the most popular field-based test of aerobic fitness levels of children and youth. It is also standardized and commonly used around the world.

Click for large image.

EU

  • It’s not just Deutsche. European banking is utterly broken (The Telegraph)  This article argues that part of the problem is "regulatory overreach".  Econintersect would argue that, unless one favors systemic collapse and starting over, it could be argued the problem could be regulatory underreach.  We would argue a better path for handling the financial crisis of 2008 would have been to seize the problem mega banks and restructure finance into a large number of smaller functioning banks while supporting the orderly dissolution of the toxic remainder.  However, we have no disagreement with this article of the opinion that banking remains dysfunctional and the Deutsche Bank crisis is representative and not a "Black Swan".  From this article:

All eyes are naturally focused on the specific problems of Deutsche Bank, but Deutsche is in truth no more than the canary in the coal mine. As Tidjane Thiam, chief executive of Credit Suisse, observed last week, as an entire sector, European banks are still “not really investable”. Much the same disease as afflicts Continental banks also applies to British counterparts, including Royal Bank of Scotland, Barclays and even Lloyds.  

UK

The rate of hate crimes reported in the UK has rocketed since the country voted to leave the European Union in June, according to the National Police Chiefs’ Council.

In 2013 we published research on the parallels between British discontent about migration in the 2010s and in the late 1960s – a moment perhaps best known for the end of Commonwealth free movement and Enoch Powell’s Rivers of Blood speech.

Following the referendum, our findings have taken on a greater resonance. Britain’s struggle to come to terms with immigration is starting to look like a case of history repeating itself.

Germany

  • Deutsche Bank races against time to reach U.S. settlement (Reuters)  Deutsche Bank (DBKGn.DE, NYSE:DB) is throwing its energies into reaching a settlement before next month's presidential election with U.S. authorities demanding a fine of up to $14 billion for mis-selling mortgage-backed securities.  The threat of such a large fine has pushed Deutsche shares to record lows and a cut-price settlement is urgently needed to reverse the trend and help to restore confidence in Germany's largest lender.  A media report late on Friday that Deutsche and the U.S. Department of Justice (DOJ) were close to agreeing a settlement of $5.4 billion lifted the stock to close 6% higher, but that report has not been confirmed.

  • German business leaders offer support to Deutsche Bank (The Guardian)  Bosses of BASF and Daimler publicly back troubled institution as it approaches deal with US Department of Justice over mis-selling.  Econintersect:  This is "moral support", not financial.

Hungary

  • Hungarians overwhelmingly reject migrant quotas, vote set to be invalid (Reuters)   Hungarians overwhelmingly rejected the European Union's scheme for migrant quotas at a referendum on Sunday with 94.8% of votes counted, data on the website of the National Election Office showed.  It said 98.2% of those who cast a valid vote rejected the quotas, but the vote was expected to be invalid as the turnout was less than the 50% required.

Philippines

  • Philippines' Duterte says China, Russia supportive when he complained of U.S. (Reuters)  Philippines President Rodrigo Duterte said on Sunday he had received support from Russia and China when he complained to them about the United States, in another broadside that could test his increasingly fragile alliance with Washington.  Duterte said that during a meeting on the sidelines of a leaders' summit in Laos last month, Russian Prime Minister Dmitry Medvedev had agreed with him when he railed against the United States.

China

  • FTSE Russell declines to add China A-shares to emerging market index (South China Morning Post)  Index provider FTSE Russell said on Thursday it would not include domestic Chinese equities in its emerging markets index, aligning with US index maker MSCI’s decision in June not to grant the so-called A shares designation as emerging market assets.  FTSE Russell’s Chief Executive Mark Makepeace said it would keep the A shares on its watch list for possible inclusion as a secondary emerging market, saying it was not a matter of “if but when” China would be elevated to emerging market status.

  • US Fed sanctions one of China’s biggest banks over “significant deficiencies” in money laundering (South China Morning Post)  Agricultural Bank of China Ltd. has been ordered by the Federal Reserve to overhaul its protections against money laundering to address “significant deficiencies”, the US regulator said in a statement Thursday.  The lender, one of China’s biggest banks, will have to come up with a written plan within 60 days to fix the shortcomings in managing risk in its New York branch and get better control over suspicious activity, the Fed said. The order didn’t carry a monetary penalty.

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

  • Democracy. Capitalism. Socialism. Choose Any Three of the Above (Evonomics)  In the millennias-long evolution of human societies and economic systems, we find ourselves today at a pass where three systems predominate, and fitfully cohabit: democracy, capitalism, and socialism. Most countries in the world operate with large doses of all three.  The author suggests that this is not an accident, but a logical progression of human organizational development.  See table of country GDP numbers below (middle-east petro-states excluded).   He then points out that there is much political discourse that runs counter to his conclusion, discourse that he labels as "spouting incoherent claptrap":

...it might seem odd that there are so many loud and prominent political voices who talk about eradicating one or more of the three. These voices often represent these isms as mutually exclusive (they aren’t), and envision vaguely utopian nirvanas of true, complete socialism, true complete capitalism, or Platonic, non-democratic polities administered by benign, elite philosopher kings (and perhaps even queens).

gdp.per.capita.list.top.countries

If there was any possible upside from the destruction stemming from the financial crisis and Great Recession it was that neoclassical economics’ intellectual hegemony began to be more seriously questioned.  As such, the rising interest in complexity theory is a welcome development. Indeed, approaching economic policy from a complexity perspective promises significant improvements.  However, this will only be the case if we avoid a Hayekian passivity grounded in the view that action is too risky given just how complex economic systems are. This would be a significant mistake for the risk of non-action in complex systems is often higher than the risk of action, especially if the latter is informed by a rigorous thinking grounded in robust argumentation.

The flaws of neoclassical economics have long been pointed out, including its belief of the “economy as machine”, where, if policymakers pull a lever they will get an expected result. However, despite what Larry Summers has written, economics is not a science that applies for all times and places. It is a doctrine and as economies evolve so too should doctrines. After the Second World War, when the United States was shifting from what Michael Lind calls the second republic (the post-Civil War governance system) to the third republic (the post-New-Deal, Great Society governance structure), there was an intense intellectual debate about the economic policy path America should take.  In Keynes-Hayek: The Clash That Defined Modern Economics, Nicholas Wapshott described this debate between Keynes (a proponent of the third republic), who articulated the need for a larger and more interventionist state, and Hayek (a defender of the second republic), who worried about state over-reach. Today, we are in need of a similar great debate about the future of economic policy for the emerging “fourth republic.”

voting.by.age.2012


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