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:
Are Negative Interest Rates and Fractional Reserve Banking Equivalent to Alchemy?
Top Candidates for 2016 Nobel prize in Economics
Is the Nobel Prize in Economics Bogus?
Google Lists Donald Trump as THE Top Economist
Colombian President Wins Nobel Peace Prize
More Than 800 Died in Haiti from Matthew
Northeast Coast of Florida Getting Lashed
Matthew to Track North into Coastal Georgia and South Carolina
Naked Capitalism is Calling All Wells Fargo Whistleblowers
Foreigner Fear Expulsion from London
UK's Biggest Brexit Battles Will Be with the World Trade Organization
More on the Pound Sterling Flash Crash
Brexit Cost is Punishing Sterling
Russia Threatens to Shoot Down U.S. Planes in Syria
Russia Considers Reentering Military Bases in Cuba and Vietnam
Russia Becoming a Grain Superpower
U.S. Confirms Russia Behind Hacking Attacks on Election Process
Australia Demonstrates a 'Desert Full of Tomatoes' Using Seawater and Solar
Articles about events, conflicts and disease around the world
Colombian leader Juan Manuel Santos wins Nobel Peace Prize (Associated Press) Colombian President Juan Manuel Santos won the Nobel Peace Prize on Friday for his efforts to end Latin America's longest-running armed conflict, an honor that came just five days after voters dealt him a stunning blow by rejecting a peace deal with leftist rebels. The Norwegian Nobel Committee praised Santos for his "resolute" attempts to stop a civil war that has killed more than 200,000 Colombians and displaced millions since the 1960s. But in a departure from its tradition of honoring both sides of a peace process, the five-member committee conspicuously left out Santos' counterpart, rebel leader Rodrigo Londono, from the honor. Santos, 65, dedicated the prize to his fellow Colombians, especially victims of the bloody conflict, and said it redoubles his commitment to ending hostilities, something he said he would work toward for the rest of his life.
Hurricane Matthew lashes coast of Florida; Jacksonville in its sights (CNN) Category 3 Hurricane Matthew has left more than 1 million people without power in Florida as it skirts the state's east coast, but the most damaging blow to the Southeast could still be to come. The storm -- centered just off the northeast Florida coast Friday afternoon -- threatened to push dangerous storm surges into Jacksonville with or without landfall and eventually communities along coastal Georgia and South Carolina. Although projections showed the storm still could go out to sea without landfall, its center very well could cross land with devastating effect, if not in Florida, then in Georgia or the Carolinas. GEI's Sig Silber is following the storm and has regularly upgraded status.
Calling All Wells Fargo Whistleblowers! (Yves Smith, Naked Capitalism) YS has contributed to GEI. Smith hopes to replicate the success of her 2013 extensive series of whistleblower and other evidence that brought to an end the big bank attempts to defend their bogus "reviews" of foreclosure abuses in 2009 and 2010.
Trump Insists the Exonerated Central Park Five Are Guilty (Bloomberg) Donald Trump stood by his long-held assertion that five men wrongly jailed for more than a decade were guilty of the 1989 rape of a banker jogging in Central Park, despite their exoneration by DNA evidence, another suspect’s confession and a $40 million city settlement. The Republican presidential candidate told CNN:
“They admitted they were guilty. The police doing the original investigation say they were guilty. The fact that that case was settled with so much evidence against them is outrageous. And the woman, so badly injured, will never be the same.”
Foreigners in London ‘Horrified’ by May’s Immigration Vision (Bloomberg) Home Secretary Amber Rudd this week proposed to punish banks and landlords who fail to make checks on foreigners doing business with them. It’s part of the government’s strategy to address public concerns about immigration that were laid bare by the U.K.’s vote to quit the European Union. A YouGov poll on Wednesday of 5,875 adults found that 59% of people support those policies, showing that Rudd and May are in tune with voters. That is of little comfort to the swathes of foreign-born Londoners, many of whom have become naturalized British citizens. For some, there are parallels with pre-World War II Germany. From Paula Levitan, an American lawyer at Bryan Cave who’s lived in London for 16 years and has acquired a British passport:
“I’m horrified by this. I can’t help but flash on the 1930s and early 40s. Are we going to have to wear badges on our arms?”
Forget Brussels, Brexit’s toughest battleground is the WTO (Politico) Negotiating Brexit with 27 occasionally hostile EU states will turn out to be the easy task for the U.K. That will seem like nothing next to the imbroglio Prime Minister Theresa May faces when she sets about crafting Britain’s global trade terms with the more than 160 members of the World Trade Organization. Britain is a member of the WTO under the auspices of the EU, the world’s largest trade bloc. Once the U.K. leaves, it has claimed that it will finally be free to decide for itself the tariffs it slaps on imported steel and lamb, and the levels of subsidies paid to its farmers. But Britain’s freedom to set trade policy — and the EU’s response to that new regime — also will have to conform to the dizzyingly complex architecture of the WTO.
Hammond urges calm over pound flash crash (BBC News) Chancellor Philip Hammond has responded to the flash crash in sterling saying that market turbulence is to be expected, but the UK economy is fundamentally strong. The pound was pummeled in the currency markets in Friday Asian trading, with traders blaming concerns over Brexit and a flash crash that hit the market. The pound briefly fell 6% to $1.1841, the biggest move since the Brexit vote. Sterling later recovered most of those losses but remained 1.3% lower. See also next article.
Rude Awakening in the U.K. Over Brexit Cost Sends Pound Down (Bloomberg) With Prime Minister Theresa May signaling that a crackdown on immigration took precedence over membership of the bloc’s single market and European leaders hardening their position, traders responded by driving the pound to its lowest against the dollar since 1985. Following an overnight plunge in Asia, the currency is wrapping up its worst week since the June Brexit vote. The pound, which dropped to as low as $1.1841 in Asia, traded down about 1.4% at $1.2433 at 4:22 p.m. in London. It lost about 4.1% for the week.
How Sweden became an exporter of jihad (BBC News) Sweden is a peaceful democratic state that has long been a safe haven for those fleeing conflict. Yet many young people whose families took refuge there are now turning their back on the country. More than 300 people have gone to fight in Syria and Iraq, making Sweden per capita one of the biggest exporters of jihadists in Europe.
The Kremlin warns it will SHOOT DOWN US planes if they carry out air strikes in Syrian regions where Russian troops are based (Daily Mail) The Russian military has warned the United States against striking the Syrian army, saying that its air defense weapons in Syria stand ready to fend off any attack from US planes. The statement underlined high tensions between Moscow and Washington after the collapse of a US-Russia-brokered Syria truce and the Syrian army's offensive on Aleppo backed by Russian warplanes. Russian Defense Ministry spokesman Maj. Gen. Igor Konashenkov said any US strikes on areas controlled by Syrian President Bashar Assad's government could jeopardize the lives of Russian servicemen.
Russian Military Considers Return to Cuba, Vietnam (ABC News) The Russian military is considering the possibility of regaining its Soviet-era bases in Cuba and Vietnam, the Defense Ministry said Friday, a statement that comes amid growing U.S.-Russia tensions over Syria. Deputy Defense Minister Nikolai Pankov told lawmakers Friday that the ministry is considering the possibility of establishing footholds far away from Russia's borders. Responding to a lawmaker's question if the military could return to Cuba and Vietnam, Pankov said the military is "reviewing" a decision to withdraw from them, but didn't offer any specifics. Putin ordered withdrawal from those countries 15 years ago.
Russia Becomes a Grain Superpower as Wheat Exports Explode (Bloomberg) Long known for its oil and gas, Russia is now moving to retake leadership in the world wheat trade it last held when the Czars ruled. In the process, it’s reshaping the market for one of the world’s most important traded food products.
U.S. Confirms Russia Behind Hacking Attacks To Disrupt Elections (Bloomberg) The U.S. said publicly for the first time that the Russian government hacked political groups and leaked stolen material in order to interfere with American elections. the Office of Director of National Intelligence and Homeland Security Department made a joint statement on Friday. Excerpts:
"These thefts and disclosures are intended to interfere with the U.S. election process. We believe, based on the scope and sensitivity of these efforts, that only Russia’s senior-most officials could have authorized these activities."
"It would be extremely difficult for someone, including a nation-state actor, to alter actual ballot counts or election results by cyber attack or intrusion."
A Desert Full of Tomatoes, Thanks to Solar Power and Seawater (MIT Technology Review) Hat tip to Naked Capitalism. At first glance, growing fruit in the desert sounds like an awfully good way to feed a mushrooming global population and adapt to the worst effects of climate change. And a farm in South Australia run by the greenhouse developer Sundrop Farms is doing just that, using solar power to desalinate water and grow tomatoes in the otherwise parched landscape. But, this article points out, Australia doesn't have any problem growing more tomatoes than needed in the old-fashioned way and the greenhouse process is not likely to be affordable in the more impoverished parts of the world where the food is needed. What is needed is to apply desalinization to plants that will really grow in the open desert.
Other Scientific, Health, Political, Economics and Business Items of Note - plus Miscellanea
Negative interest rates or 100% reserves: alchemy vs chemistry (Real World Economic Review Blog) The author suggests that the slow growth of the economy is a result of resource limitation, not monetary limitation. This thesis is contested in a well written comment at the end of the article. Here is how the author starts:
The close connection of fractional reserve banking with alchemy was recently emphasized by Mervyn King, former head of the Bank of England, in the very title of his recent book, The End of Alchemy: Money, Banking, and the Failure of the Global Economy. He refers to the more thorough development of this connection by Swiss ecological economist H. C. Binswanger in his brilliant study, Money and Magic. Given this connection to alchemy, it is more than a coincidence that the earliest and most thorough critique of fractional reserve banking came not from an alchemist but from a real chemist, Nobel Laureate Frederick Soddy (See H. Daly, “The Economic Thought of Frederick Soddy”, History of Political Economy, 1980, 12:4). Soddy’s advocacy of full reserve banking was later picked up by Irving Fisher, and by Frank Knight and others of the Chicago School. Mervyn King stops short of advocating full reserve banking, but clearly is unhappy with the fractional reserve system.
Most Central Banks, however, seem to favor the alchemy of fractional reserves as a key part of their hyper-Keynesianism: the quest to stimulate real growth by increasing monetary growth, first by low, then by zero, and now by negative interest rates. Why hasn’t it worked? Because real growth today is constrained by real resource shortages, while in the 1930s traditional Keynesianism’s assumption of unemployed resources was reasonable. There is still unemployed labor to be sure, but not unemployed natural resources, which have become the limiting factor in today’s full world. As growth converts more of nature into economy we see that these newly appropriated natural resources were not unemployed at all, but were providing ecological services that often were more valuable than the extra production resulting from their enclosure into the economy. Aggregate growth has become uneconomic – a condition unrecognized by economists long fixated on growth as panacea – but which ironically is logically implied by their absurd new policy of a negative interest rate! (http://steadystate.org/the-negative-natural-interest-rate-and-uneconomic- growth/)
Olivier J. Blanchard — the Robert M. Solow professor of economics emeritus, Department of Economics, Massachusetts Institute of Technology, and the C. Fred Bergsten senior fellow, Peterson Institute for International Economics — was named for his work in determining economic and employment fluctuations, and other contributions to macroeconomics.
Edward P. Lazear — the Jack Steele Parker professor of human resources, management and economics, Stanford University Graduate School of Business, and the Morris Arnold and Nona Jean Cox senior fellow, Hoover Institution — was cited for his development of the field of personnel economics.
Marc J. Melitz — the David A. Wells professor of political economy, Department of Economics, Harvard University — was named for his descriptions of firm heterogeneity and international trade.
Is the Nobel Prize in Economics Bogus? (Investopedia) Among those detractors of the prize in economics, one common complaint is that the Central Bank of Sweden managed to insert a prize in economics as a publicity strategy. The late 1960s marked the 300th anniversary of the Bank, and the addition of a prize in economics would highlight the Bank and its history, while simultaneously allowing the government to push "free-market" economic reforms. The ultimate goal was to give the Bank more independence from the political process. By establishing a so-called "Nobel Prize in Economics," the Bank hoped to be able to have some control over which economists received the award, thereby ensuring that the economic viewpoints it espoused would be recognized in the process. A description of award results:
While a good number of the economics awards have gone to economists recognized broadly in the field for their work, some of the early recipients were among the most committed free-market or laissez-faire economists of the time. Later, the co-winners of the 1997 award based a fund on their award-winning strategy, and that fund ultimately failed in a dramatic fashion, totaling more than $1 billion in assets lost. Examples of economist winners with political and other agendas abound. The moral of the story? When the Nobel Prize in Economics is announced, maintain some perspective on the history of the award.
Donald Trump was a top economist, according to Google (C/Net) First noticed by CNBC, a simple Google search for "top economist" listed Trump first in its results, and a search for "top economists" listed him as third. Trump holds a bachelor's degree in economics from the Wharton School of the University of Pennsylvania. He was listed alongside Paul Krugman and Joseph Stiglitz, the former a professor of economics at the Graduate Center of the City University of New York, and the latter a prof at Columbia University. Both Krugman and Stiglitz are recipients of the Nobel Prize in Economics.
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