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What We Read Today 11 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:

  • Why Contract Theory Deserves the Nobel Prize in Economics

  • Clean Coal is Far From Real - Cost Would be Close to U.S. National Debt

  • Slow Economy?  Blame the Rent and Debt Slaves

  • U.S. Home Ownership at 50-Year Low

  • Home Equity Gain is Meager, Reported Gains the Result of Cherry-Picking Time Frames

  • OPEC Had Record Output in September

  • GE and Citigroup Financing First U.S. Offshore Wind Farms

  • Trump, Clinton and Strange Bedfellows (and Strange Antagonists as Well)

  • Latinos' Voting Polling Much Like 2012

  • Deutsche Bank Special Treatment in Stress Tests

  • Putin Cancels Trip to France

  • French Pres. Hollande Says Russia Guilty of War Crimes

  • Russia Says Joining China to Counter U.S. Missile Defenses

  • Tokyo Condo Prices Face Possible 20% Decline

  • China Corporate Debt Keeps Climbing

  • And More

Articles about events, conflicts and disease around the world

Global

oil.2016.oct.11

U.S.

  • GE, Citigroup Provide Financing for First U.S. Offshore Wind (Bloomberg)  A General Electric Co. unit and Citigroup Inc. provided tax equity financing to the U.S.’s first offshore wind farm, a 30-megawatt project recently completed in Rhode Island waters.  The company building the project, Deepwater Wind LLC, announced the financing from GE Energy Financial Services and Citigroup in a statement Tuesday, without disclosing the amount. The $300 million project is scheduled to begin commercial operations in November.  A separate GE unit, GE Renewable Energy, supplied the five 6-megawatt wind turbines for the project and will provide long-term maintenance service.  The hedge fund D.E. Shaw & Co. provided about $70 million in equity financing for the project, 3 miles off Block Island. The wind farm also received $290 million in debt financing from Societe Generale SA and KeyBank NA.  In tax-equity deals, developers with little or no profit sell tax credits they can’t use to investors, which then apply the benefits to their tax bills.

  • Jonathan Swift explains the latest presidential debate (Fabius Maximus)  FM has contributed to GEI.  Read this excellent essay about out Lilliputian presidential election process.

  • Donald Trump Probably Stanched His Losses, but Didn’t Seem to Gain (The New York Times)  The bar was low for Donald J. Trump after the worst two weeks for a presidential campaign in recent memory, and he seemed to clear it at Sunday’s debate.  Another decisive loss in a face-off with Hillary Clinton could have led to a mass revolt from Republican officials and raised the possibility of a landslide defeat in November.  But Sunday night did enough that Trump will live to fight another day.

  • Trump’s Attacks on GOP Leaders Set Off Civil War Inside Party (Bloomberg)  With less than a month to go before Election Day, Republicans erupted into open warfare Tuesday as Donald Trump pledged to campaign unshackled from party leaders and vowed to punish “disloyal” members, including House Speaker Paul Ryan and John McCain, the 2008 GOP nominee.  Trump tweeted:

"Disloyal R’s are far more difficult than Crooked Hillary. They come at you from all sides. They don’t know how to win - I will teach them!"

EU

France

  • Putin halts France visit amid Syria row (BBC News)   Russia's President Vladimir Putin has cancelled a planned visit to France amid a row over Syria.  He had been due to meet French President Francois Hollande and open a new Orthodox church later this month.  But after France's government said talks would be confined to Syria, the visit was halted, French presidential sources said.  On Monday, Mr Hollande suggested Russia could face war crimes charges over its bombardment of Syria's city of Aleppo.

Russia

  • Russia Says It’s Joining China to Counter U.S. Missile Defense (Bloomberg)  Russia said it’s working with China to counter U.S. plans to expand its missile-defense network, which the two nations see as targeting their military assets.  The upgrades aim to give Washington the ability to launch a nuclear strike “with impunity,” Lieutenant General Viktor Poznikhir of the Russian Armed Forces General Staff said Tuesday at a security forum in Xiangshan, China, according to a transcript of his speech posted on the Defense Ministry’s website. The Asian neighbors this year conducted a joint missile-defense exercise of their computer command staff, he said.

Japan

  • Tokyo Condo Prices May Fall 20%, Deutsche Says (Bloomberg)  The Bank of Japan’s shift to controlling bond yields is driving up mortgage rates, prompting Deutsche Bank AG to predict Tokyo apartment prices may fall 20% or more by 2018.  The BOJ’s negative-rate policy was already hurting buyer sentiment, and its move to boost longer-term yields is a double-blow to the industry, according to Yoji Otani, a real estate analyst at Deutsche Bank in Tokyo. The 35-year fixed mortgage rate has climbed for two straight months after touching a record low of 0.9% in August, and sales of new condominiums in Tokyo this year have fallen to the lowest since the nation’s property bubble collapse in the early 1990s.

China

Click for larger image at Twitter.

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

  • Here's why contract theory deserves a Nobel Prize (Business Insider)  The Nobel Memorial Prize in Economic Science has just been awarded to Oliver Hart and Bengt Holmström for building the foundations of contract theory.  Contract theory is not merely the study of legally binding contracts.  Broadly defined, it studies the design of formal and informal agreements that motivate people with conflicting interests to take mutually beneficial actions.  Contract theory guides us in structuring arrangements between employers and employees, shareholders and chief executives, and companies and their suppliers.  In essence, contract theory is about giving each party the right incentives or motivations to work effectively together.  Econintersect:  Is there any use of this in out current U.S. federal government?  If there is some of this, we suggest it is not nearly enough.

  • 'Clean Coal' Is Far From Real (Bloomberg)   “There is a thing called clean coal,” Donald Trump said during Sunday night’s debate. But there isn’t -- and won’t be for a considerable time, if ever.  Presumably, Trump was referring to so-called carbon-capture technology, which is designed to collect and dispose of coal plants’ carbon-dioxide emissions before they escape into the atmosphere, where they trap heat. That technology may be on the drawing board and in a few small-scale demonstration projects, but it’s not close to being ready for widespread use at an affordable price.  Current pilot projects put the cost of carbon capture technology for current levels of coal burning at more than $17 trillion.

  • These Debt & Rent Slaves Get Blamed for the Lousy Economy (Wolf Street)  Over the past three decades, the US averaged nearly 120,000 more business births than deaths per year. But between 2008 and 2011, on average 30,000 more businesses died than were born, according to the Census Bureau. That the core of the US job creation machine has been faltering is not a sign of a healthy or even a “recovering” economy. Read…  Or We’ll Lose the Whole Middle Class”: Gallup CEO.  Home ownership is also falling. Millennials are taking much of the blame.  From the article:

But it’s logical: burdened by student loans and confronted with confiscatory housing costs, fewer of them have any courage or means left to deal with the extraordinary uncertainties and risks of starting a business in this environment. Given how important small and young businesses are to the economy, to jobs, to invention, to business renewal, and to the middle class, any major reluctance millennials have in starting businesses will have an impact – or already has an impact.

  • U.S. Economic Outlook: October 2016 (CoreLogic)  Home prices have risen significantly throughout the nation since the 2011 trough in the housing cycle. The CoreLogic Home Price Index has recorded a 40% rise in the national index since the trough, with some areas up more sharply and other markets showing a more subdued bounce back.  Econintersect:  Private communication from Keith Jurow indicates that the 40% average increase since 2011 hides a lot of pain.  Keith tells us that since late 2008 the average gain for 125 major real estate markets is only 9%, well under 2% gain per year.  We will link to and/or post his next article discussing this when it is finished.  The map below shows the price gains reported by CoreLogic for one year as of June.  For the latest CoreLogic housing report see August 2016 CoreLogic Home Prices Year-over-Year Growth Rate Now Improved to 6.2%.


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