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What We Read Today 28 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".).


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

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Topics today include:

  • Is there an Anti-Aging Pill?

  • Current Monetary Populism Appears to Support the Elite

  • There is Much More to Populism than Economic Pain

  • Some Transactions that Raise U.S. Trade Deficits Increase the Wealth of Americans

  • Stacy Herbert, Antal Fekete and Martijn Jeroen van der Linden Debate Money

  • New Clinton E-mail Probe by the FBI

  • Oregon Court Case is Poster Child for White Privilege

  • American Pay Growth Finally Improving

  • Three Charged with Voter Fraud

  • Wholesale Inventories/Sales Ratio at Recessionary Level

  • New Bubble Popping Risks

  • Syrians Find German Mosques Too Conservative

  • Iran-backed Shi'ites Join Mosul Offensive

  • Containment of Russia

  • Has Abenomics Actually Been a Success?

  • Is Japan a Case Study for the Inadequacy of GDP as an Economic Metric?

  • Colombia Government and Rebels Reworking Peace Agreement

  • And More

Articles about events, conflicts and disease around the world



  • Resurrected FBI Probe Breaks Clinton’s Momentum as Voters Prepare to Decide (Bloomberg)   Hillary Clinton’s seemingly smooth path to Election Day abruptly ended Friday.  Clinton’s presidential campaign was thrown back on the defensive by FBI Director James Comey’s decision to reopen the investigation into her use of a private e-mail server. New e-mails surfaced in an unrelated investigation of Clinton aide Huma Abedin’s estranged husband, former Representative Anthony Weiner.  Legally, Clinton’s campaign chairman John Podesta insisted, the new revelations won't change Comey’s decision earlier this year to close his investigation. Politically, the immediate effects were unclear but promised to inject chaos into what had been shaping up as a victory by Clinton over Republican Donald Trump on Nov. 8.

The verdict is completely absurd.

Eight months after the nation watched an armed militia take over a wildlife refuge in Oregon to protest federal land ownership, a jury has come back and said that the militia members are “not guilty.” This includes not guilty of a charge that describes what everyone knows these militants did, considering that they live-streamed themselves doing it: conspiracy to prevent Bureau of Land Management and US Fish and Wildlife employees from doing their jobs at the wildlife refuge.

Again, this is literally what they did. They armed themselves and took over a wildlife refuge, preventing federal workers from going into the facility and doing their jobs. Ammon Bundy, the militants’ leader, even participated in interviews in which he called for more people to join him in his cause.

In fact, the militants staged their protest because they want to get federal employees out of these lands. The Bundys and other militants would like to see the federal government give up federal lands to locals. This, they argue, would free the territory of environmental regulations that they see as burdensome — but are meant to preserve endangered animals and nature — and enable more exploitation of the lands’ resources by allowing, for example, more unfettered farming, mining, and hunting.

  • Signs That American Workers Are Winning (Bloomberg)  A bevy of labor market indicators are all saying the same thing: There aren’t a lot of Americans looking for work, so those with jobs are starting to reap the benefit in the form of higher wages.  In a note to clients, Macquarie Capital Markets Ltd. Economist David Doyle highlights the growing pile of evidence that wage growth is “picking up steam.” In September, the annual growth in average hourly earnings of production and non-supervisory workers reached its highest level in more than six years.

  • Three in Florida, Virginia charged with criminal voter fraud (Reuters)  Officials in Florida and Virginia filed voter fraud charges against three people in apparently unrelated cases on Friday, just 11 days before American voters cast ballots in the hotly contested presidential race.  The charges targeted a Florida woman and a Virginia man accused of filing bogus voter registration forms and a Florida woman alleged to have tampered with absentee ballots she was opening at the Miami-Dade Elections Department.  Republican presidential candidate Donald Trump has charged in recent weeks that the election will be rigged in favor of Democrat Hillary Clinton, though he has shown no proof for these claims and many Republicans have called them unfounded.  Miami-Dade State Attorney Katherine Fernandez Rundle in Florida said that 74-year-old Gladys Coego, had been working as an absentee ballot opener when a supervisor allegedly saw her changing ballots that had been left blank to support a mayoral candidate. Prosecutors said that Coego admitted to marking the ballots, and was charged with two felony counts of marking or designating the ballot of another.

  • Wholesale inventories/sales ratio already at recessionary level (Twitter)  Econintersect: Is the current condition comparable to 1994 and 1998 or 2001 and 2008?


  • Opinion: Biggest risk to economy: Fed-fueled bubbles could pop (MarketWatch)  Although the United States economy is in good shape — with essentially full employment and an inflation rate close to 2% — a world of uncertainty makes it worthwhile to consider what could go wrong in the year ahead. After all, if the U.S. economy runs into serious trouble, there will be adverse consequences for Europe, Japan, and many other countries.  Economist Martin Feldstein says that the Fed induced bubbles are a serious economic threat:

To grasp how risky, consider this: U.S. households now own $21 trillion of equities, so a 35% decline in equity prices to their historic average would involve a loss of more than $7.5 trillion. Pension funds and other equity investors would incur further losses. A return of real long-term bond yields to their historic level would involve a loss of about 30% for investors in 30-year bonds and proportionately smaller losses for investors in shorter-duration bonds. Because commercial real-estate investments are generally highly leveraged, even relatively small declines in prices could cause large losses for investors.

The fall in household wealth would reduce spending and cause a decline in gross domestic product. A rough rule of thumb implies that every $100 decline in wealth leads to a $4 decline in household spending. The return of asset prices to historic levels could therefore imply a decline of $400 billion in consumer spending, equal to about 2.5% of GDP, which would start a process of mutually reinforcing declines in incomes and spending leading to an even greater cumulative impact on GDP.


  • In Germany, Syrians find mosques too conservative (Reuters)   Syrians in Germany say many of the country's Arab mosques are more conservative than those at home.  Over two months, a dozen Syrians in six places of worship in three cities told Reuters they were uncomfortable with very conservative messages in Arabic-speaking mosques. People have criticized the way the newcomers dress and practice their religion, they said. Some insisted the Koran be interpreted word-for-word.  It is a highly contentious issue in a country where Europe's migrant influx is already having deep political and social consequences. In Germany this year Alternative for Germany, a populist party that says Islam is incompatible with the German constitution, has gained ground. There have been several attacks by militant Muslims. Syrians and others say the mosque problem is adding to mistrust.


  • Iran-backed Shi'ite militias to join assault near Mosul on new front (Reuters)   Iraqi Shi'ite militias backed by Iran said on Friday they would soon join the fight against Islamic State on a new front west of Mosul, a move which could block any retreat by the jihadists into Syria but might alarm Turkey and the United States.  The Shi'ite militias, with thousands of battle-hardened fighters trained by Iran, would bring important extra firepower to what is expected to be the biggest battle in Iraq since the U.S.-led invasion in 2003.  But their arrival on the battlefield in one of the most diverse parts of Iraq also creates worry for Western countries backing the Iraqi government offensive, who fear that the Shi'ite fighters could alienate residents in mainly Sunni areas.


  • The Return of Containment (Project Syndicate)  Russia of today presents a threat to the West similar to that of the Soviet Union of the latter half of the 20th century:

If it is to succeed, the West must recognize the advantages that Russia already wields – namely, Putin’s understanding of the Western psyche and political circumstances. On the international stage, Putin is tapping anti-American sentiment, which exists whether the US is strong or weak. Within countries, he is encouraging anti-elitist and anti-globalization movements.

Toward the end of the Soviet era, Russian leaders looked like the rearguard of a lost ideological cause. Today, by contrast, they can be perceived as the avant-garde of a movement toward isolationism, jingoism, and even hyper-nationalism. It is precisely because Western countries have now been swept up in this movement that it is so critical for rational leaders to stand up and advocate coherent strategies for containing Russia.


  • The Secret Success of Abenomics (Project Syndicate)  Japan's stagnating GDP growth is widely cited as indicating the country's economic policies are failing.  But that may not be the case - it may be a proof that GDP measurement is a faulty economic indicator:

According to official data, Japan’s economic growth slowed by one percentage point, in real terms, in the 2014 fiscal year. Yet, according to Bank of Japan researchers, tax data suggest that growth was more than three percentage points higher than the official figure, implying that GDP was some ¥30 trillion (about $300 billion dollars) larger than officially reported.

There is good reason to believe that it was. Tax data account for distributed GDP and cover a broader swath of economic activity than traditional measures of output. And, because few taxpayers have incentives to inflate their reported income, the resultant figures are unlikely to be overestimates.


  • Colombia, rebels say incorporating new proposals into peace deal (Reuters)  Colombia's government and FARC rebels are incorporating changes into the peace deal that was rejected in a referendum earlier this month in a bid to swiftly salvage the accord, both sides said on Friday.  The government and rebels are back at the negotiating table in Havana where they have been holding talks for four years on ending a 52-year old conflict that has killed more than 220,000 people.

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

  • The Anti-Aging Pill (MIT Technology Review)   An anti-aging startup hopes to elude the U.S. Food and Drug Administration and death at the same time.  The company, Elysium Health, says it will be turning chemicals that lengthen the lives of mice and worms in the laboratory into over-the-counter vitamin pills that people can take to combat aging.  The startup is being founded by Leonard Guarente, an MIT biologist who is 62 (“unfortunately,” he says) and who’s convinced that the process of aging can be slowed by tweaking the body’s metabolism (see "Is There a Fountain of Youth in Our DNA?").  The problem, Guarente says, is that it’s nearly impossible to prove, in any reasonable time frame, that drugs that extend the lifespan of animals can do the same in people; such an experiment could take decades. That’s why Guarente says he decided to take the unconventional route of packaging cutting-edge lab research as so-called nutraceuticals, which don’t require clinical trials or approval by the FDA.  See company website.  See also Can Elysium’s “Basis” Pill Really Make You Younger? (GarmaOnHealth)

  • The Blind Alley of Monetary Populism (Jeffrey Fraenkel, Project Syndicate)  JF has contributed to GEI.  The history of populism has been one of supporting "easy money".  The global populism of today is just the opposite.  Prof. Fraenkel suggests this new populism is misguided; that it is not logical to expect central banks to address income and wealth inequality which is at the core of the populist rants against those institutions:

The unconventional monetary policies of recent years may also have some new effects. Low interest rates have lately been squeezing banks’ profits. In Europe, this has become particularly pronounced, because banks are unable to pass negative interest rates on to depositors. Any self-respecting populist should like this squeeze on banks, especially one who is still angry about the 2008 global financial crisis.

Ultimately, easy money probably does more to reduce income inequality than to exacerbate it – an observation supported by econometric estimates. Nonetheless, it is not a particularly reliable tool for balancing income distribution. That should not be surprising: ensuring a more equitable distribution of income is not a central bank’s job.

The Fed and other central banks are balancing rapid growth not against equality, but against the dangers of future overheating and financial instability. They view their jobs as managing the overall economy. They are right to do so.

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