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What We Read Today 30 November 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:

  • OPEC Agrees to Cut Production

  • We are the Fake News Problem

  • Wall Street Strategists Do an About Face with Trump's Election

  • Seven Things that Turn Off Home Buyers

  • Consumers Turn into Debt Slaves

  • The Richest Countries in the World

  • The Poorest Countries in the World

  • Trump Tax Cut's will Cause Billion-Dollar Writedowns for Banks

  • Trump will Leave Business 'In Total' - Whatever that Means

  • Romney and Guiliani are Two of Four Finalists for Secretary of State

  • The Price Wrecking Ball for Obamacre Would Leave the Sick Unprotected

  • Trump Treasury Secretary Nominee Mnuchin's Tax Cut Math Doesn't Agree with Experts

  • Can the U.S. Become an Energy Superpower Next Year?

  • Up to 3 Million Backlog of EU Citizens to Seek UK Residency

  • Colombia Plane Ran Out of Fuel before Crashing

  • And More

Articles about events, conflicts and disease around the world

Global

  • OPEC Agrees to Cut Production in Drive to End Record Glut (Bloomberg)   OPEC clinched a deal to curtail oil supply, confounding skeptics as the need to clear a record global crude glut -- and prove the group’s credibility -- brought its first cuts in eight years. Crude rose as much as 8.8% in London.  OPEC will reduce output to 32.5 million barrels a day, Iranian Oil Minister Bijan Namdar Zanganeh told reporters in Vienna following a ministerial meeting on Wednesday. The breakthrough deal, effective January, showed an acceptance by Saudi Arabia that Iran, as a special case, can still raise production.

  • The richest countries in the world (24/7 Wall St., MSN Money)  This article lists the 25 richest countries in the world as ranked by GNI (Gross National Income) per capita.  Fifteen are countries or city-states with populations under 10 million; four are countries with 11 to 36 million people; four are countries with 65 to 81 million; and two have populatiuons over 100 million (U.S. and Japan).  Europe is the most represented continent (12 countries); Asia-Pacific (11); and North America (2).  The top ten:

  1. Qatar

  2. Macao

  3. Singapore

  4. Kuwait

  5. Norway

  6. United Arab Emirates

  7. Switzerland

  8. Hong Kong

  9. United States

  10. Saudi Arabia

  • The poorest countries in the world (24/7 Wall St.MSN Money)  Africa dominates this list with 22 of the 25 poorest countries, ranked according to GNI (Gross National Income) per capita.  Only three countries have populations greater than 40 million:  Democratic Republic of the Congo (ranked 1, 77 milion people); Ethiopia (11, 99 million); and Tanzania (25, 53 million).  Here are the top 10 (poorest first):

  1. Democratic Republic of the Congo

  2. Liberia

  3. Burundi

  4. Niger

  5. Guinea

  6. Malawi

  7. Mozambique

  8. Togo

  9. Madagascar

  10. Comoros

U.S.

  • Trump’s Tax Cut Means Billion-Dollar Writedowns for U.S. Banks (Bloomberg)  Donald Trump’s planned U.S. corporate tax cuts could translate to a big one-time earnings hit for many of the biggest U.S. banks, thanks to tax benefits they generated during the 2008 financial crisis.  Citigroup Inc. would take the deepest earnings hit -- perhaps $12 billion or more, according to recent estimates by the bank’s chief financial officer and several banking analysts. Mark Costiglio, a Citigroup spokesman, declined to comment. Others, including Bank of America Corp. and Wells Fargo & Co. could face multibillion-dollar writedowns.  The banks might have to write down deferred tax assets, which often pile up when a company loses money and can’t immediately enjoy the tax benefits of those losses. Any writedowns won’t have much impact on capital levels for the banks for regulatory purposes, and lower taxes will allow for higher earnings in the long run. But a one-time hit to earnings can make for a bruising quarter -- and even year -- for a bank’s results.

  • Trump announces he will leave business ‘in total’ — leaving open how he will avoid conflicts of interest (The Washington PostMSN News)   President-elect Donald J. Trump tweeted Wednesday morning that he would soon leave his “great business in total” to focus on the presidency, a response to growing worries over the businessman-in-chief’s conflicts of interest around the globe.  The announcement marks a turn from Trump’s months-long refusal to distance himself from his private business while holding the highest public office.  But it remained unclear whether the new arrangement would include a full sale of Trump’s stake or, as he has offered before, a ceding of company management to his children, which ethics advisers have said would not resolve worries that the business could still influence his decisions in the Oval Office.

  • Romney and Giuliani make the cut for Trump’s secretary of state finalists (The Washington Post, MSN News)  President-elect Donald Trump’s drama-ridden selection process for secretary of state has narrowed to four finalists, including 2012 Republican presidential nominee Mitt Romney and former New York mayor Rudolph W. Giuliani, Trump aides said Wednesday.  It was the first time that Trump’s transition team has publicly confirmed that Romney and Giuliani are competing for the highest ranking Cabinet position. Opponents of Romney have waged a remarkably public fight against him, saying the former Massachusetts governor should not get the nod because he attacked Trump in harsh personal terms during the presidential campaign and that Giuliani should be rewarded for his loyalty during the campaign.

Transition team officials would not name the other two finalists, but other leading candidates include retired Army Gen. David Petraeus — a former commanding general of the U.S. Central Command and CIA director — and Sen. Bob Corker (R-Tenn.), chairman of the Senate Foreign Relations Committee.

A fifth possible candidate is retired Marine Gen. John F. Kelly, former chief of U.S. Southern Command. Kelly, who clashed with the Obama administration over women serving in combat and plans to close the prison at Guantanamo Bay, is also a candidate for homeland security secretary and possibly other positions, people familiar with the selection process have said. Kelly is scheduled to meet with the president-elect today at Trump Tower.

  • 8 Big Changes Under Tom Price’s Obamacare Replacement Plan (The Fiscal Times)  Rep. Tom Price, 62, an orthopedic surgeon from the Atlanta suburbs and the chair of the House Budget Committee, began focusing his energies on dismantling Obamacare almost as soon as President Obama signed the landmark health insurance law in 2010. Over time, he has drafted and promoted a series of largely market-based substitutes to overcome what he has described as “oppressive” federal government strictures and runaway costs.  He is President-elect Trump's nominee to head the Department of Health and Human Services.  

The legislation Price is offering as a replacement to Obamacare is called the Empowering Patients First Act and is reflective of his long-standing concern that government has interfered with the traditional doctor-patient relationship. The latest iteration of his legislation would try to wean 20 million Americans off of Obamacare with a handful of tax credits, savings incentives, state grants and other marketing incentives to encourage competition within the insurance industry.

Price’s approach is comprehensive – his latest proposal totals 242 pages – and highly ambitious in conceiving of a parallel universe of health care insurance for many in this country.

But Price’s proposals are also controversial, among Republicans and Democrats alike.  And critics warn that anything approved along these lines would result in millions of Americans losing coverage. Moreover, younger, healthier and wealthier consumers would likely fare much better under Price’s plan than older and sicker people.

  • Trump Treasury secretary pick Mnuchin's tax claims about the wealthy defy math (CNBC)   Newly designated for Treasury secretary, Steve Mnuchin told CNBC on Wednesday that Donald Trump's tax plan would contain "no reduction" in taxes for the rich. Yet an independent analysis of the president-elect's plan suggests that most of the benefits would, in fact, go to the top earners.  Shortly after confirming that he had been chosen for the role of Treasury secretary, Mnuchin told CNBC that the president-elect's cap on itemized deductions would offset all the other cuts high earners would receive.  But the nonpartisan Tax Policy Center said Mnuchin's comments don't square with Trump's plan. In an analysis that included the deduction caps, which include benefits from charitable giving and mortgages, the center found that those changes aren't large enough to offset lower income tax and capital gains rates for the top earners.

Specifically, Trump's plan calls for capping deductions for single filers at $100,000, and at $200,000 for joint filers. It would also cut the top tax rate from 39.6 percent to 33 percent; trim the capital gains tax to 20 percent from 23.8 percent; lower the corporate tax and rate for pass-through incomes (partnerships and LLCs used by the weathy); and eliminate the estate tax.

...

According to the center's analysis, middle-class and lower earners would get a tax cut of less than 2 percent. The top 1 percent of earners would get a cut of 14 percent. And the top 0.1 percent would receive a break of more than 14 percent — totaling more than $1 million a year per filer.

 

  • Can the U.S. Become an Energy Superpower in 2017? (Bloomberg)  For decades, America depended on the world for energy. Today, it’s becoming a global supplier of oil and natural gas in its own right. This year, for the first time ever, the U.S. started turning gas from prolific shale formations into liquefied natural gas (LNG) and sending it overseas. In 2017, the country may be exporting more of the heating fuel than it imports for the first year since the 1950s.  Refurbished pipelines and terminals will come online next year to help unleash the U.S. shale gas boom into the world. But risks still loom. It remains costly to ship U.S. gas to major consumers in Europe and Asia, and President-elect Donald Trump’s trade priorities could make U.S. LNG more expensive than supplies from other producers around the world.

UK

  • Huge backlog as EU citizens rush to secure British residency (The Guardian)   EU citizens worried about their right to remain in Britain have inundated the Home Office with applications to secure their UK residency, leading to an official backlog that has trebled since the summer of 2015.  The figures emerged on a day that Labour demanded Theresa May guaranteed the rights of the more than 3 million EU citizens to remain in the UK before Brexit negotiations begin, with MP Keir Starmer saying there was “a mounting sense of very real injustice” over the issue.  The number of outstanding applications from European citizens to secure their residency status in Britain went from 37,618 in June 2015 to almost 100,000 “currently in progress” in early July 2016, including those seeking permanent residence cards and documents for non-EU family members of European citizens.

Colombia

  • Colombia plane crash: leaked audio shows pilot said he ran out of fuel (The Guardian)  The pilot of the chartered plane carrying a Brazilian soccer team told air traffic controllers he had run out of fuel before crashing into the Andes, according to a leaked recording of the final minutes of the flight.  In the sometimes chaotic audiotape from the air traffic tower, the pilot of the British-built jet could be heard repeatedly requesting permission to land due to a “total electric failure” and lack of fuel, before slamming into a mountainside late on Monday.  

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

For much of the middle of the 20th century, the most popular and influential journalist in the western world was a gossip columnist and radio host named Walter Winchell.

At his peak, Winchell’s work was consumed by some 50 million people in the United States alone—2/3 of the adult population—which included his radio broadcast and his infamous daily column, which was syndicated to over 2,000 newspapers. It was known simply as “The Column.”

But what was the column? Mostly fake news and prurient, baseless gossip. When it wasn’t trafficking in rumors about the sex lives of celebrities, it was peddling bogus stock tips, pushing government propaganda sourced from J. Edgar Hoover, and accusing mostly innocent people of being communists, Nazis or homosexuals. And that’s just the stuff that Walter Winchell actually wrote—a huge portion of the material in the column was directly submitted and written by press agents.

1940 New Yorker exposé once fact-checked the column and found that “of the 131 items in which individuals were named, fifty-four were completely inaccurate, twenty-four were partly inaccurate, and fifty-three were accurate.”

  • Wall Street Strategists Are Taking a Very Different Tone After Trump's Win (Bloomberg)  Prior to Nov. 8, analysts were issuing dire warnings about what could befall markets across the globe should Donald Trump pull off a surprise upset in the U.S. presidential election.  Fast forward to three weeks after the election, and the U.S. stock market is continuing to hit record highs. And even while analysts are scrambling to decode the impact the President-elect's campaign promises will have on their respective sectors, they're assuming a vastly different tone.  Econintersect:  One reason for the change is that Wall Street is predominantly a sell-side business.

  • 7 things that could turn off homebuyers (Bankrate.com)  Here are a list of seven things that can cause a potential buyer to quickly cross a seemingly desirable hous off the list.

  • Cartoon of the Day (Ocassional Links & Commentary)  Hat tip to Nathan Becker.  Econintersect:  Desirable public policy would enable maximizing the number of sitters relative to the number of sitees.

  • This is How Consumers Turn into Debt Slaves (Wolf Street)  Econintersect:  We in the U.S. are living beyond our means because insufficient means are provided to us.  Soaring consumer debt (up 50% since late 2010) is supporting the economy.  The additional spending is causing little inflation which implies that there is insufficient money in the economy.  If the consumer debt were replaced with extra consumer "earnings" it would not cause inflation because the same amount of money would be spent and prices would not be driven up any more than with the same spending funded with credit.  If more money were in consumer hands and credit were much more expensive, the same level of price stability could be maintained.  But, for every winner there must be a loser?  In this case the leeches providing the credit would receive less "income".  Note: The $1.2 T increase in consumer debt constitutes about half of the GDP increase 2011-2015.


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