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What We Read Today 12 December 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:

  • Are the CIA Allegations about Russia Believable?

  • McConnell Rejects Special Panel for Russia Investigation

  • Former U.S. Ambassador to Russia Says Putin Wanted Revenge against Clinton

  • Trump Warns Electoral College Suit Could Undermine His Election

  • What Exactly does the Constitution Say about State Control over Electors?

  • Trump Says 'Nobody Really Knows if Climate Change is Real'

  • Nobel Winner Hart Says 'Decentralize the EU'

  • Speculators have been Surprised by Euro Decline

  • UK House Prices are Falling, Still Higher than Last Year

  • The Troika Still Not Satisfied with Greece

  • Greek Government Announces Pension 'Bonuses' and Some VAT 'Cuts'

  • Greek Passes More Austerity Budget Cuts, Expects Growth

  • Italy's 10-Year Yields Less than U.S.

  • Another Sign of Distress in China

  • Currency Devaluation Does Not Always Lead to Domestic Growth

  • Sparrow-Sized Dinosaur Tail Discovered with Feathers

  • And More

Articles about events, conflicts and disease around the world

U.S.

  • McConnell rejects special panel for Russia election allegations (The Hill)   Senate Majority Leader Mitch McConnell (R-Ky.) said the Senate Intelligence Committee should investigate recent CIA findings that the Russian government tried to influence the U.S. presidential election.  Calling the allegations of Russian meddling “disturbing”, McConnell said Monday the intelligence panel should take the lead, dismissing calls by Sen. John McCain (R-Ariz.) and others for a special select committee to review the matter.  The Kentucky Republican said the Intelligence Committee is “more than capable of conducting a complete review of this matter”.

  • Are CIA statements on Russia proof? Believable at all? (Mish Talk)  Mish dissects the Sunday talk show palaver about the "Russian Connection".  He is not impressed.  One of the articles he held up for ridicule was the following one.

  • Former ambassador to Russia: Putin wanted ‘revenge’ against Clinton (The Hill)  Russia interfered in the U.S. elections to get revenge against Hillary Clinton, a former U.S. ambassador to the Kremlin said Sunday.  Michael McFaul, who served as the U.S. ambassador to Russia from 2012 to 2014, said he thinks Russian President Vladimir Putin wanted to help Donald Trump win the presidency to hurt Clinton.  McFaul said on NBC's "Meet the Press":

"Let's remember that Vladimir Putin thinks [Clinton] interfered in his election — the parliamentary election in December 2011 — and has said as much publicly, and I've heard him talk about it privately." 

  • Trump warns Electoral College lawsuit could undermine his election (Politico)  Donald Trump is warning that a Colorado lawsuit brought by two Democratic members of the Electoral College could harm his bid to become president.  The suit, brought by Colorado electors Polly Baca and Robert Nemanich, is intended to overturn a state law that forces them to support the statewide popular vote winner when the Electoral College convenes to pick the president on Dec. 19. In Colorado’s case, the winner was Hillary Clinton but a legal victory could invalidate similar laws in 28 other states, including several where Republican electors say they’re legally required to support Trump.  Econintersect:  It seems to us that the U.S. Constitution clearly states that each state has the right to bind the electors from that state in anyway they chose to specify.  From Article 2, Section 1:

"Each State shall appoint, in such Manner as the Legislature thereof may direct, a Number of Electors, equal to the whole Number of Senators and Representatives to which the State may be entitled in the Congress: but no Senator or Representative, or Person holding an Office of Trust or Profit under the United States, shall be appointed an Elector."

EU

  • Oliver Hart, Nobel Prize in Economics, believes that the EU should be more decentralization (euroefe.euractiv.es)  Hat tip to Laurentiu Nicolae. The European Union should make a decentralization process that returned to member countries certain areas of decision, according to the 2016 winner of the Nobel Prize in Economics Oliver Hart, who in an interview with Efe said he has always thought that the euro was "a mistake".  Hart was honored for his contributions to the theory of contracts, for which they have created tools that help understand the contracts in real life, and to resolve potential pitfalls in its drafting.  Hart said in jis interview with efe:

"I think the key word is decentralization.  Perhaps the EU has gone too far in centralizing power. If you leave this trend, the European Union can survive and flourish, but, otherwise, could fail."

[The countries of the] EU "are not sufficiently homogeneous" [to b]e "one unit", [which is] "really a mistake to try to do." 

Click for large image.
euro.speculators.downward.trend

UK

  • UK House prices are on course to fall below £300,000 in December (City A.M.)  The UK's house prices are on course to fall below £300,000 in December - and house price growth is likely to weaken next year, new figures have shown.  The Rightmove House Price Index showed prices are on course to fall 2.1% in December, after a 1.1%  fall in November.  That will put the average UK asking price at £299,159 - down from £305,670 ($324,000) in November.  But prices will still be 3.4% higher than a year ago, down from a 4.5% uplift in November.

Greece

  • Labor Reforms, Fiscal Gap the Main Issues in Talks Between Government, Institutions, Says EC (Greek Reporter)  Labor reform issues and the fiscal gap in 2018 will be the focus of the meetings between the Greek government and the heads of institutions who will return to Athens on Tuesday for talks on Greece’s second program review, a European Commission official said on Monday. According to the source, the institutions will also want to discuss the announcements made by Prime Minister Alexis Tsipras on the one-off benefit for low-income pensioners and the suspension of the VAT for the islands.  See next two articles.

  • Tsipras announces extra benefit for low-income pensioners, suspension of VAT rise for NA islands (Capital.gr)  Prime Minister Alexis Tsipras announced on Thursday an extra benefit for low income pensioners and the suspension of an increase of the VAT on the islands of the northern Aegean while the refugee crisis continues.  Speaking in a televised address on public broadcaster ERT, he said the government will redistribute €617 million to 1,600,000 Greeks who receive a pension lower than €850  ($900) per month. Concerning the VAT whose increase forms part of an already agreed batch of measures with the creditors, he said the government intends to respect a deal with the institutions to increase the tax.

  • Greece passes austerity 2017 budget, eyes 2.7 percent growth (CNBC)  Greece's Parliament has passed a budget of continued austerity as mandated by the country's creditors, but which forecasts robust growth for 2017.  Prime Minister Alexis Tsipras says it will mark Greece's "final exit" from its nearly decade-long financial crisis.  The budget adds more than €1 billion in new taxes, mostly indirect taxes on items from phone calls to alcohol. It also cuts spending by over €1 billion.  The budget was backed by the left-dominated ruling coalition and opposed by all other parties. It passed by a vote of 152-146 on Saturday.  Despite the continued austerity, Tsipras predicted that 2017 will be a "landmark year" with 2.7% economic growth. He said his government has achieved a higher-than-forecast 2016 primary surplus.  (Econintersect:  This strikes us as a 'plan' heavy on 'hopium'.  Greece is going to cut its way to growth? no sign of that yet, as shown in the graphic from Twitter, below)

Click for larger image.

  • Greek Defence Minister: There Are No Grey Zones in the Aegean (Greek Reporter)  Greece claims problems with repeated violations of its airspace by Turkey's military aircraft.  Greek Defence Minister Panos Kammenos underlined the ‘risk of an accident’ in the Aegean from the continuous violations of the Greek airspace by Turkish fighters and the air combats that follow, in an interview with Realnews Sunday newspaper.

Italy

Click for large image.
italy.us.10.year.yields

China

Remember China's wacky Transit Elevated Bus aka TEB which promised to carry passengers over traffic? Well, we have some bad news for you. China News reported that the 22-meter-long prototype unveiled in early August had been collecting dust in its hangar for well over two months, according to the two old men who were guarding the vacated test site in Qinhuangdao. One of them added that he could no longer contact his employer. A quick look at the project's still-functioning website is just as worrying, with its latest post dating back to September 15th.

Following China News' report last week, The Paper reached out to an unnamed senior staffer at TEB Technology Limited and learned that the company has indeed been facing some "significant" financial issues since mid-November, and its sole investor -- a Beijing wealth management company called Huayingkailai -- refused to provide further funding. In fact, Huayingkailai landed in hot water recently with accusations of illegal fundraising plus fake credit rating. The Paper tried to call the numbers listed on that company's website but none were answered; I did the same and had no luck, either.

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

  • 'Once in a lifetime find': Dinosaur tail discovered trapped in amber (CNN)  The tail of a 99-million-year-old dinosaur the size of a sparrow has been found entombed in amber, an unprecedented discovery that has blown away scientists.  Xing Lida, a Chinese paleontologist found the specimen, the size of a dried apricot, at an amber market in northern Myanmar near the Chinese border.  The remarkable piece was destined to end up as a curiosity or piece of jewelry, with Burmese traders believing a plant fragment was trapped inside. Pictured below, first the feathered tail in amber; second a small coelurosaur on the forest floor.  Xing told CNN:

"I realized that the content was a vertebrate, probably theropod, rather than any plant.  I was not sure that (the trader) really understood how important this specimen was, but he did not raise the price."

dinosaur.tail.in.amber

dinosaur.sparrow.sized

  • Does the financial channel of exchange rates offset the trade channel? (Bank for International Settlements)  Does currency devaluation improve trade competitiveness and stimualte domestic economic activity?  This paper argues that, while the "trade channel" effect is possible, the "financial channel" effect is negative and can more than offset.  In economies where there is a large amount of foreign currency borrowing, devaluation damages are larger than trade benefits:

Whether an exchange rate appreciation is contractionary or expansionary rests on whether the trade or financial channel predominates. The strength of the trade channel depends on the nature of trade flows, while the intensity of the financial channel depends on the sensitivity of domestic balance sheets to the exchange rate and the amount of foreign borrowing. The intensity of both of these channels can differ across countries for a range of reasons. So an appreciation may be contractionary for some countries but expansionary for others.

Click for larger image.

  • Trump says ‘nobody really knows’ if climate change is real (The Washington Post)  (Following up on our climate change discussion from yesterday's WWRT.)   President-elect Donald Trump said Sunday that “nobody really knows” whether climate change is real and that he is “studying” whether the United States should withdraw from the global warming agreement struck in Paris a year ago.  In an interview with “Fox News Sunday” host Chris Wallace, Trump said he’s “very open-minded” on whether climate change is underway but has serious concerns about how President Obama’s efforts to cut carbon emissions have undercut America’s global competitiveness.  It’s not the first time that Trump has disregarded that established scientific view.  During the presidential campaign, Trump referred to climate change as a “hoax” perpetrated by the Chinese, a comment he later described as a joke. But during a town hall in New Hampshire, he also mocked the idea of global warming. At that event, Meghan Andrade, a volunteer for the League of Conservation Voters, asked Trump what he would do to address the issue, to which he replied: “Let me ask you this — take it easy, fellas — how many people here believe in global warming? Do you believe in global warming?”  After asking three times “Who believes in global warming?” and soliciting a show of hands, Trump concluded that “nobody” believed climate change was underway except for Andrade.


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