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What We Read Today 11 January 2017

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 We Really Having a Great Rotation from Bonds to Stocks?

  • Facebook is Starting a New 'Meaningful Conversation' Project

  • Ben Franklin is Widely Misinterpreted

  • Excess Reserves from QE are Windfall to Banks - at Government Expense

  • About 1 Billion Adults Globally have No Formal Education

  • Tax Returns Show Fewer People Hit with Obamacare Tax Penalty

  • More than 5 Million Got Obamacare Subsidies Last Year:  IRS

  • CNN's Timeline of Trump Press Conference with Video Clips

  • Trump Produces a 1.5% Decline in the Dollar in Just 2 Hours

  • Experts Claim Trump is in a Constitutional Minefield

  • Best U.S. Cities for Public Transport

  • EU Objects to U.S. Scanning of Yahoo Mail

  • Does Russia Now Regret Meddling in U.S. Election?

  • India Threatens Amazon over National Flag on a Doormat

  • Alternative Local Currencies

  • Diplomacy Issues for China in 2017

  • And More 

Articles about events, conflicts and disease around the world

U.S.

  • Tax forms show fewer people hit with Obamacare tax penalty, more got Obamacare aid (CNBC)  The number of people who owed Obamacare fines last year dropped by about 20%, while the number of Americans who benefited from financial aid for Obamacare plans grew to more than 5 million, the IRS said.  In a letter to Congress, Internal Revenue Service Commissioner John Koskinen said 5.2 million people got $19.2 billion worth of tax credits to reduce their monthly premiums for health coverage bought from government-run marketplaces during 2015. Those subsidies were declared in tax filings last year.  The average amount of premium tax credits an Obamacare customer received for 2015 coverage was $3,620, according to the IRS's letter. That letter arrived as Congress moves toward repealing Obamacare.  The number of people receiving Obamacare subsidies was up from 3 million in 2014. For that year, customers got more than $10 billion in tax credits, with an average subsidy of $3,430 annually, according to the IRS.  Obamacare subsidies are available to people with low and moderate incomes. People who earn less money get more in assistance than higher earners. 

  • Trump accuses U.S. spy agencies of Nazi tactics over 'phony' Russia dossier (Reuters)  President-elect Donald Trump escalated a fight with U.S. spy agencies on Wednesday, nine days before he takes over their command as president, and accused them of practices reminiscent of Nazi Germany. The Republican said leaks from the intelligence community led to some U.S. media outlets reporting unsubstantiated claims that he was caught in a compromising position in Russia.  Trump told a news conference in New York:

"I think it was disgraceful, disgraceful that the intelligence agencies allowed any information that turned out to be so false and fake out. I think it's a disgrace, and I say that ... that's something that Nazi Germany would have done and did do." 

Click for large image.
trump.talks.down.the.dollar

"The president-elect's disregard for ethics and precedent and the Constitution in his press conference today are going to precipitate an ethics and constitutional crisis from the day he's sworn in." 

  • These U.S. Cities Offer the Best Job Access to Transit Riders (StreetsBlog USA)  How well does your city’s transit system connect people to jobs? A new report from the University of Minnesota lays out how many jobs are accessible via transit in major American cities.  Econintersect:  Comments on this article cite some opinions differing from research report.

EU

  • EU says U.S. explanation of Yahoo email scanning not enough (Reuters)   The United States has not satisfied the European Union's concerns about Yahoo's (YHOO.O) scanning of all customers' incoming emails for U.S. intelligence purposes, the bloc's justice chief told Reuters in an interview.  The European Commission, the EU executive, asked the United States in November for clarifications on the secret court order served to Yahoo as part of its monitoring of a new transatlantic pact facilitating the exchange of personal data by businesses.  To clinch an agreement on the EU-U.S. Privacy Shield, as the data transfer framework is known, Washington pledged not to engage in mass, indiscriminate surveillance.

Russia

Afghanistan

  • Afghan Taliban releases video of U.S., Australian hostages (Reuters)  The Afghan Taliban released a video on Wednesday showing an Australian and an American hostage pleading with the U.S. government to negotiate with their captors and saying that unless a prisoner exchange was agreed they would be killed.  Timothy Weeks, an Australian teacher at the American University in Kabul and his American colleague Kevin King were seized near the campus in August.  The video, which Weeks said was made on Jan. 1, showed the two men, both bearded, asking their families to put pressure on the U.S. government to help secure their release.  Addressing President-elect Donald Trump, who is due to take office on Jan. 20, Weeks said the Taliban had asked for prisoners held at Bagram air field and at Pul-e-Charkhi prison on the outskirts of Kabul to be exchanged for them.

India

  • India threatens Amazon over flag doormat (CNN)  India has threatened to cancel the visas of Amazon employees if the retailer continues to sell doormats featuring the country's flag.  Foreign minister Sushma Swaraj described the product as "unacceptable" and directed the Indian High Commission in Canada to take the issue up with Amazon at "the highest level."  She said:

"Amazon must tender unconditional apology.  They must withdraw all products insulting our national flag immediately."

A couple of months back, the Telangana government introduced coupons or tokens that will operate within the local vegetable market, of denominations as low as Rs 5, Rs 10 and Rs 20; in order to boost cash liquidity. When people enter the market they can procure these coupons in exchange for actual cash; and use them to shop. When they leave, the coupons can be redeemed back for cash.

Interestingly, the concept of using local coupons as an alternative to the national currency is not a new one. For instance, food courts of many malls have a similar system; where you exchange cash for a special debit card that only works in the restaurants in that area. Globally, it is a well-established practice known as ‘Local Exchange Trading Systems’ (LETS)—a concept that was first tried in 1980s in British Columbia in Canada. Since then, LETS has proliferated in many countries across the continents, meeting with varied levels of successes. There are, at present, more than 3,000 such local currencies operating across the world. There are, in fact, country exchanges and forums that connect all the local LETS together to exchange best practices.

China

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

  • Great Debate Erupts Over Great-Rotation Thesis for Stocks, Bonds (Bloomberg)  How long will it last? The so-called great rotation -- the massive flow of money out of the bond market into stocks -- is increasingly splitting heavyweight analysts.  The cycle of funds out of fixed-income markets and into equities, shown in the chart below, has taken a bit of a breather in recent days. Even so, for Charles Schwab Corp.’s chief global strategist Jeffrey Kleintop, the pattern of the past two months marks an important juncture, and he’s anticipating the shift has years to run.  That puts the wealth-management firm at odds with Goldman Sachs Group Inc., whose David Kostin this month rebutted expectations the rotation will stand the test of time. Many investors are restricted from moving money out of bonds, and allocations to debt securities are already near the lowest levels in 30 years, the firm’s chief equity strategist said. Similarly, Citigroup Inc. says there’s no such thing as the great rotation.

  • Facebook to start new project to help people engage in meaningful conversations (The Financial Express)  The social media site Facebook has today launched a new platform in its effort to help people have meaningful conversations.  The Facebook journalism project as it is being called, will help people not only to get more information but will also help in connecting with each other. While announcing the project, the social media site said that the project will establish stronger ties between Facebook as well as the news industry.

Announcing further about the project, the California-based company said that it will also collaborate with news organisations in order to develop products and will also work with publishers and educators on how people can be equipped with the better knowledge in this era of digital age.

  • What Ben Franklin Really Said (LawFare)  This author says that famous quote by Benjamin Franklin that “Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety” does not mean what it seems to say. Not at all:

The words appear originally in a 1755 letter that Franklin is presumed to have written on behalf of the Pennsylvania Assembly to the colonial governor during the French and Indian War. The letter was a salvo in a power struggle between the governor and the Assembly over funding for security on the frontier, one in which the Assembly wished to tax the lands of the Penn family, which ruled Pennsylvania from afar, to raise money for defense against French and Indian attacks. The governor kept vetoing the Assembly’s efforts at the behest of the family, which had appointed him. So to start matters, Franklin was writing not as a subject being asked to cede his liberty to government, but in his capacity as a legislator being asked to renounce his power to tax lands notionally under his jurisdiction. In other words, the “essential liberty” to which Franklin referred was thus not what we would think of today as civil liberties but, rather, the right of self-governance of a legislature in the interests of collective security.

What's more the “purchase [of] a little temporary safety” of which Franklin complains was not the ceding of power to a government Leviathan in exchange for some promise of protection from external threat; for in Franklin’s letter, the word “purchase” does not appear to have been a metaphor. The governor was accusing the Assembly of stalling on appropriating money for frontier defense by insisting on including the Penn lands in its taxes--and thus triggering his intervention. And the Penn family later offered cash to fund defense of the frontier--as long as the Assembly would acknowledge that it lacked the power to tax the family’s lands. Franklin was thus complaining of the choice facing the legislature between being able to make funds available for frontier defense and maintaining its right of self-governance--and he was criticizing the governor for suggesting it should be willing to give up the latter to ensure the former.

In short, Franklin was not describing some tension between government power and individual liberty. He was describing, rather, effective self-government in the service of security as the very liberty it would be contemptible to trade. Notwithstanding the way the quotation has come down to us, Franklin saw the liberty and security interests of Pennsylvanians as aligned.

  • Circuitous hidden wonders of paying interest on “excess reserves.” (Alternative Economics)  The Federal Reserve just went through its annual ritual of disclosing its preliminary results for the year: The income it earned less its operating expenses, according to central bank accounting, and how much of these earnings it is remitting, as it does every year, to the US Treasury Department. But this statement includes another nugget.  In 2016, the Fed paid our favorite banks $12 billion in interest on their “excess reserves” held at the 12 regional Federal Reserve Banks (the New York Fed, the Boston Fed, the Dallas Fed, the San Francisco Fed, etc.). But wait… who’s actually paying that $12 billion?  Is it just a well-earned freebie for the banks, conjured up out of nothing, in Fed-style? Nope. The taxpayer paid the $12 billion to the banks. Here’s how:

The Fed earns interest income from the $2.46 trillion in Treasury securities and from the $1.74 trillion in Agency mortgage-backed securities on its balance sheet. These are the securities the Fed bought from its Primary Dealers with money that it had created under the QE program. So now, it’s collecting the coupons. This is its income.

After subtracting its operating expenses ($709 million in 2016) and the interest it pays to the banks for their “excess reserves,” it remits the remainder to the Treasury Department. This is revenue for the US government, which can use every dime it gets.

According to the Federal Reserve Board’s preliminary estimates of its 2016 results, it will pay the Treasury Department $92 billion. That’s down from $97.7 billion it paid the Treasury in 2015.

Part of the reason why the payment is lower: the Fed is paying the banks more on their “excess reserves”; and this amount it pays the banks is deducted from the amount it pays the Treasury. Here are those infamous “excess reserves” that came into being as QE kicked off at the end of 2008:

  • About one-fifth of adults globally have no formal schooling (Pew Research Center)  In many parts of the world, particularly in poorer countries, attainment of even the most basic education is still far from universal. Indeed, roughly one-in five-adults (19%) around the globe have no formal schooling at all, according to a recent Pew Research Center report on education that also studied its relationship to religion.  While virtually all adults in Europe (98%) and English-speaking North America (99%) have at least some education, four-in-ten in the Middle East and North Africa (41%) and in sub-Saharan Africa (41%) have not completed even a year of primary school.

Click for larger image.


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