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What We Read Today 20 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:

  • Ten Jobs Where Employees Tend to Have High IQs

  • Iceland has Solved the Teenage Substance Abuse Problem - But Nobody Listens

  • Two Reasons the Economy Should Fare Better in 2017

  • 3 Plug-In Hybrids That Actually Make Financial Sense

  • Why the Tax System has Not Led to Narrowing of Income Inequality

  • Oil Prices Jump Ahead of OPEC Meeting

  • Will President Trump Prick the "Big, Fat, Ugly Bubble"?

  • Looking at the Trump Deficit

  • President Trump Offers a Confrontational Inauguration Address

  • What ton Expect from Trumponomics

  • Foreign Policy Issue Number 2 for Trump:  Afghanistan

  • Trump Says Europe is in Trouble

  • UK Retail Sales for December Surprise to the Downside

  • Deutsche Bank's Accounting Magic

  • Syrian Rebels Hopelessly Divided

  • Japan is Challenging Trump on Trade

  • And More

Articles about events, conflicts and disease around the world

Global

  • Oil prices jump 2 percent ahead of producers' compliance meeting (Reuters)   Oil prices rose more than 2% on Friday on expectations that this weekend's meeting of the world's top oil producers would demonstrate compliance to a global output cut deal, but rising U.S. drilling activity limited gains.  Members of the Organization of the Petroleum Exporting Countries and some other producing countries including Russia will meet in Vienna this weekend to establish a mechanism to verify compliance with a deal to cut 1.8 million barrels per day (bpd) of output, OPEC's secretary general told Reuters.  Saudi Arabia's energy minister said 1.5 million bpd had already been taken out of the market.

U.S.

  • Will President Trump Prick The ‘Big, Fat, Ugly Bubble’? (The Felder Report)  Trump is clearly not running away from his famous “big, fat, ugly bubble” comment. Just the opposite. In fact, it was probably Carl Icahn who helped him to fully appreciate just how dangerous the current situation is. In naming Icahn to his special advisory position he is demonstrating that he takes the risks currently posed by the financial markets very seriously. It sounds like Icahn may be counseling the president that it’s in everyone’s best interest to deal with the glaring “dangers” posed by the financial markets to both the economy and to Trump’s presidency “sooner” rather than later. For these reasons, I wouldn’t be surprised to see the administration make, in Spitznagels words, ‘encouraging asset prices and investments to correct themselves,’ its first order of business after the inauguration today.

  • The Trump Deficit (Kenneth Rogoff, Project Syndicate)  Two excerpts (from the beginning and the end):

It is a post-financial-crisis myth that austerity-minded conservative governments always favor fiscal prudence, while redistribution-oriented progressives view large deficits as the world’s biggest free lunch. This simplistic perspective, while perhaps containing a grain of truth, badly misses the true underlying political economy of deficits.

If a Trump presidency does entail massive borrowing – along with faster growth and higher inflation – a sharp rise in global interest rates could easily follow, putting massive pressure on weak points around the world (for example, Italian public borrowing) and on corporate borrowing in emerging markets. Many countries will benefit from US growth (if Trump does not simultaneously erect trade barriers). But anyone counting on interest rates staying low because conservative governments are averse to deficits needs a history lesson.

  • President Donald Trump’s Inauguration Speech Was A Declaration Of War (The Federalist)  President Donald J. Trump did not walk to the microphone in front of the Capitol today to salve wounds or mend hurt feelings. There were no calls for unity or attempts to bridge the political divide. After being sworn in as the 45th President of the United States, Trump issued a call to arms and declared war on the ruling class.

  • Trump's Uneasy Gamble (The Atlantic)  Donald Trump’s combative and confrontational speech, unusual for an inaugural address, encapsulated the defining political gamble he is presenting to a Republican Party still uneasily settling into his harness.  In his address, Trump offered a definition of his presidency that spoke directly to the anxieties of his uneasy electoral coalition centered on the non-college educated and non-urban whites that supported him in record numbers. But the speech may also strike those more optimistic about the direction of American life as too grim, divisive, insular, and backward looking.  See also Trump’s Presidency Opens With Combative ‘America First’ Address (Bloomberg)

  • What to Expect from Trumponomics: QuickTake Scorecard (Bloomberg)  Here is a fairly quick review of what "experts" have said and are saying about President Trump's economic policy plans. 

  • Day One Agenda for Trump Administration: Energy Deregulation (EcoWatch)  Bloomberg reported this morning that advisors have prepared an energy/enviro "short list," which includes reversing Obama administration guidelines on factoring climate change into pipeline construction and steps to suspend the social cost of carbon.  And campaign advisor and oil CEO Harold Hamm told CNBC he projects energy deregulation will be a "Day One agenda" item. The GOP got an early start moving their deregulation goals Thursday, as Rep Evan Jenkins, R-WV, introduced a resolution to permanently block the Obama administration's stream protection regulations.

  • 9 foreign policy issues the Trump administration will have to face (The Washington Post)  Issue number 2 is Afghanistan.

afghanistan.control.map.2017.jan

EU

  • Trump Says Europe Is in Trouble. He Has a Point. (Council on Foreign Relations)  President-elect Donald Trump’s interview last weekend, in which he casually predicted the breakup of the European Union, has certainly attracted attention. But despite the consternation, there is some truth in Trump’s message. The E.U., he observed, is dominated by Germany.  He said:

 “People, countries want their own identity,” 

UK

  • UK retail sales dive as inflation weighs, jolting sterling (Reuters)   British retail sales suffered their biggest slump in more than four years in December, denting what had been a promising fourth quarter and rattling sterling as more signs emerged of a pick-up in inflation since June's Brexit vote.  Consumer spending has been the main driver of Britain's economy since June's referendum decision to leave the European Union, with other sources of growth like investment and trade lagging.  Friday's data showed retail sales volumes dropped 1.9% month-on-month in December, far below economists' forecasts in a Reuters poll for a 0.1% decline and the biggest fall since April 2012.  That miss, which cut fourth quarter growth to 1.2% from the third quarter's near two-year high of 1.8%, prompted sterling to slide by almost half a cent to below $1.23.

Germany

Syria

  • Syrian rebels bitterly divided before new peace talks (Reuters)  Syrian President Bashar al-Assad's opponents appear more divided than ever as they prepare for peace talks next week, demoralised by their defeat in Aleppo and unable to unite into a single force to defend their remaining territory.      The new diplomacy led by Assad's Russian allies has exposed yet more splits in a rebellion that has never had a clear chief, with rebel factions long fractured by regional rivalries, their ties to foreign states, and an ideological battle over whether to pursue Syrian national or Sunni jihadist goals.  Several leaders have became prominent only to be killed in the nearly six-year-old conflict and numerous military and political coalitions have come and gone. After the rebels' defeat in Aleppo last month, the latest effort to unify the jihadist and moderate wings of the insurgency collapsed.  By contrast Assad is as strong as at any time since the fighting began, his Russian and Iranian backers committed to his survival while the differing agendas of foreign states backing the rebels have added to their divisions.

Japan

  • Taking on Trump: A Lesson from the Japanese (Council on Foreign Relations)  Rather than trying to hide from the spotlight, Japan has been surprisingly forthright in challenging the facts and perceptions of the new nationalists, and forcing them to confront some of the logical and factual inconsistencies in their positions. With Trump poised to take office, both U.S. allies and multinational companies that do business in the United States and abroad should be paying close attention, and emulating Japanese leadership.

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

  • Improving confidence

  • The U.S. industrial recession is ending

  • 3 Plug-In Hybrids That Actually Make Financial Sense (Cheat Sheet)  Plug-in hybrids are being offered at no premium over standard hybrid models.  With tax incentives they can sometimes be cheaper than stripped down old-fashioned ICE models.  For people who use cars for short commutes, running local errands, and nearby shopping, owners of these cars may never buy gasoline again.  Yet they have a vehicle that can, if needed, take off on an extended trip of hundreds or thousands of miles without a recharging worry.  Pictured below is the 2016 Ford Fusion Enrgi Titanium, available  at a net price of $25,348, or $296 a month with $941 down.  The car is equipped at a level consistent with a loaded $36,000 model.  With the 2017 models out, such low-priced bargains are available on the out-year models

fusion.hybrid.plugin.

  • Income Inequality (inequality.org)  Income includes the revenue streams from wages, salaries, interest on a savings account, dividends from shares of stock, rent, and profits from selling something for more than you paid for it. Income inequality refers to the extent to which income is distributed in an uneven manner among a population. In the United States, income inequality, or the gap between the rich and everyone else, has been growing markedly, by every major statistical measure, for some 30 years.  Since the early 1980s the nature of income distribution in the American economy has drastically changed:

Since 1979, the before-tax incomes of the top 1 percent of America’s households have increased more than four times faster than bottom 20 percent incomes.

The Congressional Budget Office defines after-tax income as “before-tax income minus federal taxes.” After taxes, top 1 percent incomes are increasing even faster than before taxes. Before-tax income growth for the top 1 percent has averaged 174.5 percent since 1979. The after-tax increase: 200.2 percent. A progressive tax system should function to narrow income gaps between the affluent and everyone else. Over recent decades, America’s tax system has done no narrowing.

 
Source: Congressional Budget OfficeThe Distribution of Household Income and Federal Taxes, Figure 11, November 2014.


Source: Congressional Budget Office, The Distribution of Household Income and Federal Taxes, Figure 13, November 2014.


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