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What We Read Today 21 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:

  • Global Bond Markets Lost $150 Billion this Week

  • Trump's Exec Order on Obamacare is Aimed against the Individual Mandate

  • Trump was the First President to Use These Words in an Inaugural Speech

  • Canadians Trying to Travel to U.S. to Protest Trump Refused Entry at Border

  • The Biggest Target in Trump's Inaugural Speech Wasn't Obama, It was George Bush

  • U.S. Will Warm Faster then Much of the Planet

  • Trump Has Replaced the WhiteHouse.gov Page on Global Warming with Page on Increasing Oil Production

  • Theresa May is Headed for "Brexit Max"

  • Lithuania Street Art Reveals Distrust of Trump

  • Moscow Players Toast the End of American World Leadership

  • China Has Built the World's Largest Bullet Train Network and is Just Over Half Done

  • Chinese Capital Flight is Back

  • Kevin O'Leary Promises to Eradicate Justin Trudeau's Policies

  • A Big Part of the American Dream is Dying

  • California is Boosting Climate Change Fight

  • Trump is Not Alone:  Others are also Building Walls All Around the World

  • Trump Sees Future in Coal, China in Renewables - Which is Best Vision?

  • The U.S. CEO to Worker Pay Ratio Exploded 12X 1980-2000

  • And More

Articles about events, conflicts and disease around the world

Global

Click for larger image.
global.bonds.2017.jan.20

U.S.

  • Trump’s executive order on Obamacare, explained by two health policy experts (Vox)  Shortly after the end of his inaugural parade, President Donald Trump issued his first executive order: instructions for the federal government to dismantle the Affordable Care Act “to the maximum extent permitted by law”.  The executive order is a powerful political statement about the health care law, one that directs agencies to “waive, defer, grant exemptions from, or delay” any taxes or penalties they possibly can. The order doesn’t give Trump any new powers, but does suggest that he wants to move quickly on dismantling major parts of the health overhaul.  In particular, the executive order directs agencies to use any authorities within the bounds of the law to dismantle “any provision ... that would impose a fiscal burden on any State, or a cost, fee, tax, penalty, or regulatory burden on an individual”.  This document suggests he may take aim at a piece of the law long loathed by Republicans: the individual mandate.

words.first.for.trump.inaugural

  • Canadians travelling to Donald Trump inauguration turned away at US border (Global News)  Don't just think about the U.S, - Mexican border.  Several Canadians travelling to attend either the inauguration of Donald Trump as president of the United States or a march planned for Saturday in Washington were turned away at the border by U.S. officials.  Relations between Canada and the United States are under scrutiny following the election of Trump, who has vowed to put “America first” and renegotiate a trade agreement with Mexico and Canada.  People said they were turned away when they told border agents they were anti-Trump.  Buses arranged by organizers to carry some 650 people from Canada were due to cross the border later on Friday night to attend the Saturday Women's March in Washington.  No information update was provided with the article

  • The real target of Trump’s inaugural speech wasn’t Barack Obama. It was George W. Bush. (VoxMSN News)   Donald Trump used his inaugural address to repeatedly attack the policies of one of his predecessors. His primary target wasn’t Barack Obama, though. It was George W. Bush.  Trump didn’t mention Obamacare, the Iranian nuclear deal, the opening to Cuba, or any of Obama’s other signature accomplishments.  Instead, from trade to immigration to the long wars in Afghanistan and Iraq, Trump took direct aim at the policies of the most recent GOP president. Trump didn’t mention Bush by name, but he didn’t have to: The message — that he represented a very, very different kind of Republican than Bush — came through clearly all the same.  Take Trump’s comments about how the US had wrongly “spent trillions of dollars overseas while America's infrastructure has fallen into disrepair and decay”.  The president who launched those costly wars — and who was responsible for the bulk of the estimated $5 trillion that the US has spent in Iraq and Afghanistan, and the bulk of the 8,000 American military deaths in the two countries — was Bush, not Obama.  Trump campaigned on a promise to dismantle Obama’s legacy, beginning with the president’s signature health care initiative, and he may yet do so. But on the biggest day of his life — and speaking to an audience of hundreds of millions of people inside and outside the US — Trump didn’t sound like a Republican taking aim at a Democratic predecessor. He sounded like a Republican taking aim a Republican one.

  • Wolf Richter: Mnuchin as Sears Director Oversaw Asset Stripping, Underfunding of Pension; Faces Conflict as Treasury Secretary (Naked Capitalism)

Mnuchin is one of Trump’s worst picks by virtue of being a bog-standard bankster-loyal Rubinite on macroeconomic policy (strong dollar, budget hawk), having a been the CEO of an unusually predatory mortgage servicer, yet unlike other members of the Goldman partner club that have been up for the Treasury, lacking relevant experience.

From what I could infer, the Democrats left much fewer marks on Mnuchin than they did on most of the other Trump nominees. Some of that may be that they feel they can’t object to Mnuchin saying that he will continue many of the Clinton-Obama finance-friendly policies, and Mnuchin is arguably no less qualified than the lackluster Jack Lew.

Click for large image.

UK

Britain’s economy is in for a rough ride and, though the government will try to smooth it out, the priority is getting the country out of the EU in the most complete and rapid way possible. If the price of this priority is economic pain, then pay Britain must. All of which gives firms some of the certainty they have craved since June 23rd: those fundamentally reliant on continental supply chains or the EU “passport” for financial services, say, now have the green light to plan their total or partial relocation. It also means the Brexit talks will be simpler and perhaps even less fractious than they might have been had Britain tried to “have its cake and eat it”. The country will eat its cake and live with an empty plate afterwards. Brexit really does mean Brexit. 

Lithuania

  • Trump, Putin share an embrace in Lithuanian street art (UberTopic)  There can be no doubt about sentiment in the former Soviet Republic (and Russia-phobic) Lithuania.  A street artist in Lithuania has adorned the exteriors of a barbecue restaurant with a poster showing Donald Trump locking lips with Vladimir Putin.  The picture was dated May, 2016.

trump.putin.embrace

Russia

As Donald Trump took the oath of office in Washington, applause rang out in a loft in central Moscow where pro-government activists, Kremlin-friendly consultants and nationalist politicians gathered to usher in the new American president. A “triptych” painting featuring Mr Trump, Vladimir Putin and the French far-right leader Marine Le Pen (pictured) stood in the middle of the room. Visitors sipped semi-sweet champagne and nibbled on meat pirozhki. Some party-goers donned the Guy Fawkes masks beloved of the online collective Anonymous, an impish nod to the Russian hackers whom American officials believe interfered in the elections.

While much of the world has greeted Mr Trump’s rise with trepidation, Russia has been ecstatic. Mr Trump’s pledges to improve relations have been welcomed. Charges that the Kremlin played a role in bringing him to power have been dismissed by Mr Putin as “fabrications”. (American intelligence agencies are still investigating potential links between Mr Trump’s campaign and Russian officials.) But Russian enthusiasm does not spring from a belief that Mr Trump will “make America great again”: many in Moscow herald his populist, isolationist message as a sign that an era of American global leadership is ending.

China

  • China has built the world’s largest bullet-train network (The Economist)  Less than a decade ago China had yet to connect any of its cities by bullet train. Today, it has 20,000km (12,500 miles) of high-speed rail lines, more than the rest of the world combined. It is planning to lay another 15,000km by 2025 (see map). Just as astonishing is urban growth alongside the tracks. At regular intervals—almost wherever there are stations, even if seemingly in the middle of nowhere—thickets of newly built offices and residential blocks rise from the ground.

Click for larger image.
china.high.speed.rail.map.smaller

  • Chinese capital flight is back (Matthew C. Klein, FT Alphaville)  Ever since the People’s Bank of China began reducing its enormous pile of foreign exchange reserves and letting the yuan depreciate against the dollar a few years ago, people have been arguing about why.  Of the three most popular explanations (below), capital flight has the best supporting data (graphic below is one example).  The three most popular explanations for depletion of China's forex reserves:

  • It’s portfolio diversification.

  • It’s just the end of an arbitrage.

  • It’s capital flight. 

Canada

  • Kevin O’Leary promises to scrap the carbon tax if elected prime minister (Global News)  There's a new shark cruising in Canadian waters.  Conservative Party leadership candidate Kevin O’Leary is promising to eliminate the carbon tax within days of his arrival in office if he’s elected as prime minister.  The financial tycoon said he will eradicate every one of Justin Trudeau’s policies after taking up residence at 24 Sussex Drive.  He said:

“You will not remember his name after I arrive there.” 

 “I’ll put in place a system that’s far more productive in getting innovation and keeping down emissions that does not penalize businesses.”

 “This game being played in Alberta and Ontario is crap.”

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

  • As Trump enters White House, California renews climate change fight (Thompson Reuters Foundation News)   California released new measures to fight climate change within minutes of Donald Trump being sworn in as U.S. president on Friday, signaling the state's commitment to be the nation's environmental steward under an administration that has questioned the reality of global warming.  California officials said it was a coincidence that the plan was released 37 minutes after the inauguration. The state outlined how it would achieve its goal of cutting output of heat-trapping greenhouse gases 40% below 1990 levels by 2030.  The plan drew battle lines for an expected clash with Trump over climate change, including a fight over the state's decades-old authority to set emissions limits that are far stricter than those in many other parts of the United States.  Trump has cast doubt on the degree to which human activity causes climate change. His nominee for secretary of the Environmental Protection Agency, Scott Pruitt, this week expressed doubts about the science behind climate change and said EPA rules should not hurt economic development.  The California plan includes an extension of the state's controversial carbon cap-and-trade program and calls for the state's oil refineries to cut their greenhouse gas emissions by 20%.

  • When It Comes to Walls, Trump is Not Alone (Business Insider, Twitter)

Click to view short video.
walls.around.the.world

  • Donald Trump sees the future in coal. China sees the future in renewables. Who’s making the safer bet? (PRI)  In Donald Trump's vision of America, some parts of the country's future look a lot like its past. Exhibit A: his promise to revive the flagging coal industry.  Meanwhile the world's other economic giant, China, which now uses more coal than any other country on Earth, is moving sharply in the opposite direction. China recently announced another huge new investment in renewable energy — $360 billion by 2020, which the Chinese government says will also create 13 million new jobs.  This article concludes that not only does the China strategy lead to more plentiful, cleaner, and cheaper energy, it also will enable China to displace the U.S. as leader of the world.

  • 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:

In the United States today, unions have a much smaller economic presence than they did decades ago. With unions playing a smaller economic role, the gap between worker and CEO pay was eight times larger in 2015 than in 1980.


Source: Institute for Policy Studies and AFL-CIO analysis of Bureau of Labor Statistics average hourly earnings data and corporate proxy statements, 2016


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