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What We Read Today 23 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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Topic today include:

  • U.S. Public Sees ISIS, Cyberattacks, North Korea as Top Threats

  • Why “My Nation First!” is No Better than “Me First!”  

  • Did Fake News Determine the Outcome of the 2016 Election?

  • Americans Embrace Partisan Conspiracy Theories

  • Rapid Money Supply Growth Does Not Cause Inflation and Other Myths

  • U.S. Drilling Suppresses Oil Prices

  • Trump Formally Withdraws from TPP

  • Why Donald Trump Has a Coherent, Radical Foreign Policy Doctrine 

  • Why Trump's 45 Percent Tariff is a Non-Starter

  • The Claim that Only Trade Cost U.S. to Lose Manufacturing Jobs is Bogus

  • Trump Rejects Law Suit over Foreign Payments

  • Why Trump’s Taxes May Stay Hidden, No Matter What Senior Aide Says

  • Europe's Far Right Leaders Hold Conference to Celebrate Trump's Victory

  • Theresa May's Visit to Washington will Start Post-Brexit Trade Deals

  • Iraq Claims Complete Control of Eastern Mosul

  • U.S. says will prevent China taking over territory in international waters

  • And More

Articles about events, conflicts and disease around the world

Global

  • Oil slips as U.S. drilling recovery offsets OPEC-led cuts (Reuters)   Oil prices fell 1% on Monday as signs of a strong recovery in U.S. drilling largely overshadowed news that OPEC and non-OPEC producers were on track to meet output reduction goals.  Ministers representing members of the Organization of the Petroleum Exporting Countries and non-OPEC producers said at a meeting in Vienna on Sunday that of the almost 1.8 million barrels per day (bpd) they had agreed to remove from the market starting on Jan. 1, 1.5 million bpd had already been cut.  U.S. drillers added the most rigs in nearly four years last week, data from energy services company Baker Hughes showed on Friday, extending an eight-month drilling recovery.  Brent crude LCOc1 settled down $0.26, or 0.5%, at $55.23 a barrel. U.S. crude futures CLc1 closed the session at $52.75 a barrel, down 0.9%, or $0.47.  For more details see GEI's Market Close column.  According to Phil Flynn, analyst at Chicago-based brokerage Price Futures Group:

"Despite comments over the weekend at the OPEC compliance meeting that cuts in OPEC/non-OPEC production were ahead of schedule, a sharp rise in U.S. rig counts and talk of large increases in capital spending seem to be souring the bullish mood." 

U.S.

Trump’s core strategic argument is that the United States is overextended. The core reason for this overextension is that the United States has substituted a system of multilateral relationships for a careful analysis of the national interest. In this reading, Washington is entangled in complex relationships that place risks and burdens on the United States to come to the aid of some countries. However, its commitments are not matched by those countries in capability, nor in intent.

President Trump’s proposed 45 percent tariff on Chinese imports could leverage significant changes in trade with the Middle Kingdom, but to succeed he must address Beijing more realistically than past presidents.

Since Richard Nixon’s historic trip, U.S. policy has been premised on the notion that offering China wider access to American markets and cooperation in other areas would encourage it to evolve into a western-style market economy with more democratic institutions. A prosperous and more liberal Chinese society would provide a buoyant market for U.S. exports and become more sympathetic toward American security arrangements in the Western Pacific.

That simply has not happened. China limits imports with high tariffs and discriminatory regulations, subsidizes exports with an inexpensive currency and generous credit through state controlled banks, bullies foreign investors, pirates western intellectual property and much more to gain advantages in trade.

Unapologetically, Beijing has pronounced it is creating a socialist-market economy but it all smacks of good old-fashioned mercantilism. China’s exports to the United States exceed imports 3 to 1, and that costs Americans millions of jobs.

  • Spicer Stands by Inaugural Audience Claim in First Briefing (Bloomberg)  Econintersect:  This press secretary either does not know how to properly articulate his message or the message is simply defective.  We will learn which in the coming weeks (if he lasts that long).  Today he continued his "adventure", where we (hopefully) assume he meant "we can disagree with what the facts are" and not what he said:

White House press secretary Sean Spicer stood by his claim that Donald Trump enjoyed the largest inauguration audience in history, citing people watching online, and pledged that he would not lie to reporters after a weekend of confrontations with the media.

"I think sometimes we can disagree with the facts," Spicer said on Monday at his first formal news briefing since Trump’s inauguration on Friday.

  •  It’s not technology killing manufacturing—employment was steady for 35 years between 1965 and 2000 (Economic Policy Institute)  The data presented is valid - the conclusion is not.  It is true that the loss of manufacturing jobs since 2000 was accompanied by an increase in the U.S. trade deficit with China.  But it is also true and (not mentioned in this discussion) that trade deficit increase before 2000 did not occur with a loss of manufacturing jobs.  This article cites productivity growth data remaining constant from 1965 to the present time as the justification for claiming that trade is the true killer of manufacturing jobs.  See next item for further information.

  • So What About Free Trade? (Steven Hansen, GEI)  See previous article.  From 2001 (end of 2001 recession) to 2015 manufacturing employment has declined by more than 20% while manufacturing output has increased by nearly 20%.  Obviously increased automation has reduced employment because output went up while employment went down.  Yes, it is true that the trade deficit with China also increased during the same time period so it also contributed to declining manufacturing employment.  But the claim of the preceding article that technology was not involved is clearly specious.  

  

  • Trump rejects new lawsuit over foreign payments to his firms (Reuters)   President Donald Trump on Monday dismissed allegations in a new lawsuit by prominent constitutional and ethics lawyers that he is violating the U.S. Constitution by letting his hotels and other businesses accept payments from foreign governments.  Trump told reporters at the White House that the lawsuit filed earlier in the day by Citizens for Responsibility and Ethics in Washington was "without merit".  The nonprofit watchdog said Trump is "submerged in conflicts of interest" from his ties to countries such as China, India and potentially Russia, and that payments for such things as hotel rooms and office leases posed conflicts of interest for him.  Its lawsuit seeks to stop Trump from accepting any improper payments, saying a constitutional provision known as the "emoluments" clause bans them.

  • Trump’s Taxes May Stay Hidden, No Matter What Senior Aide Says (Bloomberg)  A senior adviser to President Donald Trump sought to clarify her remarks about the president’s tax returns on Monday in a statement that leaves open the possibility that Trump will never release them.  Kellyanne Conway, who managed Trump’s successful election campaign, said unconditionally on Sunday that Trump would not make his tax returns public. Then, on Monday, she posted on Twitter that Trump is “under audit and will not release until that is completed.” Her Monday statement echoed the justification Trump has offered since February 2016 for not releasing his tax documents.  In practical terms, that may mean the public never sees Trump’s returns while he’s in office. That’s because the Internal Revenue Service has administrative procedures that make the president’s tax returns subject to mandatory examinations every year. If that procedure remains in place, Trump might remain under audit throughout his presidency.

EU

  • Europe's far-right leaders speak on Trump at conference (CNN)   Swelling music and angry rhetoric, straight from the Donald Trump inauguration playbook, were prominent Saturday as Europe's nationalist parties gathered under the banner "Europe of Nations and Freedom" -- their political bloc in the European Union parliament.  The big stars: France's Marine Le Pen, the Netherlands' Geert Wilders and Germany's Frauke Petry, each of them contesting elections this year. One large banner trumpeted "2017: The Year of the Patriots".  Le Pen led the charge with a speech that promised an end to the European Union. She described the EU as a monstrous "chimera" and an "anti-democratic oligarchy" that France needed to leave.

UK

  • Trump Team in Talks with U.K. on Post-Brexit Trade Deal (Bloomberg)  The Trump administration will lay the groundwork this week for a trade deal between the U.S. and the U.K. that would take effect after Britain leaves the European Union, a White House aide said, as Prime Minister Theresa May becomes the first foreign leader to visit the new president.  May last week declared Britain is "open for business" as she announced plans to pursue a clean break with the EU, paving the way for the U.K. to eventually strike new trade accords with the continent and other countries. May said she will travel to Washington and speak to President Donald Trump on Friday.

Syria

  • War of words as Syria peace talks open (BBC News)   The Syrian government's lead negotiator has denounced what he called his rebel counterpart's "provocative" comments at the start of peace talks in Astana.  Bashar Jaafari said Mohammed Alloush had acted in a way "removed from diplomacy" at the indirect negotiations convened by Russia, Iran and Turkey.  Mr Alloush described the Syrian government as a "terrorist entity".  He also said a political solution to the civil war was the rebels' preferred choice, but "not the only one". 

Iraq

  • Iraqi forces claim recapture of eastern Mosul after 100 days of fighting (Reuters)  Iraqi officials said on Monday government forces had taken complete control of eastern Mosul, 100 days after the start of their U.S.-backed campaign to dislodge Islamic State militants from the city.  The deputy parliament speaker announced the capture of the east of the city, Islamic State's last major stronghold in Iraq, after a meeting with Prime Minister Haider al-Abadi.

China

  • U.S. says will prevent China taking over territory in international waters (Reuters)  The new U.S. administration of President Donald Trump vowed on Monday that the United States would prevent China from taking over territory in international waters in the South China Sea, something Chinese state media has said would require Washington to "wage war",  White House spokesman Sean Spicer responded to a press conference question as to whether Trump agreed with comments by his Secretary of State nominee, Rex Tillerson, on Jan. 11 that China should not be allowed access to islands it has built in the contested South China Sea:

"I think the U.S. is going to make sure that we protect our interests there.  It’s a question of if those islands are in fact in international waters and not part of China proper, then yeah, we’re going to make sure that we defend international territories from being taken over by one country."

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

  • The World Facing Trump: Public Sees ISIS, Cyberattacks, North Korea as Top Threats (Pew Research Center)  About eight-in-ten Americans (79%) say ISIS poses a major threat to the well-being of the United States, and 71% say the same about cyberattacks from other countries.   Nearly two-thirds (64%) view North Korea’s nuclear program as a major threat, while comparable shares regard the power and influence of Russia (54%) and of China (52%) as major threats.

  • “My Nation First!” is No Better than “Me First!” (Evonomics)  Extrapolation of selfishness in small groups to society aggregates should be rejected as strenuously as it is in the small group, according to this author.  The development of human society over the last 10,000 years is a clear demonstration that collaboration is the key to advancement and individualism outside of the aggregate is destructive.  The author syas the same lesson is evident in life at all levels, from the simplest forms to the most complex.

  • Social Media and Fake News in the 2016 Election (NBER)   In the data displayed, the public beliefs of conspiracy theories was examined (see graphic below).  The question of whether fake news that was widely believed had a decisive impact on the election is difficult.  Fake news given credibility may have been mostly accepted as confirming positions already taken. The authors attempt to resolve this question, but Econintersect believe they failed to provide a final answer.  Abstract:

We present new evidence on the role of false stories circulated on social media prior to the 2016 US presidential election. Drawing on audience data, archives of fact-checking websites, and results from a new online survey, we find: (i) social media was an important but not dominant source of news in the run-up to the election, with 14 percent of Americans calling social media their “most important” source of election news; (ii) of the known false news stories that appeared in the three months before the election, those favoring Trump were shared a total of 30 million times on Facebook, while those favoring Clinton were shared eight million times; (iii) the average American saw and remembered 0.92 pro-Trump fake news stories and 0.23 pro-Clinton fake news stories, with just over half of those who recalled seeing fake news stories believing them; (iv) for fake news to have changed the outcome of the election, a single fake article would need to have had the same persuasive effect as 36 television campaign ads. 

Click for larger image.

  • Aetna’s $37 Billion Humana Takeover Blocked by Judge (Bloomberg)   Aetna Inc.’s $37 billion deal to buy rival insurer Humana Inc. was blocked by a federal judge, thwarting one of two large mergers that would reshape the U.S. health-care landscape. Aetna said it was considering an appeal.  The transaction would violate antitrust laws by reducing competition among insurers, U.S. District Judge John D. Bates in Washington ruled on Monday.  The ruling is a victory for antitrust enforcement efforts initiated by the Obama administration. It may bode poorly for the planned $48 billion merger between Anthem Inc. and Cigna Corp., which was challenged by the Justice Department and is awaiting a ruling. Shares of all four companies declined.

  • Rapid Money Supply Growth Does Not Cause Inflation (Evonomics)  Monetarist theory, which came to dominate economic thinking in the 1980s and the decades that followed, holds that rapid money supply growth is the cause of inflation. The theory, however, fails an actual test of the available evidence. In our review of 47 countries, generally from 1960 forward, we found that more often than not high inflation does not follow rapid money supply growth, and in contrast to this, high inflation has occurred frequently when it has not been preceded by rapid money supply growth.  In addition the following factors also are NOT associated with increased inflation:

  • rapid growth in government debt;

  • declining interest rates;

  • or rapid Increases in a central bank’s balance sheet.

Click for large image.


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