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What We Read Today 02 February 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:

  • Dark Web Black Market Drives a New Crypto-Currency Up 2,760%

  • Would the Stock Market Collapse if Everyone Became an Indexer?

  • How Would the Trump Border Adjustment Tax Work?

  • U.S. Corporate Taxes have Dropped By 2/3 Since 1950

  • Education Savings Accounts

  • OPEC Production Cuts Have Turned the Oil Market Upside Down

  • We Should Take Trump's Protectionism Seriously

  • Obamacare Popularity is Increasing

  • U.S. House Begins Work on Changing Obamacare

  • President Trump's Popularity Keeps Sinking

  • Only Two Weeks After Leaving Office, Americans Wish Obama Was Still President

  • How Betsy DeVos Could Fail to be Confirmed

  • How Conservative is Neil Gorsuch?

  • Trump Businesses were Paid Millions by his Campaign

  • Europe May be a Big Winner from Trump's Policies

  • Ukraine is Getting Hot Again

  • U.S. Removes Sanctions Against Russia's Hacking Agency

  • Mexico Speeds Up Trade Talks with Europe (and China, Too)

  • Trump, Truman and Lincoln on Mexico

  • And More

Articles about events, conflicts and disease around the world

U.S.

  • Take the US president’s protectionism seriously (Financial Times)  Most politicians, whether they practise what they preach or not, use “protectionism” as an insult. Not so Donald Trump. When the US president said in his inaugural address that “protection will lead to great prosperity and strength”, he was proposing the most dramatic changes in trade policy in years. With the announcement a week ago Monday’s that he wanted to renegotiate the North American Free Trade Agreement, and pull out of the almost-completed Trans-Pacific Partnership, Mr Trump signalled a clean break with recent bipartisan US trade policy.

  • Obamacare just keeps getting more popular (Business Insider)  Even with the looming threat of a repeal, more and more Americans say they support the Affordable Care Act (ACA), better known as Obamacare.  A poll released by Public Policy Polling on Thursday showed that 46% of Americans now support the ACA, while 41% oppose the law. Additionally, PPP found that 62% of people polled wanted to keep the ACA and make changes to the existing law, while only 33% wanted it repealed and have the US "start over with a new healthcare law".

  • U.S. House Begins Work on First Policies to Change Obamacare (Bloomberg)  The first legislative effort to make changes to Obamacare got underway in the U.S. House of Representatives, the beginning of what is expected to be a long and contentious process.  The House Energy and Commerce Committee’s health panel is examining drafts of four bills Thursday that will likely serve as a basis for some of Republicans’ earliest moves to replace pieces of the massive health-care law that they’ve vowed to repeal.

The bills could help lower premiums, particularly for younger, healthier Americans, by allowing insurers to charge older Americans higher prices and tightening enrollment periods.

Under Obamacare, insurers can’t deny coverage or charge more to people with pre-existing conditions. One of the bills would attempt to ensure that people with pre-existing conditions won’t be denied coverage, if those ACA protections are lost as part of the Obamacare repeal efforts. 

But the measure, proposed by Walden, doesn’t limit what insurers can charge people with pre-existing conditions, said Representative Frank Pallone, a New Jersey Democrat. Walden’s bill also includes a placeholder for a yet-to-be-seen proposal to encourage consumers to maintain continuous insurance coverage.

Walden also backed legislation aimed at bringing down drug costs by prioritizing Food and Drug Administration review of applications for generic drugs that are in shortage or that have minimal competition, if any.

Democrats criticized the bills in opening statements, calling them giveaways to insurance companies that won’t benefit consumers.

  • After 2 Weeks, Voters Yearn For Obama (Public Policy Institute)  Less than 2 weeks into Donald Trump's tenure as President, 40% of voters already want to impeach him. That's up from 35% of voters who wanted to impeach him a week ago. Only 48% of voters say that they would be opposed to Trump's impeachment. Beyond a significant percentage of voters already thinking that Trump should be removed from office, it hasn't taken long for voters to miss the good old days of Barack Obama...52% say they'd rather Obama was President, to only 43% who are glad Trump is. 

Click for large image.

Republican Sens. Susan Collins (Maine) and Lisa Murkowski (Alaska) announced Wednesday that they would not be voting for Betsy DeVos as education secretary, potentially imperiling the nominee’s confirmation. 

No Democratic senators are expected to vote for DeVos. If no other Republicans vote against DeVos, Vice President Mike Pence would be the tie-breaking vote. DeVos needs a simple majority to be confirmed. 

If Sen. Jeff Sessions (R-Ala.) is confirmed as attorney general before DeVos comes before a full Senate vote, it could further complicate her chances for confirmation. In that scenario, Sessions would not be eligible to vote.

Click for large image.

  • Donald Trump's businesses 'received millions from his campaign in run-up to election' (Independent)  (Econintersect:  If Trump woud release his tax returns we would know if he took a home office deduction for the same assets and services he was paid for by his campaign.  We'd have to ask a tax expert, but this might possibly be a legal "double dip".)  Businesses connected to US President Donald Trump are thought to have received millions of dollars during the run-up to the election.  

After launching his presidential bid in 2015, Mr Trump’s campaign could have spent as much as $12.8 million (£10.2 million) paying businesses owned, or part-owned by him, an analysis of US Federal Election Commission (FEC) data shows.  The most recent bill Mr Trump’s campaign paid was for $2 million (£1.59 million) which went to Trump Tower Commercial, LLC, according to US website Politico, which carried out the research.

5.things.to.know.about.neil.gorsuch

EU

Ukraine

  • Civilians killed in worsening Ukraine conflict amid concern Donald Trump's stance could be emboldening rebels (Independent)  Civilians are among more than a dozen people killed in Ukraine in a “dangerous deterioration” in the continuing war amid fears rebels have been emboldened by Donald Trump’s silence on alleged violations.  Both sides have been accused of ceasefire violations in battles around the town of Avdiivka, sitting on the frontline between separatists and the Ukrainian army.  NATO secretary general Jens Stoltenberg urged the Kremlin to use its influence to stop the “most serious spike in violence in a long time”, saying 5,600 ceasefire violations had been recorded in the past week.  The Trump administration has remained silent on this matter.

  • McCain says Russia testing U.S. in Ukraine, urges Trump to hit back (Reuters)  Russia is testing President Donald Trump with a surge of violence in eastern Ukraine and the U.S. president should give Ukraine the lethal aid it needs to defend against the attacks, Senator John McCain said in a letter to Trump on Thursday.  Renewed violence flared this week between Moscow-backed rebels and Ukraine government forces that has caused the highest casualty rate since mid-December and cut off power and water to thousands of civilians on both sides of the frontline.  See also next article under Russia, below.

Russia

Mexico

For many people it is hard to imagine a time when Mexico was a place of pilgrimage for an American president who went there to both apologize for the US treatment of that country in the past, but also to initiate a Good Neighbor Policy that would affirm his belief that the destinies of the two nations were intertwined. But when Harry Truman laid a wreath at the Mexico City memorial of the Niños Heroes, or Boy Heroes of the US-Mexican War, he was following in the footsteps of another president, Abraham Lincoln, who stood up as a Congressman in Illinois to protest the “unnecessary and unconstitutional” invasion of that country at the orders of James K. Polk. He accused Polk of lying and of creating a pretext for the preemptory invasion. As a result of that war, the US acquired two-fifths of Mexican territory including the states of California, Utah, Arizona and Nevada, as well as parts of present-day Kansas, New Mexico, Colorado and Wyoming.

  • In avocado country, Mexicans not afraid of Trump tariff threats (Reuters)   Avocado farmers in the rolling hillsides of Mexico's Michoacan state are not worried for now by U.S. President Donald Trump's threats to tear up a trade deal which could make the favorite snack of Super Bowl viewers more expensive.  Americans will chomp through huge amounts of avocados mashed into guacamole during the Super Bowl on Sunday, and 80% of those fruits will come from Mexico’s ever-larger expanse of orchards, thanks to a free market created by the North American Free Trade Agreement in 1994.   It is peak season for guacamole, a word that means avocado sauce in Mexico's native Nahuatl language. Some 100,000 tonnes of the green fruit, or 12% of annual U.S. demand, will be consumed on Sunday and in the days before and after the New England Patriots game against the Atlanta Falcons, exporters say.  With such market dominance and demand, growers like Adrian Iturbide doubt Trump's eagerness to impose duties on Mexican goods will dent exports. They feel they have little to fear from proposals by the Republican such as a 20 percent blanket tariff on U.S. imports from Mexico, that would affect sales of "green gold" to the northern neighbor. Iturbide said:

"If Michoacan decided for whatever reason...to stop exporting, there is nowhere else in the world that could provide the quantity of avocados that U.S. markets are consuming." 

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

  • Monero, the Drug Dealer’s Cryptocurrency of Choice, Is on Fire (Wired)  Hat tip to Neil Peters, LinkedIn GEI Discussion Group.  Over the last year, the value of the hyper-anonymous cryptocurrency Monero grew 2,760 percent, making it almost certainly the best-performing cryptocurrency of 2016. Today each Monero is worth around $12, compared with just 50 cents at the beginning of last year, and the collective value of all Monero has grown to close to $165 million. The source of that explosive growth seems to be Monero’s unique privacy properties that go well beyond the decentralization that makes Bitcoin so resistant to control by governments and banks. It’s instead designed to be far more private: fully anonymous, and virtually untraceable.  Those features have made Monero a budding favorite within at least one community that has a pressing need for secrecy: the dark web black market.

  • What If Everybody Became An Indexer? Financial Advisors' Daily Digest (Seeking Alpha)  Sami J. Karam argues that passive investors are free riders whose behavior will lead the market as a whole to go out of business, i.e., crash.  As more investors buy 'the index' all stocks rise in price regardless of merit.  Karam says this can ultimately lead to collapse as too many prices become disconnected from value.

  • Trump and the border adjustment tax: how it could work (Financial Times)  The Trump administration is promising sweeping reforms to the corporate tax system, in a move that could have big consequences far outside the US.  A main point of reference is a corporate tax blueprint drawn up by Republican members of the House of Representatives — in particular a proposal for a “border adjustment tax”. The idea has sparked intense opposition from parts of the US business community. But proponents say it would boost investment in the country.  Last week the White House suggested that such a tax would be one way to finance the wall Donald Trump has promised to build on the frontier with Mexico.  Here's how it works:

Under the border adjustment proposal, companies would no longer deduct the cost of imported goods from their taxable profits, while exports would not be taxable.

While many details remain unclear, taxing spending on imports instead of taxing sales of exports would be a winner for a country with a large trade deficit.

The Tax Foundation, a Washington think-tank, says the border adjustment tax would be expected to raise $1tr over a decade. But other aspects of the plan are likely to reduce business tax revenues overall, reinforcing the decline in corporate tax revenues as a share of the economy over the past 50 years

  • This Kind of School Choice Is Superior to Vouchers (Foundation for Economic Education) Private school choice programs in the United States come in four basic forms: individual tax credits, tax credit scholarships, vouchers, and Education Savings Accounts (ESAs).  Voucher programs are the most well-known type of private school choice.  While voucher programs are desirable for individual students and the societies in which they reside, ESAs have a few important advantages that make them more effective, according to economic theory.  Econintersect:  None of these private school options address one of the serious education problems of the U.S.:  The unsatisfactory education opportunities for many children of the poor.  Our education system will be unsatisfactory, in our opinion, unless it offers advantages for students of promise (or who could have promise given opportunity) regardless of the economic circumstances of their parents.

  • OPEC to Swell Investor Gains by Turning Market Upside Down (Bloomberg)  The Organization of Petroleum Exporting Countries is trying to flip the oil market from a structure known as contango, where longer-term prices are stronger, to backwardation, where short-term prices have a premium, said Ed Morse, head of commodities research at Citigroup Inc. That should discourage companies from adding to their oil inventories, and instead spur them to process excess stockpiles, he said.  So far the strategy is working.  Oil right now is worth more than oil futures looking forward more than three years.


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