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 dayin the early am at GEI News (membership not required for access to "The Early Bird".).
Every day most of this column ("What We Read Today") is available only to GEI members.
To become a GEI Member simply subscribe to our FREE daily newsletter.
The rest of this post is available only the GEI Members. Membership is FREE - click here
Topics today include:
Poll: Trump has highest disapproval rating of any new president
Does Trump want to somehow get rid of global supply chains?
Forget "Drain the Swamp" - It is "Government Sachs"
If Trump Cancels the Fiduciary Rule, What will Investors Do?
Steve Bannon is Obsessed with "The Fourth Turning"
Sanders Stirs Up Democratic Turmoil
Can the Nation Trump the Individual?
U.S. Dollar Index Fails to hold 100 Again
Einstein's Instincts Appear to have been Wrong about Action at a Distance
What is Going to Happen When Passive Investing Surpasses Active?
Lithium Mining in Cornwall - Will Poldark Finally Get Rich?
The Pound is Surging
Theresa May's Brexit Confusion Regarding Trade
Germany Overtakes China as Trade Surplus Leader
Trouble for the London-Frankfort Stock Exchange Merger
Trump is Undermining U.S.-Iraq Cooperation
U.S. Issues New Iran Sanctions
Japan will Pitch Infrastructure to Trump
Is China Preparing to Test Trump White House?
Articles about events, conflicts and disease around the world
Does Trump want to somehow get rid of global supply chains? (American Enterprise Institute) James Pethokoukis struggles to understand what the Trump trade policy will be. He questions why administration advisors like Peter Navarro attack Germany for "using a grossly undrevalued euro" when Fed policy has contributed substantially to the decline of the euro against the U.S. dollar by nearly 30% in recent years. JP then goes on to express alarm that administration policies might disrupt global supple chains and create economic turmoil. He includes some infographic displays including the following:
From “Drain the Swamp” to Government Sachs (The New Yorker) We now get to watch as the Administration guts regulations meant to prevent another taxpayer bailout of Wall Street, as architected by former Goldman Sachs president Gary Cohn. The adminstration appears intent on gutting the Dodd-Frank Act and hobbling the Consumer Financial Protection Agency. See also next article. An excerpt from this one:
During last year’s campaign, Trump portrayed both Ted Cruz and Hillary Clinton as pawns of Goldman Sachs. And after the self-described “Leninist” Steve Bannon took over as his campaign C.E.O., Trump broadened his critique, at one point depicting Lloyd Blankfein, Goldman’s C.E.O. and Cohn’s old boss, as a member of a cabal of global financiers who had “robbed our working class, stripped our country of its wealth, and put that money into the pockets of a handful of large corporations and political entities.” Even when it was happening, though, it was clear that all this rabble-rousing was mainly for show.
Although Trump campaigned as an economic populist, his brand of populism was simply old-school Reaganomics—giveaways to the rich and pro-corporate deregulation—rebranded with a nationalist and protectionist twist. After the election, Trump stocked his Cabinet with Wall Street billionaires and mega-millionaires—Wilbur Ross, Steve Mnuchin, Cohn—who had benefitted personally from the lax regulatory regime that was in place before 2010. A week after the election, I commented that the Trump transition was “one of the biggest bait-and-switch operations in recent history.”
In the book, authors William Strauss and Neil Howe theorize that the history of a people moves in 80-to-100 year cycles called "saecula." The idea goes back to the ancient Greeks, who believed that at a given saeculum's end, there would come "ekpyrosis," a cataclysmic event that destroys the old order and brings in a new one in a trial of fire.
This era of change is known as the Fourth Turning, and Bannon, like Strauss and Howe, believes we are in the midst of one right now.
According to the book, the last two Fourth Turnings that America experienced were the Civil War and the Reconstruction, and then the Great Depression and World War II. Before that, it was the Revolutionary War.
All these were marked by periods of dread and decay in which the American people were forced to unite to rebuild a new future, but only after a massive conflict in which many lives were lost. It all starts with a catalyst event, then there's a period of regeneracy, after that there is a defining climax in which a war for the old order is fought, and then finally there is a resolution in which a new world order is stabilized.
This is where Bannon's obsession with this book should cause concern. He believes that, for the new world order to rise, there must be a massive reckoning. That we will soon reach our climax conflict. In the White House, he has shown that he is willing to advise Trump to enact policies that will disrupt our current order to bring about what he perceives as a necessary new one. He encourages breaking down political and economic alliances and turning away from traditional American principles to cause chaos.
In that way, Bannon seems to be trying to bring about the Fourth Turning.
Sanders reopens Dem primary wounds (The Hill) Bernie Sanders is opening old wounds. Sanders’s recent swipe against former Vice President Joe Biden has angered Democratic party officials, who are accusing the onetime Democratic presidential candidate of refighting a bitter primary season that ripped the party in two. The independent senator from Vermont has also infuriated supporters of Tom Perez, a top contender for Democratic National Committee (DNC) chairman, after an unprovoked attack against the former Labor secretary. Sanders, who backs Perez rival Rep. Keith Ellison (D-Minn.) for DNC chairman, has shaken up a race that has until now featured few fireworks. The DNC campaign changed this week after Biden endorsed Perez for chairman. Sanders let loose, saying that it’s time to move beyond the “failed status-quo approach” of Biden and Perez.
How lithium mined from hot springs in Cornwall could boost Britain’s green tech (The Conversation) On January 19, the British company Cornish Lithium entered into an agreement with Canada’s Strongbow Exploration to explore and potentially develop lithium mining in Cornwall. This is just a first step and it may be years before any lithium comes on stream, but it’s worth taking a look ahead. Demand for lithium is driven by the growth in electric vehicles and renewable energies, besides ongoing demand from ceramics and glass. The metal is a key ingredient in the Li-ion batteries needed to run new electric vehicles and consumer gadgets such as mobile phones, laptops and cameras. The price of lithoum has soared, from around $6,000 per ton a couple of years ago to over $20,000 per ton.
Germany overtakes China as world's richest exporter (The Local de) According to a respected economic think tank, Germany broke its own trade surplus record in 2016 - in stark contrast to the USA, which is running a huge deficit. “Germany’s trade balance shows an estimated plus of $297 billion,” Christian Grimme of the Ifo Institute told Reuters on Monday. That number shows that Germany made almost $300 billion more from selling goods and services to other countries than it spent on imports during 2016, giving it a higher trade surplus than China. The Asian giant came second on the Munich-based think tank’s list, recording a balance of trade of $245 billion. Japan had the third highest trade surplus. In 2015, China had the highest balance of trade, followed by Germany in second.
German minister: It is "crystal clear" London Stock Exchange-Deutsche Boerse HQ should be in Frankfurt (City A.M.) The location of the legal headquarters of the merged London Stock Exchange-Deutsche Boerse company is in the spotlight again today after an influential German minister said the UK should lose out. The agreement in place specified that Deutsche Boerse shareholders will take a 54.4% stake in the company and the German exchange’s chief executive, Carsten Kengeter, will take on the same role across the merged company, while London will take the legal headquarters. Germany now wants the whole ball of wax. Econintersect: This merger of the two largest stock exchanges in Europe will likely be canceled, another casualty of Brexit.
US sanctions Iran for ballistic missile launch (The Hill) The U.S. slapped new sanctions on Iran on Friday after the Trump administration signaled it wanted to punish Tehran for its latest ballistic missile test. The Treasury Department announced that 13 people and 12 companies face new restrictions, including several entities that support the Islamic Revolutionary Guard Corps and help the Iranian government procure materials for its missile program. The individuals and companies — based in Iran, China, Lebanon and the United Arab Emirates — are banned from doing business with U.S. institutions or American citizens.
Japan to pitch infrastructure blitz at Trump meeting: report (The Hill) Japan is planning to invest in U.S. infrastructure as part of a broader policy framework that Prime Minister Shinzo Abe is expected to pitch to President Trump when they meet next week, The Japan Times reported. The Washington summit between Trump and Abe on Feb. 10 comes following Trump's vow to make massive infrastructure spending a top priority. The president personally asked Republican leadership to add a rebuilding package to their 200-day agenda, though the legislation could likely be sidelined until other GOP priorities are addressed. Still, the talk has spurred great optimism among transportation advocates and investors.
Is China Preparing to Test Trump White House? (Council on Foreign Relations) If past is precedent, Beijing will also soon look to stress-test the new White House. How President Trump responds could well determine whether he stays in the driver's seat of his own legacy. Already, there are concerning signs of conflict to come, and the Trump administration's early missteps on the South China Sea conflict could give Beijing the pretext to manufacture a crisis. Should he take the bait, President Trump risks allowing external foreign policy crises to define his tenure, not unlike the way 9/11 reshaped George W. Bush's presidency.
Other Scientific, Health, Political, Economics, and Business Items of Note - plus Miscellanea
When "the Nation" Trumps the Individual (Richard M. Eberling, Foundation for Economic Education) RME has contributed to GEI. President Trump has initiated a series of executive orders based on a conscious ideology of political and economic nationalism. Some summary excerpts:
How may we define political and economic nationalism? We might, perhaps, use a definition offered by the Swiss classical liberal and free market economist William E. Rappard, from his 1937 essay on “Economic Nationalism” that was written at the time between the two World Wars when an aggressive nationalist creed was endemic around most of the world.
The essence of this [Donald Trump] perspective is that international interactions occur in a zero-sum world.
Thus, [according to the Trump view] the United States must enter into bilateral, politically negotiated trade deals with each and every other country to balance America’s trade ledger book with them. This is not only a throwback to the mercantilist ideas of the past, but one of the crudest versions that fails to think of even looking at the overall ledger book rather than a country’s balance of trade with each separate country. Not even the mercantilists of the seventeenth century were that economically illiterate!
Quantum computers, which are based on the strange rules of quantum mechanics, will revolutionise society in a similar way to how mechanical computers have. Once built, they will help us answer many questions in science, create lifesaving medicines, provide transformative capabilities for the financial sector and in general solve certain problems that an ordinary computer would take billions of years to compute.
It is very difficult to estimate the full impact of quantum computers, as we are only starting to develop a new class of algorithms that may run on such a machine. However, one thing is clear. Nature works according to quantum physics, so quantum computers may be the very best tool possible to understand nature and the fabric of reality itself.
Cosmic Test Bolsters Einstein's “Spooky Action at a Distance” (Scientific American) Recent experiments indicate that Einstein's instinct that 'action at a distance' in cosmic space depended on physical affects not yet understood may have been wrong. Scientists have been systematically eliminating such pathways. An excerpt from this article:
A version of an iconic experiment to confirm quantum theory has for the first time used the light of distant stars to bolster the case for a phenomenon that Albert Einstein referred to as “spooky action at a distance”.
Einstein disliked the notion that objects can share a mysterious connection across any distance of space, and scientists have spent the past 50 years trying to make sure that their results showing this quantum effect could not have been caused by more intuitive explanations.
Quantum physics suggests that two so-called entangled particles can maintain a special connection—even at a large distance—such that if one is measured, that instantly tells an experimenter what measuring the other particle will show. This happens despite the fact neither particle has definite properties until it is measured. That unsettled some physicists, including Einstein, who favoured an alternative explanation: that quantum theory is incomplete, and that the outcomes instead depend on some predetermined, but hidden, variables.
This chart should terrify stock pickers everywhere (Business Insider) Passive investing is set to overtake active management in US market share in just four to seven years. That's according to Moody's Investor Services, which said in a report released February 2 that passively managed funds will have more in assets than active funds by 2024 at the latest. Econintersect: The article really does not explain the headline. Why should stock pickers be terrified? We will offer a reason: As more and more of the market is invested in an index, less and less discrimination between stocks will occur. Stock pickers will receive smaller and smaller rewards for their good choices. On the reverse side, poor choices will be less penalized.
Econintersect wants your comments,
data and opinion on the articles posted. As the internet is a
"war zone" of trolls, hackers and spammers - Econintersect must balance its
defences against ease of commenting. We have joined with Livefyre
to manage our comment streams.
To comment, just click the "Sign In" button at the top-left corner of
the comment box below. You can create a commenting account using your
favorite social network such as Twitter, Facebook, Google+, LinkedIn or
Open ID - or open a Livefyre account using your email address.
Econintersect Behind the Wall
Print this page or create a PDF file of this page
The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.
Take a look at what is going on inside of Econintersect.com