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What We Read Today 25 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:

  • The Death of Expertise

  • Buffett Says $100 Billion Wasted Trying to Beat the Market

  • Warren Buffett:  30 Years of Beating the Market - Big Time

  • Anti-Immigrant Propaganda from More then 100 Years Ago

  • Why Treasuries May be Set to Rally (Interest Rates to Go Down)

  • Tom Perez Elected DNC Chair

  • Obama and Clinton Still Control the Democratic Party

  • EPA to Slash Obama Era Regulations

  • GOP Congressman:  Trump-Russia Probe Needs a Special Prosecutor

  • U.S. Treasury Should Issue Perpetual Bonds

  • Perpetual Bonds are De Facto Debt-Free Money

  • Law Professors File Ethics Complaint Against Kelly Ann Conway

  • The ECB is Chartered Like a Commissar

  • Facts to Know about Germany's Budget Surplus

  • Personal Account:  How I Survived the Hiroshima Atomic Bomb

  • Mexico Warns of Damage to U.S. States from Trump's Border Wall Funding Plans

  • And More

Articles about events, conflicts and disease around the world

U.S.

  • Tom Perez Elected Democratic National Committee Chair (The Huffington Post)  Former Labor Secretary Tom Perez was elected chair of the Democratic National Committee on Saturday after a contentious race that highlighted divisions within the party.  Perez bested Rep. Keith Ellison (D-Minn.), the only other candidate remaining in the race after an inconclusive first round of voting. The final tally was 235 for Perez and 200 for Ellison.  Econintersect:  The Obama-Clinton democrats retained control of the party against a challenge from those who backed Independent Senator Bernie Sanders (Vermont).

  • Aggressive cuts to Obama-era green rules to start soon: EPA head (Reuters)  U.S. President Donald Trump's administration will begin rolling back Obama-era environmental regulations in an "aggressive way" as soon as next week, the head of the Environmental Protection Agency said on Saturday - adding he understood why some Americans want to see his agency eliminated completely.

  • GOP congressman: Special prosecutor needed for Russia probe (Associated Press)  A Republican congressman has called for a special prosecutor to investigate whether Russia interfered in the 2016 presidential election and was in touch with President Donald Trump's team during the campaign.  Rep. Darrell Issa (EYE'-suh) of California says it would be improper for Attorney General Jeff Sessions to lead the investigation.  Issa made the comments Friday on HBO's "Real Time with Bill Maher".  Issa said:

"You're right that you cannot have somebody — a friend of mine, Jeff Sessions — who was on the campaign and who is an appointee. You're going to need to use the special prosecutor's statute and office."

  • Why the US Treasury should issue zero coupon consols (Edward Harrison, Credit Writedowns)  EH has contributed to GEI.  The suggestion here is that the U.S. should issue zero-coupon perpetual bonds.  That would provide zero-risk securities for the financial sector without exposing the government to roll-over risk or interest payments.  In essence, they would act like debt-free money for financial transactions.  Econintersect:  An aspect that EH did not address is that this also provides de facto debt-free money for the non-financial economy as the government spends into that economy.

  • Law Professors File Ethics Complaint Against Kellyanne Conway Over ‘Lies’ (The Huffington Post)  President Donald Trump’s counselor Kellyanne Conway should face sanctions for “professional misconduct”,  which include repeated lies and ethics breaches, according to a formal complaint filed by 15 law professors across the nation.  The letter lists Conway’s lies, including those about the non-existent “Bowling Green Massacre” to justify Trump’s ban against travelers from seven predominantly Muslim countries. Not only was there no massacre, but “Ms. Conway knew there was no massacre”, the filing states. The letter, which legal ethics professors from leading universities such as Yale, Georgetown, Fordham and Duke filed this week, states:

“We do not file this complaint lightly.  We believe that, at one time, Ms. Conway understood her ethical responsibilities as a lawyer and abided by them. But she is currently behaving in a way that brings shame upon the legal profession.” 

EU

  • The ESCB (Twitter)  The ESCB (European System of Central Banks) has a charter that Donald Trump would like for his administration.  Econinteresect:  Is the ECB a commissar?

 

UK

Germany

  • Two things you should know about Germany’s budget surplus (Edward Harrison, Credit Writedowns)  EH has contributed to GEI.  Econintersect:  EH doesn't actually say that a current account surplus is necessary to run a budget surplus without shrinking the economy, which is the case.  He just says it is "easier" to run the budget surplus which is hiding a key point of understanding from the reader.  He does refer to sector balance accounting - we just think he could have emphasized the recessionary boundaries better.)  Ed writes:

You probably heard that Germany recorded its third consecutive year of government budget surpluses. This year, it was the highest full year surplus since German reunification – 24 billion euros. A lot of the commentary on Germany’s budget is stressing whether it’s a good thing or a bad thing that Germany has surpluses. Forget all of that. There are actually two other things you need to know.

First, it’s a lot easier to run a budget surplus when you have a massive trade surplus too. When you look at a country like Germany that is an export juggernaut — we’re talking an 8% current account surplus here, That’s 270 billion euros —you have to put in the context of the economy’s other sectors. In a normal economy, net of investment, the private sector will always be in a surplus position. That surplus has to be offset by either the government or the external capital position since the three sectors of economy balance to zero.

Here’s the second thing about that: the Germans understand the budgetary benefit of trade surpluses and are trying to get everyone in the eurozone to follow this model. When the euro area countries gave up monetary sovereignty to be a part of the euro, budgetary discipline became critically important because of the threat of bond vigilantes questioning a country’s solvency. What the Germans have proved is that this problem is a lot easier to tackle if you have a massive trade surplus. And since the financial crisis, the euro area has gone from a roughly balanced current account to one that is massively in surplus.

I don’t know how long the EU wants this policy framework to continue. It ism’t clear if this is a ‘ride out the storm’ approach or a permanent policy framework. I believe they want the surpluses to continue indefinitely. But if these surpluses do continue indefinitely, Donald Trump will put Europe in his crosshairs. And we’ll have to see whether he’s all bluster or whether he intends to take action.

Japan

Mexico

  • Mexico warns US over border wall funding (BBC News)  Mexico has warned the US against imposing a unilateral tax on Mexican imports to finance a border wall, saying it could respond in kind.  Foreign Minister Luis Videgaray said the government could place tariffs on selected goods from US states reliant on exports to Mexico.  According to reports, the foreign minister has previously identified states including Iowa, Texas and Wisconsin as possible targets for retaliatory tariffs.  Mexico is by far the top destination for Texan exports, with goods worth $92.4 billion exported there in 2015, according to the US Department of Commerce.  The wall is a sensitive political subject in Mexico. President Enrique Pena Nieto cancelled a trip to meet Mr Trump last month over the dispute and has said Mexico will not fund the wall.

us.mexico.border.fence

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

  • The Death Of Expertise (The Federalist)  Hat tip to Elliott Morss.  The author laments, in this 2014 article, the demise of recognition of expertise and the rise of self-annointed "experts".  The explosion of the internet has created a vehicle for the multitude to hold forth in a public venue and a means for establishing unfounded claims of expertise.  The author says experts make mistakes, some of them collossal.  But, statistically, an expert has a greater probability of being right than the average layperson.  The recognition of that is the basis for declaring "the death of expertise".  

  • Buffett Says $100 Billion Wasted Trying to Beat the Market (Bloomberg)  Billionaire investor Warren Buffett devoted a substantial portion of his annual letter to deepen his long-running critique of investment fees.  Over five pages, he updated Berkshire Hathaway Inc. shareholders on a bet made almost a decade ago that a low-cost fund that passively tracked the S&P 500 Index would outperform a basket of hedge funds. He also laid anew into the rich for being suckered by Wall Street investment advice, which he estimated has wasted more than $100 billion over the past ten years.  All this from a man who hin=mself has soundly trashed passive index investing over the past 30 some years.  Hat tip to Holger Zschäpitz (@Shuldensuehner) for the graphic.

To my Jewish, Irish, Asian and Italian friends, let’s remember:

Your ancestors were lower than dirt when they arrived here.

Italians were referred to – openly – as a subhuman race of rats and criminals.

Irishmen were apes and monkeys.

Laws were passed to keep Chinese women out of the country, so that the Chinese males who were brought over for menial labor couldn’t produce offspring.  

Jews were spat upon in the streets and routinely excluded from polite society.  

Unhire-able. Undesirable. Laws were passed to allow for the mass discrimination and segregation of your great grandparents, not much more than a century ago.

  • U.S Treasuries Might Finally Be Ready to Stage a Breakaway (Bloomberg)  U.S. Treasury yields may break out of a two-month holding pattern as the tug-of-war between bulls and bears is decisively settled by President Donald Trump’s speech to Congress next week and a slew of upcoming data.  The skew between payers and receivers on 10-year yields has dropped to zero from about eight basis points seen a week after Trump’s election, suggesting increased demand to protect short bond positions.  Econintersect:  As things stand at this point, yields appear to be headed lower, not withstanding the Fed indications of a rate hike.  That would mean a flattening yield curve indicating a slower growth economy than has been hoped for.

treasury.skews.2016.2017.feb.24

year.yields.us.5.mos.2017.feb.24


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