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.
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Topics today include:
Trump Budget will have 9% Increase in Defense Budget
Trump: 'Nobody knew health care could be so complicated'
Is the Real Republican Health Care Plan Repeal and Don't Replace?
House Intel Head: 'No evidence' of Trump campaign contact with Russia
Bannon told German diplomat the EU is flawed: report
Iraqi Army Advances Further in Mosul, Seizes Key Bridge
India GDP Growth is Slowing, Perhaps Temporarily
India Has Shrinking Manufacturing Sales, Layoffs
China Visit Possible for Trump
China's Bond Rout
China Moving to Digital Payments
Larry Summers' Tribute to his Uncle, Kenneth Arrow
II Extinct Animals Lost in Our Lifetime
California's Filling Reservoirs
The Biggest Myth about Government
Best Global Returns Since 1900
Articles about events, conflicts and disease around the world
White House: Trump budget will hike defense spending by $54B (Associated Press) The White House says President Donald Trump's upcoming budget will propose a whopping $54 billion increase in defense spending and impose corresponding cuts to domestic programs and foreign aid. The result is that Trump's initial budget wouldn't dent budget deficits projected to run about $500 billion. White House budget officials outlined the information during a telephone call with reporters Monday given on condition of anonymity. The budget officials on the call ignored requests to put the briefing on the record, though Trump on Friday decried the use of anonymous sources by the media. Trump's defense budget and spending levels for domestic agency operating budgets will be revealed in a partial submission to Congress next month, with proposals on taxes and other programs coming later. See also next article.
Trump: 'Nobody knew health care could be so complicated' (CNN) President Donald Trump noted with some exasperation Monday the complexity of the nation's health laws, which he's vowed to reform as part of a bid to scrap Obamacare. (Econontersect: The president made a statement that ranks, in out opinion, in the same Hall of Shame as the remark about the 2008 Great Financial Crisis: 'Nobody saw it coming.') Trump said at a meeting of the nation's governors at the White House:
"We have come up with a solution that's really, really I think very good. Now, I have to tell you, it's an unbelievably complex subject. Nobody knew health care could be so complicated."
"GOP lawmakers gamble that setting bill in motion to strike Affordable Care Act will help break through intraparty disagreements."
House intel head: 'No evidence' of Trump campaign contact with Russia (The Hill) The chairman of the House Intelligence Committee, Rep. Devin Nunes (R-Calif), on Monday rejected reports that members of President Trump’s campaign team had regular contact with Russian officials. Nunes's committee is investigating Russian efforts to influence U.S. presidential election, including any links between campaign officials and Moscow. Nunes told reporters:
“There is no evidence that I’ve been presented [by the intelligence community] of regular contact with anybody in the Trump campaign. The way it sounds like to me is, it’s been looked into and there’s no evidence of anything there.”
George W. Bush opens up on Trump's war with the media, Russia and travel ban (Today) In a wide-ranging interview that shied away from directly criticizing the current commander in chief, former President George W. Bush said it's critical for the media to hold accountable "people who abuse their power." He also rejected the current administration's controversial immigration policy.
Bannon told German diplomat the EU is flawed: report (The Hill) White House chief strategist Stephen Bannon questioned the effectiveness of the European Union (EU) during his meeting with Germany's ambassador to Washington a week before Vice President Pence's trip to the continent, Reuters reported on Tuesday. Several sources familiar with the talks told Reuters that Bannon expressed a view that the EU is a flawed concept and that he prefers bilateral diplomacy with Europe.
Q3 GDP Estimate To Factor In Effect Of Demonetisation (Bloomberg) The Central Statistics Office(CSO) on Tuesday, will unveil the revised advance estimate for GDP growth in 2016-17 after factoring in the note ban impact in the December-ended quarter. Earlier this month, the Reserve Bank of India lowered GDP growth forecast for this fiscal to 6.9%, but at the same time projected a rebound in the next fiscal at 7.4%. Earlier this month, the International Monetary Fund in its annual report on India had forecast that the GDP growth will slow to 6.6% in 2016-17 due to "temporary disruptions" caused by demonetisation. It, however, had said demonetisation will have only short-term impact on the economy, which will bounce back to its expected growth of more than 8 percent in the next few years.
More Layoffs Likely As India’s Manufacturing Sales Shrink (Bloomberg) Despite the government’s efforts to attract investment under its Make-in-India campaign, sales of manufactured goods fell 3.7% during 2015-16–the first decline in seven years–sparking fears of layoffs and debt default in the months to come. Spurred by a global slowdown and lack of demand, sales of manufactured goods were falling even before demonetisation, affecting sectors ranging from textiles to leather to steel. A range of factors including falling investment, increased input costs and higher import duties have caused demand for manufactured goods to fall, a trend that was visible before demonetisation and has strengthened since.
As a result, in the six months to September 2016, engineering major Larsen & Toubro Ltd. laid off some 14,000 employees. Companies such as Microsoft, IBM and Nokia were also reported to have cut back on their workforce in 2016–albeit on a smaller scale–blaming sluggish demand for downsizing.
In November 2014, just weeks after Prime Minister Narendra Modi launched his Make-in-India campaign, Nokia shut its factory in Chennai, rendering 6,600 full-time workers jobless.
Economists say the government must step in to support the manufacturing sector, which constitutes 15-16 percent of the gross domestic product (GDP) and supports 12 percent of the workforce.
Trump, China's top diplomat, discuss cooperation, possible Xi meeting (Reuters) U.S. President Donald Trump, who has attacked China on issues from trade to the South China Sea, held his first face-to-face talks with a member of the Chinese leadership on Monday, and the White House said it was a chance to discuss shared security interests and a possible meeting with President Xi Jinping. State Councilor Yang Jiechi, China's top diplomat, met Trump briefly after talks with the new U.S. National Security adviser, H.R. McMaster; Trump's son-in-law and senior adviser, Jared Kushner; and White House chief strategist Steve Bannon. A senior U.S. administration official said discussions included bilateral cooperation and the possibility of arranging a meeting between Trump and Xi, but no date was set. The official said the meeting with Trump lasted five to seven minutes.
China's Worst Bond Rout in a Decade Seen Worsening on Rules (Bloomberg) The prospect of new rules in China on asset management products is sparking speculation that the worst corporate bond rout in a decade is about to get even worse. Such concern is spreading a day after people familiar with the matter said the nation’s regulators are drafting new regulations for asset-management products, including banning third-party managers from investing some funds in other firms’ products. The plans flag the possibility that authorities may unveil stricter steps to cut leverage throughout the nation’s credit markets. See also next article.
China Government Bond 10Y(Trading Economics) The "worst bond rout in a decade" (Bloomberg, preceding article) is s bit of an overreach. There have been other steep bond declines within the last decade, including most notably the decline in the second half of 2013 from yields of 3.45% to 4.60%. (Note: Rising yield means declining bond values.)
PBOC Is Going Digital as Mobile Payments Boom Transforms Economy (Bloomberg) China’s central bank is going digital. After assembling a research team in 2014, the People’s Bank of China has done trial runs of its prototype cryptocurrency. That’s taking it a step closer to becoming one of the first major central banks to issue digital money that can be used for anything from buying noodles to purchasing a car. For users transacting over their smartphones or laptops, a PBOC-backed cryptocurrency probably wouldn’t seem much different to existing payment methods such as Alipay or WeChat. But for sellers, they would get digital payments directly from the buyer, lowering transaction costs as the middleman is cut out of the process.
Other Scientific, Health, Political, Economics, and Business Items of Note - plus Miscellanea
Farewell to Kenneth Arrow, a Gentle Genius of Economics (Larry Summers) Summers writes an eulogy for his uncle, Kenneth Arrow, perhaps the greatest economist since World War II. Arrow, it seems, had a characteristic seldom found in the economics profession: he valued negative results. His definitions of markets that worked were accompanied by definitions of market conditions that didn't work, that could be improved by government interference. How different from many economists who "take sides" and argue either that "free" markets are always optimal or that "regulated" markets are always needed. Summers says that his uncle had the only purely mathematical theorem he knows of named after an economist: Arrow's Impossibility Theorem. Bill Black recently called this Kenneth Arrow's Ignored Impossibility Theorem.
11 Extinct Animals We've Lost in Our Lifetime (Popular Mechanics) Loss of habitat and predation, many cases by man, has cause a number of species extinctions in recent decades. Eleven of them are pictures in a slide show, the West African Black Rhino is one, pictured below:
Between 1900 and 2016, the world economy moved from telegraphy to smartphones, horse-drawn carriages to supercars and from letter press to Internet. But throughout this period, a few countries produced the highest average returns for investors in stocks and bonds. According to a study by Credit Suisse Group AG and the London Business School, the best equity markets over the past 117 years were commodity-rich nations such as South Africa, Australia, the U.S. and Canada, while Denmark and Sweden yielded the highest bond returns.
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