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What We Read Today 02 March 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".).


Every day most of this column ("What We Read Today") is available only to GEI members.

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Topics today include:

  • Money Creation and Interest:  Is There Enough Money to Pay Off All the Interest?

  • Marijuana Helped the World's Top Hedge Fund Gain 145%

  • Snapchat IPO a Huge Success

  • Snapchat is Now More Valuable than Target, American Airlines and Other Iconic Companies

  • The Global Ranking of Soft Power

  • Trump Has 'Total' Confidence in Sessions

  • Why is the Trump Agenda Moving Slowly in Congress?

  • Caterpillar Shares Plunge After Its Offices Are Raided

  • The Real Causes of the Worst Drug Crisis in U.S. History

  • Large Majorities See Checks and Balances, Right to Protest as Essential for Democracy

  • Watch Two Centuries of U.S. Immigration

  • Marijuana Contributed to 145% Gain by World's Top Hedge Fund

  • Saudi Arabia Looking for Outside Investors in Its Sovereign Wealth Fund

  • When Did Talking to Ambassadors Become Toxic?

  • India Seeks New Sites for Nuclear Power Plants

  • The Uneasy China-U.S. Codependence

  • China's New Watchdog to Tackle Shadow Banking, Property Bubbles

  • And More 

Articles about events, conflicts and disease around the world


  • A Ranking of Global Soft Power (The Soft Power 30)  Hat tip to Branko Milanovic.  Power in international relations has traditionally been defined and assessed in easily quantifiable ‘hard’ terms, often understood in the context of military and economic might. Hard power is deployed in the form of coercion: using force, the threat of force, economic sanctions, or inducements of payment.  In contrast to the coercive nature of hard power, soft power describes the use of positive attraction and persuasion to achieve foreign policy objectives.  Soft power shuns the traditional foreign policy tools of carrot and stick, seeking instead to achieve influence by building networks, communicating compelling narratives, establishing international rules, and drawing on the resources that make a country naturally attractive to the world.  In short, “hard power is push; soft power is pull”.



  • Trump has 'total' confidence in Sessions (The Hill)   President Trump said Thursday that he has "total" confidence in Attorney General Jeff Sessions, dismissing bipartisan calls for Sessions to recuse himself from federal investigations into Russian interference in the 2016 presidential election.  Trump told reporters he “wasn’t aware” of Sessions’ conversations with the Russian ambassador to the U.S., Sergey Kislyak, but said he believes Sessions “probably did” speak truthfully to the Senate under oath.  Econintersect:  A kiss from the Godfather?

  • Why the Trump Agenda Is Moving Slowly: The Republicans’ Wonk Gap (The New York Times)  The problem is ideology holding sway over pragmatism.  According to this article, large portions of the Republican caucus embrace a kind of policy nihilism. They criticize any piece of legislation that doesn’t completely accomplish conservative goals, but don’t build coalitions to devise complex legislation themselves.

  • Caterpillar Shares Plunge After Its Offices Are Raided (Bloomberg)  Caterpillar Inc. (NYSE:CAT) shares headed for the steepest decline in eight months as the biggest maker of machinery for mining and construction had its Illinois offices raided by U.S. tax and financial agents.  Searches were conducted Thursday in Peoria, East Peoria and Morton by the Internal Revenue Service, the Federal Deposit Insurance Corp. and the Commerce Department, Sharon Paul, a spokeswoman for the U.S. attorney’s office for the Central District of Illinois, said by telephone.  Declining to comment on the nature of the raid, she said that in other cases the U.S. attorney’s office has dealt with the IRS’s Criminal Investigations unit and Commerce’s Office of Export Enforcement. 

Click for larger image.

“Toyotazation” of the health care system — an industrialization of medicine that’s encouraged doctors to push a patient in and out so their institutions can get paid as quickly as possible, and looking for quick solutions, such as a single pill, that can swiftly satisfy a patient’s demands. There are also broader cultural issues — like the fact that some people just aren’t willing to accept the limitations of their physical bodies, leading them to turn to doctors for a cure that medicine just doesn’t have.

...the empirical evidence shows that opioids actually aren’t effective for chronic pain, and instead pose many risks in the long term, from addiction to overdose to a higher risk of injury to even increased levels of pain. So doctors, Lembke argues, need to find other solutions, like physical therapy, that may benefit patients.

  • Large Majorities See Checks and Balances, Right to Protest as Essential for Democracy (Pew Research Center)  Large majorities of the public, Republicans and Democrats alike, say open and fair elections and a system of governmental checks and balances are essential to maintaining a strong democracy in the United States.  However, there is less consensus about the importance of other aspects of a strong democracy – notably, the freedom of news organizations to criticize political leaders.  The survey by Pew Research Center, conducted Feb. 7-12 among 1,503 adults, finds that 89% say fair and open national elections are very important to maintaining a strong democracy, while 83% say the same about a system of checks and balances dividing power between the president, Congress and the courts.

  • Two Centuries of U.S. Immigration (  Should be a hat tip for this, but we have lost the e-mail in which it came.  Click on map for animated immigration flow hiostory.


  • Tribeca fund also gained from salmon, lithium, cobalt rallies (Bloomberg)  U.K. officials see Spain as a potential chink in the armor of the European Union as it heads into the diplomatic fray that will start after Prime Minister Theresa May formally triggers the Brexit process, according to people familiar with her government’s planning.  Accused of adopting divide-and-rule tactics, May’s government has already embarked on a charm offensive with the smallest and newest members of the EU in the east. Now, it has a core member of the euro area in its sights as it tries to pick off the allies it needs to secure a sweeping free-trade agreement once it leaves the bloc, one of the people said.  Spain is an ideal candidate as long as the thorny issue of Gibraltar can be resolved. For starters, there are deep trade and tourism ties between the two countries that Prime Minister Mariano Rajoy will want to maintain as he oversees unemployment running at twice the bloc’s average.  The two are planning a deal to guarantee citizens’ residency rights.

Saudi Arabia

  • Help Wanted in Saudi Arabia: Savvy Investors (Bloomberg)   Saudi Arabia’s Public Investment Fund (PIF) has become part of Deputy Crown Prince Mohammed bin Salman’s plan to wean Saudi Arabia off its reliance on oil and make it a financial powerhouse. Already it’s committed $45 billion to a new technology fund. It’s a high-stakes gamble for the 31-year-old prince.  If the PIF’s team makes a misstep, the prince’s critics may question why he’s plowing revenue from oil into companies abroad rather than spending it at home.  A key to the growth of PIF is the forthcoming Aramco IPO, the value of which is in question.


  • Putin Invented This Toxic Ambassador Game (Bloomberg)  As a new Russia-related scandal sweeps Washington, it's impossible not to recall President Vladimir Putin's efforts in 2012 to make meetings with the U.S. ambassador to Moscow toxic. As Trump's opponents seek to inflict maximum damage for Attorney General Jeff Sessions' false denial about a meeting with a Russian envoy, they should understand where these games lead - restrictions on communications and commerce.


  • India Said to Explore New Sites for Building Nuclear Projects (Bloomberg)   India is exploring new locations, in addition to those already identified, to build nuclear power plants and meet its generation goal, a government official with direct knowledge of the matter said.  The nation has had to back out from a couple of sites in the past because of opposition from the local population and is now looking at regions, including those away from the sea, to supplement the existing list, the official said without elaborating. He asked not to be named as the plans aren’t public yet.  India’s plans to expand its nuclear generation capacity more than ten-fold have been hampered by delays in construction due to protests by the local population and suppliers’ concern over a liability law.


  • An Uneasy Codependence (Harvard Business Review)   (Econintersect:  See also The U.S. vs. China (Frank Li, GEI)  Assuming trend lines hold, the eventual shift of global supremacy from the United States to China will be the show of the century. The question is whether it will lead to more conflict or more cooperation.

For many U.S. citizens, national identity is wrapped up in being “number one,” whatever exactly that means. If an increasingly prosperous, stable, and confident China manages to assert itself as the global leader, Americans aren’t likely to slide gently into the backseat.  

No other relationship is as important, or as fraught, as America’s with China. On the one hand, the two nations are codependent. Americans import nearly $500 billion worth of relatively cheap electronics, toys, and seemingly everything else from China each year. China, meanwhile, holds $1.1 trillion in U.S. securities. The relationship, as observers like to say, is “too big to fail.”

  • China's New Watchdog to Tackle Shadow Banking, Property Bubbles (Bloomberg)  China’s banking regulator outlined wide-ranging efforts to rein in financial risks, including clamping down on shadow lending and curbing funding for property speculation.  Guo Shuqing, three days on the job as chairman of the China Banking Regulatory Commission, said he will coordinate with other financial authorities, including the central bank, to plug loopholes in regulations for cross-market financial products and update rules that no longer fit with banks’ current business and risk management.

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

  • Money Creation and Interest:  Is There Enough Money to Pay Off All the Interest? (Part 1)  (Positive Money)  Money is created as credit by banks.  Since they only create the amount lent, the additional money needed to pay interest on the principle can only be ontained by borrowing more money (again created as credit).  This is the argument that this author seeks to refute.

    While there are a number of flaws with the contemporary monetary system, it is mistaken to claim that interest payments, in of themselves, necessitate an ever-growing stock of money.

    The scenario the author uses requires the assumption that all money paid in interest is respent (or relent) back into the economy.  In such a situation there is no additional debt needed for "extra" money to pay interest; it is available "in the economy" and the debtor needs only to "earn" it in time to pay the interest in addition to the principle.  Of course, one fallacy in this argument is that it does not account for "savings" that are not reinvested ("hoarded money").  The author acknowledges this and argues that he is simply offering a demonstration that

    ... is mathematically (and therefore logically) possible for Alice to repay both the principal and interest of the loan from Bob."

    A second problem is that the scenario described requires that some agents in the economy are always "in deficit" so that others can retire their debt with interest.  If the economy is sufficiently dynamic the flow of money (velocity of money) keeps the game of "musical chairs" money going because the music never stops at the same time for all (or even a significant fraction) of the agents.  However, in the real economy there are slowdowns and then there are not enough "chairs" available at a given time for all the agents.  Cascading debt defaults (or additional issue of credit) then ensue.  The result is recession, or increased debt, or both.

  • Marijuana Helped the World's Top Hedge Fund Gain 145% (Bloomberg)   Bets on marijuana companies helped an Australian manager soar 145% last year to become the world’s best-performing hedge fund.  Stock and credit investments in North American marijuana producers contributed to 22% points of last year’s gain for the $200 million Tribeca Global Natural Resources Fund, said Sydney-based Ben Cleary, who co-manages the pool with Craig Evans. The fund has advanced 4% this year through February, Cleary said.  Tribeca fund also gained from salmon, lithium, cobalt rallies.

  • Snapchat popped in its trading debut — and it's now bigger than these 17 household names (SNAP) (Business Insider)  For more, see also next article.

  • Snap Jumps in Debut After App Maker Raises $3.4 Billion in IPO (Bloomberg)  Snap Inc., maker of the disappearing photo app that relies upon the fickle favor of millennials, jumped in its trading debut after pricing its initial public offering above the marketed range.  Shares opened at $24 and traded as high as $25.42 apiece Thursday, giving the company a market valuation of about $29 billion, based on the total number of shares outstanding after the offering in the deal prospectus.  Snap (NASDAQ:SNAP) sold 200 million shares in its IPO at $17 each, above the $14 to $16 marketed range. Its market valuation at the IPO price, of about $20 billion, implies a multiple of about 21.4 times EMarketer’s estimate for Snap’s 2017 advertising sales. Snap went public at a valuation at least twice as expensive as Facebook Inc., and four times more costly than Twitter Inc.  Click on chart for latest quote.

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