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What We Read Today 03 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".).

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Topics today include:

  • Populist Economics

  • Yellen Says March Rate Hike Likely ... Maybe

  • EPA Drops Request for Methane Control Information from Oil and Gas Industry

  • Methane May Be More Harmful Greenhouse Gas than Thought Previously

  • GOP Biggest ACA Problem in Employer Healthcare Taxes

  • Photo Contradicts Pelosi's Claim to Have Never Met with Russian Ambassador

  • Koch Group:  Trump Infrastructure Plan Could Be "Boondoggle"

  • Trump's advisers push him to purge Obama appointees 

  • 60 Years of Average Federal Taxes on Families of Four

  • Will the Dollar Fade and the Euro Rise?

  • Macron Moves Ahead of Le Pen in French Polling

  • Syrian Opposition Accepts U.N. Principles for Peace Talks

  • China Trade War Could Turn U.S. Meat Exports into Dog Food

  • What We Know About Immigration from Mexico

  • Watch U.S. Oil Drilling Collapse ... and Rise Again

  • How Does the Public View of Science Go Wrong?

  • The Real Reasons Autism Rates Are Up in the U.S.

  • Bond Investors Do Not Need to Fear the Fed ... If

  • DNA Gives Clues to the Demise of the Woolly Mammoth

  • And More

Articles about events, conflicts and disease around the world

Global

  • The Anatomy of Populist Economics (Project Syndicate)  This is a good review of what Project Syndicate contributors have written on the rise of populism.  The introduction:

For at least the past year, populism has been wreaking havoc on Western democracies. Populist forces – parties, leaders, and ideas – underpinned the “Leave” campaign’s victory in the United Kingdom’s Brexit referendum and Donald Trump’s election as President of the United States. Now, populism lurks ominously in the background of the Netherlands’ general election in March and the French presidential election in April and May.

But, despite populism’s seeming ubiquity, it is a hard concept to pin down. Populists are often intolerant of outsiders and those who are different; and yet Geert Wilders, the far-right Dutch populist leader, is a firm believer in gay rights. In the US, Trump’s presidential campaign was described as an anti-elite movement; and yet his administration is already practically a subsidiary of Goldman Sachs.

While today’s populist resurgence comes from the nationalist right, some of the leading populist exponents in recent decades – such as Venezuela’s late president, Hugo Chávez – were firmly on the left. What they share is a zero-sum view of the world, which necessitates the creation of scapegoats who can be blamed for all problems. Moreover, because populist leaders claim to embody the uniform will of a mythical “people,” they consider democracy to be a means to power, rather than a desirable end in itself.

But populists have more in common than an obsession with cultural boundaries and political borders. They also share a recipe for economic governance, one that Project Syndicate commentators have been tracking since long before today’s brand of populism began dominating the world’s headlines. Guided by their insights, we can begin to understand the origins of today’s populist resurgence, and what is in store for Western countries where its avatars come to power.

U.S.

“At our meeting later this month, the Committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate.” 

  • EPA Drops Request for Methane Information from Oil and Gas Industry (Scientific American)  U.S. EPA Administrator Scott Pruitt has swiftly complied with a request from GOP leaders in oil-and-gas-producing states to scrap an Obama-era request for industry information about reducing greenhouse gas emissions.  The agency yesterday withdrew a formal survey of oil and gas companies that required them to provide information about onshore equipment and controls that could reduce emissions of greenhouse gases, including methane. Industry and state officials complained that the information collection request (ICR) was time-consuming and expensive.  See also How Bad of a Greenhouse Gas Is Methane? (Scientific American):

The global warming potential of the gaseous fossil fuel [methane] may be consistently underestimated.

Environmental advocates are trying to change how policymakers consider the climate impacts of methane, a potent greenhouse gas.

The change, if implemented, could make natural gas a less attractive option for generating electricity in power plants.

  • Employers shouldn’t throw away their Cadillac tax-mitigation report just yet (Employee Benefit Advisor)  Special tax treatment of employer-sponsored health plans (aka Section 125) is in big trouble. Scaling back the ability of employees to reduce their taxable income to pay for medical, dental and vision premiums seems to be something that many leaders in our federal government, including Speaker Paul Ryan and Health and Human Services Secretary Tom Price, actually agree upon.  Why?  It's a big loss of Federal income tax revenue.  At $260 billion, it’s the single largest tax expenditure. And of that $260 billion, $140 billion comes from the FICA break. In comparison, the mortgage-interest deduction is $70 billion.  While public attention has been focused on the individual exchange markets introduced by ACA (aka Obamacare) and Medicaid expansion, the tax costs of employer provided health insurance dominates the space.

health.care.coverage.sources 

  • Photo contradicts Pelosi's statement about not meeting Kislyak (Politico)  House Minority Leader Nancy Pelosi (D-Calif.) said Friday that she's never met with the current Russian ambassador, Sergey Kislyak.  But a file photo from Pelosi's 2010 meeting with Russian President Dmitriy Medvedev shows Kislyak at the table across from Pelosi — then House speaker — and Rep. Steny Hoyer (D-Md.). Medvedev had been in the country for a meeting with President Barack Obama a day earlier and stopped in on Capitol Hill to meet with congressional leaders as well.  Asked to square Pelosi's comments with the photo of the meeting, a spokesman said Pelosi simply meant she never had a solo meeting with Kislyak.

  • Koch Group Warns Trump Infrastructure Plan Could Be ‘Spending Boondoggle’ (Bloomberg)  An influential conservative group backed by billionaire brothers Charles and David Koch is questioning a plan to spend $1 trillion on the nation’s infrastructure and warning that one of President Donald Trump’s signature policy initiatives could become a “spending boondoggle”.   In a memo released Friday, Freedom Partners cautions Trump and the Republican-controlled Congress against making the same mistakes that the group says were in the $787 billion federal stimulus bill in 2009. That legislation, passed at former President Barack Obama’s urging, included tax cuts, benefits payments and other spending in addition to infrastructure. It was aimed at boosting the U.S. economy amid the worst recession since the Great Depression.  The stimulus “added nearly a trillion dollars to the national debt and failed to create the so called ‘shovel ready’ infrastructure jobs that were promised,” Nathan Nascimento, the group’s vice president of policy, said in a statement.

  • Trump's advisers push him to purge Obama appointees (Politico)  Advisers to President Donald Trump are urging him to purge the government of former President Barack Obama's political appointees and quickly install more people who are loyal to him, amid a cascade of damaging stories that have put his nascent administration in seemingly constant crisis-control mode.  A number of his advisers believe Obama officials are behind the leaks and are seeking to undermine his presidency.

  • Average Federal Taxes on Family of Four (Catherine Mulbrandon, Vizualizing Economics)  CM has contributed to GEI.  (Econintersect note:  The data here is median income for a family of four, which is different (and higher) than the commonly quoted median household income.  Also, taxes are calculated for one self-employed earner providing the total family income.)

Click for larger image.

EU

President Donald Trump’s unpredictability accounts for a lot and I don’t think that US protectionist measures – tariffs or some form of border tax – would be good for the US dollar.

Sure, they 'improve’ the US trade account and would heft inflation. So the Fed must tighten more, but Fed tightening (more than other central banks) is a tired story – even if the market still lags the dots.

Protectionism might hurt the US capital account more than it helps the US trade account. On the capital account, there is risk of damage to the US dollar from second-order effects – principally retaliation by China, which could include reducing its $1 trillion holdings of US treasuries or a myriad of anti-US corporate measures in China. And that’s before confrontation about the South China Sea kicks in.

Then there’s the euro. The European Central Bank (ECB) is done easing. The ECB targets headline inflation adjusted for transient effects. Headline CPI is likely to end the year closer to the ECB’s 2% target than anyone thinks.

France

  • Macron gets presidential poll boost as Fillon crisis deepens (Reuters)  Centrist candidate Emmanuel Macron cemented his status as favourite to win the French presidency on Friday as pressure mounted on his conservative rival, Francois Fillon, to pull out because of a deepening financial scandal.  For the first time since the line-up of candidates became clear, an Oxoda poll showed Macron finishing ahead of far-right leader Marine Le Pen in the opening round. That came a day after he promised a blend of fiscal discipline and stimulus to strengthen a feeble economic recovery.

  • France's Le Pen refused to be questioned by judges in EU jobs affair: lawyer (Reuters)  French far-right leader Marine Le Pen refused to attend a summons by judges over allegations of misuse of European Union funds, her lawyer told Reuters on Friday.  Lawyer Marcel Ceccaldi said Le Pen had told the judges she would not attend before the end of the presidential campaign, to be held in two stages in April and May, in which she is one of the leading candidates.  "Of course she won't go," Ceccaldi said, citing Le Pen's parliamentary immunity.

Syria

China

  • In a China Trade War, U.S. Meat Looks Like Dog Food (Bloomberg)  As Donald Trump’s campaign threats of a trade war with China loom over American industry, executives are left to determine how they might navigate that conflict. For the U.S. meat industry, the answer might be snoring softly next to the food bowl in your kitchen.  The U.S. sells billions of dollars of beef, pork, and chicken to countries all over the world, a mutually beneficial relationship that allows companies to find buyers for cuts of meat Americans shun, like offal and pig ears. If those markets should close, said Tyson Foods Inc. Chief Executive Officer Tom Hayes, such technically edible animal parts will likely land in your dog’s breakfast.

Mexico

  • What we know about illegal immigration from Mexico (Pew Research Center)  There were 11.7 million immigrants from Mexico living in the U.S. in 2014, and about half of them were in the country illegally, according to Pew Research Center estimates. Mexico is the country’s largest source of immigrants, making up 28% of all U.S. immigrants. Some specifics:

  • The number of Mexican immigrants living in the U.S. illegally has declined by more than 1 million since 2007.

  • More non-Mexicans than Mexicans were apprehended at U.S. borders in fiscal year 2016 for the second time on record (first was 2014).

  • Mexicans were deported from the U.S. 242,456 times in 2015, down from recent high of 309,807.

 

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

  • DNA clues to why woolly mammoth died out (BBC News)  The last woolly mammoths to walk the Earth were so wracked with genetic disease that they lost their sense of smell, shunned company, and had a strange shiny coat.  That's the verdict of scientists who have analysed ancient DNA of the extinct animals for mutations.  The studies suggest the last mammoths died out after their DNA became riddled with errors.  The knowledge could inform conservation efforts for living animals.  There are fewer than 100 Asiatic cheetahs left in the wild, while the remaining mountain gorilla population is estimated at about 300. The numbers are similar to those of the last woolly mammoths living on Wrangel Island in the Arctic Ocean around 4,000 years ago.  The species succumbed as their gene pool accumulated bad mutations with insufficient numbers of indiviuals for efficient natural selection.

  • Bond Investors: Don’t Fear the Fed (Advisor Pespectives)  This article discusses how to diversify across different credit-related asset classes in a rising interest rate environment.  One area discussed is the belief that shorter duration bonds offer some protection.  However, the shorter-maturity bonds have typically been the most vulnerable when the Fed raises rates.  How to use emerging market debt in a portfolio is also discussed.

  • The Real Reasons Autism Rates Are Up in the U.S. (Scientific American)  The prevalence of autism in the United States has risen steadily since researchers first began tracking it in 2000. The rise in the rate has sparked fears of an autism ‘epidemic.’ But experts say the bulk of the increase stems from a growing awareness of autism and changes to the condition’s diagnostic criteria.  Awareness and changing criteria probably account for the bulk of the rise in prevalence, but biological factors might also contribute, says Durkin. For example, having older parents, particularly an older father, may boost the risk of autism. Children born prematurely also are at increased risk of autism, and more premature infants survive now than ever before.

  • How Does the Public’s View of Science Go So Wrong? (Scientific American)  (Econintersect:  Our summary of this article:  For many people belief "outranks" facts.)

... the public rejection of science is an extension of our politics, which in turn have become an expression of our constant outrage about everything that offends our deepest beliefs about ourselves. As social scientist David Dunning has put it: “Some of our most stubborn misbeliefs arise not from primitive childlike intuitions or careless category errors, but from the very values and philosophies that define who we are as individuals.” When those misbeliefs are challenged, laypeople take it not as correction but as a direct attack on their identity.

  • Watch U.S. Oil Drilling Collapse—and Rise Again (Bloomberg)  The boom looks like it’s back. The number of oil and gas rigs drilling in the U.S. has almost doubled since bottoming out at the lowest level in more than 75 years of records. The animation below shows the collapse of America’s energy boom beginning in 2015—and its subsequent resurrection beginning last May.  While two dozen nations are coordinating to cut oil production and rein in the global supply glut, U.S. producers are moving in the opposite direction. Over the last four months, output increased by half a million barrels a day. If that rate of expansion continues, the shale boom will break new production records by summer.

Click for larger animated time lapse map at Bloomberg.
us.drilling.map


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