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What We Read Today 06 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:

  • Prices mostly stay the same whether you shop in store or online

  • How Blockchain is Changing Finance

  • How Blockchain Works

  • U.S. Commercial Credit Growth is Slowing Down

  • Relationship of Credit Acceleration to Economic Growth

  • Trump Signs New Immigrant Order

  • Most Americans Want a Special Prosecutor for Russian Investigation

  • GOP Tries to Move Ahead with ObamaCare Repeal

  • The Man Behind Trump's Wiretap Allegation

  • Republicans Shrug Off Trump's Wiretap Claims

  • White House: Border wall cost could run $25 million per mile

  • SCOTUS: Racially Biased Juries Have No Secrecy

  • Possible ECB Normalization Timeline

  • Donald Trump's Worst Deal

  • How Chinese Currency Manipulation Helped the U.S.

  • China's Banking System Expands to 310% of GDP

  • And More

Articles about events, conflicts and disease around the world

U.S.

  • Trump signs new extreme vetting order (Washington Times)  President Trump signed a new executive order Monday that temporarily bans visitors from six Middle East and African counties while the administration creates an extreme vetting program, taking pains to remove the pitfalls of the original order and the perception that it’s a “Muslim ban.”  The new order also dropped Iran from the list of seven predominately Muslim countries covered by the original Jan. 27 executive order that was blocked by federal courts.

The ban will be phased in over a 10-day period to avoid the chaos at airports following the original executive order that caught travelers in transit, and the wording has been changed to avoid suspicions that it is a “Muslim ban,” said a Department of Homeland Security (DHS) official.

The 90-day halt of visitors from Iraq, Libya, Somalia, Sudan, Syria and Yemen will take full effect March 16, according to the official.

However, the steady stream of news about investigations into those contacts doesn't appear to have affected President Donald Trump's approval rating, which ticked up only one percentage point -- 44% to 45% -- from January.  

Concerns about the reported contacts are closely tied to partisanship, with 71% of Democrats saying they are "very concerned" about it while 54% of Republicans say they have no concerns "at all" about the reports.

According to multiple reports over the weekend, Trump’s online outbursts were a direct result of him reading a Breitbart article summarizing Levin’s on-air speculation that Obama launched a “silent coup” against Trump.

“The real police state,” as Levin characterized it on Twitter last week.

According to multiple news reports, Trump’s “steaming, raging mad” tweetstorm sent unsuspecting White House senior staff into a state of confusion and overdrive, scrambling to figure out how to spin their boss’s Saturday Twitter rant, and how to manage the political fallout.

Late last week, Mark Levin said something on one of his evening broadcasts—and the butterfly effect of that ended up becoming major national news.

  • White House: Border wall cost could run $25 million per mile (Washington Times)  The estimates of President Trump’s proposed border wall run anywhere from $8 million to $25 million a mile, new White House budget director Mick Mulvaney said in a radio interview Monday — though he said no decisions have been made on exactly what the wall will look like.  Mr. Mulvaney, speaking on “The Hugh Hewitt Show,” said they will ask for some money in the next couple of weeks, but the real details on the cost and construction won’t come until they prepare their 2019 budget, which won’t happen for another year. The director also raised the possibility that much of the new barrier will be fencing, rather than a complete concrete wall stretching the 1,950 miles of the U.S.-Mexico border. He also said they are looking to match the type of fence or wall they build with the terrain.

  • SCOTUS: Racially Biased Juries Have No Secrecy (The Daily Beast)  The Supreme Court ruled on Monday in a 5-3 decision that racially or ethnically biased juries do not have a right to secrecy in deliberations. Justice Anthony Kennedy joined forces with the four liberal justices—Elena Kagan, Stephen Breyer, Sonia Sotomayor and Ruth Bader Ginsburg.  The minority opinion, authored by Justice Samuel Alito, argued that the ruling was an injust violation of jurors’ privacy. In the case Peña-Rodriguez v. Colorado, a juror justified his or her decision in a sexual assault trial by saying:

“I think he did it because he’s Mexican, and Mexican men take whatever they want.”

EU

  • Draghi Seen Keeping Cool on Stimulus Drive Amid Inflation Surge (Bloomberg)  A timeline for the end of European Central Bank stimulus is taking shape among economists.  Policy makers will wait until at least June before upgrading their assessment of the risks to the euro-area recovery and won’t announce another reduction in bond purchases until September, according to most respondents in a Bloomberg survey.  Tapering quantitative easing and starting to raise interest rates will take until at least the end of next year and possibly into 2019.

Azerbaijan

  • Donald Trump’s Worst Deal (The New Yorker)  No evidence has surfaced showing that Donald Trump, or any of his employees involved in the Baku deal, actively participated in bribery, money laundering, or other illegal behavior. But the Trump Organization may have broken the law in its work with the Mammadov family. The Foreign Corrupt Practices Act, passed in 1977, forbade American companies from participating in a scheme to reward a foreign government official in exchange for material benefit or preferential treatment. The law even made it a crime for an American company to unknowingly benefit from a partner’s corruption if it could have discovered illicit activity but avoided doing so. This closed what was known as the “head in the sand” loophole.

China

... the “manipulation” of China’s currency is actually to the distinct advantage of millions of American consumers (especially low-income Americans) and U.S. businesses buying products and inputs made in China. Those two groups certainly aren’t complaining about low-priced Chinese products, and in fact would be made worse off if China were forced to revalue its currency and in the process make its products more expensive for Americans.

  • China's Banking System Hits $33 Trillion, Overtaking The Eurozone As World's Largest (Zero HedgeTalk Markets)  Chinese bank assets hit $33 trillion at the end of 2016, versus $31 trillion for the eurozone, $16 trillion for the US and $7 trillion for Japan. The value of China’s banking system is now more than 310% the size of its GDP, compared to "only" 280% for the eurozone and its banks, and 86% for the U.S.  Quoting Eswar Prasad, economist at Cornell University and former China head of the International Monetary Fund:

“The massive size of China’s banking system is less a cause for celebration than a sign of an economy overly dependent on bank-financed investment, beset by inefficient resource allocation, and subject to enormous credit risks.” 

china.banks.largest.in.world

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

  • Prices mostly stay the same whether you shop in store or online (Times Live)  Online shopping is supposed to be a click away from bargains and cheap goods, but this is all a myth, says new research.  A study by the Massachusetts Institute of Technology of 10 countries, including South Africa, has shown that most firms sell their products at the same price in store and online nearly 75% of the time.  South Africa was higher than average. The price of goods in store and online were 85% of the time the same. In the US products had the same prices about 69% of the time. In the UK it is as high as 91%, and in Brazil 42%.

  • How Blockchain Is Changing Finance (Harvard Business Review)  Our global financial system moves trillions of dollars a day and serves billions of people. But the system is rife with problems, adding cost through fees and delays, creating friction through redundant and onerous paperwork, and opening up opportunities for fraud and crime. To wit, 45% of financial intermediaries, such as payment networks, stock exchanges, and money transfer services, suffer from economic crime every year; the number is 37% for the entire economy, and only 20% and 27% for the professional services and technology sectors, respectively. It’s no small wonder that regulatory costs continue to climb and remain a top concern for bankers. This all adds cost, with consumers ultimately bearing the burden.  It begs the question: Why is our financial system so inefficient? First, because it’s antiquated, a kludge of industrial technologies and paper-based processes dressed up in a digital wrapper. Second, because it’s centralized, which makes it resistant to change and vulnerable to systems failures and attacks. Third, it’s exclusionary, denying billions of people access to basic financial tools. Bankers have largely dodged the sort of creative destruction that, while messy, is critical to economic vitality and progress. But the solution to this innovation logjam has emerged: blockchain.  

how.blockchain.works 

  • Credit check (Warren Mosler, The Center of the Universe)  WM has contributed to GEI.  Commercial credit growth has been decelerating for almost a year.  Warren calls this "ominous".  See next article.

  • Manifesto (Steve Keen, Debt Watch)  Steve Keen has documented the good correlation of acceleration of debt with economic growth (correlation of 82% 1980-2011).  From this article:

Both the change in income and the acceleration of credit determine the rate of change of economic activity, and these are correlated with each other (the R2 since 1980 is 0.56), but the economics collapse in late 2007 was clearly driven primarily by the rapid and unprecedented deceleration of debt.

 


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