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What We Read Today 17 May 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:

  • Technology Keeps Accelerating -- Get on Board

  • One Year for the NASDAQ Composite

  • The Magic Liberal

  • Real S&P 500 Earnings History

  • Trump: 'No politician in history has been treated more unfairly'

  • Republican Hopes for Rewriting Tax Code in 2017 Are Fading

  • U.S. immigration arrests up nearly 40 percent under Trump

  • Sheriff who likened Black Lives Matter to KKK to join Trump administration

  • Putin offers transcript to prove Trump did not pass Russia secrets 

  • The U.S. Behavior That Concerns Russia

  • U.S. Yield Curve is Flattening Again

  • Yielding Clues About Recessions: The Yield Curve as a Forecasting Tool

  • France's Macron selects his government from left, right and centre

  • Cash is Disappearing in Sweden

  • When the War is Over Can Syria be Repaired?

  • And More

Articles about events, conflicts and disease around the world


  • Trump: 'No politician in history has been treated more unfairly' (The Guardian)  The president made remarks about media fairness addressing the graduation ceremnoy at the Coast Guard Academy in Connecticut.

  • Republican Hopes for Rewriting Tax Code in 2017 Are Fading (The New York Times)  Only two months ago, Republicans in Congress and President Trump’s top economic advisers were confidently predicting that a sweeping rewrite of the tax code would be in hand by summer’s end.  But with the White House consumed with constant upheaval, Congress facing the prospect of myriad investigations on top of its delayed duty to fund the government, and health care legislation still grinding through the Senate, those hopes have faded. Even with the less ambitious plan of just tax cuts — not a tax overhaul — the new mantra in Washington is “Maybe next year.”

  • U.S. immigration arrests up nearly 40 percent under Trump (Reuters)  U.S. arrests of suspected illegal immigrants rose by nearly 40% in the first 100 days of Donald Trump's presidency, following executive orders that broadened the scope of who could be targeted for immigration violations, according to government data released on Wednesday.  The acting director of Immigration and Customs Enforcement (ICE) Thomas Homan said that arrests by his agency jumped to 41,318 between January 22 of this year and the end of April, up from 30,028 arrests in roughly the same period last year.  Of those arrested almost two-thirds had criminal convictions. But there was also a significant jump - of more than 150% - in the number of immigrants not convicted of further crimes arrested by ICE: 10,800 since the beginning of the year compared to 4,200 non-criminal arrests in the same period in 2016.

  • Sheriff who likened Black Lives Matter to KKK to join Trump administration (The Guardian)  The controversial Milwaukee County sheriff, David Clarke, who has compared Black Lives Matter to the Ku Klux Klan, has said he is joining the Trump administration as a point person between federal government and local and state law enforcement.  Clarke is an African-American.

  • U.S. Yield Curve is Flattening Again (Twitter)  See also next article.

Click for large image.

  • Yielding Clues About Recessions: The Yield Curve as a Forecasting Tool (Federal Reserve Bank of St. Louis)  It is not the flattening of the yield curve that indicates a recession, but the inversion (short-term rates higher than long-term).  The reason flattening garners so much attention is that the curve must necessarily get flatter before it can invert.

To understand why the yield curve is such an accurate forecaster of recessions, it is necessary to review a few interest rate fundamentals. The yield curve is a plot of the interest rate yields on debt instruments of different maturities, holding risk, liquidity and tax treatment constant. In the United States, the yield curve is typically drawn for Treasury securities. More often than not, the Treasury yield curve slopes upward, indicating that long-term Treasury securities offer higher yields than short-term ones.

What determines the slope of the yield curve? One explanation—the expectations theory—holds that expectations about future interest rates account for the relationship between yields and maturity, and, thus, the slope of the curve. This theory assumes that instruments of different maturities are equally attractive to investors, who care only about returns. Therefore, investors will buy and sell instruments of different maturities until long-term rates reflect an average of the short-term rates that are expected to prevail in the future.

Click for larger image.


  • France's Macron selects his government from left, right and centre (The Guardian)  The new French president, Emmanuel Macron, has unveiled his first government – an unprecedented mix of figures from parties on the left, right and centre, including a right-wing economy minister who previously served under Nicolas Sarkozy.  Macron’s appointment this week of a prime minister, Edouard Philippe, from right-wing party Les Républicains, sparked other figures to join government from the right.  Bruno Le Maire, 48, a former agriculture minister and secretary of state for Europe under Sarkozy, was named economy minister, a role which Macron once held himself. Gérald Darmanin, another Sarkozy ally from the right, will work with him in charge of public finances.

Other figures from the left and centre took senior roles, including Jean-Yves Le Drian, a leading Socialist who was defence minister in the last government under François Hollande. He was appointed foreign minister – one of two figures from Hollande’s mandate to now serve under Macron’s presidency.

Macron carried out his promise of appointing the same number of women as men. However, only one of the government’s top five roles – defence – went to a woman, Sylvie Goulard.  

Goulard is a member of the European parliament and a Europe and finance expert. She was Macron’s top European adviser during the presidential campaign, masterminding his meetings with the German chancellor Angela Merkel. Her appointment to the defence ministry sent a message about closer European defence. Goulard, who is one of several fluent German speakers in government and also speaks fluent English, will be key for British emphasis on continuing defence ties with France after Brexit.


Click for large image.


  • When the War is Over Can Syria be Repaired? (CounterPunch)  The author suggests that more has been destroyed in Syria than infrastructure, both ancient and modern, and countless individual lives.  What remains may, like Humpty Dumpty, simply not fit together ever again.  Lebanon, a similar story on a much smaller scale, is used as discouraging counterpoint:

A project to memorialise all the disappeared of the Lebanon war is funded by the International Red Cross, the EU and two NGOs. But Syria’s war will end with many more casualties and many more missing than Lebanon’s. Its conflict is on a far larger scale, with vast areas of towns and cities razed to the ground – a fate which really only struck the centre of Beirut.

Even during the Syrian war today, there are reconciliation committees. But how can its people be repaired? Be sure, for many tens of thousands of Syrians, the war is already inside them; and will continue in their hearts – if Lebanon is anything to go by – long after the bloodshed ends.


  • Putin offers transcript to prove Trump did not pass Russia secrets (Reuters)  Vladimir Putin said on Wednesday that U.S. President Donald Trump had not divulged any secrets during a meeting in Washington with Russian officials and offered to prove it by supplying Congress with a transcript.  But a leading U.S. Republican politician said he would have little faith in any notes Putin might supply.  Two U.S. officials said on Monday Trump had disclosed classified information about a planned Islamic State operation to Russian Foreign Minister Sergei Lavrov when they met last week, plunging the White House into a fresh controversy just four months into Trump's tenure.

Trump, whose administration has been dogged by allegations that Russia helped him win the White House and that he and his allies are too cozy with Moscow, has defended his decision to discuss intelligence with the Russians after media reports of the meeting alarmed some U.S. and foreign politicians.

President Putin deployed his trademark sarcasm on Wednesday to make clear he thought the accusation that Trump had divulged secrets absurd.

  • The U.S. Behavior That Concerns Russia (CounterPoint)  The article focuses on three items, expressed through the thoughts collected from a "longtime member of Russia’s foreign service, advisor to the government, author, and advocate for arms reduction",  Vladimir Kozin:

  1. The need for an agreement between the U.S. and Russia on no first use of nuclear weapons, an agreement that he thinks other nations would subsequently join.

  2. Removing what the U.S. calls missile “defense” but what Russia views as offensive weaponry from Romania, and ceasing the construction of the same in Poland. These weapons combined with no commitment to no first use, [...] opens up the possibility of an accident or a misinterpretation of a flock of geese leading to the destruction of all human civilization.

  3. Stop NATO encirclement of Russia, creating wars outside of the United Nations, and planning for first use.  Pentagon documents [...] list Russia as a top enemy, an “aggressor” and an “annexer.” The U.S. would like [...] to break Russia apart into small republics.

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

  • Technology Keeps Accelerating -- Get on Board (The Dismal Optimist)  Peter Treadway posted this the day before the tech heavy NADSAQ Composite dropped more than 150 points (2.5%).  Nonetheless we would suggest the information is still valid, only the timing is in question.  See next article.

The main theme of this blog is that technology is accelerating at an accelerating rate and humanity is entering a new epoch in its evolution. This insight is drawn on the work of Ray Kurzweil and other so-called transhumanists. My economist add to all this is to assert that this technology acceleration to an overwhelming extent is being financed by the global capital markets. It is being driven by the rapid global spread of technology and globalization itself, the profit motive and the discipline of global product markets and far less by government R&D expenditures. The private sector is the prime engine—the big global tech companies, the startups now rising in so many places—the whole army of tech companies around the world. (I don’t regard Trump cuts to science research as being that devastating.) So, if technological acceleration is inevitable, then relax and invest in it.

  • One Year for the NASDAQ Composite (Google)  Today's drop of 2.57% is well within the normal volatility of the last year, although more than for the last 6 months.


  • The Magic Liberal (CounterPunch)  The author urges a stiff dose of reality.  He says that "all the intelligence and law enforcement organizations of the U.S. are corrupt".  An yet rigtheous liberals wave that away with a magic wand when it is convenient:

One should not forget the abuses of J.Edgar Hoover during his extended tenure as head of the FBI. Just as one should not forget the crimes, over six decades, of the CIA. And yet, and yet, the liberal pundits are screaming in indignation at this firing. They are again lining up with the very most repressive and authoritarian elements in government and the deep state. It really is rather breathtaking.

  • Real S&P 500 Earnings History (The Chart of the Day)  First, please note that the S&P 500 came into existence in 1928 so the data 1990-1927 is simulated (we assume by proportion to the Dow Jones Industrial Average),  Next, Econintersect notes that from 1928 to date there is a well defined upsloping trend channel with little penetration above the resistance lone (red) over a period of 90 years (second chart belpw with annotations we added).  However, support was dramatically penetrated in the Great Financial Crisis 0f 2008.  If we extended the channel back into the simulated data before 1928 there would be another major penetration of support in 1921.  Also the data from 1900 to 1916 wouldbe mostly above the red resistance line if we had extended it.  We point this out to suggest there is nothing magical about the uptrend channel, especially the resistance at the top of the channel.


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