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What We Read Today 16 June 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:

  • Bitcoin Tumbles Most in More Than Two Years After Record Run

  • Amazon Stock Gain Pays For $13.7 Billion Whole Foods Deal

  • Supreme Court rules church plans exempt from ERISA

  • Corporate bond issuance has proceeded at a somewhat faster than anticipated pace thus far in June

  • How to Resist Trump’s “Toxic To-Do List”

  • Trump Could Force Out Rosenstein, Fail to Stop Russia Probe

  • Who in the White House will Turn Against Trump?

  • Eurozone Growth Strengthens

  • How will Conservative deal with the DUP work?

  • External demand keeps Japan's growth engine running

  • Trump Rolls Back Obama-led Cuba Opening With Limits on New Deals

  • The Hidden Cost of Privatization

  • The State of the Nation's Housing 2017

  • Political Polarization, Global Uncertainty Top CRE® 2017-18 Top Ten Issues Affecting Real Estate List 

  • Wealthy Buyers Turn to Bank-Owned Homes

  • Solar Power Will Kill Coal Faster Than You Think

  • And More

Articles about events, conflicts and disease around the world

Global

  • Bitcoin Tumbles Most in More Than Two Years After Record Run (Bloomberg)   Bitcoin sank as much as 19%, putting the digital currency on pace for its worst week since January 2015, as volatility climbs following a record-setting surge in the price.  After flirting with $3,000 on Monday, the cryptocurrency has retreated to as low as $2,076.16 in intraday trading. Other digital coins are also falling. The decline coincides with a slide in technology stocks that began after a report from Goldman Sachs Group Inc. warned that low volatility in the biggest tech stocks may be blinding investors to risks like cyclicality and regulation.

U.S.

  • Amazon Stock Gain Pays For $13.7 Billion Whole Foods Deal (Investopedia)  Amazon Inc. (AMZN) is all set to gobble up Whole Food Market (WFM). However, there's a bigger sweetener for the e-commerce giant. Amazon's stock soared close to 3% in the aftermath of the announcement, increasing the company's market cap by nearly $15 billion to $475 billion and essentially paying for the entire deal. This price movement also expanded Bezos' personal wealth by over $2 billion and catapulted him back as the second richest person in the world with a real-time net worth of $84.4 billion, according to Forbes.

  • Supreme Court rules church plans exempt from ERISA (Employee Benefit Adviser)   Protections to employees in business-sponsored retirement plans do not apply to those in plans sponsored by churches or church-affiliated institutions:

The Supreme Court’s unanimous decision on June 5, 2017 in Advocate Health Care Network v. Stapleton is a significant victory for church-affiliated hospitals and similar institutions. The opinion reverses three appellate decisions on the matter.

The Court ruled that an employee benefit plan maintained by an organization controlled by or associated with a church with the principal purpose of administering or funding an employee retirement or welfare plan for the employees of a church — such organization being a “principal-purpose organization” — is a “church plan” exempt from the requirements of the Employment Retirement Income Security Act of 1974. This ruling applies to plans that were established by the principal-purpose organization and not directly established by a church.

Trump is trying to advance a “radical economic agenda” that will make the lives of working and middle class people worse. Trump will be unable to deliver on his campaign promises to do just the opposite: bring back jobs and restore America to a mythic past, says Klein. With nothing more to offer, she says, he will need to make good on the implicit promise of the “cheap thrills” of asserting dominance over people of color and women. 

To resist effectively, Klein says, there has to be a “counter plan.”  With preparation—and armed with a sound sense of history and how we got here—diverse social movements need to coalesce around a compelling alternative narrative and vision. Neoliberal economic policies are fueling the rise of fascist tendencies and movements in countries around the world, she says, but “left wing economic populism fights fascism.”

Another key to resisting shock politics, according to Klein: Economics should be part of political science, and “we need economists who understand politics.”

  • Trump Could Force Out Rosenstein, Fail to Stop Russia Probe (Bloomberg)  If Donald Trump fires Rod Rosenstein or prods him into recusing himself from the Russia meddling investigation he oversees, the president risks creating chaos at the Justice Department while failing to stop the inquiry.  The future of Rosenstein, the deputy attorney general, came under doubt Friday when Trump attacked him in a tweet and a U.S. official confirmed that Rosenstein has told colleagues he may have to recuse himself from the inquiry because he’d criticized James Comey in a memo before Trump fired the former FBI director.

  • Who in the White House will Turn Against Trump?  (The New Yorker) Econintersect:  Is there the equivalent of John Dean in the current White House?  This article makes it seem to be a question of when, not if, we will find out who that (those) person(s) is (are) if there is (are) such person(s):

The reason that this White House staff is so leaky, so prepared to express private anxiety and contempt, even while parading obeisance for the cameras, is that the President himself has so far been incapable of garnering its discretion or respect. Trump has made it plain that he is capable of turning his confused fury against anyone in his circle at any time. In a tweet on Friday morning, Trump confirmed that he is under investigation for firing the F.B.I. director James Comey, but blamed the Deputy Attorney General, Rod Rosenstein, for the legal imbroglio that Trump himself has created. The President has fired a few aides, he has made known his disdain and disappointment at many others, and he will, undoubtedly, turn against more. Steve Bannon, Kellyanne Conway, Jared Kushner, Jeff Sessions, Sean Spicer­—who has not yet felt the lash?

Trump’s egotism, his demand for one-way loyalty, and his incapacity to assume responsibility for his own untruths and mistakes were, his biographers make plain, his pattern in business and have proved to be his pattern as President.

Veteran Washington reporters tell me that they have never observed this kind of anxiety, regret, and sense of imminent personal doom among White House staffers—not to this degree, anyway. These troubled aides seem to think that they can help their own standing by turning on those around them—and that by retailing information anonymously they will be able to live with themselves after serving a President who has proved so disconnected from the truth and reality.

EU

  • Eurozone Growth Strengthens (Moody's Analytics)  The euro zone recorded its fastest growth rate in two years in the March quarter. The real GDP expanded by 0.6% q/q in the first quarter, stronger than preliminary estimates and the December stanza’s 0.5% pace. High-frequency indicators suggest this buoyant pace will persist through the June quarter. The area’s composite PMI held steady at 56.8 in May, unchanged from April’s six-year high and far above the average of 55.6 recorded in the three months to March. This is consistent with growth picking up further in the second quarter, to around 0.6% to 0.7%. The impressive momentum is being supported mainly by a stellar manufacturing performance. The details brought even better news, showing that booming manufacturing orders are raising work backlogs and lifting job creation to its fastest in over 10 years, as firms expand capacity to meet the rise in demand. Meanwhile, the euro zone's unemployment rate unexpectedly fell to 9.3% in April, from a downwardly revised 9.4% in March and from 10.2% in April 2016, the lowest rate since March 2009. Cyclical labor market improvement combined with strengthening wage growth in some euro area countries will boost household spending, while broad-based improvement in global demand will support euro area exports. 

UK

  • How will Conservative deal with the DUP work? (The Conversation)   It is important to note that the deal between the Conservatives and the DUP is not a formal coalition. No DUP MPs will be in government and the DUP will not be sitting on the government benches in the House of Commons. The party won’t receive official support from the civil service either. In fact, it will still receive short money – funding provided to the opposition parties in parliament.

The first test of the agreement will be the Queen’s speech, in which the government sets out its legislative plans for the year ahead. MPs then vote on the speech. While this is not an official vote of confidence, May must secure the support of the House of Commons in this vote to remain in office.

Assuming this first test is passed, the agreement with the DUP then moves on to the more substantive stage – dealing with legislation brought before the House of Commons.

Japan

  • External demand keeps Japan's growth engine running (Moody's Analytics)  External demand remains the catalyst for growth in Japan. The yen’s depreciation since late 2016 is boosting export values in local currency terms. But it’s also raising Japan’s external competitiveness, which has come at an opportune time because global trade is rising thanks to firmer U.S. and euro zone demand. The upswing in the global tech cycle has also helped, although this will likely fade in May and onwards because the tech cycle is entering its production phase. Auto exports have also firmed in recent months and will likely buttress overall export growth. Japanese automakers are releasing new car models, with sanguine demand from North America. A tighter trade policy from the U.S. seems unlikely, at least for Japan, as both nations have reaffirmed their pledge to bilateral trade. The import bill will likely grow at a slower pace because commodity prices have eased. This will support the overall trade surplus over the coming months.

Cuba

  • Trump Rolls Back Obama-led Cuba Opening With Limits on New Deals (Bloomberg)  President Donald Trump announced new restrictions Friday limiting U.S. citizens’ ability to travel to and do business in Cuba, moving to roll back his predecessor’s historic rapprochement and drawing a rare rebuke from the nation’s largest business lobbying group.  The changes Trump announced include a ban on Americans doing business with the military and intelligence-affiliated companies that control large swaths of the Cuban economy. He unveiled the new policy during a speech in Miami, where the fervently anti-Castro expatriate community helped deliver an electoral victory to Trump in the crucial battleground state.

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

  • The Hidden Cost of Privatization (Institute for New Economic Thinking)  The author argues that there are some things that are best provided by government and disputes the idea that governments should by run like businesses.  Econintersect would summarize the idea with words not used by the author:  The activities of government are aimed at maximizing service at the lowest possible cost; the activities of business are aimed at satisfying the customer with while achieving the highest possible profit.  From the author's conclusion:

While the business of business is business, the business of government is not. It has its own functions, an “agenda,” as Keynes puts it. This government agenda must be decided by the interests of the public, and these interests, as we have argued, are not just an agglomeration of individual interests. The public has interests in common, and the determination of these interests, and the actions on them, occur through the institutions of government. Government provides a public space, places and times for public discourse on the affairs of the nation, such as the public hearings of government agencies, the constituent gatherings of elected officials and electoral campaigns. And the political matters discussed through these avenues are decided, and acted on, in the legislature of the government, while the laws enacted there are enforced through the judiciary. The government substantiates the public purpose, keeping it in the conscience of the nation, and this, arguably, is its most important function.

A decade after the onset of the Great Recession, the national housing market is finally returning to normal. With incomes rising and household growth strengthening, the housing sector is poised to become an important engine of economic growth. But not all households and not all markets are thriving, and affordability pressures remain near record levels.

home.prices.2000.2016

home.prices.2000.2016.map

home.growth.minorities.drive.2000.2016

Click for large image.
home.construction.vacancy.2000.2016

  1. Political Polarization and Global Uncertainty

  2. The Technology Boom

  3. Generational Disruption

  4. Retail Disruption

  5. Infrastructure Investment

  6. Housing: The Big Mismatch

  7. Lost Decades of the Middle Class

  8. Real Estate’s Emerging Role in Health Care

  9. Immigration

  10. Climate Change

  • Wealthy Buyers Turn to Bank-Owned Homes (Realtor Mag)  Wealthy home buyers are getting around the pervasive inventory crunch by snapping up bank-owned properties and making high-end renovations. Homes listed as REOs “used to be a huge anchor on the property, but now it propels it,” Danny Hertzberg, an agent with the Jills Group at Coldwell Banker in Miami Beach, Fla., told The Wall Street Journal.

Hertzberg says luxury bank-owned properties in his market are discounted about 10 percent, much less than the 20 percent to 30 percent discount that was typical a few years ago. Hertzberg recently sold a 10,383-square-foot waterfront REO property with six bedrooms for $8.7 million, which was 6 percent below the list price. The home had been appraised for about $13 million.

But the market for bank-owned homes is also getting tighter. In April, the number of properties nationwide in some stage of foreclosure was 734,996—down 66 percent from a peak of 2.2 million in 2010, according to data from ATTOM Data Solutions. In 2016, million-dollar homes made up 2.06 percent of all REO sales, the largest share in three years, says Daren Blomquist, senior vice president at ATTOM Data Solutions.

  • Solar Power Will Kill Coal Faster Than You Think (Bloomberg)   Solar power, once so costly it only made economic sense in spaceships, is becoming cheap enough that it will push coal and even natural-gas plants out of business faster than previously forecast.  That’s the conclusion of a Bloomberg New Energy Finance outlook for how fuel and electricity markets will evolve by 2040. The research group estimated solar already rivals the cost of new coal power plants in Germany and the U.S. and by 2021 will do so in quick-growing markets such as China and India.


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