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What We Read Today 05 July 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:

  • A few reasons why many financial advisors love bond ETFs

  • Do Wind Turbines Kill Birds?

  • Missing Income

  • Paul Krugman’s Lack of Self-Awareness Is Truly Stunning

  • The economic side effects of the student loan crisis (in 3 charts)

  • Crude Plummets

  • How an obscure Austrian philosopher saw through our empty rhetoric about ‘sustainability’

  • Earth’s wildernesses are disappearing, and not enough of them are WorldHeritage-listed

  • Taking Wall Street’s Side, Young Congressman Infuriates Allies

  • Cruz plan could be key to unlocking healthcare votes

  • Kansas or California?

  • Trump bashes wind energy in a state that gets a third of its electricity from wind

  • ECB Balance Sheet Shrinks

  • Monetary-fiscal interactions and the euro area’s vulnerability

  • The ECB on Fiat Money and Government Debt Default

  • The Monetary Idiocy of Politicians

  • Two Massive New Holes Have Exploded Open In Siberia

  • And More

Articles about events, conflicts and disease around the world


  • Crude Plummets (Twitter)  Econintersect:  Price chart shown is for WTI crude.

Click for larger image.

  • How an obscure Austrian philosopher saw through our empty rhetoric about ‘sustainability’ (The Conversation)  Gunther Anders suggested that the societal changes brought by the industrial age – chief among them the division of labor – opened a gap between individuals’ capability to produce machines, and their capability to imagine and deal with the consequences.  He also wrote of “apocalyptic blindness”, a mindset during the Third Industrial Revolution described by the author of this article:

…determines a notion of time and future that renders human beings incapable of facing the possibility of a bad end to their history. The belief in progress, persistently ingrained since the Industrial Revolution, causes the incapability of humans to understand that their existence is threatened, and that this could lead to the end of their history.

Predominantly free of human activity, especially industrial-scale activities, large wilderness areas host a huge range of environmental values, including endangered species and ecosystems, and critical functions such as storing carbon and providing fresh water. Many indigenous people and local communities, who are often politically and economically marginalised, depend on wilderness areas and have deep cultural connections to them.

Yet despite being important and highly threatened, wilderness areas have been almost completely ignored in international environmental policy. Immediate proactive action is required to save them.

Click for larger image.

Very little of the world’s wilderness (green) is within natural World Heritage Sites (pink). Author provided


  • Taking Wall Street’s Side, Young Congressman Infuriates Allies (Bloomberg)  Ted Budd, a GOP congressman, got a hard lesson in the limits of his small-government philosophy early in his first term. But the new Wall Street allies he picked up during the debate over financial regulation give Americans a glimpse of how their legislative sausage is made.  When Budd won his House seat in November, among his biggest campaign donors were employees of Lowe’s Corp., the home-improvement chain headquartered in his North Carolina district. Budd is a retailer himself, and his ownership of a gun shop was a key part of his pitch to voters. He vowed to cut red tape, slash taxes and reduce regulations.  In April, Budd found himself in the middle of one of the ugliest lobbying battles in Washington: the skirmish over debit-card swipe fees. It pits two powerhouse industries, banking and retail, against each other.  He has sided with the banks because of political ideology. To him, the issue was about keeping the government out of private business.

  • Cruz plan could be key to unlocking healthcare votes (The Hill)  The fate of of legislation repealing and replacing ObamaCare could hinge on an amendment from Sen. Ted Cruz.

The Texas Republican is pushing for a provision that would allow insurers to sell plans that do not comply with ObamaCare insurance regulations, so long as they also sell plans that comply with those rules. Cruz says giving insurers a path around the regulations should allow them to offer some plans at a lower cost. 

It's unclear whether the amendment will be added to the Senate bill, known as the Better Care Reconciliation Act, or even whether it will pass muster under budgetary rules.

But the amendment could be the key to ensuring that the legislation passes both the House and the Senate.

  • Kansas or California? (Project Syndicate)  (Econintersect:  This piece suffers from a fallacy of composition, namely that U.S. federal taxation and expenditures are governed by the same relationships, liimitations, and effects as the individual states.  The observations regarding the fiscal activities of Kansas and California are correct; the application of those experiences to the federal government is nonsense.)  The authors write:

US President Donald Trump and congressional Republicans have made large tax cuts for top earners a high priority, arguing that such cuts will stimulate economic growth, create jobs, and pay for themselves through increased revenues.

But these claims are baseless. Countless international, national, and state comparisons have demonstrated overwhelmingly that trickle-down economics is a regressive fantasy. The latest evidence of this comes from Kansas, where tax cuts signed by Governor Sam Brownback in 2012 have utterly failed to deliver growth.

Before making the same costly mistake, Trump should take a lesson from California – a progressive state that he loves to hate. California raised taxes for top earners in 2012 and has since enjoyed one of the strongest growth rates in the country. And now, California is significantly expanding its earned income tax credit, CalEITC, building on the proven record of the federal earned income tax credit (EITC).


Click for large image.

[T]he fiscal authorities of the euro area countries have given up the ability to issue non-defaultable debt. As a consequence, effective macroeconomic stabilisation has been difficult to achieve. Coordinating the fiscal policy of the individual countries around a common euro area, non-defaultable debt instrument would improve business cycle outcomes. Corsetti et al. (2016) describe this proposal in greater detail and discuss possible challenges, including the risk of a restructuring of national public debt.


  • The Monetary Idiocy of Politicians (Twitter)  (Econintersect:  The ignorance of politicians regarding monetary systems is equaled only bve the idiocy of those who beloeve them and vote for them.)  See also preceding tweet in EU section.


  • Two Massive New Holes Have Exploded Open In Siberia (IFL Science)  Hat tip to @AssaadRazzouk.  Two mysterious gaping holes have recently emerged in the frosty land of Siberia, accompanied by a "loud explosion-like bang" and a billowing plume of smoke and fire.  Scientists were lured to the area after a local reindeer herder reported a huge boom, a tower of fire, and black clouds of smoke in depths of Russia’s Yamal Peninsula in the Article Circle, the Siberian Times reports.  One of the holes is believed to have exploded at the beginning of this year and the other was on the morning of 28 June. The second bang was so loud it was picked up by seismic stations located in neighboring settlements and near a local gas field. The new hole is approximately eight meters (26 feet) in diameter and at least 20 meters (65 feet) deep.

Due to the explosive circumstances, the local scientists are treating this as a methane gas explosion. Many regions of the Arctic have methane locked within their permafrost. The thawing of this permafrost - often from natural cases, sometimes by exacerbated human-made process - causes this gas to “seep out.” If underground, it can cause a pressure build-up and eventually result in a pop and a bang. In this instance, it isn't clear how the fire was involved, although is methane is flammable.

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

  • Advisors who are using ETFs have come to recognize that bond ETFs offer many of the same benefits as an equity ETF, including diversification, low fees and ease of exposure.

  • Many ETF fund structures help bond ETFs realize and pay out fewer capital gains.

  • Bond ETFs are being used by many financial advisors for core fixed income exposure, as well as more specialized applications such as managing duration and seeking income.

  • Do Wind Turbines Kill Birds? (Think Progress)  Wind turbines account for between 140,000 and 368,000 bird deaths annually. And while that might seem like a lot, it’s still well below the number killed each year by cell phone towers (6.8 million), collisions with glass buildings (one billion), and cats (3.7 billion).

  • Missing Income (Alhambra Investments)  Hat tip to Lee Adler, Wall Street Examiner.  Income expected extrapolating past data trends simply has not materialized.

  • Paul Krugman’s Lack of Self-Awareness Is Truly Stunning (National Review)  Prof. Krugman is accused of gross hypocracy in his political discourse.  Several tweets are presented to make the case.

  • The economic side effects of the student loan crisis (in 3 charts) (BlackRock Blog)  As of the latest BLS figures, the unemployment rate of 4.3% is significantly below the level at which the Fed’s models are sure inflation will be rising due to wage pressures. It isn’t, as incomes and wages remain in the same state as throughout the past few disappointing years. To acknowledge that “something” isn’t right, the staff at the US central bank has continued to mark down their projections for what constitutes “full employment.” At the last FOMC meeting, one at which the committee voted for another “rate hike”, the lower bound central tendency for “full employment” was reduced to 4.5% from 4.7%.

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