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What We Read Today 04 October 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:

  • Steve Keen on Financial Crisis

  • Tax reform in the age of inequality

  • Why a Republican strategist thinks we’re in a new Gilded Age

  • Trump Interior Department will delay methane emissions rules for oil and gas industry

  • Monetary policy without a working theory of inflation

  • Stocks and Bonds Correlations

  • Emerging Market Currencies Offer Opportunities

  • For many Puerto Rico residents, it’s time to leave the island

  • State Dept: Tillerson did not call Trump 'moron'

  • U.S. Trade Dispute Scaring Companies From Buying Solar Power

  • Most Americans have no idea what tax reform means to them

  • The president is quietly taking aim at our national monuments

  • Trump Begins Repeal of Obama Power Plant Emission Cuts

  • Puerto Rico bondholders on Wall Street are 'suicidal,' fear government will wipe them out - broker

  • Puerto Rico bonds plunge after Trump pledge to wipe out debt

  • Hedge fund manager some call the next Warren Buffett owns nearly $1 billion of Puerto Rico's bonds

  • EU cash grab is a huge boost to Trump's tax-reform effort

  • German Manufacturing is Expanding

  • And More

Articles about events, conflicts and disease around the world

Global

U.S.

  • San Juan's airport is packed with people with one-way tickets after Hurricane Maria devastated the island.

  • Many people outside the security checkpoint at the San Juan airport were crying, waiting and watching until their loved ones disappeared into the terminal.

  • Florida Gov. Rick Scott has urged his state to begin preparing for an influx of people.

  • State Dept: Tillerson did not call Trump 'moron' (The Hill)  State Department spokeswoman Heather Nauert on Wednesday strongly denied that Secretary of State Rex Tillerson called President Trump a "moron," as appeared in reports.  She also said that Tillerson had reassured her that he and the president were "all good," despite reports that he was considering leaving the State Department amid growing tensions with Trump.  Nauert said during a press briefing:

"The secretary does not use that type of language.  The secretary did not use that type of language to speak about the president of the United States. He does not use that language to speak about anyone."

  • Uncertainty over prices may lead companies to favor wind power

  • Trump will decide whether to impose tariffs on solar imports

  • About 66 percent of Americans cannot pass a basic financial literacy test — and have no real idea what tax reform actually means for them.

  • Anyone getting overly passionate about this subject is most likely just hearing what they want to hear.

  • We simply don't have enough information to know how the proposed changes would impact an individual taxpayer.

"The Trump administration, urged on by well-funded ideologues and fossil fuel interests, is engaged in an unprecedented effort to destroy our country’s system of public lands. This effort is not about our shared national interest, and if left unchecked it will eventually reach your back yard."

  • EPA is poised to argue Clean Power Plan exceeds legal limits

  • Public will be invited to offer ideas for replacement rule

  • Bondholders are "suicidal" with worry that President Donald Trump really will wipe them out, even if he can't actually reduce Puerto Rico's debt, according to one anonymous prominent bond broker.

  • The dealer told CNBC the thing to watch is whether the Federal Emergency Management Agency provides grants or loans to the island.

  • New U.S. issued loans would likely be senior to other debt, and bond holders fear new debt will take priority for repayment, and they will not get paid on the existing $72 billion debt.

  • Seth Klarman's hedge fund, Baupost, owns $911 million of the island's bonds through Decagon Holdings entities, according to a public court filing.

  • "The Baupost Group is a holder of COFINA [Puerto Rico Sales Tax Financing Corp.] bonds through the Decagon entities. Baupost regularly makes investments through subsidiary holding entities," Baupost spokeswoman Diana DeSocio wrote in an email.

  • Baupost has $30 billion in assets under management as of March 2017, according to the firm.

EU

  • In the same day, the EU is demanding that Amazon pay Luxembourg $300 million in back taxes and that Ireland grab $15.3 billion in taxes from Apple.

  • This daily double tax whammy is inadvertently making a great argument for Trump's call for 20 percent corporate tax rates here in the U.S.

  • It's time for the Trump team and the congressional GOP to use today's news as a rallying call for their plan.

Germany

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

  • Tax reform in the age of inequality (Brookings)  Today, the U.S. struggles with significant poverty that is made worse by a growing inequality chasm, and the recently released GOP tax reform plan only exacerbates what has become an increasingly dire trend for poor and low-income families and for black and Hispanic Americans. The plan, which lacks significant details, provides its largest and most enduring tax breaks for wealthy Americans and for corporations. The wealthier you are, the more likely you are to benefit from the proposed tax changes. The poorer you are, the less likely you are to leave poverty.

  • Why a Republican strategist thinks we’re in a new Gilded Age (The Washington Post)  Everywhere he looks, Republican strategist and lobbyist Bruce Mehlman sees “eerie” parallels between the Gilded Age and today.  Mehlman produces quarterly reports about the political climate. In his latest, which he’s distributing to his clients today, he argues that “data is the new oil”. He likens Facebook’s Mark Zuckerberg, Google’s Larry Page and Amazon’s Jeff Bezos (who also owns The Washington Post) to captains of industry like Andrew Carnegie, John D. Rockefeller and Cornelius Vanderbilt.

  • Trump Interior Department will delay methane emissions rules for oil and gas industry (CNBCEconintersect:  Recall the Roman emperor Nero?

  • The Interior Department will delay for one year implementing rules meant to capture methane emissions from oil and gas operations.

  • The department is seeking to water down or scrap the rules and wants to avoid imposing compliance costs on energy firms since it may ultimately kill the regulations.

  • Methane accounts for 10 percent of all U.S. greenhouse gas emissions.

trump.nero

... by the time I left the Fed after more than eight years, I had come to believe that my lack of prior involvement in monetary policy had proven in one respect to be something of an advantage for my participation in FOMC deliberations. Coming fresh to a place where much of the discourse was accepted or assumed by the very smart economists on the FOMC and the Fed staff helped me to see where some of that received wisdom was not holding-up well in the circumstances we were facing.  That perspective also led me to see how some well-worn tools or concepts in monetary policy that rely on unobservable variables had perhaps been less useful even before the onset of the financial crisis. The most important of these – which I will discuss at some length later – is the concept of inflation expectations, which has played a central role in mainstream monetary policy thinking and practice.

  • Stocks and Bonds Correlations (The Daily Shot)  The diversification value of bonds for a stock portfolio has high time variance.  In July this year, yes - now , no (for diversification).  Stocks have been highly correlated with Treasury yields recently.


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