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What We Read Today 07 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:

  • Outdated and Unreliable: FEMA’s Faulty Flood Maps Put Homeowners at Risk

  • Income inequality has been growing for decades and Americans are taking note

  • Tesla's Model 3 Bottlenecks Delay Unveiling of Semi Truck

  • Where Did It Come From?  Is The Trend Your Friend?

  • There’s a Climate Bomb Under Your Feet

  • The total output of the world economy over the last two thousand years

  • Real Output Per Capita over the Past 2,000 Years

  • Wells Fargo Offering Refunds Nationwide for Improper Mortgage Fees

  • Sonia Sotomayor tore apart partisan gerrymandering with one simple, devastating question

  • The Trump-Russia dossier: why its findings grow more significant by the day

  • How the Trump dossier came to light: secret sources, a retired spy and John McCain

  • The former director of the CIA got into intelligence after his wife urged him to 'get a real job and help pay the bills'

  • Hurricane Nate Threatens U.S. Gulf Coast With $4 Billion Loss

  • Nate Lands - 07Oct2017

  • Belgian ports batten down the hatches for Brexit trade shock

  • Pro-unity Catalans take to the streets to condemn ‘selfish revolution’

  • Syria: Turkish forces prepare to support anti-Assad rebels in Idlib

  • More than 260 arrests in anti-Putin protests across Russia

  • Trump says 'only one thing will work' to solve the North Korea crisis

  • Analyst Raises Scenario of a China Takeover of North Korea

  • And More

Articles about events, conflicts and disease around the world

Global

  • There’s a Climate Bomb Under Your Feet (Bloomberg)  Soil locks away carbon just as the oceans do. But that lock is getting picked as the atmosphere warms and development accelerates.  Extrapolating from a forest study, researchers estimate that over this century the warming induced from global soil loss, at the rate they monitored, will be “equivalent to the past two decades of carbon emissions from fossil fuel burning and is comparable in magnitude to the cumulative carbon losses to the atmosphere due to human-driven land use change during the past two centuries.”  Researchers suggest that warming soil may set off a chain reaction of carbon emissions that “could be very difficult, if not impossible, to halt”.

  • The total output of the world economy over the last two thousand years (Our World in Data)  Hat tip to Peter Diamandis.  Here is a reconstruction of global GDP over the very long run: the last two millennia, using recent data from the World Bank for the period from 1990 onward and for the historical estimates before 1990 using the historical estimates constructed by the economic historian Angus Maddison.4  See also next article.

  • Real Output Per Capita over the Past 2,000 Years (Our World in Data) Economic prosperity was only achieved over the last couple of hundred years. In fact, it was mostly achieved over the second half of the last hundred years.  Click title link for interactive version of this graph:

global.gdp.per.capita

U.S.

"Could you tell me what the value is to democracy from political gerrymandering? How does that help our system of government?"

Belgium

  • Belgian ports batten down the hatches for Brexit trade shock (The Guardian)  Zeebrugge, one of Europe’s most important modern ports, which does 45% of its trade with the UK. Zeebrugge, (literally “Bruges on Sea”), describes itself as a bridgehead for the British economy. Every week 64 container ships and ferries leave Zeebrugge bound for Tilbury, Tyne, Sheerness, Southampton and other UK ports, laden with goods for British shops and warehouses. A daily ferry still crosses from Zeebrugge to Hull, with 800,000 passengers disembarking at the Belgian port each year (including those arriving on North Sea cruises).

Spain

Huge numbers are expected to protest on Sunday in Barcelona against the perceived hijacking of the political process by an independence movement that has so far never won the support of more than 48% of the population.

Syria

  • Syria: Turkish forces prepare to support anti-Assad rebels in Idlib (The Guardian)  Erdo─čan offers assistance to ‘our brothers in Idlib’ as fighters from Free Syrian Army carry out campaign.  Idlib and surrounding areas in north-west Syria are among the largest strongholds for rebels fighting the Syrian president, Bashar al-Assad, but it is now largely controlled by Hayat Tahrir al-Sham, a group led by al-Qaida’s former Syria affiliate.

Russia

  • More than 260 arrests in anti-Putin protests across Russia (The Guardian)  Riot police confront supporters of jailed opposition leader Alexei Navalny as president marks 65th birthday.  Dozens were arrested in Putin’s hometown of St Petersburg, Russia’s second biggest city. One woman had her leg broken when riot police dispersed hundreds of protesters chanting “Putin is a thief!” in the centre of the city, according to Russian media. Blood could be seen pouring down the head of another woman detained by police in footage posted to social media.

The protest in St Petersburg was just one of more than 80 anti-Putin rallies that took place across Russia on Saturday, after Navalny was sentenced to 20 days in prison on Monday for organising “unsanctioned public rallies.” This was the third time Navalny, a 41-year-old anti-corruption lawyer who wants to stand against Putin at next year’s presidential elections, has been jailed since March.

North Korea

  • Trump says 'only one thing will work' to solve the North Korea crisis (Business Insider)  (Econintersect:  We guess we shouldn't put this in the "flexible thinking" file.  US President Donald Trump said on Saturday that "only one thing will work" to solve the North Korea crisis, although he did not explicitly specify what that would be.  The president tweeted:

"Presidents and their administrations have been talking to North Korea for 25 years, agreements made and massive amounts of money paid........hasn't worked, agreements violated before the ink was dry, makings fools of U.S. negotiators. Sorry, but only one thing will work!"

Bill Emmott, the former editor-in-chief of The Economist magazine, said such a move by China would not only gain Beijing a solid foothold on the Korean Peninsula, but also the opportunity to strengthen its own geopolitical position, enhance its global power status, perhaps even the ability to claim the reputation of a peacemaker.

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

  • Outdated and Unreliable: FEMA’s Faulty Flood Maps Put Homeowners at Risk (Bloomberg)  FEMA manages flood maps for about 22,000 communities across the U.S. Almost two-thirds of those maps have an “effective date”—the date it was last officially updated—more than five years old; some maps have been in place for more than 40 years.  Over that time significant drainage and groundwater changes have occurred.  FEMA offers a lame excuse, sayong these maps only paint part of the risk picture:

“The recent storms were strong evidence of the fact that anywhere it can rain, it can flood.  FEMA encourages everyone to consider buying flood insurance and making mitigation-related changes to reduce their risk and protect their properties.”

fema.flood.maps.ages.map

fema.flood.maps.ages.chart

  • Income inequality has been growing for decades and Americans are taking note (London School of Economics)  While income inequality is largely unavoidable, the magnitude of inequality in the US today is staggering. Some analysts suggest that this massive gap between the rich and everyone else is a clear sign that the US economy is broken – only a handful of people at the top are benefitting from the system while the rest of the country lags behind.  Interestingly, the growth of inequality has vatied geographically and this effects how the public reacts to the problem across the country.  See gtaph below.

The public’s understanding of inequality has the potential to play a significant role shaping the discourse surrounding the issue of inequality, who participates in discussions about issue, and how policy debates related to income differences evolve. But a public that is unaware or ambivalent about the state of American inequality is unlikely to emphasize income differences as an important political issue or insist on solutions that might address income disparities.

Resources are being diverted to address the bottlenecks holding back the Model 3, Musk wrote in a tweet Friday. He’s also delaying the semi unveiling to Nov. 16 because Tesla is prioritizing efforts to increase battery output for Puerto Rico, which has sought the company’s help to restore power following Hurricane Maria.

Tesla built only 260 Model 3 sedans during the third quarter, less than a fifth of its 1,500-unit forecast. The company has offered scant detail about the problems it’s having producing the mission-critical car that starts at $35,000, roughly half the cost of the least expensive Model S sedan. A delayed ramp up risks the ire of some of the almost half a million reservation holders who started paying $1,000 deposits early last year.

  • Where Did It Come From?  Is The Trend Your Friend? (Ed Easterling, Crestmont Research)  EE has contributed ti GEI.  Since March of 2009, the stock market’s annualized return has averaged more than 17%. Does this portend another strong decade ahead? Hopeful analysts and investors are clinging closely to the old adage “the trend is your friend.” Yet, is 17% a reasonable expectation? What were the sources for that level of return and will those drivers continue to deliver?  Ed points out that (1) P/E ratios are at historic highs and so gains from further expansion of that ratio are not likely.  He argues also that (2) earnings per share (EPS) growth cannot be expected to replicate the last ten years.  And (3) dividends are likely to be less than in the past when P/E ratios were lower (see second graphic below).  The three factors listed above define the three components of total return (first graphic below).  Finally, earnings per share growth has been driven long-term by GDP growth, but has fluctuated much more than has GDP (third graphic below).Note that extreme positive deviations of EPS (1986-87, 1999-2000, and 2006-07) have been followed significant EPS declines and sharp market declines.

total.return.components

dividends.vs.pe.ratio

eps.and.gdp.1980.2016


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