Written by Econintersect
Early Bird Headlines 07 October 2016
Econintersect: Here are some of the headlines we found to help you start your day. For more headlines see our afternoon feature for GEI members, What We Read Today, which has many more headlines and a number of article discussions to keep you abreast of what we have found interesting.
Global
Asia markets stumble as British pound drops in early trade, US jobs data awaited (CNBC) Asia markets stumbled on Friday, with sentiment weighed by the British pound’s sharp drop in early trade, while traders likely took to the sidelines ahead of the key U.S. September jobs report due later the global day.
Why is the United Nations still so misunderstood? (The Conversation)
Clearly, the UN is no “enchanted palace“; no international organisation ever has been. Plainly, it has its closed diplomatic backrooms and all the problems that that entails. It is a vast edifice, but it has a great many open doors. And in a global context of seemingly intractable war and the onrushing crisis of climate change, it remains the ultimate and vital arena for monitoring the global balance of power and adjudicating international relations as best we can.
U.S.
There’s a second Atlantic storm called Hurricane Nicole – here’s why it matters (Business Insider) All the attention is on Hurricane Matthew as it nears a catastrophic march up the Florida coast, starting in the early hours of Friday morning. And rightly so. This storm could be a worst-case scenario for Florida. But you may have heard about another hurricane out there, Hurricane Nicole. And it is no dainty thing – Nicole has just been upgraded to Category 2. This very unusual weather pattern is being tracked hourly by GEI’s Sig Silber. Graphic below was on his webpage a short while ago and is being upgraded to latest status regularly. Matthew is the larger storm on the left and Nicole on the right.
NYU accidentally announces one of its professors wins Nobel Prize (Politico) New York University may have been guilty of a little wishful thinking when it accidentally posted a draft news release online saying that one of its business professors, Paul Romer, won the 2016 Nobel Prize for economics. (He has not.) The award will not be announced until Monday. Econintersect: Paul Romer would be one of our favorites to win because of his critical and outspoken thinking about the defects over the last half century and longer in widely held and taught economic theory. But it is exactly because of that critical thinking that he is unlikely to be recognized. If his thinking were given validity a significant minority of Nobel awards in economics would be devalued (and in good conscience withdrawn, although that would not be done simply for the recipient having exercised defective thinking).
President Barack Obama’s Crappy Legacy (CounterPunch) Hat tip to Roger Erickson. Among the negatives listed:
Failed to end the neocon control of military policy
Failed to improve race relations, in fact they have deteriorated
Failed to reform the criminal justice system
Failed to make enough progress on climate change
Failed to establish a green energy policy
Has seen nuclear war become more probable
Failed to enable better union organizing conditions
Continued the trend toward privatization of education and did not improve the public system
Failed to deliver on open and transparent government
Failed to prosecute war criminals in U.S. government and banking executive fraudsters and felons
President Obama’s Approval Rating Hits Highest Point of 2nd Term (U.S. News & World Report) According to a CNN/ORC poll conducted from Sept. 28 to Oct. 2, 55% of Americans approve of the president’s job performance, with 44% disapproving. The poll shows Obama with the highest approval to date in his second term. The rating matches his best since he took office in 2009.
Truth, Lies and Conspiracy in the 2016 Election (CounterPunch) There is not much sheer in this article but you ought to read it anyway. It might be the reason Barack Obama’s approval rating is going up (see preceding article).
Matt Drudge Peddles Irresponsible Conspiracy Theory Downplaying Deadly Hurricane Matthew (Media Matters) On October 6, Drudge claimed “the deplorables” were wondering if the government was lying about the intensity of the deadly hurricane and also questioned the legitimacy of the National Hurricane Center’s data:
Here’s the best theory we’ve seen of how Trump paid so little tax (Josh Barro, Business Insider) This is a discussion of how Donald Trump managed to personally lose nearly $1 billion in 1995 and not have a personal bankruptcy. We have previously reported the speculation by John Hempton that Trump might have used an illegal ‘debt parking’ arrangement. Barro suggests (as have others) that the IRS is not likely so incompetent that they would have failed to detect such a subterfuge. Barro quotes a report (subscription only) by tax expert Lee Sheppard which points out an unintentional loophole that existed in 1995 and which would have made the large income loss possible. The IRS felt that wording of the loophole obviously could not be the intent the law because it allowed the owner of a bankrupt “S” corporation to recognize the losses in his personal income without recognizing the forgiven debt as well. The IRS lost a Supreme Court case in 2001 and the loophole was not ended until the law was rewritten in 2002. Barro doesn’t know if Trump used this loophole but he says that “it would fit the available evidence very well“. If he used the loophole, Barro says:
“…it would help explain how he managed to run up a tax loss so big that it amounted to nearly 2% of all the net operating losses taken on individual income tax returns in the entire country in 1995.
It would also blow up the narrative that Trump’s huge loss just reflects the tax code working properly, letting businesspeople offset their real profits with their real losses.
If Trump didn’t use the Gitlitz loophole and he really did enjoy a bona fide economic loss of nearly $1 billion, he could prove that by releasing his tax returns in their entirety.
Until he does that, we can’t just assume Trump “used the tax code just the way it’s supposed to be used,” as his running mate, Gov. Mike Pence, claimed Tuesday night. After all, like the rest of us, Pence has not seen the entire tax returns he is purporting to bless.”
EU
Why The OECD And The European Commission Should Significantly Lower Their Assumptions For Returns On Pension Funds (Social Europe) Econintersect: You mean that zero and negative interest rates will affect pension funds? (Sarcasm detector flashing)
UK
Pound falls 6% in Asian trading mystery (The Guardian) A flash crash of sterling in early trading may have been ‘fat finger’ error or technical glitch in response to ‘hard Brexit’ warnings. The pound fell by 6% to US$1.1841, with traders confused as to the cause. It sent the FTSE 100 up by 28 points to 7,028 in early trading. The blue-chip index tends to rise when the pound falls, because most of the constituent companies earn the majority of their money in dollars, rather than pounds. At one stage in overnight trading, the pound was down by as much as 10% to $1.1378 until a rogue outlying trade was canceled, leading to a recovery. When the London markets opened, sterling was trading at $1.2430. The chart below from Bloomberg shows the flash crash but not the subsequent recovery.
Germany
Deutsche Bank Explores Capital-Raising Options, “All Unattractive” (Zero Hedge) Despite proclamations from various officials, business leaders, and mainstream media pundits that Deutsche Bank’s demise was: a) driven by speculators, b) not driven by any need for liquidity, because c) the bank has plenty of capital… it doesn’t. As Bloomberg reports, no matter how much the DoJ fine is watered-down (don’t expect much), the most systemically dangerous bank in the world is holding informal talks with securities firms to explore options including raising capital; but while the lender has several options, as one analyst noted rather awkwardly, “they’re all unattractive.” After three straight days up – soaring 25% off last Friday’s lows, thanks to a disproven rumor of a pending settlement with the DoJ – Deutsche Bank closed down 4% from its opening highs today.
