Written by Econintersect
Early Bird Headlines 24 July 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
2016 on Track to be World’s Hottest Year on Record (EcoWatch) The Earth is warming at a faster rate than expected and this year is on track to be the hottest year on record, according to a report by the World Meteorological Organization (WMO).
U.S.
Trouble In Potomac City? Household Net Worth As % of Disposable Income Is Flashing Trouble (Confounded Interest) Hat tip to Lee Adler, Wall Street Examiner. Household net worth as a percentage of disposable Income is soaring and the yield curve is flattening … just like prior to the 2 previous recessions. In the following graph the red line is the 10-year minus 2-year treasury yield and the blue line is household and nonprofit organizations net worth divided by income.
A 555-strong U.S. Olympics team includes record 292 women (Investing.com) The American team, announced on Saturday by the U.S. Olympic Committee (USOC), will contest 244 of 306 medal events. The Americans topped the gold medal (46) and overall medal (104) table at London 2012. The record number of women on the U.S. team tops the previous mark of 289 by China in 2008. It is the second time the American roster has featured more females than males.
AP Poll: Support grows among Americans for stricter gun laws (Associated Press) Americans increasingly favor tougher gun laws by margins that have grown wider after a steady drumbeat of shootings in recent months, but they also are pessimistic that change will happen anytime soon, according to a new Associated Press-GfK poll. Nearly two-thirds of respondents expressed support for stricter laws, with majorities favoring nationwide bans on the sale of semi-automatic assault weapons such as the AR-15 and on the sale of high-capacity magazines holding 10 or more bullets. The percentage of Americans who want such laws is the highest since the AP-GfK poll started asking the question in 2013, a survey taken about 10 months after the Sandy Hook Elementary School shooting in Newtown, Connecticut, that killed 20 children and six educators. Go here for survey details.
Trump’s Attack on Clinton’s Character (FactCheck.org) The study by CNN and FactCheck.org of 13 major accusations by Trump against Clinton are found to be significantly not true. Econintersect: True or not, details of statements by Trump are not as important as the emotion he arouses among voters. Logic is secondary to emotion in determining how a majority of Americans votr, in our opinion.
Podcast: Why wars in the Middle East will cost the U.S. trillions more (Reuters) The United States is at war and has been for more than a decade. Although major combat operations in Iraq in Afghanistan have ended, America still maintains a presence in both and will for years to come. It also funds Syrian rebels, bombs Islamic State strongholds in the region and runs drones from Afghanistan to the Horn of Africa. With America fighting on so many fronts, it’s hard to understand the Pentagon’s strategy or the endgame for the various conflicts. Retired U.S. Army Colonel Andrew Bacevich says it feels that way because it is that way. According to Bacevich, the American military is fighting a war that began decades before 9/11. This week on War College, Bacevich walks us through what he calls America’s War With the Greater Middle East and tells us how it started and why he thinks it must end.
EU
Euro Hits Fresh Low, Strong Week For Dollar (Investing.com) The euro fell to a fresh monthly low versus the U.S. dollar. The primary catalyst was the shootings in Munich. Economic data from the Eurozone was better than expected with the flash PMIs ticking up, supporting the ECB’s wait-and-see attitude. The main takeaway from the ECB meeting this past week is that Mario Draghi wants to see evidence of economic and financial markets deteriorating before taking additional action. Monetary policy will remain accommodative but it may be a while before the ECB eases again because they want to see how data fares “in the coming months“.
Ireland
Ireland Suffers Both Financial and Political Brexit Impact (Daily Forex) According to some economists, Ireland is feeling the effects from the U.K.’s vote to leave the European Union more than any other country with exporters warning that the plummeting pound will erode earnings and economic growth just as the recovery from the 2010 international bailout was finally taking hold. Irish shares have declined, not least because the U.K. is the top destination for the country’s exports after the U.S. and the biggest for its services. In addition, Northern Irish nationalists have been demanding a vote on reunification and together with the loss of its key ally, Prime Minister Enda Kenny finds himself in a precarious position.
Turkey
Turkey failed coup: Presidential guard to be disbanded (BBC News) Turkey’s elite presidential guard is to be disbanded after nearly 300 of its members were detained following last week’s failed coup. Prime Minister Binali Yildirim told a TV channel that there was “no need” for the regiment. Earlier, Turkey detained a nephew of US-based cleric Fethullah Gulen who it says was behind the uprising. He strongly denies the claim. A key aide of Mr Gulen has also been arrested, a presidency official said. President Recep Tayyip Erdogan has launched a widespread crackdown following the attempted coup, arresting thousands of service personnel and sacking or suspending thousands of government officials, school teachers and university heads.
Malaysia
Report: MH370 pilot conducted similar route on home computer (CNN) An FBI forensic examination shows the pilot of Malaysia Airlines Flight 370 conducted a flight simulation on his home computer that closely matched the suspected route of the missing Boeing 777 in the southern Indian Ocean, according to a Malaysian government document obtained by New York magazine. The confidential document summarizes Malaysia’s police investigation into Zaharie Ahmad Shah, the captain of the plane that has been missing for more than two years.
Japan
Former Fed Chair Ben Bernanke takes his stimulus wisdom to the Bank of Japan (Investing.com) Yes, Helicopter Ben has suggested further money easing strategies to the Bank of Japan, including issuance of perpetual bonds at zero interest. These would be non-negotiable and exist only for the balance sheet of the Bank of Japan. Econintersect: This is a Trillion Dollar Platinum Coin proposal dressed in different, more seductive lingerie.
China
China’s Rare-Earths Bust (The Wall Street Journal) Honda says it has co-produced the world’s first hybrid car engine that doesn’t use heavy rare-earth metals, allowing it to cut reliance on imports from China. This innovation, to debut in Honda minivans this fall, illustrates how far we’ve come since the great rare-earths panic of 2010 when China produced 95% of all rare earth elements and decided to cut production.
China’s growth sucks in more debt bucks for less bang (Reuters) As China’s economy notches up another quarter of steady growth, the pace of credit creation grows ever more frantic for every extra unit of production, as inefficient state firms swallow an increasing share of lending. The world’s second-largest economy grew 6.7% in the first half of the year, unchanged from the first quarter, testament to policymakers’ determination to regulate the pace of slowdown after 25 years of breakneck expansion. Analysts say that determination has come at the cost of a dangerous rise in debt, which is six times less effective at generating growth than a few years ago. From 2003 to 2008, when annual growth averaged more than 11%, it took just one yuan of extra credit to generate one yuan of GDP growth, according to Morgan Stanley calculations. Econintersect: This is similar to the experience of the U.S. which saw a dollar of new debt produce nearly a dollar of GDP growth in mid-1960s decline to about $6 of debt to produce an additional dollar of GDP by the early 2000s. See The Declining Usefulness of Debt (Seeking Alpha, May 2009). Graph is for U.S. GDP and total debt, government plus private.
