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Monday, December 16, 2013

Claman On Call: Herbalife reports no changes to financial results after reaudits

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Daily Market Update with Liz Claman

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Herbalife reports no changes to financial results after reaudits

Claman on Call: FBN's Liz Claman with an after-hours web-exclusive on the markets, Herbalife and Google and Intel's new robots.

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Employment vs equality

Ezra Klein argues that inequality is not, as President Obama says, “the defining challenge of our time”. Instead, unemployment should be the focus. To Klein, inequality is “easy to worry about” and it can be used to mobilize political allies, but he cites economist Jared Bernstein and argues that there isn’t enough evidence that inequality is hurting the overall economy:

Bernstein found that there wasn’t strong evidence for the idea that inequality is weakening demand — or for any of the other theories tying inequality to a weaker economy. There “is not enough concrete proof to lead objective observers to unequivocally conclude that inequality has held back growth," Bernstein wrote.

Paul Krugman disagrees, saying that “the reasons to focus on inequality are overwhelmingly convincing”. First, rising inequality is a bigger factor in falling middle-class incomes than slow economic growth. Second, Krugman argues that “there is a reasonable case for assigning at least partial blame for the economic crisis to rising inequality”. Third, inequality enabled a political consensus “in favor of deregulation and financialization”. Finally, Krugman argues that it is precisely because inequality’s causes are “mysterious” that it demands our attention.

Lawrence Mishel characterizes the debate as a “question of where the burden of proof lies in the inequality debate”. The question shouldn’t be if inequality hinders growth, but whether inequality increases growth. “And there is no reliable evidence that more inequality leads to more growth”.

Jared Bernstein takes a middle road of sorts: “Demand-side policies that that significantly lower unemployment will also reduce inequality... So we don’t have to choose whether to fight weak demand or high inequality. Fight the former and you’ll help reduce the latter”. Dean Baker echoes Bernstein’s false choice argument.

Steve Randy Waldman is incensed: he says Klein is “misrepresenting” Bernstein’s research. What Klein quotes is, “a kind of handwringing on Bernstein’s part”, which he pulls “out of context”. Not only that, Waldman says, Klein is “probably getting causality backwards... Broadening the distribution of income may well be prerequisite to full employment going forward”. And as far as pining for a world more focused on growth and employment than inequality, we’re already there, says Waldman.

The Economist points to the political-economy consequences of this issue: “If we don't find ways of redistributing national income that don't hurt growth, we're going to end up with ways of redistributing national income that do.”

Klein, in a long post responding to critics, makes a number of detailed points. Broadly, he writes, “I don't have many policy disagreements with the folks focusing on inequality. But politics is about prioritization, and what politicians end up doing is in part driven by what problems their political coalitions are most worried about”. And that, Klein still thinks, should be jobs. -- Ben Walsh

On to today’s links:

Politicking
How the Death Star e-petition to the White House led to policy change - On The Media

Wonks
Larry Summers: Why we're facing secular stagnation - Reuters Opinion
People complicated - Mark Buchanan

Ugh
Former BofA homeowner aid contractor: “Everyone knew that we weren’t helping people" - Bloomberg

The Fed
If QE is "heroin", what is "methadone" and how do we avoid "side effects"? - Sober Look
Another FOMC meeting, another chance for the Fed to think about tapering, and probably decide not to - Tim Duy
Some people think the Fed will taper, some don't - WSJ

Long Reads
Judge Rakoff's essay on why no high-level execs have been prosecuted since the crisis - NY Review of Books

New Normal
What the top US multinationals are doing with their cash now: mostly just buying back stock - WaPo

Must Read
The for-profit college that intentionally placed grads in temp jobs to game its job placement stats - Chris Kirkham

Growth Industries
Create a fake baby, save 20% on Amazon - Matt Yglesias

Listicles
Is Counterparties a feminist? - The New Inquiry

Fascinating
Why do programmers start counting at zero? - Mike Hoye

Strangely Existential
World loses faith in metal - Bloomberg

Equals
The horrifying state of wearable tech for women, or, the tweeting bra - Charlotte Lytton

Cosmic
"The solar system around us is rife with instability" - Nautilus

Great Minds
"Nietzsche's my favorite. He's just insane": Mike Tyson's reading list - WSJ

Questions to Which the Answer Is No One Knows
Why do Americans write the month before the day? - The Guardian

Follow Counterparties on Twitter. And, of course, there are many more links at Counterparties.

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Business Today: Upbeat data, deals lift Wall Street; traders keep eye on Fed

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12/16/2013
Reuters Election 2012 Daily round-up of the day's top news from the campaign trail, the White House and all the politics in between
Upbeat data, deals lift Wall Street; traders keep eye on Fed
NEW YORK (Reuters) - U.S. stocks rose on Monday after closing Friday their worst week since August as upbeat economic data from the United States and Europe boosted optimism ahead of a key Federal Reserve decision later in the week.
U.S. factory activity gains steam as production broadens
WASHINGTON (Reuters) - U.S. manufacturing output rose for a fourth straight month in November as production increased almost across the board, the latest suggestion the economy is gaining steam.
Exclusive: Comcast weighs three options for Time Warner Cable deal
NEW YORK (Reuters) - Comcast Corp is examining three scenarios for a potential deal with Time Warner Cable, including a full takeover bid for the second-largest cable operator, people close to the situation said on Monday.
Lockheed may revise 2014 outlook if U.S. budget deal passes
WASHINGTON (Reuters) - U.S. weapons maker Lockheed Martin Corp may revise upward its financial outlook for 2014 if Congress passes a two-year budget deal that would blunt the effect of mandatory budget cuts, Marillyn Hewson, the company's president and chief executive officer, told Reuters on Monday.
Boeing announces $10 billion buyback, raises dividend
(Reuters) - Boeing Co's board authorized a new $10 billion share buyback program, and the company said it would increase its quarterly dividend by about 50 percent to 73 cents per share.
AIG sells aircraft leasing wing to focus on insurance
(Reuters) - Insurer American International Group Inc said on Monday it will sell its aircraft-leasing business to AerCap Holdings NV for $5.4 billion, after four years of trying to divest its biggest non-insurance business in fits and starts.
Fonterra challenged in China's fast-growing milk powder market
SHANGHAI/WELLINGTON (Reuters) - Milk powder buyers in China are starting to cut their reliance on New Zealand's Fonterra , opening the way for U.S. and European firms to break the dairy giant's grip on an infant milk formula market set to double to $25 billion by 2017.
BlackRock ups stake in Telecom Italia ahead of vote for control
MILAN (Reuters) - BlackRock raised its stake in Telecom Italia to make it the struggling firm's second-biggest investor ahead of a vote for control, but did not say if it would side with top shareholder Telefonica or rebels fighting the Spanish firm's strategy.
Canada's competition watchdog challenges Google's search dominance
TORONTO (Reuters) - Canada's Competition Bureau has filed a legal motion against Google Inc alleging that the company is abusing its dominant position in online search, joining U.S. and European anti-trust authorities in challenging the practices of the web giant.
Florida judge grants $10.5 million bail for ex-UBS banker
FORT LAUDERDALE, Florida (Reuters) - Raoul Weil, a former high-ranking UBS banker charged with tax fraud by U.S. authorities, was ordered freed on bail of $10.5 million on Monday in federal court in Fort Lauderdale.
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