Daily Digest

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Daily Digest 1/18 - 'Francogeddon' Arrives, The Great Wage Slowdown

Sunday, January 18, 2015, 11:41 AM

Economy

Obama Proposes New Tax Increases on Wealthy to Help Middle Class (jdargis)

“Slapping American small businesses, savers and investors with more tax hikes only negates the benefits of the tax policies that have been successful in helping to expand the economy, promote savings, and create jobs,” Republican Orrin Hatch, the chairman of the Senate Finance Committee, said in a statement Saturday. “The president needs to stop listening to his liberal allies who want to raise taxes at all costs and start working with Congress to fix our broken tax code.”

Driving the Obama Tax Plan: The Great Wage Slowdown (jdargis)

The great wage slowdown has several main causes: globalization, which has forced Americans to compete with hundreds of millions of poorer workers from around the world; technological change, which allows machines to replace human labor in new ways; the slowdown in American educational attainment, even as the rest of the world has continued to become more educated and more highly skilled; and the shifting balance of economic power, away from workers and toward companies and their executives.

Getting Connected (jdargis)

In 2010, President Obama launched what he called his “National Broadband Plan,” intended to guide the build-out of high-speed broadband throughout the United States, particularly in places that otherwise lack good internet options. Some hoped the president’s plan would mark the start of a New Deal for the internet age, a bringing of connectivity to the countryside. “In a country where we expect free WiFi with our coffee,” Obama has asked, “why shouldn’t we have it in our schools?” But while the president helped direct billions in funding for internet build-out, the impact of the plan has been limited—2 percent of Americans still have no internet access, and a full 20 percent of Americans still aren’t online, many because of high costs and poor service.

Oh Switzerland, What Have You Done? (Wendy SD)

Frankly, I don’t buy the SNB’s “cap is no longer needed” story. If the currency peg was really redundant, market reaction would have been far less extreme. Nor do I agree with Markus Brunnermeier and Harold James that this was due to domestic political worries about SNB solvency. In my view this is all about ECB QE – and about the power dynamics between central banks.

'Francogeddon': Swiss central bank stuns market with policy U-turn (Merle2)

Only days ago, SNB officials had described the 1.20 francs per euro cap, introduced in 2011 at the height of the euro zone crisis to prevent the strong currency leading to deflation and a recession, as the cornerstone of the bank's monetary policy.

Hungary’s Orban Makes World’s Best Trade on Swiss Franc Loans (Wendy SD)

Hungarian Prime Minister Viktor Orban, often criticized for punishing banks, is being hailed as a hero for warding off financial disaster with his quest to rid the country of mortgages worth billions of Swiss francs. Orban in November forced Hungarian banks to make financial arrangements to convert 3.3 trillion forint ($12 billion) in foreign-currency mortgages, overwhelmingly denominated in Swiss francs, into local currency. The move, to be completed this year, prevented a 700 billion-forint jump in household debt when the Swiss National Bank (SNBN) set the franc free yesterday, Hungary’s monetary authority said.

Inside New York City’s newest recycling center (jdargis)

Because Europe took to recycling well before the US, the equipment to do this separation is mostly manufactured there; the Sunset Park facility uses equipment from a Dutch company called Bollegraaf. And the company has a finely tuned set of methods for pulling out different materials based on their properties. For example, tin cans are mostly steel, and a large rotating magnetic drum poised above the recycling stream plucks these items out. (This was buried too far inside the facility to see, but the visitor's center had video of it.)

Why the Entire U.S. Weather Satellite System is at Risk (Wendy SD)

NOAA (the National Atmospheric and Oceanic Administration) maintains two types of satellites: Geostationary (or GOES series), which provide continuous images of the earth from a fixed point about 22,000 miles up, and Polar-orbiting (or JPSS series), which circle 500 miles above the planet and provide the images used in long-range forecasting. A legacy of mismanagement, budget overruns, and slipping deadlines means that satellites in both programs may well fail before their replacements are launched and become fully functional.

Gold & Silver

Click to read the PM Daily Market Commentary: 1/16/15

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