We hope everyone enjoyed the holiday weekend! It’s time for another round of interesting reads. Here are the favorites from the research team at Fort Pitt:
“The St. Louis Fed has the best explanation so far of why negative interest rates won’t work” by Greg McKenna tells us why negative interest rates are an experiment that can’t work. Negative rates are simply a tax on banks, which is then passed on to businesses and individuals.
In “Where jobs are squeezed by Chinese trade, voters see extremes” Nelson Schwartz and Quoctrung Bui describe in The New York Times a direct link between presidential candidate favorability and policies opposing globalization. Research by leading academic economists suggests that damage to manufacturing jobs from a sharp acceleration in globalization has contributed to the bitter political divide in the US. Areas hardest hit by trade shocks were more likely to move to the far left or far right politically.
The next piece, by Wolf Richter of Wolf Street, is titled “This chart shows the collapse of ‘King Coal’ by state, and why miners are going bankrupt.” Coal mining companies, historically the dominant providers of fuel for power generation in the US, are being squeezed into bankruptcy. Part of the problem is technological innovation, but another key driver is federal energy policy.
Finally, “Too much of a good thing,” by The Economist describes the airline industry’s improved return on capital as a result of the recent collapse of jet fuel prices. Consumers have yet to see much benefit in the form of lower airfares.