What We Read Today 04 January 2014

January 4th, 2014
in econ_news, syndication

Econintersect: Click Read more >> below graphic to see today's list.

The top of today's reading list is an article about the new industrial revolution with robots ........ and the tenth article is another recent article from Reinhart and Rogoff on the global debt crisis.  The bonus (11th article) discusses whether gold is overdue for an up year.

Follow up:

  • One of these things is not like the other ... (Walter Kurtz, Sober Look) The U.S. government balance sheet has more than 40% of assets in student loans. Over the next two years this is projected to increase about 30% to got above $1 trillion. Defaults on these loans will, of course, add to the national debt. In addition the government has a liability exposure for more than $500 billion privately owned loans which have government guarantees.


Debt crisis will hurt millions, says think-tank (BBC News) Millions of UK households will face "perilous" levels of debt when interest rates begin to rise, according to a think-tank focused on living standards.
  • Trust RMDs After a Spouse Dies (Natalie Choate, Morningstar Advisor) There is probably no such thing as a simple question regarding required minimum distributions.
Of the 9 previous times in the last 40 years that mortgage rates have increased by 1% YoY, housing permits fell by at least 100,000 YoY on 8 of those occasions. The 9th time, briefly during the bubble year of 2004, was followed by a YoY decline of -65,000 permits in spring 2005.


  • IMF paper warns of 'savings tax' and mass write-offs as West's debt hits 200-year high (Ambrose Evans-Pritchard, The Telegraph) The full working paper at IMF site: Financial and Sovereign Debt Crises: Some Lessons Learned and Those Forgotten (Carmen M. Reinhart and Kenneth S. Rogoff). See also recent GEI News articles. R & R classify revaluations, such as the changes of the gold standard ratio in 1933 and 1934, as defaults as is commonly done. The same results with the post 1971 floating exchange rate regime revaluation of currencies cannot be considered default because revaluation is the way imbalances are supposed to be corrected in a fiat, by design.  There may be a quibble if it is specified that the government can only issue money by borrowing from private banks.  That is something that the banking oligarchy asserts to be fact - an assertion that is eminently challengeable because the U.S. Constitution specifies the government's responsibility to coin currency. The use of privately financed debt to fund deficits of the government has been a political decision and can be changed by political action.

The other factor that is questionable here is the aggregation of public and private debt.  They have completely separable functions in monetary finance.



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