What You Missed Three Weeks Ago Today

April 21st, 2014
in econ_news, syndication

Every day our reading list article discusses things we found interesting in the news, in journals, blogs and media.  Most of the articles we list we find worthy of some comment or short discussion.  Sometimes the discussion gets a little longer than what could be called brief.  The following is the full WWRT (What We Read Today) article posted two weeks ago Saturday.

There are some interesting things 'behind the wall'.

Follow up:

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What We Read Today 31 March 2014

Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.

  • Bad loan write-downs soar at China banks (Simon Rabinovich, Financial Times) China has revealed that bad debt write-offs more than doubled in 2013 compared to 2012. S&P says that the pace of write-offs will "accelerate this year". The question of how much economic stress this creates as China's economy slows down remains to be seen. The quagmire that Japan and western economies have encountered is at least partly due to the failure to sufficiently write-off bad debts. Can China follow the Swedish model to handle failed credit? (See next article.)
Zhejiang Xingrun Real Estate Co., a closely held developer based in Fenghua, is insolvent, with 3.5 billion yuan ($562 million) of debt. Its residential projects have been halted and authorities have detained its largest shareholder and his son, according to the city's government.
  • Exclusive: China seizes $14.5 billion assets from family, associates of ex-security chief: sources (Benjamin Kang Lim and Ben Blanchard, Reuters) Is this a crackdown on corruption or just political payback? Not clear. But what is clear is that in the U.S. the matter would have been settled with a payment of a few million dollars, if it had been dealt with at all, that is. Unless, of course, it involved political payback and then it would have been dealt with like a bridge in New Jersey. Note: Still more on China 'behind the wall'.
  • More Traction (Warren Mosler, The Center of the Universe) Warren Mosler contributes to Global Economic Intersection.


  • The Two Numbers Climate Economists Can’t Stand to See Together (Alex Morales, Bloomberg) Separate reports from the IPCC (Intergovernmental Panel on Climate Change) provide an economic costs figure for climate change and a cost to mitigate factors causing climate change. The apparent problem? The cost of mitigating is greater than the cost of damages. The real problem? Scientists are not estimating the same things in the two estimates. And the estimates themselves are most probably based on poor methods. The article discusses some of these but Econintersect suggests an additional factor: The discussion is centered on estimates of GDP which may have little to do with true economic health. GDP is a process of measuring current cash flows and misses completely the present value of future consequences, what economists call "externalities". In some ways, GDP is like a mouse and the "externalities" an elephant.
  • Wearable ‘Heart Sock’ Helps You Avoid a Heart Attack (Kara, Care 2 make a difference) A new development now in research testing may be available for those at risk of heart attacks in about ten years. The implant device, called a "heart sock", fits snugly over the entire surface area of your heart and is capable of monitoring virtually every useful statistic regarding your heart's health. Any a abnormality can be transmitted directly to your doctor. In an emergency, the device is even capable of "massaging" your heart back to life with electrode-induced pulses.

There are 15 articles discussed today 'behind the wall'.


  • Topping or Basing? (Lance Roberts, StreetTalkLive) Lance Roberts has contributed to Global Economic Intersection. In this week's newsletter Lance notes that there are good reasons to look for a near-term rally and several reasons to worry about a major correction not too far in the future. The following chart indicates short-term oversold conditions which could produce a rally.


  • A "Second Opinion" on the Economic Health of the American Middle Class (Richard V. Burkhauser, Jeff Larrimore, and Kosali I. Simon, National Tax Journal) This should be compared to the very poor "analysis" discussed yesterday (Manhattan Institute: The Myth of Increasing Income Inequality by Diana Furchtgott-Roth). In this case a careful analysis reveals that such things as changes in tax codes, in-kind benefits (such as employer-provided health insurance) and inclusion of household make-up show less of an income disadvantage for the middle class over the last 30 years than simply looking at pre-tax tax unit analysis. But there still is a degradation, not just as much.


One reason the U.S. economy is still weak is that big American companies are "maximizing profits" instead of investing in their people and future projects.

Click on chart for larger and expanded view at Advisor Perspectives dshort.com.

  • Stephen Roach: Forget China’s growth target (Houses and Holes, Macro Business) Viewpoint here is that China will do "whatever it takes" to keep GDP growth above 7%, even though such actions are incompatible with stated multi-year objectives. That means further stimulus in 2014 and no significant credit tightening or bad debt clean-up.


  • Save capitalism from the capitalists by taxing wealth (Thomas Piketty, Financial Times) Piketty says that the economic class structures of Europe and the U.S. have reversed over the last 100 years and it's all a consequence of policy choices made by governments. Are confiscatory taxes necessary to prevent an unsustainable trend from proceeding to the point of a collapse? Piketty argues that is the least destructive approach to a trend of growing inequality.
  • How You, I and Everyone Got the Top 1 Percent All Wrong (Derek Thompson, The Atlantic) While the world has focused on the top 1% the real inequality story has been the top 1% of the top 1%. And to a lesser extent the top 10% of the top 1% also has not seen attention that it deserves. Decomposing the data shows that the top few have accumulated wealth at the expense of the bottom 99.9% with the top of the 99.9% managing to hold even over the past 50 years while those lower down lost ground. See also the research report this is from: The Distribution of US Wealth, Capital Income and Returns since 1913 (pdf) (Emmanual Saez and Gabriel Zucman, UC Berkeley)


  • Obamacare: Where are We Now? (John Cassidy, The New Yorker) A professed supporter of ACA (Affordable Care Act) takes a sober look at the legislation's shortcomings and how the public and the body politic are reacting.



  • The Artificial Leaf (Jared P. Scott and Kelly Nyks, GE Focus Forward) The future of energy as a distributed generation system duplicating nature is the topic of this future-vision short video.

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