April 22nd, 2014
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 four weeks ago Monday.
There are some interesting things 'behind the wall'.
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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.
- Venice votes to split from Italy as 89% of the city's residents opt to form a new independent (Hannah Roberts, Daily Mail) Hat tips to John O'Donnell and Lew Rockwell. The urge to unravel is spreading. Some of the ongoing activity: Scotland separation from England; Crimea from Ukraine (although as a Russian Federation republic); and Basque and Catalonia from Spain. With the perception that military might is no longer of primary importance for survival, the need for consolidation of multiple city-states and regions under a single government is now being questioned.
Occasionally there are statements concerning secession within the U.S., although formal movements have yet to take hold. In some cases there are economic factors that would influence how things would work out. For example, Sig Silber (GEI Opinion) recently determined that succession of New Mexico as an independent nation had severe economic problems, a regional succession including surrounding southwestern states, including Texas, to form a new nation would be economically feasible. See The Nation of New Mexico.
- Flight 370: When facts are few, imaginations run wild (Ann O'Neill, CNN) Hat tip to Alun Hill. Great summary of the story and a virtual library of news videos.
- Forests Around Chernobyl Aren’t Decaying Properly (Rachel Nuwer, Smithsonian.com) Some commenters contest the article's representation of facts.
- Retirement Strategy: The ETF-Only Portfolio Versus Buy-The-Dips Portfolio, Game On! (Alan Saltzman, Regarded Solutions, Seeking Alpha) Via GEI discussion group on LinkedIn. The author has set up two parallel portfolios with a dividend stock theme. One is an actively managed portfolio of individual stocks and the other a passively managed ETF portfolio. He will be publishing articles tracking the progress of the securities in the two portfolios in real time over the duration of his experiment.
Today there are 12 additional articles discussed 'behind the wall'.
- Income Gap, Meet the Longevity Gap (Annie Lowrey, The New York Times) Does wealth = health? The following graph indicates that it does, at least in terms of longevity. The graphs for women (not shown here) show similar trends but with smaller differences, both between the two times referenced and between poor and rich counties.
- Fisher Outs Bubbles Ben: QE Was A Massive Intended Gift To The 1% (David Stockman, Contra Corner) Hat tip to Lee Adler. A former leader of the "Trickle Down Ronald Reagan Team" is now critical of the most grandiose trickle down program in history. Is this a 'change of heart' or a 'bridge too far'? It may be some of both.
- I’ll Take the Tax: 10 Obamacare Exemptions You Don’t Want (Dan Ritter, Wall Street Cheat Sheet) The author lists the ten exemptions from Obamacare that enable avoidance of the tax levied on the uninsured. The author says that given a choice between any one of the ten or the tax, he would pay the tax.
- Why Sell Puts? (Paul Price, TalkMarkets) Selling puts on stocks we would want to buy should the stock price drop to the option strike price is a good way to make money while waiting to buy. The author reviews 14 months of activity with 24 options sold for a net premium collection of $12,621. He also used $4,335.70 of total premium collection to close out three options at a loss before expiration and exercise to buy the underlying stock. He could, of course, held those three options (on Caterpillar, Mosaic and Quest Diagnostics) and bought the stock (had the stock 'put to him' for the strike price). He chose not to do that in this case.
- Specifying “Demand”: Nick Rowe Meets Steve Keen on His Own Ground (Steve Roth, Angry Bear) Great discussion of the conflation of "flow" (which indicates a change with time) with "measures of account" (which indicate a specific snapshot in time). This is a wonkish discussion of semantics that actually delves into major problems that many economists create because they do not sufficiently define specifically what are stocks and what are flows. Read this before you watch the current Documentary of the Week and then read it again afterwards. You should be somewhat less confused after all that effort, even if only slightly. But, even if only slightly less confused, hang on to that gain because there will be more gains coming if you keep following this story.
- Market Momentum Beginning to Fade: Are Stocks Losing Steam? (Chris Puplava, Financial Sense) Hat tip to Doug Short, Advisor Perspectives dshort.com. Puplava says trends are bullish but momentum is fading. Kinda like the sun is shining but thunder is rumbling in the distance. Will that shower come here? As every farm boy will tell you, if you hear thunder you better watch for the dark clouds. If you start to see some growing on the horizon either get the hay wagon into the barn or covered by a tarp.
- Debt and Taxes (Peter Schiff, Advisor Perspectives) Schiff thinks that investors and forecasters should have been spooked by "red flags contained in in the national and global headlines that have come out thus far in 2014". He sees government debt as a burden that will cause a disaster for the U.S. (and others, including China). Steve Keen says the problem is private debt. We believe that there is (are) one or more debates between Schiff and Keen. We'll look for them and post one or two.
- When the Rivers Run Black (Rachael Cernansky, Medium.com) Hat tip to Ben Peterson, Newsana. Future environmental disasters have been stored up over much of the U.S. It is not only the carbon in the atmosphere we need to worry about, it is the coal ash sludge sitting around on top of the ground containing heavy metals and other deadly toxins that is also an unattended hazard.
- The Global Economy’s Tale Risks (Robert Shiller, Project Syndicate) Shiller recounts experiences that indicate the world responds more to propaganda than facts and analysis. (Econintersect characterization what what Shiller wrote, not his actual words.) In Shiller's words:
"We seem to be at the mercy of our narratives."
- Industrial Commodities Update (Tiho, The Short Side of Long) There is also a bearish chart for oil in this article.
- Abenomics hits the rails (Martin Hutchinson, Asia Times) Hat tip to Michael Welyki, Newsana. Note: Martin Hutchinson has contributed to Global Economic Intersection. At the bottom of this piece, which criticizes "false Keynesian nostrums", is a false nostrum of another sort: balanced government budgets for sovereign currency entities are good, even necessary.
- Stockpiling Grain in Ukraine (Simon Constable, Barron's) Note: From GEI discussion group on LinkedIn. As the Ukrainian hryvnia devalued against the dollar in recent months, shipments of grain from Ukraine have diminished as farmers have used their agricultural commodities to protect against a further local currency devaluation. When it comes to real currency crisis situations it seems that things of utilitarian value may be preferred as a store of value over things that merely glitter.