What We Read Today 17 September 2014

September 17th, 2014
in econ_news, syndication

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 (and sometimes longer ones) 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.

  • PBoC injects $81bn into banking system (Josh Noble, Financial Times) This is a move to counter the real estate sector slowdown and the weak manufacturing numbers that threaten to lower GDP growth well below targets. More stimulus moves may follow.

Follow up:

  • Fed Seen Doubling Reverse Repos to Raise Interest Rates (Matthew Boesler, Bloomberg) The Fed will be using reverse repo operations to maintain overnight interest rates at the level they desire. In a trial period to date in 2014 the volume of trades have been around $120 billion. Economists surveyed by Bloomberg say the total each day (night) will have to be at least double that. Boesler explains very well what is going on:

The Fed's need for a tool to influence repo rates directly arose after almost six years of bond buying to stimulate economic growth flooded the banking system with $2.68 trillion of excess reserves. That means banks no longer need to borrow reserves in the once-vibrant fed funds market, so the fed funds rate no longer represents the true cost of overnight credit.

In order to raise bank borrowing costs and ensure that the fed funds rate doesn't trade below the FOMC's target range when it begins tightening policy, the Fed will have to absorb cash from money funds that would otherwise be lent to banks through repos.

  • Home Free? (James Surowiecki, The New Yorker) What is the best way to reduce social services costs for homelessness? Utah has found that simply giving a home to the homeless costs the state's taxpayers slightly less that 40% of the traditional social services costs.
  • Recent articles about Scotland Independence Vote :

A Better Nation, Scotland’s Divisive Independence Vote (Boston Review)

The Energy Prices at Risk with Scottish Independence (Money Morning) By Kent Moors who has contributed to GEI.

Scottish independence: polls put No camp’s lead at four points (Financial Times) Too close to call.

  • Articles about wars elsewhere in the world:

UN Brokers Agreement to Start Gaza Rebuilding (abc News)

White House officials warn Syria over ISIS mission (Fox News)

US to strike ISIL 'sanctuaries' in Syria (Al Jazeera)

Syria in Revolt, Understanding the Unthinkable War (Boston Review)

US Troops Could Fight ISIS in Iraq, General Tells Senate (abc News)

Ukraine crisis: Rebels granted self-rule and amnesty (BBC News)

Ukraine ratifies EU integration deal (The Guardian)

Can EU-Ukraine trade pact survive Russian pressure? (BBC News)

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