What We Read Today 13 October 2014

October 13th, 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.

  • European Central Bank to launch fresh stimulus as eurozone stutters (Szu Ping Chau, The Telegraph) Hat tip to Ian R. Campbell, GEI Discussion Group, LinkedIn) Inflation expectation moved down to 1.7% (currently at 0.3% actual) is the environment with Graghi saying that further rate cuts are out (some are already negative) but other actions are still being considered. Draghi suggests that "full-blown" quantitative easing was an option if "expectations drifted down further".

Follow up:

  • The Modern Portfolio Flat Earth Society (Vitaliy Katsenelson, Institutional Investor) We have discussed this article before. If you missed it then you should read it now. The author points out the ridiculous connection that MPT (Modern Portfolio Theory) makes between volatility and risk. Most people love upside volatility (gain) and want to avoid downside volatility (loss). Measurement of portfolio performance using the two-sided volatility is simply wrong. Performance is better mausred by gain as a positive and drawdown as a negative. A very important aspect of the math in MPT not specifically discussed by Katsenelsen is the assumption that price movements are normally distributed (follow a bell curve). MPT math is based on that fallacious assumption, which is what is behind the improper treatment of gain vs. drawdown by the theory. MPT produces very precise measurements of market and portfolio performance, along with precise expected future results. Unfortunately the projections are sometimes precise but very inaccurate. If you need a visual to help remember the difference between accuracy and precision, the following target graphic will help. If your gun produces the shot pattern on the left, you will eat well by taking only a few shots. If it is the one on the right you may shoot 100 times and still go hungry - you're precisely hitting a spot, it's just not where the meat is located.


  • St. Louis, Ferguson and Related News

St Louis protests to continue after arrests made in Ferguson (The Guardian)

  • Recent articles about Scotland Independence and Similar Movements

Brown says Cameron "unstatesmanlike" on Scottish MPs plan (BBC News)

Thousands rally in Barcelona against Catalonian independence (The Guardian)

Will Catalonia Hold a Referendum on Whether to Break Away From Spain? (National Geographic)

  • Articles about conflicts and disease around the world


Here's How Nigeria Beat Ebola It took 18,500 interviews, but Nigeria managed to contain the outbreak. (Mother Jones)

To stop Ebola, US must be able to diagnose it quickly (The Boston Globe)

Second US Ebola diagnosis 'deeply concerning', top health officials admit (The Guardian)

Obama calls for action to ensure U.S. medical system can handle Ebola (Reuters)

Ebola Vaccine Would Likely Have Been Found By Now If Not For Budget Cuts: NIH Director (Huffington Post)

Ebola – as seen through the eyes of a 13-year-old from Sierra Leone (The Guardian)


Donors pledge $5.4bn for Palestinians at Cairo summit (BBC News)

Israeli minister: World may be wasting its money on Gaza (The Jerusalem Post)

UN Chief Says 'Occupation' is to Blame for Gaza War (Arutz Sheva)


Turkey 'agrees to US air base use' (BBC News)


Iran warns of risk to Israel's security should US seek overthrow of Assad (The Guardian)

How she went from a schoolteacher to an ISIS member (CNN World)


McCain urges ground troops to defeat Isis: 'They're winning, and we're not' (The Guardian)


Ukraine leader sacks defence minister ahead of Russia talks (Yahoo! News)

Russia says it's pulling 17,000 troops from near Ukrainian border (CNN World)

Hong Kong

Hong Kong leader says pro-democracy protests will not change Beijing’s stance Chief executive Leung Chun-ying warns that protests have ‘spun out of control’ and police may use some force to clear streets (The Guardian)

Hong Kong police start clearing protest barricades (The Globe and Mail)

North Korea

Rogers says Korea to unify within 5 years (Futures)

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