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What We Read Today 24 February 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.

Included in the 14 articles Behind the Wall today are 4 on the California drought.

  • Israel Shows California No Need to Fret About Water Desalination (Alisa Odenheimer and James Nash, Bloomberg) See also article immediately above. Israel now gets about 25% of its 1.91 billion cubic meters of water from desalination. According to data from The USGS Water Science School, California uses about 41 billion cubic meters of fresh water per year, more than 20 times the Israeli usage (2005 data).
"I think it will turn out that it is very affordable compared to not having the water here in Southern California, particularly with the drought that we are facing."

Click on image for infographic at Contra Costa Times.


  • America in Decline? It’s a Matter of Choices, Not Fate (Robert J. Lieber, World Affairs) America "actually continues to possess far greater material strengths than commonly assumed," according to the author. Whether the people of the U.S. will make choices that result in capitalizing on those strengths is the real question.
  • Wall Street Landlords Buy Bad Loans for Cheaper Homes (Heather Perlberg and John Gittelsohn, Bloomberg) A new "vulture capitalism" venture has investor groups buying up bad mortgages so they can devour the carrion. after buying the mortgages they can foreclose and short circuit the court house auction step in acquiring properties on the cheap.
  • The Worst Ten-Letter Word (John Mauldin, Thoughts from the Frontline - Free subscription required.) John Mauldin has contributed to Global Economic Intersection. An excellent summary of data and thinking about inequality (wealth, income). John argues that the economy is now rewarding "knowledge workers" well while "goods-producing workers" have been losing ground. The implication (he doesn't actually use the following terms) is that our inequality problems arise because there is a structural imbalance in the labor force with a shortage of "brains" and surplus of "brawn".


  • Pettis: Emerging markets crisis is GFC 2.0 (House and Holes, Macro Business) Unwise investment in many emerging market countries will come home to roost and a new phase of financial crisis will unfold. Pettis calls this the Great Financial Crisis 2.0. The outcome will be a global New Deal which will involve most obviously the U.S. and India, along with other countries which have been underinvested in infrastructure in recent decades. This is an excerpt from an article that Global Economic Intersection will be publishing within the next week or so.
  • FRFA may provide relief to product-starved US money markets (Walter Kurtz, Sober Look) Markets are starved for short-term low risk liquidity (see graph) and the full-allotment overnight reverse repurchase agreement facility (FRFA) that the Fed is about to implement as part of a mechanism to control short-term rates may actually provide stability and needed liquidity for financial markets. Aha! A high function utilization of the expanded Fed balance sheet.


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