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What We Read Today 07 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.

  • The Face Behind Bitcoin (Leah McGrath Goodman, Newsweek) Hat tip to John O'Donnell. According to this article Satoshi Nakamoto, the inventor of bitcoin, is a 65-year old grandfather from California. He supposedly has left hundreds of millions of dollars in bitcoins untouched and retreated to the family home in the San Gabriel foothills. Read the result of a 2-month search by Newsweek that apparently found what no one else has. See also the later article next.

  • Crimea sets referendum on joining Russia (Carol Morello and Anthony Faiola, The Washington Post) The parliament of Crimea unanimously passed a resolution today (06 March) which authorized the transfer of Ukraine from Ukraine to Russia, subject to a public referendum which they scheduled for 16 March. This will presumably preempt a vote on increased autonomy for Crimea scheduled for 30 March. The Washington Post offered the following characterizations:

The regional parliament, now led by Sergei Aksyonov - a businessman and politician known around Kiev as the "Goblin" because of his alleged ties to organized crime, vowed to nationalize Ukrainian state industries and begin setting up government ministries separate from Ukraine, which it joined in 1954 when the nation was still a satellite of the Soviet Union.

"This is our response to the disorder and lawlessness in Kiev," Sergei Shuvainikov, a member of the Crimean legislature, said Thursday. "We will decide our future ourselves."

  • Obama calls Putin, proposes solution to Ukraine dispute (David Jackson, USA Today) The president spent another hour on the phone today (06 March) with Russian president Putin is an attempt to get a diplomatic resolution to the Ukraine crisis. Below is a video of President Obama's statement to the press today in which he described the nature of sanctions being imposed until the dispute is resolved. A CNN report gives further details.

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  • Changing Circumstances, Graphed (Paul Krugman, The New York Times) The Taylor Rule relates unemployment and inflation to Fed rates and has shown a good correlation for years - until 2009, that is. Prof. Krugman shows how the relationship has broken down,


  • Should China abandon its growth target? (Peter Cai, China Spectator) Some observers believe that China is doing more harm than good by targeting GDP growth. The arguments center on danger in forcing growth at any price:
If the government sets the goal too high or places too much emphasis on GDP growth, it means that Beijing is more likely to rely on old tricks such as infrastructure spending and credit expansion to prop up the economy.
  • How Motel Ownership Offers Indian-Americans a Gateway to the American Dream (Vicky Gan, About 70% of America's motels are owned by Indian-Americans (not American Indians). More than 2/3 come from the Indian state of Gujurat which is on the Arabian Sea, north of Mumbai (Bombay), south of the large state of Rajasthan and forming part of India's border with Pakistan. According to Wikipedia it is the most industrialized state in India. Most of the territory is believed to have once been part of the ancient Indus Civilization which was in existence up to 1,000 years before Babylon and contained what are believed to be the largest cities of the ancient world. So the next time you stay in a motel your host may be descended from the earliest organized civilizations in our history.
  • Why is American internet so slow? (John Aziz, The Week) The U.S. now ranks 31st in the world in internet download speed, right after Estonia. And the U.S. is 42nd in upload speed.

Susan Crawford argues that "huge telecommunication companies" such as Comcast, Time Warner, Verizon, and AT&T have "divided up markets and put themselves in a position where they're subject to no competition."
  • Godzilla is good for you? (Steve Keen, Business Spectator) Steve Keen has contributed to Global Economic Intersection. Steve points out that Godzilla is a biological impossibility: something that big is necessarily cumbersome and slow moving. So much for cinematic fiction. But in the real world of global finance it seems there is belief that humongous size with blazing speed and agility is something that can be operational and safe. Steve suggests that there is one relationship between a gargantuan financial system and Godzilla: both have a "positive relationship between size and destructive capacity".


  • Individuals flee shrinking U.S. municipal bond market (Lisa Lambert, Reuters) Individual investors, the largest segment of the municipal bond market are reducing their holdings as the total value of that market has been shrinking. The value of the market is the lowest in five years. Is anybody buying? Banks have increased muni holdings as others have been selling. The question of the day? Who is the "smart money"?
  • Do You Drink Coffee Between 8 and 9 a.m.? Here is Why You Should Not. (Shubhra Krishan, Care2 make a difference) This managing editor has the following getting started routine: First thing after dressing is 8 oz. of water; then 20-30 minutes later 4-6 oz. of orange juice; after another 15-30 minutes a full breakfast (fruit and cereal or bacon (one slice), eggs and toast; finally coffee arrives, sometimes a few minutes and sometimes an hour after eating, strong and black between 1 and 3 hours after arising. Not quite what the author here describes as ideal but far from what he says is not okay. See also next article.
  • GDP is rubbish! (Leith van Onselen, Macro Business) The effect of population growth is only ione of the problems itemized. Econintersect has frequently argued that GDP is a poor way to measure the economy. This article is a must read!


  • A New SAT Aims to Realign With Schoolwork (Tamar Lewin, The New York Times) Many changes are being implemented. Some of the changes: Going back to a 1600 max (800 math and 800 "evidence based" reading and writing); penalties for guessing are being eliminated; and math will be more focused on linear equations, functions and proportional thinking.
The changes are extensive: The SAT's rarefied vocabulary challenges will be replaced by words that are common in college courses, like "empirical" and "synthesis." The math questions, now scattered across many topics, will focus more narrowly on linear equations, functions and proportional thinking. The use of a calculator will no longer be allowed on some of the math sections.
  • Alibaba’s Yuebao gives China's banks a rude awakening (Peter Cai, China Spectator) China's online retailing giant, Alibaba (larger than Amazon and eBay combined) is making some waves with explosive growth of its online shadow bank, Yuebao. In just eight months it has attracted more than 80 million depositors and deposits of $90 billion. See also Alibaba and the Chinese banking thieves for details about how Yuebao is taking business away from China's traditional banks.

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