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What We Read Today 19 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.

  • String of suicides rocking financial world baffles experts (Michael Gray, New York Post) Hat tip to Sig Silber. All of these suicides were with a physically aggressive technique. There were no wrist slashing or overdose cases among them. Dr. Christine Moutier, chief medical officer of the American Foundation for Suicide Prevention, is quoted:
"The suicide-research literature doesn't help very much with the question of why the method of these suicides is so out in the open."

  • Why Putin Did It (Christopher Dickey, The Daily Beast) The article quotes carrier foreign service officer and former U.S. Ambassador James F. Matlock, Jr. (1981-1983, Czechoslovakia; 1987-1991, Soviet Union) who thinks the current situation is the result of more than two decades of ill-conceived actions by American "hawks":
... throughout the Clinton administration and especially during the George W. Bush administration, “the United States insisted on treating Russia as the loser,” says Matlock. The Obama administration famously tried a “reset” of relations with Moscow, but “then Congress’s penchant for minding other people’s business when it cannot cope with its own began to take its toll.” In supposed defense of human rights, the hawks on the Hill piled insult upon insult—at least in the eyes of Putin, and also in the view of many Russians who identify with his sense of grievance.

Wow! Could America have used council from Nelson Mandella during this period? See also Matlock's WaPo Op Ed: The U.S. has treated Russia like a loser since the end of the Cold War. and also from TDB: Vladimir Putin’s Seizure of Crimea Is Based on Pure Fiction.

the two most plausible scenarios at this stage are that Flight 370 ran out of fuel and crashed into the Indian Ocean, or that the plane has already landed "somewhere in southeast Asia" as part of a terror plot.

"It could have landed somewhere, filled with explosives and then sent somewhere else to cause some great damage, and I think we have to look at all possibilities right now."
Make transportation networks, not war or a richer 1%.


There are 13 articles discussed behind the wall today.

  • China does not look well (Houses and Holes, Macro Business) Nice review and summary from a variety of sources. One of the topics is China's housing market, which shows signs of rolling over.

dhina-housing-macro-bus-2014-mar-19-600px

"Subprime risks are contained." Ben Bernanke 2007
"Risks in China's bond market are generally controllable." Zhang Xiaojun 2014
  • How a Massive Decline in Oil Prices Could Impact Alternative Energy (Harry Dent, Survive & Prosper) The 'Greatest Recession' has only just begun, according to Harry Dent, and massive debt deflation will take commodities back to generational lows and economic misery will envelop the world. But Harry also sees great opportunity for some along with the misery for others.

oil-dent-1998-2023

  • EM central banks sell US government bonds (Michael Mackenzie, Financial Times) We discussed yesterday the speculation about Russia dumping U.S. Treasuries as the foreign custody account fell by $105 billion since the first of the year. Tuesday (18 March 2014) the Treasury released the detailed accounts for the first month of the year and Russia sold only $6.8 billion of U.S. Treasuries then. Many emerging market countries sold treasuries as economic stress increased. A few countries increased treasury holdings in the custodian account in January, including China, and Belgium. Mackenzie suggests that the big drop l;ast week, if it was Russia, may not have invovled selling treasuries but simply moving tham to a third party custodian to avoid possible U.S. sanctions freezing Russian assets. The accounting for what countries did what last week will not be available until the third week in May when March account details are released.
  • Keynes and Loanable Funds (Philip Pilkington, Fixing the Economists) Hat tip to Yves Smith at Naked Capitalism. Great review of Keynes' criticism of the loanable funds theory of banking that pollutes so much economic thinking even to this very day and the relationship to liquidity preference theory of interest, widely associated with Keynes but actually predating his inclusion in The General Theory by at least 50 years. We will be reposting the full article on GEI Analysis in the future. We have posted contributions by Philip Pilkington in the past and will be doing so on a regular basis going forward.

liquidity-preference-pilk-fixing-2014-mar-08

  • Current Annual Inflation Commentary (Timothy McMahon, InflationData.com) February 2014 saw the third lowest year-over-year inflation in almost 50 years, 1.13%. The last time it was lower than this was August 1964.w

Click on graph for larger image at InflationData.com.
inflation-annual-rate-600x450

  • Why the ECB Should Buy American (Jeffrey Frankel, Project Syndicate) Jeffrey Frankel has contributed to Global Economic Intersection. Prof. Frankel argues that the ECB has no direct means of holding the value of the euro down so it should do so indirectly by buying U.S. Treasuries.


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