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What We Read Today 22 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.

  • How USPS Could Save the Economy, Change Your Life (David Dayen, The Progressive Populist) Dayen describes ten different applications for postal banking in the U.S. This idea will be fought tooth and nail by some who will say it is a 'slippery slope to socialism'. Some of these think the USPS shouldn't be allowed to remain a non-profit corporation with government sponsorship (but no government financial support). But others are on the same page as Dayen - See for example GEI Opinion by Ellen Brown (here and here and here) and by John Lounsbury (here).

Click on map for larger image.
Dispute-map-global-quartz-2014-mar-21-600px

Today 13 additional articles are discussed 'behind the wall'.

  • Bank Money Is Contracting (And Other Hidden Statistics) (Jake Huneycutt, Seeking Alpha) Hat tip to Michael Hartig, GEI Discussion Group, LinkedIn. This article is loaded with great data and analysis. Two of the fourteen graphics are shown below. Some of the conclusions: (1) "State" money is becoming tighter while "private" money (banking and finance) is becoming looser; (2) corporations are not unwinding debt; and (3) margin debt as % of GDP is at a blow-off peak. As good as the article is, the discussion of money and finance in the comment stream is even better. Caution: Follow this link when you have a minimum of 20 minutes to devote - 30 or 40 minutes is even better.

money-supply-huneycutt-sa-2014-mar-19

money-supply-huneycutt-corp-debt-sa-2014-mar-19

  • What Makes a Slam-Dunk Portfolio? (Frank Holmes, U.S. Global Investors) Frank Holmes has contributed to Global Economic Intersection. Holmes says that strong portfolios keep moving into the strongest sectors of the market which he identifies now as "technology, health care, materials, and consumer discretionary." He specifically gives Tesla as one of several examples of stock selection. He says NASDAQ:TSLA is far more than just an electric car company. It is an electrical technology company with innovations in utilities as well.

The US unconventional energy boom has reversed the decline of domestic production, lowered oil and gas imports, reduced gas prices, and created political space for tougher regulations on coal-fired power plants. This column argues that it is not a panacea, however. Even if current estimates prove accurate, the long-run benefits to the US economy will be relatively small. Improving energy efficiency and promoting low-carbon technologies will be just as important as before - especially for the EU, given its more limited known reserves of unconventional oil and gas.
  • Japan leads us into a new future, taking the next step in the great monetary experiment (Fabius Maximus) Fabius Maximus has contributed to Global Economic Intersection. Good summary of the essentially identical monetary expansion by the world's four major central banks. Fabius Maximus offers little in the way speculation about how the "grand experiment" will end. We frequently post article discussions from analysts who say it ends in disaster and those who say it ends well.
  • Janet Yellen didn’t gaffe (Felix Salmon, Reuters) While people focused on the stock market, the bond market yawned when she made her interview statement about raising interest rates 6 months after QE ends. In this context, Felix says:
So why does everybody think that Yellen blundered? The answer is simple: they were looking at the stock market (which doesn't matter), rather than the bond market (which does). Stocks fell, briefly; not a lot, and not for long, but enough that people noticed.

felix-salmon
Ten-year Treasury rate.

  • White House Tightens Health Plan’s Standards After Consumers Complain (Robert Pear, The New York Times) The Obama administration issued stringent new standards on Friday for health insurance to address a flood of complaints from consumers who said that costs were too high and that the choice of doctors, hospitals and prescription drugs was too limited in many health plans offered this year under the Affordable Care Act.
  • Carbon crash – solar dawn (Paul Gilding, RE New Economy) This author says fossil fuels will be obsolete in 20 years. Yesterday we read Harry Dent's projection that oil will decline by 80% in the next 10 years. Can both happen? Not without the mother of all economic whiplashes.
  • United States Current Account (Trading Economics) Increasing exports, improving foreign direct investment in the U.S. and low interest payment for U.S. debt held overseas are the major factors. According to Reuters, this is a 14-year best. From Trading Economics:
The United States recorded a Current Account deficit of 81118 USD Million in the fourth quarter of 2013. Current Account in the United States is reported by the U.S. Bureau of Economic Analysis. Current Account in the United States averaged -43690.14 USD Million from 1960 until 2013, reaching an all time high of 9957 USD Million in the first quarter of 1991 and a record low of -214501 USD Million in the third quarter of 2006. Current Account is the sum of the balance of trade (exports minus imports of goods and services), net factor income (such as interest and dividends) and net transfer payments (such as foreign aid).

current-account-us-2014-mar-21


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