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What We Read Today 24 April 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.

  • Deutsche Bank under pressure by investors to raise capital (Daniel Schafer and Alice Ross, Financial Times) Investors fear the bank is not strong enough to weather another credit markets slump. Several large investors have told the Financial Times that they want the bank to take pre-emptive action before the ECB does its next round of evaluations in November. This news comes one day after both UBS and JP Morgan Chase downgraded the stock (NYSE:DB) to neutral with concerns that the bank might "delay efforts to cut costs and build capital". See UBS Joins JPMorgan in Lowering Deutsche Bank on Capital (Nicholas Comfort, Bloomberg).
  • 2 Stocks With Huge Insider Buying (David Goodboy, Street Authority) Two stocks that have accumulated large insider buys over time (and therefore avoided the radar of many analysts) are BJ's Restaurants (NASDAQ:BJRI) and NuStar Holdings (NYSE:NSH). Read the article for details.

Today there are 11 articles discussed 'behind the wall'.

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  • How Did Canada's Middle Class Get So Rich? (Derek Thompson, The Atlantic) The U.S. no longer has the wealthiest middle class in the world. In 2010 Canada climbed into a tie with the U.S. and probably has surpassed their southern neighbors since. Derek Thompson says that it is a combination of less income inequality and a stronger housing market that has made the difference. The following graphic from The New York Times shows how the richest countries in the world compare to the U.S.

Click on graphic for larger image.

  • Retiree Social Security benefits to be wiped out by health care costs (Michael S. Fischer, Life Health Pro) With medical costs rising much faster than CPI upon which the Social Security COLA (cost of living adjustment) is based, the time will come in the future when Medicare Premiums plus supplemental insurance and/or co-pays will become larger than the SS benefit.
  • Is gulf cleanup over or not? BP and Coast Guard differ. (Steven Mufson, The Washington Post) On Tuesday night, BP said that the “active cleanup” of the Gulf of Mexico oil spill had been brought “to a close.” Later Tuesday night, the Coast Guard said the response to the spill isn’t over yet, “not by a long shot.” Here is an infographic about selected wildlife species.
  • China Releases Japanese Ship After Unprecedented Seizure (Chris Cooper and Kiyotaka Matsuda, Bloomberg) A Chinese court released a Japanese ship owned by Mitsui O.S.K. Lines Ltd. after the cargo carrier paid compensation for the loss of two vessels leased from a Chinese company before the two countries went to war in 1937. The total settlement, including court fees, was little over $28 million.


Grosseteste's treatise on light, called De Luce (Concerning Light), is the earliest known attempt to describe the universe using a coherent set of physical laws, centuries before Isaac Newton. It proposes that the same physics of light and matter, which explain the solidity of ordinary objects, could be applied to the cosmos as a whole.

In explaining the formation of the ancient universe, geocentric and composed of a series of nested spheres, Grosseteste conceives the universe as beginning from a single point of light, the fusion of matter and form, which expands until matter can be moved no further: the first sphere. A different form of light radiates inwards compressing matter, until it will move no further, generating the second sphere, and so on.

Grosseteste's calculations are very consistent and precise. Had he had access to modern calculus and computing methods, he surely would have used them. In a recent paper, just published in the Proceedings of the Royal Society A, our team built computer models to express Grosseteste's equations. In doing so it suggests, although this was probably not apparent to Grosseteste at the time, a series of ordered universes reminiscent of the modern "multiverse" concept.

To be clear, Piketty makes a great contribution to economics, especially in his call to tightly link economic analysis to historical political and social conditions, rather than pretend to solve problems of the world from detached abstract reasoning. However like all reformation efforts in the discipline, his (and fellow students of inequality) will be met by fierce internal opposition, the ultimate outcome of which is to twist his work into something it is not in order to pretend that it supports the status quo. This happened to Coase, it happened following the Cambridge controversy, it happened in macro after the financial crisis, and it will happen again now. There are simply too many vested interests who want the profession to continue to come to the same conclusions.

It also happened to Keynes in 1937 following the publication of The General Theory, courtesy of John Hicks, who eventually recanted in 1980.

  • Wealthy Chinese are turning to American surrogates to birth their children (Lily Kuo, Quartz) Hat tip to Roger Erickson who says this sounds like a legal nightmare. Under current law babies of foreign nationals born in the U.S. to surrogate mothers are natural born U.S. citizens. Imagine someday the son of the President of China running for U.S. president. Now that would really be globalization.

Click on image for interactive map at The Washington Post.

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