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What We Read Today 28 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.

  • Why China fears the Putin precedent (John Lee, Business Spectator) China appears to be just as confused as the U.S. and the EU regarding the Ukraine situation. But China has concerns because of the ploy used by Putin of using "self-determination" as a pretext for interfering with former Soviet states. China would have a problem if the same doctrine were applied to Tibet, Xinjiang and Taiwan where self-determination referenda would likely (certainly?) go against Beijing.

  • China, US rally on climate change (House and Holes, Macro Business) China and the U.S. have started new talks on how to curb carbon emissions. Climate experts say this is a promising new turn of events. The author of this article expresses some skepticism about the political reality of anything happening. There are additional articles today on climate change 'behind the wall'.
We'll have Manhattan
the Bronx and Staten
Island too
  • East European oligarchs rush to snap up London property (Kate Allen and Vanessa Houlder, Financial Times) Russians and Ukrainians are trying to get asets out of harms way as sanctions start to bite. Perhaps the decline in New York is because of fear the U.S. could sieze property if the crisis worsens.
  • New report calls U.S. a 'rising star' of global manufacturing (James B. Kelleher, Reuters) The U.S. is now ranked number two (behind China) in the world for manufacturing competitiveness. Cheap natural gas has been a major factor in the comeback. Reuters says that Mexico actually has manufacturing costs below China but does not make a top ranking because of crime and corruption. The top ten has Korea (3) and Japan (5) plus six European countries, headed by UK (4).

Today there are 13 articles discussed 'behind the wall'. The first 4 are about climate change and energy issues. The final 3 concern China.

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  • “Farcical” start to Tony Abbott’s renewable energy review (Giles Parkinson, REnew economy) Tony Abbott ran on a renewable energy platform and was elected Australian prime minister in 2013. Now he has appointed fossil fuel advocate to run a renewable energy review. The study will have some interesting assumptions:

Not only will ACIL Allen do the modelling for the RET Review panel, some of the assumptions that will form the basis of that modelling have also stunned the clean energy industry, and been branded as a farce.

This includes an apparent refusal to measure the benefits of renewable energy - including the health benefits, job benefits, and the network benefits - which the panel has dismissed as "too hard to model" and little more than a "transfer of wealth", presumably away from the coal generators and network providers. There is concern about how it will model the reduction in wholesale prices - the main complaint from the existing fossil fuel industry.

"We've had, since 1996, 17.5 years where the temperature has shown no measurable increase. In fact, it can be argued since 2003, it has cooled off somewhat."

The author says such statements are made based on observations of individual years and by ignoring the measured trends.


  • Rooftop Solar: Does it really need the grid? (Giles Parkinson, REnew economy) This is an updated discussion of energy storage for distributed generation which would be necessary for photovoltaic solar to provide full home electrical power without a power grid connection. One of the problems for power companies is the constant fixed costs of the power grid which will become more and more dominant when less power is delivered as customers disconnect from the grid completely or share grid power and local power generation. The author suggests that the pricing of grid connection is likely to be separated from the cost of power delivered to maintain a sustainable business model for power companies.


  • The economist who revealed how media bias works (Matt Phillips, Quartz) Worthwhile because we weren't aware of this work going on and the level of recognition that it has garnered. Disappointing because not much is really saud about media bias.
  • Why the Housing Market Is Still Stalling the Economy (Neil Irwin, The New York Times) The author goes over factors that we have discussed recently, including low rate of household formation, young people remaining at home with paarenst and older people moving back in with parents for economic reasons and a tight mortgage market. The author also reviews the booming multi-family (apartment) market. Bottom line is that housing is a lower percentage of the economy today than during any recession over the last 65 years. And that is when the economy is one of the weakest non-recession economies during the same time-frame.


  • 100% Reserve Banking — The History (Atif Mian and Amir Sufi, House of Debt) Short, sweet and right to the point. Read this one and book mark it. Or print it out, put it under your pillow and hope for osmosis.
  • The cost of corruption in China (Peter Cai, China Spectator) The author says that the government is taking needed action to rein in corruption in an attempt to salvage whatever is left of the Chinese Communist Party's legitimacy.
  • China’s crumbling property market (Houses and Holes, Macro Business) Lot's of good discussion and charts (2 below) here. Included is discussion of China's apparent pivot from housing to infrastructure.



  • Suspicion grows that China is exporting deflation worldwide by driving down yuan (Ambrose Evans-Pritchard, The Telegraph) This is a repeat discussion from Saturday. Evans-Pritchard says that the U.S. suspects China of driving down the yuan to bolster its weakening export sector. If so the move is contrary to the strengthening yuan that is needed to further a rebalancing of the Chinese economy toward greater domestic consumption, a change that economists like Michael Pettis maintain is essential for the economy of China to avoid a painful readjustment, even possibly a collapse. Whatever the cause, the yuan has made a spectacular move, depreciating by 3.1% vs the U.S. dollar in just a couple of months. See also following article.


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