econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



>> Click Here for Historical Wall Post Listing <<

What We Read Today 23 May 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.

  • Russia’s Oil Spills Dwarf Gulf Spill (Clare Delaney, EcoFriendlyLink) Hat tip to Roger Erickson. Author claims Russia spills 6x as much oil as BP's Deepwater Horizon spill in the Gulf of Mexico in 2010 every year. Delaney says remote spills of 30 million gallons are in relatively remote areas, unpublicized and not cleaned up, creating some environmental nightmares.

  • Gundlach: Golden Age of Housing Is Over (Janet Levaux, ThinkAdvisor) Bond guru Jeffrey Gundlach says he is surprised at the enthusiasm for single-family housing. He notes that "data is no better than they were at the so-called trough of the recession". Keith Jurow has been analyzing data and reaching the same conclusion for the past three years. See Keith's latest GEI Analysis article on the difficulties in CRE (commercial real estate) markets.
  • Minyanville’s Harrison: Online Media Model Is ‘Broken’ (Paul Vigna, MoneyBeat, The Wall Street Journal) After 13 years, Todd Harrison is putting Minyanville up for sale. He says the ad-based business model doesn't work and he wants to get his creation into hands that will pursue a different business model. Here is a great quote: "The Internet is the most deflationary invention of all time."

Today there are 9 articles discussed 'behind the wall'.

Please support all that we do at Global Economic Intersection with a subscription to our premium content 'behind the wall'.

You get a full year for only $25.


  • This Happened Twice Before, And Each Time Stocks Crashed (Wolf Richter, Testosterone Pit) Three times in the last 15 years margin debt surged to a new high and then dropped sharply by more than 5%. The two previous margin peaks came 3-6 months before a Dow 30 peak that was followed by a major bear market.

margin-peaks-testost-2014-may-22

  • Corrupt companies face fines of 400% of illicit profits (Caroline Binham, Financial Times) Author says the move is to create "fines comparable with those meted out in the US, where penalties can be as high as hundreds of millions of dollars." Well, in the U.S. such fines are just considered the cost of doing business.
  • Why Republicans Love Taxing the Poor (Jonathan Chait, The New York Times) This short Op Ed will anger quite a few. Chait accuses the GOP of being "monomaniacally focused on redistributing income upward".
  • Risk of disappointment from the ECB in June remains high (Walter Kurtz, Sober Look) The risk that the ECB will do nothing in June because of continued expansion in the aggregate would ignore that some countries, headed by France, are contracting again. The fragile Eurozone economy needs very little to sucumb to deflationary pressures and head south again.

short-interest-zh-2014-may-22

  • Has Thomas Piketty met his match? (Evan Davis, The Spectator) Davis says he has. She is Diedre McClosky, Distinguished Professor of Economics, History, English, and Communication, University of Illinois at Chicago and Professor of Economic History, Gothenburg University, Sweden. In essence, McClosky criticizes the analysis of wealth and income distribution without characterizing what is productive and what is parasitic. The two characterizations in bold are made by Econintersect, not Davis or McClosky. The question of productive and unproductive wealth has been discussed here before. See next article.
  • Wrongly conflates physical capital equipment with all forms of money valued assets whether they are in productive use or not;
  • Does not explain the economic pattern differences of various countries;
  • Does not explore what his data clearly shows: that profit based incomes are far more important to building inequality than are changes in wage structures.

Galbraith says that the "fundamental law" proposed by Piketty (r>g) is neither fundamental nor a law but an artifact of the conflation of productive and non-productive wealth; And furthermore that market value (driven by bubbles) rather than physical volumes of capital is a dominant factor in his relationship, marginalizing the entire argument for a "fundamental law".

According to Galbraith, Piketty is essentially a born-again New Deal Democrat in philosophy. Galbraith says that it would make no sense to go back that system now. He (Galbraith) sees instead a different path involving less expansion of the social welfare state and more implementation of such reforms as higher minimum wages, continued low tax on earned income but higher tax on unearned income (he calls it rentier income). If need be, the state can impose regulation to force less oligarchy and more free market competition.

Galbraith agrees with Piketty's position on raising estate taxes. But Galbraith says Piketty has the wrong reasoning; estate taxes are not for redistribution or raising tax revenue but to prevent the formation of dynasties.

Galbraith's conclusion:

In sum, Capital in the Twenty-First Century is a weighty book, replete with good information on the flows of income, transfers of wealth, and the distribution of financial resources in some of the world's wealthiest countries. Piketty rightly argues, from the beginning, that good economics must begin-or at least include-a meticulous examination of the facts. Yet he does not provide a very sound guide to policy. And despite its great ambitions, his book is not the accomplished work of high theory that its title, length, and reception (so far) suggest.

Read also reviews of Capital in the Twenty-First Century by Philip Pilkington and by Hunter Lewis.

  • Employment Scars of the Housing Bust (Atif Mian and Amir Sufi, House of Debt) Housing is key to the economy. What the authors don't emphasize is that housing represents a colossally unproductive use of capital. Houses produce no useful good or service once you get past the basics of minimum living space (say 100-200 sq. feet per person) plus small common spaces for food prep and sanitary waste disposal. Everything else is conspicuous consumption.

housing-bust-unemploy-house-of-debt-2014-may-22


Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.






Econintersect Behind the Wall



search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
Slow Economic Growth Will Be Around For A Long Time
The Job Guarantee, Wage-Price Inflation And Alternative Solutions: Part 2
News Blog
Why New Jets Could Destroy Airlines
March 2017 Texas Manufacturing Survey Continues to Expand
Wage Growth After The Great Recession
Is OPEC Losing Its Ability To Influence Oil Prices?
Many Worry That The Great Recession And Mounting Student Debt Have Stunted Millennials' Financial Development
Infographic Of The Day: Visualizing The Shifting Income Distribution Of American Jobs
Early Headlines: Asia Stocks, Dollar, Oil All Down, Gold Up, Border Wall Obstacles, US To 'Fix' Gov With Business Ideas, ACA Death Spiral, US C-I Lending Down, Merkel Election Boost, And More
Most Read Articles Last Week Ending 25 March
Funded By The Crowd
U.S. Top Source Of DDoS Attacks In Q4 2016
How Artificial Intelligence And The Robotic Revolution Will Change The Workplace Of Tomorrow
Amazon's Alexa Is A Fast Learner
What We Read Today 26 March 2017
Investing Blog
Market And Sector Analysis 25 March 2017
Earnings: A Lot Less Than Meets The Eye
Opinion Blog
Is The 20th Century Still The 'Hayek Century'?
Yellen's Dangerous Glass-Steagall Repression
Precious Metals Blog
These Gold Stocks Will Produce Much Bigger Gains Than Gold Itself
Live Markets
27Mar2017 Market Close: US Dollar Falls Into The 98 Range, WTI Crude Slips Into The 47 Handle, Wall Street Generally Sour And Down
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government































 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved