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 07 June 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.

  • Lawrence Summers on ‘House of Debt’ (Lawrence Summers, Financial Times) Summers says House of Debt: How They (and You) Caused the Great Recession, and How We Can Prevent It from Happening Again, by Atif Mian and Amir Sufi, University of Chicago Press, "could be the most important book to come out of the 2008 financial crisis and subsequent Great Recession". The thesis of the book is that the mistake in addressing the GFC (Great Financial Crisis) was that the debt produced insolvency of the household sector was substantially ignored while the financial system was being bailed out. This is an amazing review to read as Summers alternates between criticizing the authors' "lack of understanding of policy choices" and calling them "naive on policy" while letting "their indignation get the better of them" and praising the thoroughness of their data analysis and logic. Perhaps the most encouraging part of this excellent review is the last paragraph where Summers indicates a recognition that money ("balance sheets") is (are) a critical part of modeling any economic situation. This is a long way from the pre-2008 days when debt, credit and money were not considered macroeconomic variables by the mainstream.
The reality that the post-crisis policy challenges were more complex than they recognise detracts only slightly from Mian and Sufi's accomplishment in House of Debt. All future work on financial crises will have to reckon with the household balance sheet effects they stress. After their work, we can still believe in the necessity of financial rescues; however, we can no longer believe in their sufficiency. And after their work, we have an important new agenda of reforms to consider if future crises are to be prevented.
  • An intellectual storming of the beaches is required in Europe (Bill Mitchell, billy blog) Europe is occupied by "fiscal policy bolted down by the neo-liberal ideology [and] there is no room to grow". Bill Mitchell says it is time for an economic policy D-Day, "an intellectual storming of the beaches". Mitchell revisits some of the history of the Great Depression and finds the same mistakes are being made again. He suggests a frontal assault on employment and thrusting of monetary policy attempts at managing the economy into the background. His first submission of evidence is the 6-year record of fiscal austerity on employment in Europe.


Today there are 11 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.

  • China Leads the World in Green Energy, Gaming and Gambling Markets (Frank Holmes, U.S. Global Investors) Frank Holmes has contributed to GEI. China is serious about "cleaning up its act" according to this Frank Holmes report. They are spending nearly 2/3 more than the U.S. to address pollution problems. Also of interest is a table showing both the U.S. and China well down the ranking list for internet speed.


  • Why a six-hour workday is getting a test in Sweden (Aimee Picchi, Money Watch, CBS) In a controlled experiment in Gothenburg, Sweden, some municipal workers are being put on a six-hour work day while the remainder continue with eight. The city wants to test whether reducing the workday will actually improve efficiency and output, cut sick pay and ultimately save money. Some research is cited in this article to support the hypothesis being tested.
  • Bubbling up (The Economist) An international gas market is developing. The Economist says that buyers will gain more than sellers as both long-distance pipelines and expanded tanker fleets will be brought into use to handle a production boom. For example, over the next four years LNG (liquified natural gas production will increase by 1/3.
  • Why Medicare Advantage costs taxpayers billions more than it should (Fred Schulte, The Center for Public Integrity) The systematic rapid upward shift in "risk score" charges indicate to researchers at the Center for Public Integrity that providers are being more aggressive and not the other possibility that insurees are rapidly becoming sicker. The study concludes that $70 billion of improper charges were made to the government from 2008 through 2013.

Click on graph to go to source article for larger interactive graphic.

  • Growth moderates in China amid rebalancing: World Bank (Xinhua, Want China Times) Hat tip to Macro Business. China wants to reduce investment and increase consumption, where they are ranked near the top and near the bottom, respectively, globally.The BIS (Bank for International Settlements warns that a disorderly deleveraging of local government debt (which has been expanding out of control) could produce too rapid a rebalancing and create much economic distress for China (and for everyone else, as well).
  • The Great Credit Mistake (Adair Turner, Project Syndicate) Great read. Fixing the financial system supply side is panned as an abject failure. The neglect of the demand side of the economy is the "great credit mistake" that Adair refers to. He mentions in passing as support the Atif Mian and Amir Sufi book, House of Debt, for which we have listed a book review by Larry Summers in the public section today. Turner points out that their are significant policy constraint differences between the Eurozone and countries organized as federal structures like the U.S. Here is the end of the article, emphasis by Econintersect:

But fiscal stimulus is constrained within the eurozone, where member countries no longer issue their own currency and "sovereign" debt therefore carries a default risk. Aggressive monetary expansion through quantitative easing is also far more complicated and politically contentious in a currency area with no federal debt for the central bank to buy. To survive and thrive, the eurozone will need to become more centralized, with some common fiscal revenues, expenditures, and debts.

Of course, this scenario implies immensely difficult political choices. But the starting point for debate must be realism about the nature and severity of the problems facing the eurozone. If eurozone policy assumes that fixing the banks will fix the economy, the next ten years in Europe could look like the 1990s in Japan.

From Giles' reconstruction you would conclude that wealth inequality has not risen in the UK all that much since 1980. I have seen a lot of data related to this and I simply cannot believe this. It also does not really pass the 'smell test' - i.e. it does not really confirm with what we actually see day-to-day.

And he concludes:

Perhaps Piketty has mucked up some of the figures. But his is not the only study dealing with this issue. In that sense, I don't think that this is a Reinhart and Rogoff moment that discredits the underlying thesis of Piketty's book. Rather I think that it is just another lesson in data analysis for us all. Lies, lies and damned statistics, as they say.

Click for larger image at 'Fixing the Economists'.

  • Gold Manipulation: What Investors Should Do Now (James A. Kostohryz, Seeking Alpha) Kostohryz says that reported manipulations of gold by banks (and possibly others?) has little lasting effect on the gold market. He says central bank activities would be another story. Bottom line, he says, stay away from gold as long as the price is higher than $850 which is , he says, the fair market price when compared to other commodities.

Click on graphic for larger images at Advisor Perspectives

  • A Sustainable Monetary Framework for an Independent Scotland (Philip Pilkington, Levy Institute) Philip Pilkington contributes regularly to GEI. Pilkington finds that Scotland is a very wealthy country but that is largely dependent on there petroleum resources. See graphs below. For adequate long-term stability Pilkington finds that Scotland must transition away from its strong dependence on oil and gas revenues. He also concluded that Scotland would be better served with its own currency rather than continuing to use the British pound. The mechanics of phasing into a new monetary and macroeconomic structure is the subject of this paper.

Click on graphs for larger images.


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


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
Main Home
Analysis Blog
Why Long-Run Theories of Profit and Accumulation Fall Short
Brexit - Who Wins and Loses
News Blog
What We Read Today 24 April 2017
Best And Worst States To Retire In The United States
April 2017 Texas Manufacturing Survey Continues to Expand
March 2017 CFNAI Super Index Moving Average Declined
What Is The Informal Labor Market?
Changes In Labor Force Participation
Infographic Of The Day: 10 Habits Of Millionaires For Building Wealth
Early Headlines: Asia Stocks Mostly Up, China Down, Dollar And Oil Up, Gold Down, European Stocks Open Up, 2nd SCOTUS Seat For Trump?, SCOTUS Gets Gerrymander, UK Has Huge Gender Pay Gaps, And More
Most Read Articles Last Week Ending 22 April
GOP Healthcare Plan Would Cost The Poor And Old The Most
These Amazing Creative Animals Show Why Humans Are The Most Innovative Species Of All
Earnings And Economic Reports: Week Starting 24 April 2017
What Americans Think About Climate Change
Investing Blog
Market And Sector Analysis 23 April 2017
Markets Rally As Expected
Opinion Blog
America's Gilded Age 2: On The Rocks
What Does The Strong Q1 Growth Mean For China?
Precious Metals Blog
Three Gold Plays For The New Era Of Chaos
Live Markets
24Apr2017 Market Close: Wall Street Closes Higher, DOW Closes Up 216 Points, Investors Now Worry About A Looming Shutdown Of The Federal Government
Amazon Books & More

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



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


Asia / Pacific
Middle East / Africa
USA Government

RSS Feeds / Social Media

Combined Econintersect Feed

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution



  Top Economics Site 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