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What We Read Today 08 July 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.

  • Independent Foreclosure Review (Federal Reserve Board, July 2014) The Federal Reserve Board has published a report regarding the Independent Foreclosure Review (IFR) and the Payment Agreement which required large mortgage servicers to provide approximately $10 billion in cash payments to eligible borrowers and other foreclosure prevention assistance.

Last week, for the first time in memory, the wholesale price of electricity in Queensland fell into negative territory - in the middle of the day. For several days the price, normally around $40-$50 a megawatt hour, hovered in and around zero. Prices were deflated throughout the week, largely because of the influence of one of the newest, biggest power stations in the state - rooftop solar.


There are 11 articles discussed today 'behind the wall'.

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  • Germany vs. U.S. Trade with China (The Daily Shot, email, no url). Germany has a much more favorable balance of trade with China than does the U.S. The reason according to The Daily Shot is determined effort by the German government.


  • Shades of 1930 in Wall Street Banks’ Dark Pools? (Pam Martens, Wall Street on Parade) Last week FINRA (Financial Industry Regulatory Authority) released trading data for Wall Street's dark pools which was a bombshell, that mainstream business media has yet to comprehend. The same mega Wall Street banks whose share prices crashed in the 2008 financial crisis are today not only running dark pools for stock trading but they're trading the stock of their own corporate parents - to the tune of tens of millions of shares a week. Those Wall Street banks include JPMorgan Chase, Bank of America Merrill Lynch and Citigroup. What could possibly go wrong in this arrangement? Nothing more than the same activity which destroyed U.S. banking in the 1930s.


  • Europe’s Debt Wish (Kenneth Rogoff, Project Syndicate) Gross debt of households and financial institutions are larger today as a share on national incomes than before the financial crisis. Rogoff says it is difficult to see how this will resolve without "significant debt restructuring or rescheduling".


  • Have We Hit Peak America? (Elbridge Colby and Paul Lettow, Foreign Policy) Polls of the American people show a growing sense of decline for the world's greatest power. And measurements of global economic growth also indicate that a shift toward North American dominance in the 20th century has reversed to a shift toward Asia in the 21st.


  • Our Mismeasured Economy (Lew Daly, The New York Times) Daly says that we are not measuring properly the contribution of government to the economy over time. He says that 30% of personal consumption is funded by a lower dollar amount of government expenditure. Infrastructure provides about $800 billion of annual gain but costs only about $185 billion. And Lew says there is unmeasured economic benefit from regulations (example given , the Clean Air Act) and from government sponsored "human, social, intellectual and natural capital". See also next article.
  • GDP and the Public Sector (Dean Baker, Center for Economic and Policy Research) Dean Baker has contributed to GEI. Baker criticizes the preceding Lew Daly Op Ed on two grounds. First he says that Daly has focused on GDP while societal well-being is far more that an economic measure. The criticism he makes is basically that the government is far more important than the contribution it makes to GDP. And then he goes on to discuss a second point, why he thinks the "government's role in the economy goes much deeper than Daly suggests". The roles played by government permeate every corner of the economy that public and private activity are "so thoroughly integrated it is impossible to separate the two". Baker says "this is the fundamental misunderstanding, not our measure of GDP" which Lew discussed.
  • Why China Will Reclaim Siberia (Frank Jacobs, The New York Times) Until 1860 Siberia was part of greater China. It could become so again. Russia could become a truly European country instead of the multi-continental land giant it is today.
"A land without people for a people without land." At the turn of the 20th century, that slogan promoted Jewish migration to Palestine. It could be recycled today, justifying a Chinese takeover of Siberia. Of course, Russia's Asian hinterland isn't really empty (and neither was Palestine). But Siberia is as resource-rich and people-poor as China is the opposite. The weight of that logic scares the Kremlin.


  • The Weak Consumer (The Daily Slot, email, no url) An old story - this recovery is weak compared to those following other recessions.


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