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 (and sometimes longer ones) 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.
Pushing locals aside, Russians take top rebel posts in east Ukraine (Gabriela Baczynska and Aleksandar Vasovic, Reuters) Hat tip to John Katz. Russian nationals have been brought in to take top posts in self-proclaimed Donetsk People's Republic in eastern Ukraine. Is it a Ukrainian revolution if there are no Ukrainian leaders at the top?
Another German aviation source, a Colonel A.D. Bernd Biederman has also supported the "no missle" thesis, neues deutschland: NVA-Raketenspezialist: MH17 nicht von Boden-Luft-Rakete abgeschossen (Neues Deutchland). Biederman maintains that a missile hot would have started fires immediately and he claims that wreckage only started burning after impact with the ground. Econintersect: Would wreckage been spread over a a six to nine mile range if the plane was brought down intact? Would bodies have fallen from the sky separately from the plane? Could the plane have disintegrated at altitude and not have caught on fire? Could "bullets" cause the plane to disintegrate? See contemporaneous Daily Mail article.
One of the commenters on the Ward article states that the maximum altitude of the SU-25 Ukrainian aircraft implicated by other reports has a maximum unloaded altitude of 23,000 feet and fully loaded with munitions 16,000. Flight MH 17 was flying somewhere between 31,000 and 35,000 feet at last ground contact.
Good economic decisions require good data. And to get good data, we must account for all relevant variables. But we're not doing this when it comes to climate change - and that means we're making decisions based on a flawed picture of future risks. While we can't define future climate-change risks with precision, they should be included in economic policy, fiscal and business decisions because of their potential magnitude.
The scientific community is all but unanimous in its agreement that climate change is a serious threat. According to Gallup, nearly 60 percent of Americans believe that global warming is caused by human activity. Still, for many people, the effects of climate change seem like a future problem - something that falls by the wayside as we tackle what seem like more immediate crises.
But climate change is a present danger. The buildup of greenhouse gases is cumulative and irreversible; the pollutants we are now emitting will remain in the atmosphere for hundreds of years. So what we do each day will affect us and the planet for centuries. Damage resulting from climate change cuts across almost every aspect of life: public health, extreme weather, the economy and so much else. - Read the rest at The Washington Post.
Iraq militants blow up purported tomb of Biblical Jonah (Doug Stanglin, USA Today) The Iraq insurgency group ISIS has reportedly destroyed the Mosul mosque which was on a site first built 2,800 years ago and purported to be the burial site of Jonah (swallowed by the whale for three days) and the prophet Daniel. Locals told reporters ISIS had declared the mosque was no longer used for prayer but for apostasy.
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3 reasons Yellen's FOMC remains dovish (Walter Kurtz, Sober Look) One reason is that expectations for wage growth remain near zero even thought realized growth has been nearer to 2% recently. A second reason is a tight mortgage market. A third reason, and the first Kurtz mentions, is fiscal drag:
How Money and Banking Work On a Gold Standard (Philosophical Economics) Hat tip to FT Alphaville. Very few understand how money and banking work on a gold standard, according to the author. (Econintersect finds the same to be true of the current monetary system, as well.) The author comes to the conclusion (after some excellent analysis and discussion - read it!) that any use of a gold standard would be like using an abacus instead of a computer because all gold standards are "obsolete and unnecessary". In the author's conclusion he also explains why a gold standard is little different in operation than our current fiat system:
Contrary to the usual assumptions, the fiat monetary system that we currently use is not that different from the gold-based system in use in the early 20th century. All one has to do to get from such a system, to our current system, is (1) make everything electronic, and (2) delete the gold. Just get rid of it, let the central bank create as much base money as it wants, against nothing, or against gold that, by law, cannot be redeemed (the setup from 1933 to 1971).
The difference between a central banking system that uses fiat money and a system that uses a gold standard is that, with the gold standard, the private sector retains the power to take formal action to limit the central bank-it can choose to redeem the Fed's gold, and thereby cause the Fed to default, as physically awkward and inconvenient for the private sector as that would be (to try to withdraw and store massive quantities of gold, rather than simply relax and trust that the Fed has things under control). If you don't think mass redemption would be a risk (and I don't-the risk certainly didn't show itself from 1930 to 1932, when it had a chance to), then a gold standard should not scare you. The Fed would have ample room to engage in all kinds of stimulatory activities, to include some, and maybe all, of the quantitative easing that it engaged in during the recent crisis.
Japan labour demand strengthens, good omen for economic recovery (Stanley White and Tetsushi Kajimoto, Reuters) Job openings hit a 22-year high in Japan. The jobs to applicants ration hit 1.10 last seen in June 1992, right after the Japanese "bubble" burst. Reuters says confidence in Japan is growing that the economy will be able to absorb the massive tax increase that took effect 01 April.
Neonicotinoids linked to recent fall in farmland bird numbers (Damian Carrington, The Guardian) Hat tip to Roger Erickson. Research demonstrates for the first time the knock-on effects to other species of class of insecticides known to harm bees. The EU has initiated a two year ban on three neonicotinoid insect poisons pending further sturdy on the effects on bees. Now this adds to the class of compounds challenges.
Bond ETFs Swelling in Europe as Trading Debt Gets Tougher (Alistair Marsh, Bloomberg) Hat tip to Irene Bauer. When demand for a class of securities is unprecedented is it a good time to buy. Let's see ... Buy when demand is high then you'll sell when demand is ... (The buyers will fill in the blank with "higher" while those not buying will say "low".)
The unprecedented era of near-zero benchmark interest rates that's fueling demand for debt shows no signs of abating in Europe, with European Central Bank President Mario Draghi pledging to keep borrowing costs at record lows for an extended period. Deposits into bond ETFs across the region are growing twice as fast as flows in the U.S. as Federal Reserve Chair Janet Yellen said rates in the world's largest economy may rise sooner than it currently envisions if the labor market improves.
the BEST of the charts ~ effect of QE on rates is the opposite of expectations (Tom Brakke, @researchpuzzler, Twitter) Walter Kurtz (The Daily Slot, email) suggests that the unexpected rise in interest rates during QE is due to anticipation of the end of QE. Econintersect: If that interpretation is correct then why don't interest rates remain elevated after QE ends? Do they fall because of anticipation of another QE to follow? Or maybe interest rates rose because of fear that QE would never end? We suggest that all this "excuse making" simply hides the fact that the monetary system is just not understood by most (or all?)
Subprime Loans Just the Start of Students’ Debt (Shah Gilani, Wall Street Insights & Indictments) Shah Gilani has contributed to GEI. The $1.2 trillion in accumulated outstanding student loan debt plus the deadbeat operatives who pray on the overly indebted (current and former) students is not the only problem. Students are also being recruited for "special" student credit cards that charge up to 20% interest.
China Said to Allow Five Regions to Create Bad-Loan Firms (Steven Yang and Aiping Soo, Bloomberg) Governments in Shanghai, Guangdong, Zhejiang, Jiangsu and Anhui are being allowed by Beijing to set up asset management companies to buy up bad assets from banks, trust and finance companies and leasing firms. Obviously these local governments are not sovereign in currency so the "invisible hand" in this market will be Beijing.
China Trade Numbers Still Don’t Add Up Post-Fake Exports (Xiaoqing Pi, Bloomberg) In early 2013 massive numbers of fake invoices for exports that didn't exist in order to hide illegal capital flows into China. Looks like it is happening again. In June China reported 1.31 times as much export to Hong Kong as Hong Kong recorded as imports from China. Bloomberg calculates that would amount to $6.4 billion in hidden capital flow for June alone.
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