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What We Read Today 10 August 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 (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.

  • Gas and Oil Traders Near Panic (Barry Norman, FX Empire) high inventories drove prices down as low as 96.60 for four days last week but the Iraq bombing announcement panicked the market higher Friday and it went back near Monday's highs above 98.20. Chart after the Read more >> jump.

more

Click on chart for larger image at FX Empire.
crude-5day-2014-aug-08

  • To Work Better, Work Less (Cody C. Delsitraty, The Atlantic) Productivity declines after many hours of work. So why do many people keep working long hours? In 1926 Henry Ford cut the 6-day 48 hour work week to 5 days and 40 hours. Why? He said he got more work done. France has 5 weeks of vacation required by law and a 35-hour work week (although some companies give compensatory time off when one works in excess of 35 hours in some weeks). Germans work an average of 1,436 hours per year vs. Americans 1,804 average, yet the Germans produce as much as Americans in the shorter time. So, ease up and get more done!!!
  • PSA Test Is Misused, Unreliable, Says the Antigen's Discoverer (Eric J. Topol, Medscape Multispecialty) How a test that gives 80% false positive results ever got FDA approval is a mystery - unless, of course, you understand the power of money. PSA (prostate-specific antigen) was discovered in the 1970s to be a reliable indicator of recurrence of prostate cancer after treatment. It was not, and never has been since (in spite of major research effort), found to be a reliable screening tool for the occurrence of prostate cancer. But using it for screening all men over age 50 is a billion dollar a year cash cow for producers of the test kits and worth much more for the doctors using the kits. For more read:
  1. PSA Screening Does Reduce Deaths, but Is Not Recommended
  2. Largest Prostate Screening Trial Still Shows It Saves Lives
  3. PSA Screening Halves Mortality From Prostate Cancer: Gothenburg Study
  4. Final USPSTF Guidelines: No to Routine PSA Testing
  5. PSA Screening Reduces Death From Prostate Cancer.
  • How Much Salary Should Clients Be Saving? (Craig L. Israelsen, Financial Planning) Econintersect: These guidelines are fine but expenditures during retirement can be much more flexible than when younger when fixed expenses are normally higher(think mortgages, raising children, clothing and transportation for getting to work, etc.). In retirement it is much easier to cut expenses in a year when investments are making less (or losing) than it is manage income fluctuations earlier in life. For further on how much people really save (and how much they might need to save) see GEI Analysis: Will the Real Personal Savings Rate Please Stand Up?

retire-income-israelsen-fin-plng-2014-aug-04


There are 10 articles discussed today 'behind the wall'.

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  • 10-Year Investing Forecast: Takeaways for Advisors (Allan S. Roth, Financial Planning) Vanguard provides a 10-year portfolio evaluation model which provides the distribution of returns at various percentile levels using normal distributions. They also provide correlation coefficients for various generalized asset classes included in the model. Econintersect caveat emptor: (1) Years such as 2001 for NASDAQ and 2008 for everything are not part of the normal distribution; and (2) correlations shift significantly over time periods as short as one or a very few years.

portfolio-vanguard-fin-plng-allan-roth-2014-aug-04

  • Senate Bombshell Testimony Today: Citigroup and Bank of America Stock Worthless Without Implied Government Guarantees (Pam Martens, Wall Street on Parade) Hat tip to Roger Erickson. We missed this one a week ago. Pam Martens covers the testimony of three university professors on 31 July who testified that (1) Dodd-Frank in no way ends too big to fail; (2) Citi and Bank of America are deeply undercapitalized institutions that survive only because market participants are convinced authorities are afraid to force them to resolve their weaknesses; (3) Bank bailouts were a wealth transfer from ordinary taxpayers to the stakeholders in banks; (4) inadequate regulation allowed the Great Financial Crisis to happen; (5) the Fed has failed the public; (6) downside risk for excessive leverage should fall on the shareholders not on the public; and (7) Dodd-Frank has clearly specified bailout processes to be executed by the Fed. Read the article to find out who these professors are and then ask yourself why we haven't seen any news about this. Martens says she expected "the phone lines of lobbyists and congressional campaign managers to be lighting up all over the nation's capitol this afternoon." Econintersect can imagine that "da boyz" were pulling media strings, as well.

No tech issue in the 113th Congress showed more promise-and ultimately fell down harder-than patent litigation reform. The issue of "patent trolls," companies that have no business outside of threatening patent lawsuits, hit the big time in 2013. In no small part, that's because the trolls invaded Main Street USA en masse. Bottom-of-the-barrel patent trolls sent out demand letters, asking small businesses to pay up for things like using off-the-shelf wireless routers and scanners. Any member of Congress who hadn't heard of the "trolls" surely has now.

  • Greed destroyed us all: George W. Bush and the real story of the Great Recession (Richard S. Grossman, Salon) There is something very wrong with the summary conclusions of this article (see excerpt below). The enumeration of the factors which produced the Great Financial Crisis is quite satisfactory in the article, perhaps not quite as critically specific about relative importance as could have been. An in the conclusion (below) the blame assigned to Greenspan is quite appropriate. But the fiscal policy of the G.W. Bush administration had little effect on the great catastrophe. If any presidents need to be blamed for policy errors, Reagan and Clinton have much more oil for the fire than either of the Bushes. Even Jimmy Carter probably contributed more to the disaster than "W". Bush II just had the bad luck to have taken controls of the plane of state in mid-fight just before the course locked in by his predecessors hit the mountainside.

Nonetheless, the bulk of the blame for the crisis must be assigned to the Bush administration's fiscal policy and the Greenspan Fed's monetary policy. Why? Quite simply: fear and greed. The economic and speculative boom launched by the fiscal and monetary policies of the early 2000s raised the returns to greed-that is, the incentive to take on additional risk-to extraordinary levels. No matter how fear-inspiring the regulation and supervision was-and it was not-it would have been overwhelmed by dangerously high levels of greed.

Loansandleases

  • IBM Chip Processes Data Similar to the Way Your Brain Does (Tom Simonite, MIT Technology Review) A chip that uses a million digital neurons and 256 million synapses may signal the beginning of a new era of more intelligent computers. It doesn't crunch massive volumes of numbers but is better than conventional chips at processing the types of signals our brains get via our senses.
  • Sticky data: Why even 'anonymized' information can still identify you (Matthew Braga, The Globe and Mail) A computer program quickly took the anonymous driving records of New York City's cab drivers and within two hours was able to identify what cabbie drove for everyone of 173 million rides in 2013. If data has originated with "ownership" or "labels" and the ownership is removed the original labels are very easily redetermined. That means that everything on the internet or in telephone records can possibly be traced back to individuals. Some researchers believe that careful scrubbing of data can make this very difficult but others maintain it cannot be made anonymous in a fail safe manner.

fiber-optics-arctic-buzzfeed-fwd-2914-aug-07-600x300


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