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.
Rosneft asks Moscow for $42bn (Jack Farchy and Kathrin Hille, Financial Times) The crunch of sanctions is starting to show as the huge government owned energy company Rosneft asked the government for $42 billion to offset losses resulting from the western action. One of Putin's most trusted economic advisors has said sanctions would cost Russia "at least" $200 billion over the next three years.
Putin's Ukraine gamble hastens exodus of Russian money and talent (Guy Faulconbridge, Shadi Bushra and Jack Stubbs, Reuters) Russia is paying a big price for Russian President Vladimir Putin's adventures in Ukraine. Reuters reports that capital outflows are as much as 3-4 times normal and may reach amounts as high as 10% of the country's GDP in 2014. And capital inflows which normally somewhat balance outflows have gone to zero. And some of the top talent in Russia is fleeing as well. From Lev Gudkov, director of the independent Moscow-based Levada Centre pollster:
"We are losing the most educated, most active, most entrepreneurial people."
But the exodus from Russia is more likely Putin in general than Ukraine related in particular. Before Putin's election in May, 2012 emigration from Russia was 33,578 in 2010 and 36,774 in 2011. It then jumped to 122,751 in 2012 and 186,382 in 2013. Probably not leaving are the people who know how to grow potatoes and make vodka which may be needed more than ever.
Indonesia Clamps Down on ISIS Support, ‘Alumni’ Jihadi Threat (Kate Lamb, Voice of America) ISIS Spreads to Indonesia. Econintersect: Ideology is probably much less important for building this movement than is high youth unemployment. Until the world figures out how to make use of hundreds of millions of idle youth, there will be Al Qaeda, ISIS and a myriad of other "extremist" organizations. The human soul requires meaningful function in life; when meaning is not provided then restless youth will define their own.
Low-Salt Diets Shown to Pose Health Risks (Ron Winslow, The Wall Street Journal) A new study of more than 100,000 people from 17 countries found that those consuming less than 3,000 milligrams of sodium per day had a 27% higher incidence of death from heart attack or stroke compared to those who consumed 3,000 - 6,000 milligrams. Above 6,000 milligrams the death rate increased again. Critics say that there were insufficient controls to prove any causation. But these results do corroborate a study last year that found not evidence that cutting sodium intake below 2,300 milligrams a day reduced the risk of heart disease. See Low-Salt Benefits Questioned (Jennifer Corbet Dooren, The Wall Street Journal).
There are 10 articles discussed today 'behind the wall'.
Today we include discussion of three articles about the "Japanification" of Germany.
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The map that shows the real problem (N.B., The Economist) Amtrak keeps losing big bucks. The map below shows where it has a chance to make money ( some of the areas inside red ellipses). The traffic for the rest of the country is insufficient turning the wide open spaces into a huge money pit.
Molecular shuttle speeds up hydrogen production (R&D) The ultimate clean energy storage, highly portable and energy dense is .... hydrogen. This article describes a new process that improves the efficiency of solar photovoltaic hydrogen production from water, which also replaces expensive platinum catalysts with nickel.
Junk stabilises after recent sell-off (Vivianne Rodrigues, Financial Times) Investors have started breathing again this week and have started buying high yioield bonds again at a healthy rate. Last week saw record outflows from junk bond funds and had a lot of people talking about black swans. We have discussed that in WWRT in previous days and pointed out that the statistics applied to characterize the events were simply incorrect. Any way, things are looking more "normal" this week.
China’s Savers Put Record $2.1 Trillion in Wealth Products (Jun Luo, Bloomberg) Chinese households increased investments in "wealth management products" by 24% in the first half of 2014, pushing the total value of such assets to $2.1 trillion. The average annual returns for the savings vehicles was 5.2% compared to 3% on traditional one-year deposits with banks. In 4 1/2 years the value of assets in the shadow banking savings products has increased 12x. The products have been criticized for having ill-defined risks and lack of transparency.
Germany 10-Year Bond Yield Drops Below 1% as GDP Shrinks (Lukanyo Mnyanda and Neal Armstrong, Bloomberg) According to this article (and every other one we found) the 10-year German government bond saw a yield less than 1% briefly Thursday (14 August) as markets reacted to the country's 0.2% GDP contraction for the second quarter. But we have not found a chart anywhere or a trading range summary that shows that. See German yield below 1%: 4 takeaways (Ben Eisen and William Watts, MarketWatch) for the following graph:
German yield below 1%: 4 takeaways (Ben Eisen and William Watts, MarketWatch) The article quotes Kit Juckes, global macro strategist at Société Générale (emphasis added by Econintersect):
"Put it another way, at this point, I can see 10-year bunds breaking 1% before EUR/USD breaks %1.3333: and that just highlights Draghi's problem. Too little growth to stop the debt snowball, a vicious cycle of fiscal austerity and lack of aggregate demand staying in place and dooming Europe to Japanification."
Compare Germany 2011 to Japan 1990 GDP Growth (Trading Economics) Let's add a note of caution to the observations below and from the preceding article discussion: Just because historical comparisons look similar that does not necessarily mean the eventual outcomes will be the same (or even similar). Similarities do create the occasions where one should be on the lookout for whether economic performance patterns do or do not run parallel from now on.
Limits on fundamental limits to computation (Igor L. Markov, Nature) Subscription required to read full article. Ultimately the current technology for semiconductor functions is limited by atomic dimensions and speeds of electrons' movement. But that is the theoretical limit. The practical limits will be defined by just how defect free atomic scale materials can be produced. Because there will always be multiple orders of redundancy required which greatly increases dimensions theoretically achievable. Beyond the atomic and molecular scale limits for computing is an further "dimension" of quantum effects that might be exploitable with smaller amounts of material than we conceive of using today.
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