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What We Read Today 28 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.

  • US probes wave of cyber attacks on banks (Tom Braithwaite and Hannah Kuchler, Financial Times) The Federal Bureau of Investigation said on Wednesday it was working with the US Secret Service "to determine the scope of recently reported cyber attacks against several American financial institutions". There is concern that the increased hacker activity may be from Russia in response to sanctions imposed over the Ukraine situation.
  • Recent articles about Ferguson:

Cash raised for Mo. cop surpasses Brown donations (Natalie DiBlasio, USA Today)

Adam Schiff Pushes Body Cameras For Cops (Arthur Delaney, The Huffington Post)

St. Louis County Police Chief Defends Aggressive Response To Ferguson Protests (Ryan J. Reilly, Huffington Post)

  • Articles about wars elsewhere in the world:

Gaza truce holding but Israel's Netanyahu under fire at home (Nidal Al-Mughrabi and Jeffrey Heller, Reuters)

Obama Wants New ISIS War Plan ASAP (Josh Rogin and Eli Lake, The Daily Beast)

U.S. rules out coordinating with Assad on airstrikes against Islamists in Syria (Anne GHearan, The Washington Post)

American Douglas McAuthur McCain Dies Fighting for ISIS in Syria (Cassandra Vinograd and Ammar Cheikh Omar, NBC News)

US flights 'to spy on Islamic State' in Syria (Al Jazeera)

Russia's Economy Close To Recession With Sanctions, Food Import Ban (Meagan Clark, International Business Times)

Pro-Russia rebels extend fight in south Ukraine (Roman Olearchyk, Jack Farchy and Neil Buckley, Financial Times)

Russian Troops in Ukraine Shape NATO's Counter to Putin (David Francis, Foreign Policy) Free registration required.

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  • Spotting The Next Detroit - America's Fasting-Shrinking Cities (Tyler Durden, Zero Hedge) Hat tip to Doomstead Diner. More than half of the 25 fastest shrinking cities in the U.S. (from 2012 to 2013) are in just three states: Michigan (8), Georgia (3) and Indiana (2). Regionally there is one each in four states in the Midwest and Plains, one each in four states (besides Georgia) in the Southeast, one each in three states west of the continental divide and one in a Northeastern state.

Click on graph for larger image at Zero Hedge.

  • China’s recipe for higher consumption and steady economic growth (Wang Xiaolu and Zhou Yixiao, China Spectator) Income inequality is raising its head in China, too. These authors say that the key to rebalancing the Chinese economy to get domestic consumption back up nearer to 50% of the economy is a broader distribution of income to lower income groups. And perhaps the most important part of that is establishing social safety net programs for situations of unemployment, health and injury problems and disability. Seems strange that would be lacking in a Communist country, but that us the case.
  • Dethrone ‘King Dollar’ (Jared Bernstein, The New York Times) The U.S. pays a price for providing the world's reserve currency which could be lessened if that arrangement were to end. Bernstein argues that inflation, employment and domestic savings all would see benefits if the dollar were "dethroned".
  • Blogs review: Is this a European U-turn? (Jeremie Cohen-Setton, Hat tip to Naked Capitalism. Mario Draghi (ECB head) admitted at Jackson Hole that the Eurozone was in trouble, something he had denied as recently as a couple of weeks ago. He called for fiscal action to help the ECB to do its job, as close as he has yet come to calling for an end to austerity.


  • Europe Fears Banks Lack Cash Cushion to Cover Bad Loans (Landon Thomas Jr, DealBook, The New York Times) Concern is increasing that European banks will be found to be "swimming naked" this fall. The E.C.B. will publish the results of its half-year investigation into Europe's 128 largest banks on Oct. 17. But until then, with worries mounting that the central bank will come down hard on banks with particularly weak loan books, investors and analysts have been scrambling to determine which of these lenders are most at peril. And with European banks sharing similar characteristics with Texas banks in the late 1980s - nonperforming real estate loans and slim cash buffers - the Texas ratio has emerged as a popular analytical tool. This spring, banking analysts for Nomura in London used the Texas ratio to highlight 11 banks in Southern Europe that were most exposed to nonperforming loans relative to cash they had on hand. Of the 11 banks that exceeded the 100 percent threshold, three banks stood out with ratios of 150 percent and above: Piraeus Bank in Greece, Banco Popolare in Italy and Banco Popular Español in Spain.
  • China's SMEs struggle to jump the credit hurdle (Peter Cai, China Spectator) Small and medium size enterprises (SMEs) in China are finding getting credit increasingly difficult as the government tries to slow the runaway growth of debt in that country. Large corporations are having a much easier time. The major portion of growth in the economy come from the SMEs, which are privately owned whereas the large corporations are largely government owned with slow growth rates for the most part.
  • Serious Bailouts Ahead in China (Walter Kurtz, The Daily Slot email, no url) The massive debt overhang has been securitized and is spread all through the economy.


  • Intelligence Gap: How a Chinese National Gained Access to Arizona’s Terror Center (Ryan Gabrielson, Andrew Becker and David Sleight, ProPublica) The un-vetted computer engineer plugged into law enforcement networks and a database of 5 million Arizona drivers in a possible breach that was kept secret for years. There's a lot that remains mysterious about Fan's brief tenure as a computer programmer at the Arizona counter terrorism center. No one has explained why Arizona law enforcement officials gave a Chinese national access to such protected information. Nor has anyone said whether Fan copied any of the potentially sensitive materials he had access to. But the people responsible for hiring Fan say one thing is clear: The privacy of as many as 5 million Arizona residents and other citizens has been exposed. Fan, they said, was authorized to use the state's driver's license database as part of his work on a facial recognition technology. He often took that material home, and they fear he took it back to China.

It sounds completely off-the-walls insane, but the incongruities between Albert Einstein's theory of relativity and some of Max Planck's discoveries about the nature of matter can only be explained if we're living in a Matrix-style holographic illusion, according to Craig Hogan, director of the Department of Energy's Fermilab Center for Particle Astrophysics.

"For thousands of years, we have assumed that space is made of points and lines," he told me. "Maybe that is not right-it might be made of waves, the way that matter and energy are."

  • Natural Gas Production Falls Short in China (Keith Bradsher, The New York Times) China can't keep natural gas production increasing at the rate of it GDP. This is hindering the plans of the government to phase out coal plants for producing electricity.


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