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What We Read Today 29 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.

  • Housing Recovery: Illusion or Reality? (Michael Haltman, GEI Discussion Group, LinkedIn) Michael Haltman contributes to GEI. He discusses an article by Michael Sincere at MarketWatch (see next article) which is a review of an article by Keith Jurow. Haltman wants to believe that the U.S. housing market will continue to climb, but he finds that arguments presented by Keith Jurow and discussed by Sincere for a continuing bear market for U.S. housing cannot be dismissed out of hand. Jurow's article can be read at GEI Analysis: Why the Trade-Up Housing Market Is Gone.

  • Recent articles about Ferguson:

Suit Claims Police Brutality at Ferguson Protests (Alan Scher Zagier, Associated Press, ABC News)

Missouri police sued for $40 million over actions in Ferguson protests (Carey Gilliam, Reuters)

These seven charts explain how Ferguson—and many other US cities—wring revenue from black people and the poor (Gwynn Guilford, Quartz)

Liberal failures and the real lessons of Ferguson (Tom DeLay, The Washington Times)

The Poorest Corner Of Town (Ben Casselman, FiveThirtyEight Economics)

poor-black-communities-538-ben-casselman-2014-aug-26

  • Articles about wars elsewhere in the world:

With Gaza War, Movement to Boycott Israel Gains Momentum in Europe (Steven Erlanger, The New York Times)

Europe seeks role in postwar Gaza, paving way for Abbas return (Josef Federman, Associated Press, U.S. News & World Report)

Fighting in Syria spawns separate civil war in global jihadist movement (Jamie Dettmer, Fox News)

U.S. Identifies Citizens Joining Rebels in Syria, Including ISIS (Michael S. Schmidt and Eric Schmitt, The New York Times)

Islamic State Economy Runs on Extortion, Oil Piracy in Syria, Iraq (Nour Malas and Maria Abi-Habib, The Wall Street Journal)

U.S. seeks coalition against Islamic State, but military partners no sure bet (Lesley Wroughton and Missy Ryan, Reuters)

Kurds Recapture Iraq Oil Fields, Advance on Rebel-Held Towns (Khalid Al-Ansary and Zainab Fattah, Bloomberg)

Russia sends tanks and troops into Ukraine, seizes a strategic town (Victoria Butenko and Carol J. Williams, Los Angeles Times)

Ukraine Leader Says ‘Huge Loads of Arms’ Pour in From Russia (Neil MacFarquhar and Michael R. Gordon, The New York Times)

ukraine-war-zone-nyt-2014-aug-28

ukraine-war-zone-caption-nyt-2014-aug-28


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  • Grand Central: Aircraft Orders Help U.S. Recovery, Ideas Jump Needed (Jon Hilsenrath, The Wall Street Journal) Two items here: Hilsenrath finds the much higher investment growth in equipment vs investment in intellectual property a disturbing fact (see Alan Tonelson take, next article). This article also cites the correlation of QE episodes to stock market gains and cautions that the market may have rough times ahead with vanishing monetary supply stimulus accompanied by rising interest rates in a few months.

dow-qe-wsj-2014-aug-26

  • (What’s Left of) Our Economy: Right and Wrong Ways to Think About the Quality of Growth (Alan Tonelson, Reality Chek) Tonelson says that it is only "common sense" that capex (capital investment in durable machines) should be greater than investment in intellectual property. The idea is that ideas without implementation have little lasting value ("quality") when compared to those that are implemented. Therefore the healthiest situation is the one that we have: capex in "things" exceeds capex in "ideas" by a substantial amount. If it were the other way around wouldn't that imply a greater failure to implement ideas? Wouldn't that indicate a waste of ideas?

  • New framework for sovereign defaults (Elaine Moore, Financial Times) A group representing more than 400 of the world's largest banks, investors and debt issuers, the International Capital Market Association, has agreed a plan for dealing with financially stricken countries and their creditors, in a bid to prevent a repeat of the wrangling that has pushed Argentina into default. The proposal would give countries the option to bind all investors to decisions agreed by the majority. If this becomes an established practice it will be a big deal. It could bring the sort of sanity to sovereign debt defaults that exists through bankruptcy in the private sector.
  • Watching for signs of economic deterioration in Brazil (Walter Kurtz, Sober Look) Brazil is teetering on the verge of recession with IP (industrial production) growth going negative, widespread lay-offs and two tears of payroll growth less that 1% a year. This follows more than 10-fold rise in mortgage debt over the last seven years.

brazil-bank-credit-to-housing-sober-2014-aug-25

  • Bank of America seeks to void verdict in $1.27 billion 'Hustle' case (Nate Raymond, Reuters) Bank of America has asked U.S. Federal Court judge Jed Rakoff to vacate a $1.27 billion jury award for misrepresentation in mortgages associated with the Countrywide Finance origination program known as "Hustle". Last week the bank agreed to pay $16.65 billion to settle government charges related to the same mortgages. In this case the bank's attorneys maintain the government did not prove its case.
  • China’s misleading economic indicators (Yukon Huang, The A-List, Financial Times) The argument here is not that the official economic performance numbers released by China inflate the actual results, but that the processes involved may actually have been under reporting growth.
  • Spain CPI is Negative (Walter Kurtz, The Daily Shot email, no url) Spanish CPI is now firmly in the red as deflation sets in. Some of this of course is lower imported energy prices, but it's negative CPI nevertheless.

Spain-CPI-daily-slot-2014-aug-28

  • Blowing the lid off food safety in China (Sacha Cody, China Spectator) While food in China is generally safe, repeated food safety incidents make a mockery out of serious reform efforts. The media, in partnership with whistleblowers, has been increasingly successful in exposing violators. The latest case described in this article is indicative of their approach. The author suggests much more needs to be done.
  • The Rise and Fall of Piketty Critiques (Unlearning Economics, Pieria) This is well worth the read for a discussion of the pettiness and circular logic of the papers being considered. The author doesn't go so far as to say so but these characteristics are representative of all too many economics "studies".
  • How Long to the Next Recession? iM's Weekly Update (Anron Vrba and Georg Vrba, Advisor Perspectives dshort.com) Georg Vrba has contributed to GEI. There is no U.S. recession indicated in the "near future" which appears from their graphics to cover at least one year.

business-cycle-recessions-Vrba-2014-aug-28


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