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What We Read Today 03 September 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.

In May the presidents of Russia, Belarus and Kazakhstan signed a treaty that brought the Eurasian Economic Union into existence. This was to be the kernel of a new economic empire. But now that Putin is willing to starve Russians by banning food imports in retaliation for economic sanctions by the west, which in turn are in response to Putin's aggressive actions toward Ukraine, Belarus and Kazakhstan are refusing to go along. They prefer to allow their people to eat rather than sacrifice them to the glory of Putin's vision. Presidents of both countries are speaking out in opposition to Putin's machinations and the sanctions games that he is joining. Vlad the Impaler better watch the position of his petard.

  • Nasty, brutish and artsy? Neanderthal hashtag engraving found (Sharon Begley, Reuters) New research is "a major contribution to the redefinition of our perception of Neanderthal culture". Artwork found in a cave in Gibraltar is the first to be clearly identified as made by Neanderthals. A picture has been emerging in recent years of Neanderthals as an advanced intellectual species. Econintersect: Could it be that Neanderthals were a more intelligent and pacifist but widely dispersed humanoid species (compared to homo sapiens) that was overcome by a larger population of aggressive, swift afoot and less intelligent brings? Think about the possibilities if your ego will allow. Read the research paper: A rock engraving made by Neanderthals in Gibraltar (Joaquin Rodriguez-Vidal et al, Proceedings of the National Academy of Sciences of the United States of America).
  • Recent articles about Ferguson:

Whatís going on with the fundraising campaigns for Ferguson police officer Darren Wilson? (Sarah Larimer, The Washington Post)

  • Articles about wars elsewhere in the world:

Support for Hamas rises after Gaza war, poll finds (Associated Press, Fox News)

U.S. military strike in Somalia targeted al Shabaab leader (Abdi Shiekh, Reuters)

U.S. Conducts Counterterrorism Operation in Somalia (Gordon Lubold, Foreign Policy)

Steven Sotloff's Murder Proves the Islamic State Isn't Interested in Negotiating -- and Never Was (Shane Harris and Kate Brannen, Foreign Policy) Free registration required.

Waging Desperate Campaign, Iraqi Town Held Off Militants (Azam Ahmed, The New York Times)

Obama notifies Congress on new round of Iraq airstrikes (Lesley Clark, McClatchy)

Germany To Arm Kurdish Fighters Battling ISIS In Iraq (Avaneesh Pandey, International Business Times)

Ukraine claims Russian military forces in major rebel cities (Associated Press, Fox News)

Baltic States Fear Putin Amid Escalation in Ukraine (Daniel Arkin, NBC News)

Putin Takes Off the Gloves in Eastern Ukraine (Alec Luhn, Foreign Policy) Free registration required.

NATO plans high-readiness force to counter Russia (John-Thor Dahlburg, Associated Press, Raleigh News Observer)

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

The first five articles are about part-time employment and low-paying jobs.

This week we have started a new section "Other Economics and Business Items of Note".

Please support all that we do at Global Economic Intersection with a subscription to our premium content 'behind the wall'.

There are between 75 and 100 articles reviewed most weeks. That is in addition to the 140-160 articles of free content we provide.

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  • 10 Terrifying Facts About U.S. Jobs (Jimmy Mengel, Outsider Club) The author says the trend to increasing part-time employment "has only accelerated since the recession". That is clearly wrong. The growth rate has been the slowest in the current century since the recession. What did happen was the largest jump in the last 45 years occurred during the recession. The trend to part-time employment has actually been slowing down over the last 45 years (see graph), except the jumps during recessions have been getting progressively larger. Although the growth in part-time workers has increased twice as fast over the last 45 years (+172%) than the working age population (16 and older) has grown (+86%), the author's inference that this is a bad thing is entirely misplaced, particularly for the past five years. See next two articles.

  • Part-time jobs for economic reasons as a share of full-time employment and total part-time jobs have been declining (Mark J. Perry, Carpe Diem, American Enterprise Institute) Mark J. Perry has contributed to GEI. The number of people working part-time for economic reasons (i.e., forced to work part-time because they can't get full-time) has been declining since the end of the Great Recession. Since the fraction of the labor force working part-time has been inching up slowly the number working part-time for non-economic reasons (i.e., because they want to) has been increasing. See also the next article.


  • Most Part-Time Workers Want To Be Part-Time (Matthew Yglesias, Slate) The percentage of part-time workers who worked at that level because they wanted to increased from 66.5% late in the recession to 71.7% as of August last year when the graph below was created. The latest data (July 2014) has seen the ratio increase further to 72.4%.

Part-time for economic reasons / Total part-time

The growth rate for full-time workers has been and remains at about the level of the early to mid-2000s. We can see the first-quarter dip, but while growth should certainly be faster, this can hardly be called a disaster. Meanwhile, the number of part-time jobs has declined over the past year or so, even as total employment continued to increase.

During the crisis, the part-time versus full-time argument was true-full-time jobs dropped and part-time jobs skyrocketed-but that hasn't been the case for the past couple of years.

Ten Worst Paying Jobs in America (Naomi Shavin, New Republic) For reference, someone working 40 hours a week for 52.14 weeks earns $15,120.60 in a year if they get minimum wage ($7.25 an hour). At $8.50 an hour it's $17,727.60 a year; at $10 an hour, $20,856. From Naomi Shavin's article:

Not everybody in these jobs is struggling. Sometimes people in low-paying jobs are students, or take them part-time and, while they aren't making much money, they also aren't living in poverty. But of the Americans who are getting by on the federal minimum wage, it's important to note that in 46 out of 50 states, women make up more than half of minimum wage workers. (I have written about this previously, for Forbes, if you want to read more details about the breakdown and its sources.) In the remaining four states, women still make up roughly half of minimum wage workers. This is one reason that 40 percent of households with single mothers as the sole breadwinner were in poverty. This, of course, plays into why the problem of reliable and affordable child care is so urgent. Child care, by the way, is the eleventh worst paid job in America. But that's another story.



A central-government guarantee of the shadow banking system would extend its financial responsibility from 71.90 trillion RMB in bank loans (outstanding loans at year-end 2013) to 110 trillion RMB [$17.6 trillion] (outstanding shadow banking assets under management plus loans at year end 2013) in bank loans and shadow banking loans, an increase of over 50%. The central government has been loath to extend guarantees to the shadow banking sector, which inherently carries far greater risks.

Can the central government support this new scale of debt? Not comfortably. The central government has worked hard to keep non-performing loans in its state-owned banks to a very low ratio. Government revenues are not overwhelming, and local governments already face a revenue shortage in the redistribution of funds from the local governments to the central government, and back again. Assets can be sold, or foreign reserves used, at great expense to the domestic economy.

Does this increase moral hazard among non-state financial entities? You bet. Knowing that the central government has set the precedent of contradicting its own terms and bailed out a failing financial product will increase the likelihood that shadow lenders will take risks. As a result, the CBRC and other financial regulatory bodies had better increase regulations for the shadow-banking sector before moral hazard takes root on a grand scale.

  • China banking crisis 'almost certain', warns economist Gabriel Stein (Jonathan Shapiro, The Sydney Morning Herald) Gabriel Stein, of economic consulting firm Oxford Economics, told a Sydney audience on Tuesday that Chinese authorities were understating the extent of bad loans on their banks' books and faced tough choices in dealing with the potential bank failure. Stein said:
"We don't know when there will be a China banking crisis and how it will play out but it is almost certain there will be one."
  • Are Gold Prices Taking Cues From The Swiss Franc? (Chris Kimble, Advisor Perspectives Gold and silver have long-term correlations with the Swiss franc going back almost 50 years. The most recent 14-year trends for all three are testing support. If any one of them breaks down through support is that a good time to short the other two? Or will a bounce for one be a bounce for all?


  • Other Economics and Business Items of Note

Best states to retire to for tax reasons (Investment News)

Tesla - Overvalued at 193.64, Undervalued at 284.12 (Tim Niggam, Marketfly)

The Logic of Neoliberal Populism (Triple Crisis)

Atlantic City facing unprecedented economic collapse (Philadelphia Inquirer)

The Simple Lesson We Should Learn from Global Economics (The Federalist)

CBO, Fed Growth Forecasts Unattainable, Northwestern's Gordon Says (The Wall Street Journal)

China Fights Local Budget Corruption With 'Economic Constitution' (Bloomberg Businessweek)

Military & strategy links: Iraq, Ukraine, NATO, anti-sub warfare, economics of war and more (The Interpreter)

Will Gold Still Go to $5000? (Armstrong Economics)

Is there really a connection between education and economics? (Vital Remnants)

The Role of Unions (Library of Economics and Liberty)

Economics vs politics: Which is India's priority? (CNBC) Video

RBA Sees Currency Overvalued as Pause in Rates Extended: Economy (Bloomberg)

Exclusive: From Seoul to Mexico City, pressure mounts to ease U.S. oil export ban (Reuters)

Serious Lessons From Comedian Chris Tucker's $14 Million IRS Bill (Forbes)

China Targeting Foreign Companies, American Chamber Says (Bloomberg)

Japan Wages Rising Most Since 1997 Not Enough to Beat Inflation (Bloomberg)

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