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.
Draghi brings out ABS rocket boosters (Ralph Atkins, Financial Times) The ECB (European Central Bank) action announced today is not QE (quantitative easing) in the form it has been customarily used. Instead of boosting weakened banks with expanded reserves with the expectation that lending will then be increased, the ECB is injecting money directly into the real (non-financial) economy by purchasing ABS (asset backed securities) and covered bonds. More 'behind the wall'.
Abe’s Support Jumps After Boosting Female Ministers in Reshuffle (Isabel Reynolds, Bloomberg) Prime Minister Shinzo Abe gained support in polls following placing a record-breaking five women in his cabinet. One poll has his approval rating at 64% and another has 60%. Previously polls were running just above and just below 50%.
There are 13 articles discussed today 'behind the wall'.
This week we have started a new section "Other Economics and Business Items of Note", the final section every day.
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.
You get a full year for only $25.
An Excellent Time for U.S. Shale Producers (Dave Gonigam, 5 Min. Forecast) More than 1.1 million new jobs were created between 2010 and 2013 in just four states. Almost 14% of employment growth has occurred in four states with 9% of the population.
It wouldn’t matter if China went into a recession (Adam Carr, China Spectator) Carr write from the point of view of how Australia would be affected and with the thesis that a recession in China is a decline of GDP growth to 6%. Talk about looseness of terminology! Houses and Holes at Macro Business said: "Mad" Adam Carr has entered an enviable zen state (Mad Adam apotheosis!).
Negative Response to Draghi (Walter Kurtz, The Daily Shot email, no url) The Euro sank and French bonds went to negative interest for the first time. The market was not very impressed. See also next article.
The Dying Russians (Masha Green, The New York Review of Books) The population of Russia has declined by 5% since the end of Communism, mostly due to increased mortality. The author says scientists have yet to explain why Russians are "dying in numbers, and at ages, and of causes never seen in any other country that is not, by any standard definition, at war".
CBO, Fed Growth Forecasts Unattainable, Northwestern’s Gordon Says (Jon Hilsenrath, The Wall Street Journal) This week's review article by Steven Hansen in GEI Analysis will discuss what he thinks might be the 'New Normal' GDP growth rate of 2% to 2.5%. Prof. Robert Gordon, Northwestern University, has estimated that the current average rate is actually above the potential of the economy for the next decade. Prof. Gordon estimates that the potential average through all business cycle variations from now to 2024 is 1.6% growth. Gordon says the CBO projection of an average 2.2% is unrealistic. We guess that makes the Fed expectation of 3% wildly unrealistic. See A New Method of Estimating Potential Real GDP Growth: Implications for the Labor Market and the Debt/GDP Ratio (Robert J. Gordon, NBER Working Paper) - Abstract is free, SSRN.com online copy of full paper costs $5.
I Really Want to Crush the Efficient Market Hypothesis…. (Cullen Roche, Pragmatic Capitalism) Cullen is dismayed by the idealized world of "rational expectations" and "normal distributions". Even the idea of passive investing gives him heartburn since even the purest passive investor makes decisions about what to buy. He says:
The only truly passive index is a portfolio of the global financial assets. And since no such portfolio exists in any realistically applicable manner, you must, by definition, actively choose to pick your assets in some way.
ADP: August Payrolls Rise 200k-plus For Fifth Straight Month (James Picerno, The Capital Spectator) James Picerno has contributed to GEI. The markets will get crushed today if the BLS Employment Situation Report does not match the ADP job gains. Another payrolls gain above 200,000 has been assumed and failing to meet the assumption would not be taken well. For details on the ADP report see GEI Analysis.
Econintersect wants your comments,
data and opinion on the articles posted. As the internet is a
"war zone" of trolls, hackers and spammers - Econintersect must balance its
defences against ease of commenting. We have joined with Livefyre
to manage our comment streams.
To comment, just click the "Sign In" button at the top-left corner of
the comment box below. You can create a commenting account using your
favorite social network such as Twitter, Facebook, Google+, LinkedIn or
Open ID - or open a Livefyre account using your email address.
Econintersect Behind the Wall
Print this page or create a PDF file of this page
The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.
Take a look at what is going on inside of Econintersect.com