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What We Read Today 14 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.

  • Wall Street's teetering new rental empire (Rebecca Burns, Al Jazeera) According to Rebecca Burns the rise of rent-backed securities ensures we'll have another crash. In just nine months since the first security was offered the issuance of RBS (rental backed securities) has swelled to more than $3 billion and is headed to more than $1 trillion within six years. With huge demand from yield-chasing investors abuses similar to MBS (mortgage backed securities) are sure to follow.

Homeowners and the lawyers that advocate for them say they aren't getting a fair hearing in a legal system tilted toward banks from start to finish.

"They just slam the defendants," said Margery Golant, a lawyer in Palm Beach and Broward counties. "They deny them their rights, have hearings in absentia and just flush them down the garbage disposal."

  • At Home in a Crowd (Alex Tribou, Bloomberg) Now there are 28 urban centers with populations larger than 10 million. In 15 years there will be 40.

Click for large image at Bloomberg.com.
cities-more-than-10-million-600x450

  • Recent articles about Scotland Independence Vote :

Is Scotland Big Enough To Go it Alone? (Peter St. Onge, Mises.org) Hat tip to Mark Thornton.

With Scottish Independence Vote, Uncertainty Abounds (Financial Planning)

  • Articles about wars elsewhere in the world:

The Dogs of Hell: An Original Jihadi Trashes ISIS (The Polemicist) Hat tip to Roger Erickson.

MORICI: Broad changes in global economy needed to defeat global terrorism (The Washington Times)

200 Boko Haram Militants, Including Senior Commander, Killed In Clashes (International Business Times)

Homemade Tank Powered by Game Boy Fights Wars of Future (Bloomberg)

The falsehoods in President Obama's speech on the Islamic State (Mark LeVine, Al Jazeera)

Struggling to Starve ISIS of Oil Revenue, U.S. Seeks Assistance From Turkey (The New York Times)

Overcoming ISIS: Transcending Sectarian Rivalries (Laurelle Atkinson, Worldpress.org)

Islamic State's Twitter silence raises questions (Reuters)

The Islamic State threat is overstated (The Washington Post)

The Partner Problem in Iraq and Syria (The Brookings Institute)

Ukraine PM accuses Russia of wanting to 'restore the Soviet Union' (Al Jazeera)

Parallels to 1937 (Robert Shiller, Project Syndicate)

Exxon Riles U.S., EU by Using Sanctions Loophole (Bloomberg) Hat tip to Roger Erickson.

Ukraine, rebels exchange prisoners in peace deal (Al Jazeera)


There are 12 articles discussed today 'behind the wall'.

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Pimco-high-yield-warns-kimble-2014-sep-13

high-yield-spread-warning-kimble-2014-sep-13

  • Can large primary surpluses solve Europe’s debt problem? (Barry Eichengreen and Ugo Panizza, Voxeu.org) Both Barry Eichengreen and Ugo Panizza have contributed to GEI. The authors conclude that solving the Euro crisis by members running large permanent surpluses is an unrealistic objective.
  • Oil glut ignites gasoline price swoon (MSN Money) Even as refineries labor against capacity constraints the price of gasoline keeps coming down. The high capacity utilization is more driven by supply of crude than by demand for the refined products.

refinery-capacity-gasoline-prices

  • Hard money is not a mistake (Steve Randy Waldman, Interfluidity) Steve Waldman has contributed to GEI. Any monetary system creates advanatages and disadvantages throughout the economic spectrum.
Soft money types - I've heard the sentiment from Scott Sumner, Brad DeLong, Kevin Drum, and now Paul Krugman - really want to see the bias towards hard money and fiscal austerity as some kind of mistake. I wish that were true. It just isn't. Aggregate wealth is held by risk averse individuals who don't individually experience aggregate outcomes. Prospective outcomes have to be extremely good and nearly certain to offset the insecurity soft money policy induces among individuals at the top of the distribution, people who have much more to lose than they are likely to gain. It's not because they're bad people. Diminishing marginal utility, habit formation and reference group comparison, the zero-sum quality of insurance against systematic risk, and the tendency of regression towards the mean, all make soft money a bad bet for the wealthy even when it is a good bet for the broader public and the macroeconomy.
  • Review: Driving an Electric Car in the Adirondacks (Pete Nelson, Adirondack Almanack) This is a very informative piece about the viability of electric cars in the mountainous "boonies". The car in the report is a Chevy Volt. Highly recommended reading.
  • Economic Forecasting Survey (The Wall Street Journal) The quarterly survey of 50 economists has provided the usual result: Things will continue pretty much as they are right now.

gdp-projections-wsj-2014-sep-13

  • Ford's Big Gamble (Daniel Gross, Slate) A Ford F-150 that gets up to 1/3 better gas mileage? That would be 27-28 mpg highway? With a gasoline powered internal combustion engine? The company plans to do it by paring about 700 pounds off the weight of the machine by using aluminum.
  • China Muni Bonds Now Offer More Transparency, Regulation (Marlene Y. Satter, Think Advisor) While better structure, regulation and openness has come to the Chinese municipal bond market, investors still need to exercise caution because of the exceptionally high levels of local government debt relative to locally retained tax revenues.
  • The Yellowstone Supervolcano Goes Viral (George Black, The New Yorker) Yellowstone is one of the world's largest volcanoes. This supervolcano has erupted three times in known geological history and the time separations between eruptions have been roughly between 600,000 and 700,000 years. It last erupted 640,000 years ago. Does that mean another massive event is imminent? Geologists estimate that there is only one chance in 100,000 that Yellowstone could erupt in any given year. Want to relax? Well the estimates also mean one chance in a thousand that it could happen in the 21st century. Now that seems a little more ominous! See This Is What Would Happen If The Yellowstone Supervolcano Erupted (Ajai Raj, Business Insider) for possible consequences (map below). Also see These 18 'Very High Threat' Volcanoes Could Wreak Havoc On The US (Ajai Raj, Business Insider) for the 18 most dangerous U.S. volcanoes out of the 169 active sites in the country. A total of 55 have been designated serious threats.

Yellowstone-threat-map

  • Other Economics and Business Items of Note

Meet The Bubblebusters: Federal Reserve Launches A Committee To "Avoid Asset Bubbles" (Zero Hedge)

Better medication adherence a potential use for Apple Watch (Employee Benefit Advisor)

Andrew Madoff's $16M fortune enrages father's victims (CNBC) Hat tip to Marvin Clark.

China Premier Seeks to Reassure Investors Amid Probes (Bloomberg)

Alibaba 101: The biggest IPO of all time (CNN Money)

Does Apple's HealthKit signal the end of employer-based health insurance? (Employee Benefit Advisor)

These men may revolutionize how you shop. There’s a reason they’re all Chinese (Quartz)

We may predict the death of physical currency; bills and coins (Real World Economics Review Blog) Hat tip to Frances Copolla.

Alibaba Taps Chinese Diaspora as Global Amazon Battle (Bloomberg)

Fed's rate guidance on chopping block, new exit plan nears (Reuters)

Art Cashin: "Things Could Theoretically Turn Into What I Call A Lehman Moment" (Zero Hedge)

10 states with the highest uninsured rates post-ACA (Employee Benefit Advisor)

Hands down, people without kids have better lives—except for this one major thing (Quartz)


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