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What We Read Today 03 October 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.

  • JPMorgan Says Data Breach Affected 76 Million Households (Alex Veiga, Associated Press, abc News) JPMorgan Chase & Co. has reported a huge cyber attack this summer which compromised customer information for about 76 million households and 7 million small businesses, the bank said Thursday. Names, addresses, phone numbers and email addresses were stolen from the company's servers but the data did not include account numbers, passwords, Social Security numbers or dates of birth. Only customers who use the websites and JPMorganOnline and the apps ChaseMobile and JPMorgan Mobile were affected.

  • Conservatives set to defy Europe on human rights (George Parker and Helen Warrell, Financial Times) The UK wants the European Court of Human Rights to allow that country to regard the court's rulings as "advisory" and retaining human rights law sovereignty with the British government. Britain is unhappy with recent court rulings such as an edict that prisoners have the right to vote. UK Justice Secretary Chris Gatling said that if other countries disagreed with the British request then the UK would "simply walk away".


  • Recent article about Scotland Independence and Other Movements

Alex Salmond announces plan to block poll tax collection (BBC News)

Europe must address Spain-Catalonia issue (The Guardian)

  • Articles about conflicts elsewhere in the world:

Hong Kong leader stands firm, as both sides raise stakes (Al Jazeera)

Hong Kong Leader Willing to Hold Limited Talks With Protesters (The New York Times)

Hong Kong's Protests Vs. Pakistan's Protests In Pictures (Jon Springer, Forbes)

Ebola Plague? Stupidity is a real epidemic inside government (Armstrong Economics)

REPORT Women and Children for Sale A new U.N. report paints a terrifying picture of life under the Islamic State (Foreign Policy)

The Shape-Shifting Coalition (Micah Zenko, Foreign Policy)

Islamic State: Turkey MPs back Iraq-Syria deployment (BBC News)

Isis defies coalition air strikes in battle for town on Syria-Turkey border (The Guardian)

Exclusive: U.S. Special Ops Readied Syria Attack in June (The Daily Beast)

In New Front Against Islamic State, Dictionary Becomes a Weapon (The New York Times)

Islamist Terror Group Recruits Members With $50 And A Cell Phone, Study Finds (Huffington Post)

Islamic State committing 'staggering' crimes in Iraq: U.N. report (MSN News)

What ISIS Could Teach the West (The New York Times)

The 9 Biggest Myths About ISIS Debunked (The World Post)

Bush on ISIS: America has learned 'lesson' about Iraq (Fox News)

Iraq military gets advanced Russian air defense, flame weapons (RT)

Iran, the Thinkable Ally (The New York Times)

Ukraine rebels renew Donetsk airport offensive (BBC News)

Ukraine wary of fragile peace as patriotism surges (Associated Press, Yahoo! News)

Putin says 'foolish' sanctions will not hold back Russia (Reuters)

There are 15 articles discussed today 'behind the wall'.

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  • Thirst Turns to Desperation in Rural California (Jennifer Medina, The New York Times) More than 500 rural homes in Tulare County have no running water which has vanished into the persistent drought. Tulare County is located south of Fresno, county seat is Visalia and, includes as about the easternmost 1/3, large portions of the Sequoia National Forest.
  • Quarterly M&A Activity (Walter Kurtz, The Daily Shot email, no url) Only a soft fourth quarter can stop a takeout of the previous high (2007).


  • Ritholtz Wealth Management launches robo platform (Joyce Hanson, Investment News) Chairman and chief investment officer Barry Ritholtz and chief executive Josh Brown of boutique investment firm Ritholtz Wealth Management have announced a new automated advisor investment management platform for individuals who fall below their asset and fee minimums. The platform technology is provided by Upside Financial and will use portfolios using ETFs (electronically traded funds) selected based on investors' financial situations and risk tolerances with automatic portfolio rebalancing.
  • Inflation Hawks’ Views Are Independent of Actual Monetary Outcomes (Josh Barro, The New York Times) Barro discusses the positions of 24 economists today compared to where they went on record nearly four years ago (see next article). Only nine of the signatories would make any comment when approached by Bloomberg for comment. Some of the responses would be hilarious if they weren't so disingenuous. For example one said that no time limit was set in the letter and so sometime in the future inflation would surely exceed 2%. Some others pointed out that the copy of the letter shown to them had no date on it and "rested their arguments". (How ridiculous this evasion is can be seen in the next article which links to the letter with date as displayed on the Manhattan Institute website.) One respondent (Jim Grant) gave a reply that "we have had inflation - it just hasn't shown up in consumer prices". Econintersect suggests that the temptation to dismiss this as flippant should be resisted. There can be a case made that there has been inflation in financial asset prices and real estate. Read the next article to continue this pathetic tale.
  • An Open Letter to Ben Bernanke (24 signatories, Economic Policies for the 21st Century at the Manhattan Institute) This letter (dated 15 November 2010) disagreed with the Fed course of action to try to push inflation higher and predicted pursuit of the policy would risk "currency debasement" and "inflation". This group also contested the idea that monetary policy (QE) would "achieve the Fed's objective of promoting employment". Below the data comparisons is the key paragraph showing the context. Comparing the factors mentioned between the date of the letter (15 November 2010) and today:
  • Dollar index: 78.67 (then); 85.73 (now); Dollar is 9% stronger
  • CPI (unadjusted 12 mos.): 3.4% (then); 1.7% (now); Inflation rate has been halved
  • Employment (Non-farm payrolls): 132.5 million (then); 139.1 million (now); Increased by 6.6 million
  • Employment (Household survey): 140.3 million (then); 146.4 million (now); Increased by 6.1 million
  • Unemployment rate: 8.8% (then); 6.1% (now)
We believe the Federal Reserve's large-scale asset purchase plan (so-called "quantitative easing") should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed's objective of promoting employment.
  • No, the Rich Are Not Taking All of the Economic Pie (Scott Winship, Economic Policies for the 21st Century at the Manhattan Institute) Winship claims that including the value of non-taxed employer provided benefits (such as health insurance) and using the income for households rather than individuals a different result is obtained than by Pavlina Tcherneva (see next article).



  • CitiMortgage, Wells lose bid to end lawsuit over credit reports (Dena Aubin, Reuters) A U.S. district court in Southern California has refused to throw out a class action suit against two mortgage banks. U.S. District Judge Janis Sammartino said consumers had offered enough facts to support their claims that Wells and CitiMortgage Inc gave inaccurate information to a credit reporting agency, hurting consumers' ability to get new loans. The suit claims that the banks erroneously reported foreclosures or bankruptcies in cases that were actually short sales agreed to by the bank.
  • Lawmakers grill new EU economy chief amid doubts (Juergen Baetz, Associated Press, U-T San Diego) Pierre Moscovici, who could not convince his own French government to comply with EU fiscal guidelines, is assuring he will enforce the EU suicide pact on members if the European Parliament confirms him as the next European Union Commissioner for Economic and Financial Affairs, Taxation and Customs Union.
  • Argentina running out of options (Walter Kurtz, Sober Look) The currency is inflating and the black market exchange rate is headed toward doubling the official US dollar peg (over 70% of the value of the peso lost in the last three years - see first graph below). So the costs of imports (on which the Argentine economy critically depends) are shooting through the roof, while the revenue from grain exports (see soybeans, second graph below) has fallen by almost 40% in US dollar terms in just four months. The latest data shows domestic expenditures by the government growing by more than 40% a year while revenues are growing about 30%. One of the biggest drivers of this death spiral are subsidies to importers to try to keep a lid on domestic inflation. In July those expenditures were up 55% y-o-y.



  • Other Economics and Business Items of Note and Miscellanea

Total Return Fund records largest redemptions in its history on Gross exit (Investment News)

Eric Holder’s Mixed Legacy on White-Collar Crime (The New York Times) Hat tip to Roger Erickson.

Antonin Scalia Says Constitution Permits Court To 'Favor Religion Over Non-Religion (The Washington Times)

Europe Accelerates into Deflation and Recession! (Bert Dohman, LinkedIn)

What Turned Warren Buffett Into a Car Guy? Economics (Bloomberg Businessweek)

Draghi Says ECB Hopes to Get at Root of Eurozone’s Economic Problems (Brian Blackstone, Real Time Economics, The Wall Street Journal) Draghi invokes Greek mythology - maybe voodoo next?

Eurozone manufacturing edges closer to stagnation (Markit Eurozone Manufacturing PMI)

Economics of Cybersecurity (edX)

Abenomics: will the sun rise on Japan again? (The Telegraph)

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