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.
Why would the ECB buy corporate bonds? (Matthew C. Klein, FT Alphaville) It may be that the market for asset backed securities and covered bonds in simply not large enough for the massive bond buying the ECB may do. They may have to acquire corporate debt as well.
This does raise the question of how buying debt of large corporations will do much to boost lending to smaller firms, a stated objective. And the corporations are not issuing a lot of bonds anyway.
Petition drive to limit hospital charges in Michigan gets go-ahead from state election board (Associated Press) The state of Michigan has approved the circulation of petitions to be presented to the legislature requesting legislation that would limit the billing of uninsured patients by hospitals. Such a limit might be 150% of the reimbursement rate from an insurance company. The idea is to stop billing $5,000 for a service that insurance companies reimburse, say, $400.
Eric Holder Says Justice Department Has Moles on Wall Street (Pam Martens and Russ Martens, Wall Street on Parade) They may have moles but they still have not tried a single high level bankster. The Martens end with the observation that TBTF as a criminal activity could also be eliminated by simply breaking up the banks.
Gold sending wacky signals (Patti Domm, CNBC) Hat tip to Marvin Clark. Has gold formed double bottom in 2014? See first graph below. Well gold is actually rallying, up 14% since the end of December, if you are buying and selling in euros. See second graph below. Domm says that the confusing situation is occurring because both gold and the U.S. dollar are viewed as safe havens in ties of financial and economic stress. Jim Steel, chief commodities analyst at HSBC, thinks that gold has little upside. He attributes the gold spike in October to the pullback in stocks and if stocks don't keep going down then gold will likely retreat again. Steele says he is "ambivalent gold in dollar terms."
The Moral Economy of Debt (Robert Skidelsky, Project Syndicate) Robert Skidelsky has contributed to GEI. Prof. Skidelsky argues that debt is more of a social relationship subject to negotiation than an iron law of morality. He supports his argument with that of David Graber in his book Debt: The First 5,000 Years.
The moral of the tale is not, as Polonius instructed his son Laertes, "neither a borrower nor a lender be." Without both, humanity might still be living in caves. Rather, we need to limit the supply of and demand for credit to what the economy is capable of producing. How to do this and maintain freedom of enterprise is one of the great unsettled questions of political economy.
The Future of Solar Economics and Policy (John Farrell, Clean Technica) Solar is rapidly becoming the economic source of electrical power. Part of the analysis has to do with the "value of solar". see next article.
Minnesota’s Value of Solar (John Farrell, Energy) The value of solar sometimes exceeds the retail price of solar because value includes environmental costs that is not part of the utility pricing formula. In other words, the utility does not charge for and does not have to pay for environmental damage.
Distributed Generation Poses Existential Threat To Utilities (Richard Martin, Forbes) Distributed generation at user sites are making the grid a less critical part of customer electrical energy supply and are creating a threat to the existing business plans for utilities.. It is not discussed in this article, but the implementation of value of electricity from each source might create an accounting which would "save" the grid and traditional utilities. See immediately preceding article.
American Businesses Are Worried About Europe, Again (Jonathan House, The Wall Street Journal) Half of all business economists surveyed believe that Europe will have a negative effect on U.S. business. Only a little more than a third felt that way three months ago.
Other Economics and Business Items of Note and Miscellanea
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