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.
Nothing in Moderation (Thomas B. Edsall, The New York Times) On many political issues there is no middle any more. Surveys of voters and ratings of politicians find that extreme polarization is greater among the voters. An example is given on voter survey results on taxes (more-liberal and less-conservative). Question: why is it so often that data for the right is displayed on the left and date for the left is on the right? See also An Artificial “Disconnect” (David E. Broockman, UCal Berkeley)
Articles about conflicts and disease around the world
2.4% Mortgages Coming — and NO Inflation (Rick Ackerman, Rick's Picks) Rick Ackerman contributes to GEI. Rick says the 30-year U.S. Treasury bond interest rate will go below 2.4%. At the close Wednesday the rate was 3.06%. The high in 2014 has been 3.93% (January) and the low 2.92% (October). The multi-decade low was 2.53% (June 2012). So 2.4% does not seem so far out. What about lower rates - are they possible? What about going below 2.0%? Germany right now has 30-year yield of 1.76% and at the beginning of October his a modern-day low of 1.54% briefly. What about going below 1.5%? Japan right now has a 30-year yield of 1.62% (and has briefly been as low as 1.28%). In multi-generational debt deflation cycles interest rates can go lower than most now alive could ever have imagined.
ECB Stress Tests: The View of an Insider (Yves Smith, Naked Capitalism) Contains an piece from Yanis Varoufakis which posits that the safety of banks passing the recent ECB stress tests is an illusion. Why? A majority of bank assets today are financial instruments. Loans (now a minority asset) are backed by tangible assets as security. Financial instruments are backed by a counterparty and counterparty risk is not part of the stress formula, just the security risks. When the next financial system collapse comes it will be brought on by counterparty failures (just like the last one). So this article suggests the tests are purely cosmetic and the pig lives on as before.
How the Fed got from eternity to here (John Authers, Financial Times) When QE3 began (also called QE∞ or QE infinity), it was expected by most to increase inflation, devalue the dollar and push interest rates up. The opposite happened. What does that tell us about the state of understanding of economics?
Euro vs $US (Warren Mosler, The Center of the Universe) This post contains a great line of seeming nonsense which actually makes perfect sense. You'll have to read Warren's article to see why.
I can see the euro going up in value until it becomes worthless.
What is secular stagnation? (Matthew Yglesias, Vox) The term was introduced in 1939 by economist Alvin Hansen when he discussed the problem of what happens to economic growth when population is declining. The term secular stagnation was again introduced by Lawrence Summers at an IMF Forum nearly a year ago. Summers discussed the possibility that demand might be independent of the amount of monetary stimulus that could be created. His address can be seen below. See reference Economic Progress and Declining Population Growth (Alvin Hansen, The American Economic Review - 1939). Yglesias discusses other theories of economic slowdown. But none of the slowdown theories discussed bear on the Irving Fisher theory of debt deflation that has been gaining interest and attention along with the thinking that Yglesias discusses.
Other Economics and Business Items of Note and Miscellanea
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