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What We Read Today 04 November 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.

  • First-time homebuyers hit lowest level in nearly 30 years (Diana Olick, CNBC) The last time the level of first-time home purchases were at this level a 30-year fixed-rate mortgage carried about 14% interest. Now it's a little above 4%. Yet only 33% of home sales are to first time buyers in 2014, compared to the long-term average of 40%. See next article.

  • Weekend Brings Record Snow to the Appalachians, New England (Michael Doll, Early season snowfall from Maine to Tennessee breaking all-time records for the date. In Bangor, ME a 12 inch snowfall broke the existing 02 November record of 0.5 inch (1951). Other records were set as Aroostock County recorded depths up to 21 inches and Mt. LeConte, TN received 22 inches. Higher elevations in the Smoky Mountains generally received more than a foot of snow. Other notables were snow across much of upstate South Carolina, with up to 4.5 inches in the Columbia area. Sugar Mountain Ski Resort, Banner Elk, NC opening Sunday with two trails skiable on a 10-32 inch machine-made base and 8 inches of new natural snow. Also low temperature records were set across much of Florida. Vero Beach had an overnight low Sunday morning of 41 degrees breaking the 1993 record by 6 degrees. Tampa had a high temperature Sunday of 67 degrees, breaking a 119 year-old record of 68. For a weekly update of weather pattern and climate news follow GEI News weekly global weather and climate review by weather economist Sig Silber every Monday evening.

With just one week to go until the midterm elections, a new poll indicates that billionaires are likely to retain control of the United States government.

The poll, conducted by the University of Minnesota's Opinion Research Institute, shows that the proxy candidates of billionaires are likely to win ninety-eight per cent of next Tuesday's races, with the remaining two per cent leaning billionaire.

Although the poll indicates that some races are still "too close to call," the fact that billionaires funded candidates on both sides puts the races safely in their column.

  • Articles about conflicts and disease around the world


Nurse: No option but to fight Ebola quarantine (Associated Press, MSN News)

Ebola Cure Delayed by Drug Industry’s Drive for Profit, W.H.O. Leader Says (The New York Times)

Health Experts Say Ebola Might Be Loosening Grip on Liberia (Voice of America)


Suicide bombing targets Shia festival in Nigeria: Suspected Boko Haram attack in northeast Nigeria kills 15 people and injures 50 others (Al Jazeera)

Burkina Faso

Burkina Faso: where democracy has always run on protests and coups (The Conversation)


Fighting rages in Libya's Benghazi (Al Jazeera)


'Bodies Everywhere': Migrant Boat Sinks Off Turkey (NBC News)

Russia’s borders: Turkey treading carefully over the wars in Syria and Ukraine (The Conversation)

Boat with suspected migrants sinks off Turkey; 24 dead, 7 rescued: Boat carrying suspected migrants from Afghanistan and Syria sinks off Istanbul; authorities search for survivors (Al Jazeera)


Al-Qaida Fighters Push Offensive in Northern Syria (abc News)


ISIL brings more than just brutality to the battlefield (Al Jazeera)


Cows Vote as Putin Tightens Grip on East Ukraine (Bloomberg)

U.S. Slams 'Sham' Ukraine Vote With Warning to Russia (NBC News)

Ukraine Says Rebel Votes Undercut Truce as Tension Mount (Bloomberg)


APNewsBreak: Russia Boycotts Nuclear Meeting (abc News)

Russian warplanes send 'great power' message: NATO (AFP, Yahoo! News)


Mexican soldiers charged in civilian court: Seven soldiers allegedly were involved in deaths of gang members at a rural warehouse in June (Al Jazeera)

There are 10 articles discussed today 'behind the wall'. The last six discuss the negative impact of fiscal policy on GDP.

Do not miss "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'.

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  • Janus’ Bill Gross: Government Needs to Spend More (Gil Weinreich, ThinkAdvisor) Gross says that in a time of high debt deflation can crush an economy. Debt cannot be repaid in a deflating economy because the amount of money is, well, deflating. Gross argues that inflation of 2% is needed to keep a "fire-wall" against the devastation that deflation would bring. He feels that monetary policy is not enough in this regard and fiscal action is needed. Says Gross:
"The real economy needs money printing, yes, but money spending more so, and that must come from the fiscal side - from the dreaded government side - where deficits are anathema and balanced budgets are increasingly in vogue."
  • What boomers are getting so wrong about retirement (Suzie Orman, CNBC) Biggest mistake is retiring with debt. There are five other big mistakes that Suzie outlines on a video. Sometimes Suzie over-generalizes with her public venue advice, but in this case we thinks she is right on target.
So, here is my plea to Money and Banking professors. Spend less time teaching the mechanics of the deposit/bank-credit multiplier. Rather, spend more time explaining how this process creates credit figuratively out of thin air and why thin-air credit creation has such an important effect on the business cycle. Who knows? Perhaps one of your students will become a Fed official and can then explain this concept to her Fed colleagues.


This brief look at what QE did not do helps us understand why it is so hard to know what it did accomplish. It was an uncontrolled experiment. There was no way to apply QE to half of the economy and a placebo to the other half. Furthermore, for most of its life, the expansionary effects of QE were fighting against the contractionary effects of fiscal policy. It was a standoff, but there is no way to tell if that is because both policies were weak, or because both were equally strong. The most widely accepted conclusion about QE—that things would have been even worse without it—remains plausible, but since that is a counterfactual hypothesis that can never be conclusively tested, the debate will undoubtedly continue.




  • The Fiscal Barometer (Brookings Institute) The fiscal impact measure shows how much federal, state, and local government taxes and spending added to or subtracted from the overall pace of economic growth. Between 2008 and 2011, fiscal impact was positive, indicating that government policy was stimulative; in recent years, it has been negative, indicating restraint.


  • The Fiscal Headwinds Have Finally Subsided (Parinitha Sastry and Louise Sheiner, Brookings Institute) For the first time since the stimulus program ended in 2010 there have been two consecutive quarters with no subtraction from GDP growth due to the total fiscal actions of federal, state and local spending. The net of taxes and transfers continues to be a negative as the federal deficit continues to decline.


  • Other Economics and Business Items of Note and Miscellanea

Singer's Elliott Says U.S. Growth Optimism Unwarranted as Data ‘Cooked’ (Bloomberg)

Canada Trade Balance Swings Unexpectedly to Surplus in September - Update (4-Traders) Hat tip yo Alan Tonelson.

Former UBS exec found not guilty in U.S. tax cheating trial (Reuters)

Business vs. Economics (Paul Krugman, The New York Times)

Return of the COIN-istas (the zombies of military theory) (Fabius Maximus) Fabius Maximus contributes to GEI.

Here Are All The Ridiculous Domain Names Mike Bloomberg's Lawyers Just Registered For Him (Business Insider)

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