econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



>> Click Here for Historical Wall Post Listing <<

What We Read Today 10 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.

  • Xi and Abe in landmark meeting (Demetri Sevastopulo, Financial Times) After an icy two years of disputes over islands in the East China Sea Japan and China have "agreed to disagree" and have moved on to have a meeting between Prime Minister Shinzo Abe and President Xi Jinping, the top leaders of the two countries.

" ... stable and healthy development of Sino-Japanese ties is in line with fundamental interests of people in both countries as well as the common aspiration of the international community."
  • How well does the CPI measure individuals’ health care burden? (Jonathan Bernstein, Sober Look) Bernstein says that CPI estimates of household medical expenses have likely understated the costs for some time. The estimation of CPI-Med to be 5.825% of total consumer expenditures has two implications: (1) About 2/3 of medical expenses (17% of GDP) are employer paid; and (2) those who do not have employer paid health care have inflation seriously underestimated to the extent that medical inflation exceeds overall inflation. In the second case the last few years have had medical inflation relatively close to overall inflation so the impact has been less than 6-10 years ago when medical inflation sometimes doubled overall inflation. Bernstein says the value of CPI-MED in coming years will reflect how quickly employers transfer more and more health care costs to employees.
  • Recent articles about Scotland Independence and Similar Movements

Catalonia vote: 80% back independence - officials (BBC News)

Can new powers for Scotland really be delivered within promised timescale? (The Conversation)

  • Articles about problems, conflicts and disease around the world

Ebola

Fast-spreading killers: how Ebola compares with other diseases (The Conversation)

Why It's Not Enough to Just Eradicate Ebola (NBC News)

Syria

Lebanon army arrests Syria rebel commander (Al Arabiya News)

Syria activists say government air raids kill at least 21 in ISIS-held town (Associated Press, Fox News)

Iraq

Iraqi officials say IS leader wounded in airstrike (Associated Press, Yahoo! News)

Obama signals 'new phase' against Islamic State in Iraq (BBC News)

Ukraine

Mounting fears of full-scale conflict in Ukraine (AFP, Yahoo! News)

Nervous Kazakhstan 'sensitive' about Ukraine question (BBC News)

Russia

In Ukraine, the start of a new Cold War that Russia can’t win (The Conversation)

Brazil

Brazil drought linked to Amazon deforestation (BBC News) Video.

Mexico

Protesters set fire to Mexican palace as anger over missing students grows (The Guardian)


There are 14 articles discussed today 'behind the wall'.

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'.

There are between 75 and 100 articles reviewed most weeks. That is in addition to the 140-160 articles of free content we provide.

You get a full year for only $25.


  • U.S. producers answer Saudis challenge on price (Phil Flynn, Futures Magazine) The U.S. is responding to what they are calling oil "dumping" by Saudi Arabia. Among possible actions are resumption of replenishing the U.S. SPR (Strategic Petroleum Reserve). The U.S. has also mentioned that a tax on discounted oil might be applied to discourage the "dumping". The talk on Wednesday morning produce some stability for the rest of the week. See OPEC preparing for price war (Phil Flynn, Futures Magazine).

oil-2014-nov-07

  • China’s high-speed debt train picks up pace (Peter Cai, China Spectator) Cai has lots of questions after recent travels across China. He reports lots of new and empty buildings. This causes him to raise flags because this overinvestment was accompanied by a six-fold increase in local government debt from 2008 to 2013, to rmb 20 trillion ($3.8 trillion). There are maturity mismatch problems in handling this debt and the revenue for local governments is highly dependent on land sales which have to be drying up with the current real estate bubble deflation. He writes:

"... a number of factors help put the severity of the local government debt problem into perspective. There is a mismatch in maturities, the debt exposes the country's banking system and local governments are heavy reliant on land sales for revenue.

Unlike many other municipal governments in developed countries, Chinese local governments below provincial levels are not permitted to raise debt. Consequently, local governments have turned to so-called financing vehicles to raise money and it's estimated there are now around 11,000 of them.

They have sourced most of their funding from Chinese banks. These state-owned financial institutions are responsible for providing 50.8 per cent of all local government debt, 71.6 per cent of explicitly guaranteed debt and 61.9 per cent of implicitly guaranteed debt.

Because Chinese banks have been clamping down on excessive exposure to local government debt lately, many local governments have been forced to borrow from the shadow banking sector, which typically charges 10 percentage points more than banks.

So Chinese banks are heavily exposed to the local government debt both through formal lending as well as off balance sheet activities.

Apart from an over reliance on the banking sector, local governments are also dependent on land sale revenue to balance their books as well as to service their ever-growing debt."

  • China: Yield Curve Handwriting on the Wall (Walter Kurtz, The Daily Shot email, no url) Interest rates in China are telling a story far different from the GDP growth rate which is still above 7%. Inverted yield curves are a necessary but occasionally not sufficient predecessor to recessions. In developed countries recessions are accompanied by two quarters of negative GDP growth. If China's growth dropped to 4% or 3% would that actually feel like a recession after the country has gotten used to growth rates twice as high and more? This looks ominous: Not only is the yield curve inverted but the negative slope is increasing.

china-negative-yield-curve

  • China's rebalancing is not what it seems (Peter Cai, China Spectator) Cai says that when th deflation in prices for manufactured goods and the inflation in prices for services are properly accounted for, the services share of GDP (an essential major component of the rebalancing away from investment and exports to greater consumption) is only increasing at annual rate of 0.4% over the past four years, not the 2.9% increase indicated by nominal figures. For more on deflation in China, see GEI News over the past 15 months, here and here and here and here. But President Xi Jinping doesn't see any problems: China's economic risks 'not that scary': Xi (Channel News Asia)
  • Europe Redefines ‘Stress’ (Raul Ilargi Meijer, The Automatic Earth) Hat tip to Yves Smith, Naked Capitalism) Very simply the numbers don't add up. The eurozone bankers can keep running their computers but the results will never balance. The system has removed the balancing mechanism as this excellent article describes.

children-in-poverty

  • U.S.: First-time Home Buyers are Fading (Walter Kurtz, The Daily Shot email, no url) The U.S. housing market builds from the bottom up, starting with the first-time home buyer increasing the level of demand. First-time home buyers are declining and this will dampen the move-up buying pressure in the U.S. market.

home-buyers-first-time

  • Other Economics and Business Items of Note and Miscellanea

Black Americans continue to languish in the Obama economy (Personal Liberty)

Kerry: APEC no longer just about economics (ABS CBN News)

Brat will hold the only Ph. D. in economics in the House (Richmond Times-Dispatch)

Real World Economics: Deflation hurts as much as inflation (Twin Cities Pioneer Press)

Everything You Ever Wanted to Know about Supply-Side Economics, in a Single Image (Town Hall Finance)

Hindu Conference Tries to Share Dharmic Knowledge – From Women’s Rights to World Economics (The Chakra)

Summer training program shows student what it takes to get a Ph.D. in economics (University of Houston: Class)


Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.






Econintersect Behind the Wall



search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
Slow Economic Growth Will Be Around For A Long Time
The Job Guarantee, Wage-Price Inflation And Alternative Solutions: Part 2
News Blog
Why New Jets Could Destroy Airlines
March 2017 Texas Manufacturing Survey Continues to Expand
Wage Growth After The Great Recession
Is OPEC Losing Its Ability To Influence Oil Prices?
Many Worry That The Great Recession And Mounting Student Debt Have Stunted Millennials' Financial Development
Infographic Of The Day: Visualizing The Shifting Income Distribution Of American Jobs
Early Headlines: Asia Stocks, Dollar, Oil All Down, Gold Up, Border Wall Obstacles, US To 'Fix' Gov With Business Ideas, ACA Death Spiral, US C-I Lending Down, Merkel Election Boost, And More
Most Read Articles Last Week Ending 25 March
Funded By The Crowd
U.S. Top Source Of DDoS Attacks In Q4 2016
How Artificial Intelligence And The Robotic Revolution Will Change The Workplace Of Tomorrow
Amazon's Alexa Is A Fast Learner
What We Read Today 26 March 2017
Investing Blog
Market And Sector Analysis 25 March 2017
Earnings: A Lot Less Than Meets The Eye
Opinion Blog
Is The 20th Century Still The 'Hayek Century'?
Yellen's Dangerous Glass-Steagall Repression
Precious Metals Blog
These Gold Stocks Will Produce Much Bigger Gains Than Gold Itself
Live Markets
27Mar2017 Pre-Market Commentary: Fasten Seat Belts As The DOW Is Set To Open Down Triple Digits, Crude Prices Slipping Along With The US Dollar, Not A Good Day On Wall Street
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government































 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved