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What We Read Today 10 December 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.

Congressional leaders reach deal on $1.1 trillion spending bill (Ed O'Keefe, The Washington Post)  Congressional leaders unveiled a massive $1.01 trillion spending bill Tuesday night that will keep most of the federal government funded through September.  If the final votes are not completed in the next 48 hours the government will shut down Thursday night.  Leaders of both parties say the bill will be passed in time to avoid that.

This is why Americans are overweight and broke (Catey Hill, MarketWatch)  If your waistline is expanding while your bank account is shrinking, a new survey may have uncovered the caloric culprit.  Of course, lack of exercise is also a big factor in weight management, but this article focuses on the biggest budget buster also being the biggest waist line buster.  For a complete review of how employees of American companies view their well being see The Principal Financial Well Being IndexSM:  Employees (4th Quarter 2014)

budget-busters

Articles about events, conflicts and disease around the world

Ferguson and Related News

Attorneys demand Ferguson Officer Darren Wilson be banned from policing in Missouri (Yahoo! News)

Columbia Law students get exams delayed to deal with 'trauma' of Ferguson, Garner decisions (Fox News)

Poll: Americans back charges in Eric Garner death (USA Today)

Ebola

Ebola outbreak: Virus still 'running ahead of us', says WHO (BBC News)

Somalia

Somalia invites energy companies to explore for oil (BBC News)

China helps fight piracy off Somalia (Hellenic Shipping News)

Turkey

Cameron: UK and Turkey 'hand in glove' in extremism fight (BBC News)

Iran

Can Iran 'control' its cohabiting couples? (BBC News) Violation of Islamic law.

Ukraine

Ukraine forces, rebels largely suspend hostilities (Yahoo News!)

Russia

Putin Plan B to Ship Gas Through Turkey Seen as Unrealistic (Bloomberg)

Russia's Usmanov to give back Watson's auctioned Nobel medal (BBC News)

Mexico

Mexico says evidence proves missing students were incinerated (Reuters)

Oil and Gas Bloodbath Spreads to Junk Bonds, Leveraged Loans. Defaults Next (Wolf Ricter, Wolf Street)  Energy companies sold 14% of all junk bonds issued in 2014 through October, $50 billion altogether, just in time to see a crash in oil prices gather steam.  The worst part of the crunch is because, not only are the bonds themselves high risk and facing their Armageddon as profits from drilling operations and America's oil boom are drying up, but this junk has been leveraged up to amplify profits and banks are involved in financing the leverage, even participating in the leverage themselves.  Richter says the Fed is very concerned about the involvement of banks.  Since August the bids for oils and gas bonds have fallen off the table as the following graph. (See Oil plunge taking no prisoners, though leveraged loans outperforming high yield (and the S&P) - LeveragedLoan.com.)

oil-gas-loans-bids-2014

So far the leveraged loan fall-out has been less than the junk bonds have seen, indicating that the lowest quality was not leveraged.  But if more default risk enters the picture leveraged loans could quickly become worthless.  At 10/1 leverage a position is worthless if the bond declines below 90% bid.  And 40% of the junk bonds are there already.  When bonds start trading below 80 the market is worried about immediate risk of default - and the higher quality  leveraged bonds could get caught in the contagion.

oil-gas-bonds-98-80-2014-dec-05


Here are 5 global problems cheaper oil may fuel (Tom Bemis, MarketWatch) American consumers (indeed global consumers) are celebrating lower fuel costs.  but Bemis list five potential problems:

  1. Fragile governments depending on oil revenues will face a lot more finncial stress.
  2. Geopolitical turmoil may erupt when some nations cannot fund basic needs of their populace.  This turmoil may be met with oppression by dictators.
  3. There may be knock on effects for countries receiving support from oil producing states.
  4. Oil producing states have had fast growing populations and lower oil revenues may create particularly severe hardships.
  5. Oil is extremely volatile and production disruptions and new well development cutbacks could produce violent price swings.

10 Reasons Why A Severe Drop in Oil Prices Is A Problem (Tyler Durden, Zero Hedge)  One of the ten reason has to do with U.S. employment.  Shale oil development has been a major supporter of U.S. employment, as shown in the following graph.  Employment in non-shale states is not quite back to January 2008 levels.  All employment growth since then has been in shale states.

jobs-shale-vs-non-shale-states

SEC Seeking S&P’s Suspension From Rating Commercial Mortgage Bonds (Matt Robinson and Dave Michaels, Bloomberg) The SEC (Securities and Exchange Commission) has been investigating whether Standard & Poors "bent rating criteria to win business in 2011".  Unnamed sources are saying that the SEC is seeking to ban S&P from grading commercial-mortgage bonds as part of the penalty for wrongdoing.  This would be the toughest action ever against a major credit rater.  Fallacious credit ratings in 2003-2007 are considered a significant factor leading up to the Great Financial Crisis of 2008.  And that is a crime still unpunished.

Who Has 1 Billion Users and is About to Overtake Facebook? (Steve Tappin, LinkedIn)  Another question:  Who has more users than Google+, LinkedIn and Twitter combined and is not Facebook?  According to this article it is Tencent (OTC:TCTZD and OTC:TCEHY), a Chinese company that operates WeChat and QQ.  This article, dated 04 November 2014, has numbers that are out of date in the rapidly changing online messaging world.  It also is missing major messaing and social networking apps, even if we agree to exclude all email apps.  For example the following article dated 09 December 2014 gives WeChat active user count as 468 million, 85% larger than the graphic below.  And the article does not mention LINE which has more than half a billion registered users.

The latest data we find for QQ (13 November 2014) give monthly user count as 820 million, of which 542 million were using "smart device":   Tencent QQ MAUs 820M, Wechat MAUs 468M in Q3 2014 (Incitez China, China Internet Watch).

Facebook announced in February 2014 (at the time WhatsApp was being acquired for $19 billion)  that WhatsApp had 417 million users.  WhatsApp's only venture capital investor about the same time claimed 450 million users.  In August 2014 WhatsApp CEO Jan Koum announced the company had grown: WhatsApp hits 600 million monthly active users (Dara Kerr, c/net).

The latest numbers we find for Facebook give 1.35 billion users (October 2014):  Facebook now has as many users as China has people (Katherine Rushton, The Telegraph).

The latest numbers for:

Google: 187 million Monthly Unique Visitors (as of 3/25/13)  By the Numbers:  60 Amazing Google Search Statistics and Facts (Craig Smith, Digital marketing RamblingsSearch only.

Google:  300 million Google + users (as of 10/23/13)  By the Numbers:  45 Amazing Google+ Statistics (Craig Smith, Digital marketing RamblingsGoogle+ only.

Google:  425 million Gmail users (as of 2/713):  By the Numbers:  10 Amazing Gmail Statistics (Craig Smith, Digital marketing Ramblings)  Gmail only.

Google:  750 million Chrome users (as of 5/15/13):  By the Numbers:  15 Amazing Google Chrome and App Statistics (Craig Smith, Digital marketing RamblingsChrome only.

Google:  1 billion YouTube users (as of 4/21/14):  By the Numbers: 60 Amazing YouTube Statistics (Craig Smith, Digital marketing RamblingsYouTube only.

-----------------------------

Google Total:  There are a minimum of 1 billion Google users and a maximum of 2.66 billion.  The actual number of unique users is certainly much closer to 1 billion than 2.6 billion, due to much overlap of usage.  Therefore we will use at least 1 billion users.  If we restrict the count to only social media and messaging services that are not email, then the total for Google includes only Google+ and agrees with the graph below.

-----------------------------

LINE:  580 million users:  How many People Use Skype, WhatsApp, WeChat, LINE, Kik and Other Top Chat Apps (Craig Smith, Digital marketing Ramblings).

LinkedIn:  332 million users (as of 3Q/14):  Numbers of LinkedIn members from 1st quarter 2009 to 3rd quarter 2014 (in millions) (Statista)

Microsoft:  300 million Skype users (as of 8/28/13):  How many People Use Skype, WhatsApp, WeChat, LINE, Kik and Other Top Chat Apps (Craig Smith, Digital marketing RamblingsSkype only.

Microsoft:  400 million Outlook email users (as of 5/2/13):  Microsoft: Outlook.com now has over 400M accounts, 125M on mobile (Sean Ludwig, Venture Beat)  Outlook email only.

Twitter: 284 million (Twitter Reports Third Quarter 2014 Results)

Apple:  200 million iMessage users:  How many People Use Skype, WhatsApp, WeChat, LINE, Kik and Other Top Chat Apps (Craig Smith, Digital marketing RamblingsiMessage only.

-----------------------------

So using the latest numbers we have found the outdated information provided by this article can be updated:

Tencent (1.29 billion) is now approximately the same size as Facebook (1.35 billion) without WhatsApp.  But including WhatsApp with Facebook the total is approaching 2 billion (`1.95 billion).  Both the Tencent total and the new Facebook/WhatsApp total certainly contain some overlap of users (those using both apps).  So Facebook may not be exactly 1.5 times the size of Tencent (1.95 / 1.29) because the overlaps may be different.

Tencent (1.29 bn) is still larger than Google+, LinkedIn and Twitter combined (0.92 bn)  but if iMessage and LINE are included the total (1.7 billion) is more than 30% larger than Tencent (and 13.5% less than Facebook plus WhatsApp).

There are dozens of other social networking sites that are attracting tens of millions (and even over 100 million in a few cases).  Undoubtedly there are substatntial overlaps because of multiple memberships among the various smaller sites and the "big boys".  The raw numbers for all these smaller sites would easily aggregate to 1-2 billion members but only a very small percentage are likely to unique users to only one site.

The bottom line?  There are proably up to 2 billion (or possibly slightly more) individuals involved with social networking today.  That is more than 1/4 of all the souls on the planet,  And that is an impressive number.

social-networking-services


 Text well, eat better: WeChat enters the online food delivery business (Bien Perez and Sophie Yu, South China Morning Post)  Users of the Tencent mobile messaging service WeChat, known as Weixin on the mainland, can now browse nearby restaurants, receive exclusive promotional offers and order food through the app in Hong Kong, Taiwan, Singapore, Malaysia, Thailand, the Philippines and India.  The service is being offered in partnership with foodpanda, a Berlin company that operates the different brands globally:  hellofood (Latin America, Middle East & Africa), foodpanda (Asia & Eastern Europe) and Delivery Club (Russia).  This article is dated 09 December 2014 and states that WeChat has "468 million active monthly users worldwide".

Other Economics and Business Items of Note and Miscellanea

Democratic State Rep with Economics PhD:  Vermont's Gruber Contract 'Likely ... Economic Propaganda' (Breitbart.com)

Grim forecast for Canberra shops due to stagnating wages: Deloitte Access Economics (Sydney Morning Herald)

Opinion: Bad politics threatens good economics (MarketWatch)

Capital Economics: Any home-price rebound will be temporary (HousingWire)

Grand Central: Here’s How to Read a Patient Fed (The Wall Street Journal)

Bank of England May Be Too Optimistic on Productivity, Weale Says  (The Wall Street Journal)

Global Asset Prices and the Taper Tantrum Revisited (Liberty Street Economics)  We may post this at GEI News.

Peter Temin: Lessons from the Great Depression (Institute for New Economic Thinking) We may post this in GEI News.

Thomas Piketty interview, by PSE (Paris School of Economics)


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