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What We Read Today 17 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.

Falling prices of oil and the impact on the global and domestic economy (Peter Morici, Al Jazeera)  Collapsing oil prices have driven gasoline prices for regular under $2 a gallon in 13 states.  While this is a windfall to airllines, travelers and consumers in general, it has an economic cost yo others, notably oil producers and their suppliers.  Peter Morici, an economist at the University of Maryland, discusses the economic gains and losses on Al Jazeera TV.

Click to watch video.

2015 Standard Mileage Rates (IRS Notice 2014-79)

  • 57.5 cents per mile for business miles driven (up from 56 cents in 2014)
  • 23 cents per mile driven for medical or moving purposes (down half a cent from 2014)
  • 14 cents per mile driven in service of charitable organizations (fixed by Congress, never adjusted for inflation)

Kelly Phillips, Forbes, explains why the mileage rates appear to be inconsistent.  It’s because different formulas are prescribed by law for each driving category:

If you’re wondering about the difference in the rates for business and medical or moving purposes, there’s a reason: the standard mileage rate for business is calculated using an annual study of the fixed and variable costs of operating an automobile, including depreciation, insurance, repairs, tires, maintenance, gas and oil while the rate for medical and moving purposes is based on the variable costs, such as gas and oil. That also explains why the rate for medical or moving purposes has dipped while the rate for business has gone up. Inflation is edging costs – other than gas – up a tiny bit.

Note:  Taxpayers have the option of deducting actual expenses rather than the mileage rates allowed.  In many cases the extra work involved in record keeping and accounting is more than an additional tax deduction would make worthwhile.

Articles about events, conflicts and disease around the world

Ferguson and Related News







  • Norway's Oil Decline Accelerates (  Country with well-managed (lack of) dependency on oil revenues reacts quickly to collapsing prices with new oil projects being scrapped.



Russian economic crisis: as it happened 16 December 2014 (Peter Spence, The Telegraph)  A timeline of the action in Moscow overnight as Russia was in turmoil over a collapsing economy.  With the nation’s economy heavily dependent on oil, the crash in global crude prices (now approaching 50%) has created an unstable economic condition for Russia.  The value of the ruble has been cut in half and the Russian oligarchy is hurting.  If any of those petro-billionaires was highly leveraged and not sufficiently hedged they are probably under water and will never come up.


Putin Now Faces 'One Of Those Guns Or Butter Moments' (Armin Rosen, Business Insider) Forget about the sanctions hurting Russia.  It’s all about the price of oil.  The ruble has moved in lock-step with the price of WTI (West Texas Intermediate) crude oil price.  Will Putin try to resolve his crisis with a military offensive?


Unmasking the Hype of Capitalist Economics (Jeff Mackler, Counter Punch) A self-identified socialist describes what’s wrong with what capitalism has become and how a deluded public has basically turned off (witness 2/3 of all voters staying home election day 2014, a record low turnout).

Following Up: All Looks Clear on America’s Foreign Borrowing Front (Alan Tonelson, Reality Chek)  Demand for U.S. treasuries is high and Tonelson is sounding an all-clear on market prospects for U.S. government debt.  As the Fed tapered Treasury purchases this year treasury yields came down, quite the opposite of many predictions.  And after Fed purchases ended altogether the yields fell even faster.  See next article.

Benchmark U.S. Bond Yield Closes at Lowest Since May 2013 (Min Zeng, The Wall Street Journal) The 10-year U.S. Treasury bond closed at a 190month high Tuesday (16 December) with the yield all the way down to 2.07%.  Econintersect will have to revisit its October outlook for Treasuries.  Yields for 10-year bonds may well go back below 2%.  See Treasuries Now Looking Down (John Lounsbury, GEI Investing, 12 October 2014) )


 10 Wall Street Firms Fined Over Conflicts in Toys ‘R’ Us I.P.O. (Deal Book, The New York Times)  A withdrawn I/P.O. (initial public offering in 2010 that was withdrawn and not completed has resulted in $43.5 million in fines for Wall Street banks for not supervising internal conflicts of interest.

Wall Street’s self-regulatory group, the Financial Industry Regulatory Authority, said on Thursday that it had fined 10 firms a total of $43.5 million for allowing their research analysts to solicit investment banking business and for offering favorable research coverage in connection with a planned initial public offering of the retailer Toys “R” Us in 2010.

At Big Banks, a Lesson Not Learned (Gretchen Morgenson, The New York Times)  Morgenstern says it is time to impose punishment on banksters for wrongdoing that goes beyond what has simply been regarded as a cost of doing business.

With recidivism a way of life on Wall Street, perhaps it is time for securities regulators to consider far tougher penalties when bad conduct recurs. It’s becoming clearer by the day that collecting fines paid by bank shareholders is not enough to keep bankers from breaking the rules.

A Home of One’s Own (Editorial, New York Times)   This editorial maintains that the severity of the mortgage crisis was exacerbated by the banks rather than the borrowers:

The notion that borrowers brought foreclosure on themselves ignores evidence to the contrary. Many defaults in the housing bust were rooted in reckless and predatory lending that boosted lenders’ profitswhile stripping borrowers’ equity. Deep unemployment after the bust led to foreclosures among owners whose loans would otherwise have remained manageable.

In addition, foreclosure relief by lenders has been inadequate, causing disproportionate harm to lower-income and minority borrowers: A recent study by researchers at Brandeis University found that members of minority groups are twice as likely as whites to lose their homes to foreclosure, even though most seriously delinquent home loans are held by white borrowers.

The notion that low- and moderate-income borrowers cannot sustain homeownership is further undermined by evidence showing that the key to success is not a hefty down payment or even perfect credit, but rather carefully underwritten, 30-year fixed-rate loans that can be paid off in stable monthly increments.

Americans are 40% poorer than before the recession (Quentin Fortrell, MarketWatch)  Hat tip to Rob Carter.  Things are not moving in the right direction.  Not only would the median American household need to increase its net worth by 2/3 to return to the wealth it had in 2007, but it would actually have to increase net worth to equal wealth it had in 2010, the year after the Great Recession supposedly ended.


The Great Generic Drug Rip-Off  (Charles Hugh Smith, Of Two Minds)  Charles Hugh Smith contributes to GEI.  Something (not so) funny has happened to generic drug prices over the past year when you were not paying attention.


Other Economics and Business Items of Note and Miscellanea

David Koch a social liberal but focused on economics (The Witchita Eagle)

For Japan there is no road but to an economic recovery (Fabius Maximus) Fabius Maximus cntributes to GEI.

When Will the Fed Raise Rates? WSJ’s Hilsenrath and Reddy Discuss (The Wall Street Journal)

A New Clue in the Search for Life on Mars: Methane Gas (The New York Times)

Curiosity catches a whiff of methane on Mars – and a possibility of past life  (The Conversation)

Peter Lyons: Bet the house on city's weatherboard economics (The New Zealand Herald)  Why work when owning a suburban cottage will get more in appreciation each year than the median family income.

BOE Sees Rising Eurozone Threat (The Wall Street Journal)

Economics pushes many young adults to do without cars (The Valdosta Daily Times)

Announcing the Community Currency Knowledge Gateway (New Economics Foundation)

Why I’ll talk politics with climate change deniers – but not science (The Conversation)

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