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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.
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Greek PM Tsipras names anti-austerity cabinet, port sale halted (Reuters) Prime Minister elect Alexis Tsipras named academic economist Yanis Varoufakis as his finance minister in an cabinet filled with anti-austerity veterans. Both Tsipras and Varoufakis said they were prepared to negotiate debt settlements but the campaign was run on a promise to end austerity, so modifications to the imposed economic and fiscal programs in some way is likely to be included in any successful outcome. Yanis Varoukas has contributed to GEI (as co-author with Yves Smith) and has been frequently cited.
Impact of lengthy low oil price (Financial Times) Oil is below $50 a barrel, a price at which many exploration projects are far from viable. Lex's Oliver Ralph and Alan Livsey discuss the impact of a lengthy spell at this level and whether shelved or capped projects will cause a supply shortage, increasing prices again.
Articles about events, conflicts and disease around the world
Race Relations and Related News
As Indian stocks soar, business sentiment falters (Fast FT, Financial Times) Over the last four months the Mumbai Sensex Index has risen 11% - and the MNI India Business Indicator sentiment metric for future conditions expectations has slumped by nearly 10%. This month MNI future expectations declined by 6% (the steepest single-month decline since last February), while the Sensex is up more than 7%. The MNI has reached its lowest level since April 2014, the month before the election of Prime Minister Narendra Modi and is down 5% since May. Over the same eight months the Sensex has advanced by nearly 25% from the day after the election and 32% from the day before the election. The FT attributes the lagging business sentiment to disappointment over the slow pace of reforms promised by Modi.
Why Stupid Politics Is the Cause of Our Economic Problems (Joseph Stiglitz, Project Syndicate, The World Post) The short verson of this article is that if a politician is not Keynesian h (she) is stupid. Stiglitz discusses as one of his specific the "third arrow" of Prime Minister Shinzo Abe's economic recovery program for Japan. Stiglitz says it was "launched in the wrong direction". He is referring to the big consumption tax hike last year at the very time other programs were attemting to increase consumption. Japan was thrown back into recession. For some detailed analysis of why the tax hike was a bad idea, see GEI News, 04 July 2013),
Sociology unfound (Philip Cohen, American Sociological Association) Over the past century and a half economists have gained an outsized recognition in the press compared to other social scientists.
Soaring Canadian Bonds (Walter Kurtz, The Daily Shot) There has been some notice taken of the U.S. 30-year Treasury bond having yield decline almost 130 basis points (bp) over the past twelve months, from 3.68% to 2.40%, but how many have noticed the extraordinary developments north of the border? Canada has seen a drop of 110 bp. Kurtz says he thinks Canada has never before seen a 30-year yield blow 2%.
US Treasury yield curve flattens ahead of the FOMC meet (Onkar Godbole, FXStreet) The spreads at the beginning of them month: 1 month-2 years, 64 bp (basis points or 0.64%) 2-10 years, 146 bp; 5-30 years, 108 bp. At close of trading 17 January 2015: 1 month-2 years, 52 bp; 2-10 years, 129 bp; and 5-30 years, 106 bp. Godbole says this reflects a growing expectation that weak economic data will delay interest rate hike by the Fed. If there is any significant wording changes after the Fed meeting today there will almost certainly be fireworks in the Treasury market.
Wages in the UK (Edward Harrison, Twitter) Edward Harrison has contributed to GEI. For the first time in seven years there has been real wage growtth in the UK over the last quarter.
Other Economics and Business Items of Note and Miscellanea
US Suspends Largest Private Contractor in Iraq and Afghanistan for Massive Fraud (Scott Higham and Steven Rich, The Washington Post, Reader Supported News) Hat tip to Rob Carter.
Stone Age Economics (Library of Econiomics and Liberty) Unfortunately we think the author, Scott Sumner, has one foot in the stone age himself in this discussion.
New study: No, free-market capitalism doesn’t make nasty economic shocks more likely (American Enterprise Institute)
Why we have not gone into space, & why we will. (Fabius Maximus) FM has contributed to GEI.
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