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What We Read Today 31 January 2015

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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As Measle Cases Spread in U.S., So Does Anxiety (Julie Turkewitz and Damien Cave, The New York Times)  There are only a small number of cases (90 in the U.S. and Mexico combined) but the wide geographic distribution has health officials concerned.  Only one hot spot has been identified with 52 of the cases linked to Disneyland in California.  The number of cases has been trending higher since the disease was declared "eradicated" in the U.S. in 2000, with more than 600 cases reported in 2014.  This is partly due to some choosing not to vaccinate their children combined with an effectiveness rate less than 100% leaving million still susceptible to the disease.  Officials say that this is a critical point for identification of those with the disease and effective quarantine to prevent a much larger outbreak.  See also next article.


Vaccine Critics Turn Defensive Over Measles (Jack Healy and Michael Paulson, The New York Times)  There is an active anti-vaccine movement in the U.S. as advocates aay they fear adverse side effects, most common among them autism.  From the NYT:

The anti-vaccine movement can largely be traced to a 1998 report in a medical journal that suggested a link between vaccines and autism but was later proved fraudulent and retracted. Today, the waves of parents who shun vaccines include some who still believe in the link and some, like the Amish, who have religious objections to vaccines. Then there is a particular subculture of largely wealthy and well-educated families, many living in palmy enclaves around Los Angeles and San Francisco, who are trying to carve out “all-natural” lives for their children.

The article cites high percentages of unvaccinated children in some communities, such as "50 to 60 percent of their kindergartners" in some schools in Orange County, California.  For the entire county 90% are vaccinated, only slighly below the statewide average of 90.4%.  Other communities near San Fransisco report report 25% to 58% incomplete vaccination records.

With the newly reported cases doctors and agencies across the county report a ground swell of requests for vaccination.

Articles about events, conflicts and disease around the world











Another Plunging Economic Indicator: The Fed Yammering Index  (Josh Zumbrun, The Wall Street Journal)  When things are perceived by the Board of Governors to be going well, word counts expand in the Fed policy statements issued.  When there is a crisis word counts shrink, as in the entry into the recession that started at the end of 2007 and again when the Great Financial Crisis broke wide open in 3Q 2008.  Well, word counts have been collapsing in recent months (but they are still high by historical comparison).  We'll let our readers explain what this means.  Note:  Zero hedge reported a laughter count indicator which seems to be negatively correlated with the "Yammering Index" as far as it goes (2001-2006).  See next article.


Guest Post: The Correlation Of Laughter At FOMC Meetings (The Daily Stag Hunt, Zero Hedge)  At the same time word counts for Fed Policy statements following FOMC (Fed Open Market Committee) meetings were declining (see preceding article), laughter in those meeting was rising.  The time period tracked here ended in 2006 just as the housing bubble crested.  Let's see:  Nero fiddled and the Fed .....

Click for larger image at Zero Hedge.

Supreme Court says health benefits don’t ‘vest’ (Keith R. McCurdy, Employee Benefit Adviser)  A unanimous decision by the SCOTUS (Supreme Court of the U.S.) has overturned a lower court decision and ruled that unless retiree health benefits are defined by a legal contract they are not a 'vested' right that must be maintained indefinitely.  These have been traditionally 'memorialized' in collective bargaining agreement documents which did not specify if and when the agreed upon healthcare benefits could be changed by the company for employees who retired while the agreement was in effect.  The common practice was to assume the benefits were vested for life for such retirees and previously all such cases contesting that interpretation had been settled 'out of court' before they got to SCOTUS.  Bottom line:  If a term or condition is not specified in a contract it cannot be presumed to be in the contract.  Thus a rare unanimous decision.

Currency Wars Heat up as Central Banks Race to Cut Rates (Frank Holmes, U.S. Global Investors)  Following are some selected topics from this very long report.

  • A Tale of Two 10-year Bonds  While some are amazed that the U.S. 10-year has a yield back below 2%, we think it is more amazing that a bond that may take a large haircut or be completely defaulted is paying only 11%.



  • Sector Performance last Week of January 2015  There were no winners.

Click for large image.

  • Global Deflation Looms  And the graph doesn't even include Japan which is right now very close to the U.S.  There is no doubt that there is a four-year disinflationary trend that is very close to having the major economic engines of the world all in deflation.


  • McDonald's Big Mac Currency Valuation Index  According to this whimsical index the Swiss franc is overvalued by more than 50% and the yuan renminbi is undervalued by more than 40%.  See the article from The Economist below.


The Big Mac Index (The Economist)  The Big Mac index was invented by The Economist in 1986 as a lighthearted guide to whether currencies are at their “correct” level. It is based on the theory of purchasing-power parity (PPP), the notion that in the long run exchange rates should move towards the rate that would equalize the prices of an identical basket of goods and services (in this case, a burger) in any two countries.  As we suggested in the article before this one, this metric could be called "whimsical".  The graphics below are part of an interactive display at The Economist that allows data to be viewed for individual countries.



Other Economics and Business Items of Note and Miscellanea

Week Ahead Economic Overview (Markit)  What's coming up in the first week of February? (A few great graphics.)

Google's surprising problem is out (USA Today)  Google has now missed earnings estimate five consecutive quarters.

Obama’s Peter Pan Economics (The Wall Street Journal)  "Other than the president, perfect fairness is an obsession mainly among children."

Obama’s ‘middle class economics': Clever politics, terribly bad economics (American Enterprise Institute)  US needs more savings or innovation, higher labor productivity and investment.  Not the time to raise taxes, according to this article.

Public debt in Africa: Not contagious (The Economist)  Gambia’s financial woes do not portend an African public-debt crisis.

Amazon shares rally 12% after profit returns (USA Today)

Online Economics Textbooks (  A list with links.

Ford's Fourth-Quarter Profit Beats Estimates (Bloomberg Business)  Ford Profit Slumps 98% on Slowed Pickup Output, Europe Losses.

Ford Ends 2014 With A Thud As Profits Fall 98 Percent; Why 2015 Looks Stronger (Forbes)

Alibaba Profit Surges, but a Revenue Gain of 40% Still Misses Forecasts  (The New York Times)

Alibaba vows to fight fakes - and China's government (USA Today)

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