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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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Reserve Bank of Australia cuts cash rate 25 bps to record low 2.25% (Investing.com staff) See also next article.
Aussie dollar gets destroyed after RBA cuts rates (Myles Udland, Business Insider) The Aussie dollar dropped 1.7%, a very large move, in just a few minutes following the rate cut (previous article). This article points out that the Aussie dollar is still probably significantly overvalued because of declining commodity prices. AUD has continued to drop to $0,7634 as this is written. For the latest exchange rate go to Investing.com.
Articles about events, conflicts and disease around the world
Oh, those largely repaired Irish banks... (Constantin Gurdgiev, true economics) Constantin Gurdgiev contributes to GEI.
Oil Prices' Impact On Canada's Oil Transportation Industry (Kario-Paul A. Brown, Investopedia)
Investment Riches Built on Subprime Auto Loans to Poor (Michael Corkery and Jessica Silver-Greenberg, The New York Times) Predatory lending to desperate car buyers at interest rates over 20%. How are lenders doing it? Have you heard of securitized debt? That's right, the old sucker play for investors held over from the housing bubble that keyed the Great Financial Crisis of 2008. In this case the amounts of money involved are not systemically dangerous, but there are still big investor losses to come and pain and suffering for the borrowers.
Scapegoating poor people for the housing crash is dumb. This study shows just how dumb. (Dylan Matthews, Vox) What happened as the housing bubble reached a peak? Foreclosures in the first three years after origination more than doubled for the top two income quintiles and was cut almost by half for the fourth quintile and by almost 2/3 for the poorest quintile. These numbers are expressed as a percentage of all foreclosures within the first three years. Having an explosion of delinquencies for the top 40% compared to the lowest 40% is inconsistent with having the lower income group drive the housing bubble and being responsible for the collapse.
The full paper: Changes in Buyer Composition and the Expansion of Credit During the Boom (Manuel Adelino, Antoinette Schoar and Felipe Severino, Social Science Research Network). The abstract:
One top Wall Street economist thinks the markets have never been this easy (Myles Udland, Business Insider) One graph from Torsten Slok of Deutsche Bank needs no further explanation.
Gauging Housing Demand for the Spring of 2015 – Caution in the Wind (Logan Mohtashami) A senior mortgage lending officer offers an optimistic view for housing markets in 2015. And then he includes the graph below, which is missing the real median household income for 2014. His hope for the new year is based on ... well, hope. There is nothing in the data shown to indicate any improving trend has started. But new data from Sentier Research does change the picture presented in the article: real median household income increased 3.3% from December 2013 to December 2014, to $53,653 using the normalization factor of the data here. That would extend the green line to the upper left corner of the death valley box and may replace "pure hope" with "hope plus supporting data". The second graphic below has an "X" added representing the new Sentier data.
Econintersect: The graph below has the 2014 income data from Sentier Research added (by us). See Median Household Income Improves Significantly in December 2014 (GEI Economic Releases, 26 January 2015).
Other Economics and Business Items of Note and Miscellanea
Despite history, GOP still wed to trickle-down economics (The Atlanta Constitution)
Paul Ryan: Obama Exploiting 'Envy Economics' with Tax Plan (Breitbart News)
Economics on electric cars face reset (The Detroit News) Do electric cars make sense with $2 gasoline?
Now’s the Time for Infrastructure Spending, White House Says (The Wall Street Journal)
Grover Norquist Turns on His Anti-Tax Bae Sam Brownback (Mother Jones) Kansas governor proposed increasing alcohol and tobacco taxes.
15 Marijuana Stocks To Watch In 2015 (Benzinga)
Battle of the Economics Bloggers (Bloomberg View)
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