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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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Australian PM Tony Abbott down but not out after no-confidence vote (Monica Attard, CNN) Abbott has survived a non-confidence vote among his Liberal party members by a 61-39 margin. The closeness of the vote indicates that he is "irretrievably damaged". The weakness of Abbott's position is revealed when the 40 votes of his cabinet are removed he lost the remaining votes by a margin nearly 2:1.
Articles about events, conflicts and disease around the world
Opinion: More jobs means more problems for the Fed (Michael Madowitz, MarketWatch) Madowitz says we cannot forget about the hidden slack in the labor market that is not reflected by the unemployment rate: The labor force participation rate is still at decades lows. And the celebrated wage growth over the last two months is less impressive in context. He writes:
Five Decades of Middle Class Wages: Not an Encouraging Perspective (Doug Short, Advisor Perspectives dshort.com) Doug Short contributes to GEI. Doug has constructed a hypothetical real weekly wage over the past 50 years by multiplying the median real hourly wage times the median hours worked per week. This "median" weekly income for Joe Sixpack has fallen more than 14% since 1972.
The truth about China's lies and statistics (John Lee, China Spectator) China has a very low GDP per capita and over one quarter of its people live on less than $2 (U.S.) per day. Over 100 million are still below the poverty line figure of $1.25 per day. Its debt-to-GDP ratio is over 200% (possibly 300% due to inflated GDP reported), and the fixed investment model is running out of steam. As its population ages, increases in labor productivity are the main hope for sustained growth. The trends may not be disastrous, but China is becoming a 'normal' economy with abnormally big problems.
China Will Allow Banks to Set Yuan-U.S. Dollar Rates for Retail Customers (Wynne Wang, The Wall Street Journal) This sounds significant at first blush but is quite limited in scope. It applies only to individual customers who are only allowed to purchase a total of $50,000 of foreign currencies in a year. China seems to be inching toward an easing of exchange rate controls over the renminbi. In March, China doubled the parity rate, a daily reference rate, to allow the yuan to trade 2% either way against the dollar. This increase was expected to inject greater volatilities into the currency exchange market.
Some thoughts on slowing house price appreciation in the US (Walter Kurtz, Sober Look) The only time in 30 years that prices were this far above "fair evaluation" was in the housing bubble.
Have We Been Reading the Declaration of Independence All Wrong? (MSN News) Scholars are uncertain whether a period (see below) actually exists in the original Declaration of Independence. If it is not there then Jefferson and the signers of the Declaration of Independence can be inferred to have a "big government" view that has not previously been considered and also that the fundamental rights of "all men" extend beyond "Life, Liberty and the pursuit of Happiness" to the power of government. With the period in question in place, government can be interpreted as subservient; without it government assumes a more equal footing. See also If Only Thomas Jefferson Could Settle the Issue (Jennifer Schuessler, The New York Times).
U.S. Job Creation Index (Weekly) (Gallup) Repeated from 04 July 2014. (We wondered at the time what this might mean and now we know that employment growth was picking up for the following months.) Gallup's Job Creation Index is the net of Gallup's Job Market measure, subtracting the percentage of workers who say their employer is letting people go and reducing the size of its workforce from the percentage who say their employer is hiring new workers and expanding the size of its workforce. Weekly results are based on telephone interviews with approximately 4,000 working adults; margin of error is ±2 percentage points. The index has not been higher than the current level since 2007.
These oil frackers are pulling away from rivals (Philip van Dorn, MarketWatch) While many look in the rear view mirror and start writing off frackers and horizontal drillers, others, like van Dorn, look at the evolving data which explains why U.S. oil production is still going up even as the number of active rigs is going down. One fact van Dorn reveals which you may not have know is that “while rigs applied to vertical wells have decreased dramatically by 46% year-over-year, rigs applied to horizontal wells have seen a slight reduction of 5%.” The rig count is being largely impacted by shutting down the marginal traditional wells near end-of-life, commonly called stripper wells. Why is the number of rigs involved in horizontal drilling remaining so high? Because the productivity of those rigs is surging as producers move down the learning curve. Just how this oil production/price chess game will play out remains to be seen.
Other Economics and Business Items of Note and Miscellanea
Citi: Oil Could Plunge to $20, and This Might Be 'the End of OPEC' (Bloomberg Business)
Rand Paul’s Mixed-Up Math on the Fed (American Enterprise Institute) Confusion from Kentucky.
The USA of I.O.U. (Banker's anonymous) The U.S. has a history of too-big-to-fail. In the early years of the 19th century the TBTF were the stockbrokers, traders and financiers of the day.
These Experts Know Exactly Where Oil Prices Are Headed (Bloomberg Business) It's somewhere between $30 and $200 a barrel (unless you're Citigroup and then $30 could be $20 (see above)..
Not Immune (The New Yorker) With measles breaking out it is unfortunate that political figures speaking out have little understanding of public health.
Resistant (The New Yorker) Book review: Pox: An American History by Michael Willrich. The medical history of vaccination is about great success; the political history is not.
Austrian Economists, 9/11 Truthers and Brain Worms (Noah Smith, Bloomberg) This is a particularly vitriolic takedown of Austrian School economic thinking.
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