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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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More evidence that we’re losing America. It’s not too late to act. (Fabius Maximus) FM contributes to GEI. There is a lot of recent news covered in this artcile but we want to highlight two illustrations:
Articles about events, conflicts and disease around the world
Time Again for T Bonds? (Biiwii.com) Biiwii sold bonds when the optimism indicator exceeded 70 for the first time since the summer of 2012. That peak occurred just over three weeks ago and bonds corrected sharply right after that. He says here:
One More Stock To Build A Retirement Portfolio Upon At Any Age (Alan Saltzman, Regarded Solutions, Seeking Alpha) From GEI Discussion Group, LinkedIn. Saltzman is high on this stock which has record over more than 20 years of annual dividend increases. The stock is a REIT, Realty Income (NYSE:O). This article is loaded with analyst assessment data but an important message is seen in one of the graphics which shows the power of dividend reinvestment: An original $8,000 investment in 1994 is today worth more than $47,000 (not adjusted for taxes paid on dividends).
The “Plucking Model” of Recessions and Recoveries (Gregory Claeys and Thomas Walsh, breugel) This article looks at a model proposed by Milton Friedman more than 50 years ago by Milton Friedman and discussed by him again in 1993: The "Plucking Model" of Business Fluctuations. The basic thesis is that the size of a recovery from a recession is proportional to the depth of the recession. These authors look at the EU countries that experienced recessions in 2007-09 and finds that the regression plot for size of recovery versus size of recession supports the Friedman hypothesis (left hand graph below). While it is not part of the Friedman proposal, the authors also looked at size of the recessions compared to size of the preceding booms. As seen in the right hand graph below, there is no correlation whatsoever for these two metrics.
How addiction to debt came even to China (Martin Wolf, Financial Times, CNBC) Hat to to Apekshit Mulay via LinkedIn. Martin Wolf says balance sheets matter and the world has balance sheets out of balance. He discusses where the problems have been the biggest and where they may be in the future.
Wolf finds the next credit boom that might be a problem exists in China. He also mentions that, while some of the private debt bubble has been unwound somewhat in countries such as the US, UK and Spain (with transference to public debt increases), other private sector bubbles have continued to grow (Canada and France are mentioned). But China is his focus:
Wolf comes to a conclusion without mentioning specifics.* He sdays the world needs a mechanism to create demand without "without creating unmanageable rises in indebtedness". He has hopes for China avoiding a full blown crisis as seen in the rest of the world, but it does mean that "an engine of growth in demand is about to be switched off" as China rebalances.
Other Economics and Business Items of Note and Miscellanea
Financial Planning Association Responds to President Obama Announcement on DOL Fiduciary Rule (Financial Planning Association) FPA supports the president's efforts to get a meaningful fiduciary standard enacted.
Lenovo’s security debacle reveals blurred boundary between adware and malware (The Conversation) Lenovo's public whipping for serving up malware in its default installs should be a lesson to all.
6 reasons why you should visit Aspen this winter (Business Insider) The Managing Editor has several members of his family going to Aspen next week and he is not. :-(
Bowser: Legal pot possession to take effect at midnight in the District (The Washington Post)
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