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What We Read Today 20 March 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.

This feature is published every day late afternoon New York time. For early morning review of headlines see "The Early Bird" published every day in the early am at GEI News (membership not required for access to "The Early Bird".).

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Watch the Solar Eclipse in Less Than a Minute (Bloomberg Business)  Much of Europe into the North Atlantic experienced a total solar eclipse friday 20 March 2015.

eclipse.video.bloomberg


Articles about events, conflicts and disease around the world

U.S.

U.S. Sets First Fracking Standards in More Than 30 Years (Bloomberg)  Extensive disclosures of the chemicals used on public land now required.

France

France mandates new buildings have green roofs, solar panels (Al Jazeera)  Law passed by Socialist government calls for either green roofs or solar panels on new buildings in commercial zones.

Greece

EU offers Greece 2 billion euros to boost growth, help with "humanitarian crisis" (Reuters)

Merkel sets strict terms for Greek aid, Juncker flags EU cash (Reuters) Contrary to headline, latest Merkel statement indicates increased flexibility.

Greece debt: Confusion in Varoufakis middle finger row (BBC News)

Nigeria

Retreating Boko Haram leaves mass of throat-slit corpses near Nigerian town (Reuters)  At least 70 bodies found.

Somalia

Beyond Somalia’s massive security wall (Al Jazeera)  Mogadishu in split in two – one side for internationals, the other for locals.

Yemen

Suicide Bombers Kill 137 at Shiite Mosques in Yemeni Capital  (Bloomberg)

Israel

Obama tells Netanyahu U.S. to 'reassess' policy on Israel, Mideast diplomacy (Reuters)

Syria

As Syrian Civil War Rages On, Chemical Weapons Use Persists (Foreign Policy)  Recent days have made clear just how tenuous the dream of eliminating Syria’s stockpile had been as the government has dropped barrels of chlorine gas on the city of Sarmin.  Of course the government denies what has been reported by observers.  

Iran

Deadlocked Iran nuclear talks break off, to resume next week (Reuters)

Ukraine

Ukraine ceasefire being violated in government-controlled Peski (BBC News)  Video shows destruction and repeated gunfire.

Ukraine's president says truce not working, urges more Russia sanctions: newspaper (Reuters)

UK sends military advisers to train Ukraine troops (CNN)

Russia

Could Europe lose Greece to Russia? (BBC News)

China

ChemChina close to Pirelli deal that would trigger buyout offer (Reuters)  Italian tire maker could be sold to Chinese company.

Australia

Australia signals approval of China-based AIIB; Japan divided (Reuters)  Will U.S. become an isolated outsider?  China has invited U.S. membership in the new Asian Infrastructure Investment Bank but the U.S. has maintained opposition.



What the “Yellen Effect” Ultimately Means for Oil (Kent Moors, Oil & Energy Investor)  Kent Moors contributes to GEI.  Continuation of low interest rates even if for more than the few more months now expected will not help financing in the oil patch.  The perception there is of very high risk and the high yield market for oil has crashed.  Moors says the very high spreads there will only get worse.  He says that the high yield activity for drilling only makes sense at $90 a barrel and higher.  The yield for oil junk has more than doubled over the last 9 months.  Moors points out that while most of the forward production has been hedged, the cost of continuing to do that at current prices is prohibitive.  So money will be available as long as the Fed remains dovish but the cost for the energy sector will be interest rates that are just as prohibitive as the cost of forward hedging (or even more so).  Econintersect:  The chart indicates that there is no indication of a top for Energy HY, currently approaching 13% yield.  Where will the top be?  15%?  20%?  The top will come when no one is looking to borrow or the oil market establishes a price uptrend, which is not the case today.

energy.hy


One chart that shows just how ridiculously huge Wall Street bonuses are (Danielle Kurtzleben, Vox)  Hat tip to Roger Erickson.  The "takers" are certainly doing okay compared to the "makers".

wall.street.bonuses


Yellen Is Watching These Four Indicators for Signals on When to Raise Rates (Steve Matthews, Bloomberg Business)  In her press conference on March 18, Yellen laid out the markers for what "reasonably confident'' means. While "I don't have a mechanical answer for you,'' there are four targets that matter.  These are unemployment 5-5.2%, core inflation rising to 2%, wage growth push for inflation and rising inflation expectations.

unemployment.2015.mar

core.inflation.2015.mar

wage.growth.2015.mar

expected.inflation.2015.mar


When Politics Trumps Economics (Cullen Roche, Pragmatic Capitalism) Hat tip to Rob Carter.

Yes, it's true - as I've noted repeatedly, the economy is doing better than it gets credit for. But we could be doing a lot better. And if we'd had policies more geared towards the household sector (like middle class tax cuts) and fixing what I repeatedly said was the real problem - the bankrupt middle class - then I think we'd be much better off than we are. But we're muddling along and underperforming our potential because we've decided that political fearmongering is more important than actually helping people. So I guess we'll have to let the Fed continue to try to prop this ship up all because we're afraid that budget deficits cause hyperinflation and high interest rates.

It's a sad state of affairs and I only hope that it doesn't take another big collapse in the economy to get politicians to start making decisions that help those who need it most.


Interagency Guidance on Home Equity Lines of Credit Nearing Their End-of-Draw Periods (Office of the Comptroller of the Currency, The Fed, FDIC, National Credit Union Administration and Conference of State Bank Supervisors) There is official organized concern about the hundreds of billions of HELOC rollovers to occur 2014-2017. Keith Jurow has been writing about this. Here is one of his graphs:


New economics – not much will change at the current rate (Bill Mitchell, billy blog) Bill Mitchell thinks that the INET (Institute for New Economic Thinking) sponsored effort at Oxford to define a new economic curriculum (CORE) is being subverted by "neo-liberals [who] were reinventing themselves as 'progressive' or 'heterodox' and hi-jacking the reform process". Mitchell ascribes the process to "group think" and suggests considering the work of Solomon Asch who studied group pressure and prestige suggestion, conformity. Mitchell includes two videos, only one of which is still available:



Other Economics and Business Items of Note and Miscellanea

Who Owns the US Post Office? (Angry Bear) hat tip to Yves Smith, Naked Capitalism.  The Constitution specifically provides for the establishment of post offices and postal roads.  The author claims that Congress has abdicated its Constitutional responsibility.

Obama orders 40 percent cut in government's greenhouse gases (Arkansas Online)  President Barack Obama will order the federal government on Thursday to cut its emissions of greenhouse gases by 40% and increase renewable energy to 30% of consumption.  Comparisons are to be made to 2008 levels in 2025.  Corporations that sell to the federal government have pledged to make changes toward the government goals although not necessarily to the same extent.  IBM, for example, has pledged 35% carbon reduction and 20% use of renewables.

Here's the Next Biggest Threat to Global Crude Oil Prices (Bloomberg Business)  Russia may increase oil exports by as much as 250,000 barrels a day this year, a 5% growth in shipments, the most in at least a decade.

Traitors to their Class (The New York Times)  This Op Ed says some "Horatio Algerians for the new Gilded Age are working to keep the downtrodden down. They are traitors to their class, with all the strutting moral superiority that comes with the conversion."

Biogen's Alzheimer's drug slows mental decline in early study (Reuters)  Positive results for early and mild forms of the disease.

Retirees Could Lose Their 'Guaranteed' Health-Care Benefits (Bloomberg Business)  Unlike pensions, retiree health-care benefits are not legally guaranteed .

The Zero-Sum Moment (The New York Times)  David Brooks bemoans the loss of "win-win" politics.

Possible fatty acid detected on Mars (BBC News)  An alcohol may also have been found.  Origins (ie, biologic or not) cannot be determined.

Proof That Millennial Women Are Taking Over the World (Bloomberg)  Young women outpace men in earning college degrees, and have sailed past previous generations in labor force participation, while men work at a lower rate.


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