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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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Earth Has A Layer No One Knew About (Mary Beth Griggs, Popular Science) Scientists have found a specific layer in the middle of the mantle which is mechanically distinct from the other regions of the mantle above it and below it (closer to the core). This layer is chemically very similar to the rest of the mantle but they found "the strength in the rocks had increased by an insane amount--it was nearly 300 times stronger than that same type of rock would be at levels higher in the mantle". This mechanical barrier explains why subducted tectonic plates "stall out for a while, caught between a rock and a stiff place". The stall is temporary and the surface material eventually transverses the "stff layer" and then continues sinking toward the core.
Articles about events, conflicts and disease around the world
US Dollar: American Phoenix (Jawad Mian, John Mauldin's Outside the Box) Mian expects the dollar to have difficulty in strengthening further over the next five years because of weakness in the economy and a current account that he expects to increase in deficit. The past experience of large moves of appreciation (> 50%) occurred when these two factors were not unfavorable and he thinks they will be unfavorable going forward now.
Power from the People (Florence Jaumotte and Carolina Osorio Buitron, IMF) This paper finds lower unionization in advanced economies correlates with an increase in the income share for the top 10%. Note: Correlation coefficient is not provided. Econintersect: Our unfinished work is having difficulty in establishing that such a correlation exists in the U.S. But work is not completed so don't take that as a result.
Housing Affordability Hits 2 Extremes (Daily Real Estate News, Realtor Magazine) There are wide discrepancies between different markets regarding housing purchase affordability. Affordability is related to the mortgage payment for a median price home divided by the median income for that real esate market. An affordabilty ratio of 28% is considered "financially healthy".
The five most affordable markets (mortgage-payment-to-income-ratio):
1. Detroit-Warren-Dearborn, Mich. (13.2%)
2. St. Louis, Mo.-Ill. (18.1%)
3. Cleveland-Elyria, Ohio (18.8%)
4. Atlanta-Sandy Springs-Roswell, Ga. (19.8%)
5. Pittsburgh (20.1%)
The five least affordable markets:
1. San Francisco-Oakland-Hayward, Calif. (72%)
2. San Diego-Carlsbad, Calif. (56.9%)
3. Los Angeles-Long Beach-Anaheim, Calif. (50.7%)
4. New York-Newark-Jersey City, N.Y.-N.J.-Pa. (46.6%)
5. Miami-Fort Lauderdale-West Palm Beach, Fla. (42.2%)
U.S. and UK Inflation Rates (Walter Kurtz, The Daily Shot) UK inflation is running below forecasts while the U.S. is running above. Both have more inflation than the EU or Japan, especially the U.S. But not even the U.S. shows any sign of inflation becoming entrenched, inspite of what you may be hearing from various pundits.
Other Economics and Business Items of Note and Miscellanea
To move beyond boom and bust, we need a new theory of capitalism (The Guardian) Hat tip to Randy Wray. An article about the holy grail of economics.
Kraft Will Merge With Heinz in Deal Backed by 3G and Buffett (Bloomberg Business) Do you want ketchup on your mac and cheese?
Maryland HIX enrollment nearly doubles in half the time (Employee Benefit Advisor News) Insurance industry and individuals more knowledgable and system "bugs" are fewer.
The new authoritarianism (VoxEU.org) New dictatorships have mock elections and govern by manipulating information.
Biggest U.S. Automakers Said to Study Lower-Pay Tier for UAW (Bloomberg Business) UAW unlikely to accept.
Bitcoin’s lien problem (FT Alphaville) Hat tip to Yves Smith, Naked Capitalism. A common claim for bitcoins, that they eliminate debt from the creation of money, is bogus because they do no eliminate debt from the use of the virtual money.
Climate denial is immoral, says head of US Episcopal church (The Guardian)
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