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What We Read Today 01 April 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".).


Every day most of this column ("What We Read Today") is available only to GEI members.

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Where carbon emissions are greatest (Kennedy Elliott, The Washington Post)  Hat tip to Flowing Data.  Carbon emissions produced by fossil fuel combustion are concentrated in areas of high population density, mainly in the northern hemisphere.  China and the U.S. combine for about 40% of the global total.  This is about 3.7x the amount emitted by the next two countries combined, India and Russia.

Click for interactive map at The Washington Post.

Articles about events, conflicts and disease around the world





  • Nigeria elections: Winner Buhari issues Boko Haram vow (BBC News)  The winner of Nigeria's presidential election, Muhammadu Buhari, has issued a defiant vow against militants Boko Haram, saying they would "soon know the strength of our collective will".  The president-elect also vowed to tackle corruption, which he described as an "even greater evil".


  • Why did Israel side with Saudi Arabia on Yemen? (Al Monitor)  "Rather than celebrating Saudi Arabia’s attack on Yemen, Israel should feel aversion toward it, since the destabilization of any Arab state can only lead to more and more terrorism and ultimately impacts Israel."



Costa Rica


  • Japanese hoarding $300B under mattresses (CNBC)  Hat tip to Marvin Clark.  Part of this is likely tax evasion but part is also a reaction to entrenched deflation.  But the deflation motivation has a downside with the devaluation of the yen over the last couple of years.  Two years ago ¥36 trillion was worth close to $500 billion.  This difference means little to the average person in Japan, however, because they don't buy anything priced in dollars or that is imported.

Forex reserves in emerging markets begin to shrink (Financial Times)  Foreign currency reserves in emerging markets fell last year for the first time in two decades (with the exception of the Great Financial crisis year, 2008) as developing economies found themselves beset by waning competitiveness, capital outflows and concerns over US monetary policy.  This may be the start of a new trend and a difficult struggle for globalization until reversed again.  But as monetary easing diminishes in the developed world the liquidity that has supported the foreign exchnage reserve expansion will be gone.

ACA at 5 Years: 25 Numbers to Know (Medscape Multispecialty)  The stats come from federal agencies and think-tanks such as the Kaiser Family Foundation, the Robert Wood Johnson Foundation, and the Urban Institute. Because different institutions use different time frames and methodologies to arrive at estimates of the law's effect, some figures here may vary somewhat from those published elsewhere.  Here are the 25:

11.7 million: Number of Americans who have signed up or reenrolled for coverage on ACA insurance exchanges for 2015.

46%: Increase in the number of Americans signing up for coverage in an ACA exchange plan from 2014 to 2015.

2.3 million: Number of young adults who gained coverage from 2010 through September 2013 by staying on their parents' health insurance plan up to age 26 years.

28: Number of states, along with Washington, DC, that expanded their Medicaid eligibility requirements under the ACA.

11.2 million: Number of additional Americans enrolled in Medicaid and the Children's Health Insurance Program in January 2015 compared with in the fall of 2013, 86% of them in states that expanded their Medicaid programs.

30,700: Jobs that Alabama would have gained each year through 2020 if it had expanded its Medicaid program.

900,000: Number of Americans whose individual or employer-sponsored health policies were cancelled for 2015 because they did not comply with the ACA.

$7.4 billion: Drop in uncompensated care for hospitals nationwide in 2014 resulting from ACA exchange coverage and Medicaid expansion.

46%: Percentage of Americans who said they approved of the ACA in the first Kaiser Family Foundation tracking polling in April 2010.

50%: Highest ever approval rating for the law in the Kaiser Family Foundation poll, posted in June 2010.

33%: Lowest ever approval rating for the law, posted in November 2013 during the glitchy rollout of

41%: Approval rating for the law in March 2015.

87%: Percentage of 2015 enrollees in ACA exchange plans in the 37 states using who receive a premium subsidy in the form of a tax credit.

$3960: Average premium subsidy (annual) in 2015.

1 in 2: Number of American households eligible for a premium subsidy in 2014 who will have to pay some money back to the government in 2015 because of income changes.

$794: Estimated average payment these households will owe the government in 2015.

$15 billion: Amount saved so far by 9 million Medicare beneficiaries receiving prescription drugs as a result of the law's shrinkage of the infamous Part D "doughnut hole."

18: ACA tax increases, new taxes, fees, and penalties the Heritage Foundation counted in a government analysis of the ACA.

15: Number of seats on the law's Independent Payment Advisory Board, created to curb Medicare spending and loathed by organized medicine.

0: Number of people appointed to the Independent Payment Advisory Board so far.

26%/12%: Percentages of Republicans and Democrats, respectively, who said in March 2015 that an ACA government panel helps make decisions about patients' end-of-life care. As in a "death panel."

$10: Threshold for "transfers of values" to physicians — think of a $10 bag of bagels from a pharmaceutical representative — that drug and device makers must report to the government, as required by the ACA's Sunshine Act.

0.3%: Percentage point increase in new-patient visits as a proportion of all visits for primary care physicians from 2013 (22.6%) to 2014 (22.9%), when insurance coverage expanded under the ACA.

3: Number of lawsuits about the ACA that have made it to the Supreme Court: National Federation of Independent Business v Sebelius (individual mandate and Medicaid expansion), Burwell v Hobby Lobby (contraception coverage mandate), and King v Burwell (premium subsidies). The last case is pending.

The economics of deflation (Speech by Ben Broadbent, Deputy Governor for Monetary Policy, Bank of England)  Broadbent reviews the history of inflation from 1840 to date.  See Chart 1.  He finds that deflation has different economic effects depending not only on the expectation of lower prices deferring consumption but also based on the direction of wages and interest rates.  If wages deflate along with prices the incentive to save to buy more tomorrow is diminished because tomorrow there will be less money available in income.  He also points out that the incentive to save to buy more with your money tomorrow exists even when there is inflation as long as real interest rates are positive, so the thinking of the consumer is not changed by deflation unless the real interest rates are increased over what has been experienced in the past. 

Econintersect:  Looking at much of the developed world the conditions in the 21st century so far have seen very low (even negative) real interest rates and little real income gains or minor losses.  Such conditions do not promote deflationary spirals which feed on themselves.

In the19th century U.S. nominal interest rates remained fairly constant (3% - 6%) though all the inflation - deflation cycling (and real interest rates varied between 0% and 6%, mostly between 2% and 6%, with the zero bound being hit briefly right after the Civil War, 1869 - 1872).  Positive real interest rates would have been procyclical except for diminished perception of advantage for saving because of the relative stability of nominal interest rates.  In addition wages also tended to cycle up and down with the business cycle.  Thus the deflationary/inflationary cycling in 19th century America was not an impediment to economic growth that it might have been.  See Chart 5.

There is much more good discussion in this article and some more excellent graphics.



Bad News For America's Biggest Housing Bubble: San Francisco Home Prices Suffer Biggest Drop In Three Years (Tyler Durden, Zero HedgeZH says that when it comes to U.S. housing markets, "none is more important than San Fransisco".  The headline is a little on the sensationalistic side.  It is actually the second derivative of price change that is the most negative in more than three years - prices are still up 7.9% from a year ago.  But that is the lowest year-over-year change since 2Q 2012.

Click for larger image at Zero Hedge.

Nationwide’s Health of Housing Markets (HoHM) Report (In the Nation)  The LIHHM (Leading Index of Healthy Housing Markets) shows that the overall housing market is healthier than at any time since 2001 (earliest available data), suggesting that there is little reason to fear a national housing downturn over the next year.  Only two of the 373 MSAs (metropolitan statistical areas) in the nation are in negative territory (Bismarck, ND and Atlantic City, NJ), and even these are nearly in the neutral zone, according to the report.


Other Economics and Business Items of Note and Miscellanea

Why oil’s not hitting lows? ‘Phenomenal’ demand (CNBC)  OPEC output hits highest level in six months and U.S. output is still rising, but prices aren't falling further because the world is soaking up this huge supply.

Space and the city (The Economist)  This could have been written by GEI contributor Scott Baker who is a land-tax proponent for much longer than we have known him.

[G]overnments should impose higher taxes on the value of land. In most rich countries, land-value taxes account for a small share of total revenues. Land taxes are efficient. They are difficult to dodge; you cannot stuff land into a bank-vault in Luxembourg. Whereas a high tax on property can discourage investment, a high tax on land creates an incentive to develop unused sites. Land-value taxes can also help cater for newcomers. New infrastructure raises the value of nearby land, automatically feeding through into revenues—which helps to pay for the improvements.

40 Things Every Dividend Investor Should Know About Dividend Investing (  You may know most of these (but probably not all) but you can't lose anything from a thorough review from time to time.  Bookmark this one.

Everything You Need To Know About Laissez-Faire Economics. A Conversation with Alan Kirman (This View of Life)  Hat tip to Roger Erickson.  A biologist interviews an economist.  Roger suggests that the tone of the interview considers if biology should be fused into existing economics.  Roger thinks the reverse is the correct logic.

Brilliant!  New Graphene Bulb Lights the Way for more Durable and Energy-Saving Future (Digital Trends)  Hat tip to Marvin Clark.  New bulb will cost less and last 10 percent longer than traditional LEDs.  But see next article.

Cree Just Released a Smart Bulb that Only Costs 15 Bucks (Digital Trends)  New LED pumps out 815 lumens, consumes 11W at full brightness, and also sports Cree’s next-generation 4Flow Filament design for an even, omnidirectional glow.  it’s also compatible with Wink and ZigBee-certified hubs, so you can control it from anywhere in the world. Just sync your bulbs to the accompanying smartphone app, and you can easily dim or brighten them, schedule them to come on at the start of each day, or even turn on at random times while you’re away to make it look like somebody’s home.

Priced out: New housing froth discourages buyers (CNBC)  When it comes to fixed monthly payments Shari Olafsen, director of the Carnegie Group, says buying is cheaper than renting in many housing markets, but there are still affordability issues holding back the housing market as "some local markets are once again going beyond sustainable prices and becoming overvalued".  Other headwinds include potential first-time home buyers inhibited by college loan debt, millions of hoeowners still underwater on their mortgagaes and millions more reluctant to abandon low mortgage interest reates that are no longer available.  There is more discussion on housing earlier in this post.


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