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What We Read Today 19 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".).

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A record 125 people were exonerated of crimes in 2014. Here are 6 of their stories. (German Lopez, Vox)  University of Michigan law professor Samuel Gross:

"It turns out that [wrongful conviction] is a much more common problem than everybody realizes.''

There has been a generally increasing number of wrongful convictions overturned as the years have progressed.  But the real number of railroaded convicts is simply not known.  It is likely that those investigated are only the tip of the iceberg.  The incentives in the criminal justice system are focused on getting convictions and not on assuring that all convictions obtained are deserved.

exonerations.us.1989.2014


Articles about events, conflicts and disease around the world

U.S.

  • Solar Power Battle Puts Hawaii at Forefront of Worldwide Changes (The New York Times, MSN News)  Rooftop solar systems now sit atop roughly 12% of Hawaii’s homes, according to the federal Energy Information Administration, by far the highest proportion in the nation.  That has put this state at the forefront of a global upheaval in the power business as utilities struggle to adjust to a shift to low cost rooftop solar electricity, putting an extreme strain on their business model.  Follow this story which we feature on GEI News and other GEI blogs frequently.
  • GDP Is a Bad Measure of Our Economy—Here’s a Better One (Time)  GDP growth is being challenged by a new holistic set of variables and shows the U.S. lags behind in crucial areas.
  • Credit is a powerful tool for American families (The Washington PostEconintersect: And it is an even more powerful tool for banks to suck more money out of the American consumer who already is suffering from falling incomes.

Germany

  • Deutsche Bank prepares to spin off Postbank (Financial Times)  Deutsche Bank is preparing to divest its Postbank retail operation in the latest strategy overhaul by a big global bank in response to sluggish markets and a welter of tough new regulations since the financial crisis.  The retail banking operation of Postbank is a relative low margin operation focused on middle income and lower income clientele.
  • Deutsche Bank leans towards limited revamp with Postbank sale - sources (Reuters)  This report states that sources indicate the Postbank divestiture will be a limited move away from retail banking with Deutsche Bank retaining retail banking operations for high net-worth individuals and institutions.  This was identified by FT (previous article) as a lower risk reorganization option vs. moving completely from retail banking to become strictly an investment bank.
  • Deutsche Postbank staff to go on strike (MarketWatch)  Almost 95% of Deutsche Postbank AG employees voted for walkouts in response to reports that the Deutsche Bank parent plans to spin off the mass-retail banking subsidiary operation.  The union demands that Postbank agree to forgo layoffs, and seeks a 5% pay increase for some of the bank's employees.
  • Deutsche Postbank (Wikipedia)  The Postscheckdienst was introduced in 1909 by the German Reich establishing accounts for payment transactions by mail and linking postal and banking services in German states.  In 1990 the German Postal Service (Deutsche Bundespost) was divided into three companies, Deutsche Post,Deutsche Telekom and Postbank, which was subsequently merged with the postal bank from East Germany.  Postbank became an independent, joint stock company in 1995. Postbank then extended operations, and engaged in loans, insurance and homes savings.  Over a period of time starting in 2008, Deutsche Bank aquired majority shareholder control of Deutsche Postbank for a total cost of about €6 billion euros.

Greece

Libya

Ukraine

China

  • China Powers Up (The Financialist)  China has bad news for coal exporters - its upgrading its electric grid system to move generating plants away from the coast to a more useful distribution around the country. The improved efficiency of the grid will reduce the amount of coal needed and plants will located closer to China's own coal mines.  Not mentioned in this article is the longer range changes in China's plans to increase dependency on renewable energy, especially solar which is on the verge of becoming cheaper than coal.  See Will Rooftop Solar Energy Ruin The Electric Utility Business? (Econintersect Feature)

Canada



ETF Chart of the Day: A Different Spin on the MLP ETF (Paul Weisbruch, Street One Financial, ETF Trends)  This actively managed ETF was launched 02 October 2014.  Opening day trading was $25.10, $25.18, $24.76 and $25.13 (open, high, low and close).  The all-time high close is from opening day ($25.13) and intraday is $27.77 on 07 November 2014.  Two quarterly dividends have been paid ($.50 on 06 Jan 2015) and ($0.505 0n 07 April 2015), implying a dividend yield of 9.2% at Friday's closing price.  The chart looks exceptionally ugly right up to the early part of January with the all-time closing low of $19.64 on 13 Jan 2015 and the all-time intraday low of $18.99 on 14 Jan 2015.  Since then the chart has looked much more promising.  With the bulk of the stocks held in the beat up oil and gas sector, this is a good ETF to keep an eye on for a possible contrarian turn-around play with income.

InfraCap.Active.MLP.ETF


World Markets Weekend Update: The Rally Shifts (Mostly) Into Reverse (Doug Short, Advisor Perspectives dshort.com)  Doug Short is a regular contributor to GEI.  All markets Doug tracks, except for Shanghai, have turned down.  And Shanghai will do the same on Monday as market reforms announced after the market closed on Friday sent stock futures there down 6%.

world.markets.2015.apr.17


Other Economics and Business Items of Note and Miscellanea

ETFs May Be Moving Stocks in Unseen Ways (Barron's)  Hat tip to Patricia Baronowski-Schneider (LinkedIn).  The $1.2 trillion in U.S. stock ETFs is having a much larger impact on the market than the fund industry claims, according to a recent report from Goldman Sachs. At issue: Heavy trading of index-tracking ETFs appears to be herding individual stocks up or down together, particularly in niche industries such as real estate and mining, creating tighter correlations than existed in the past.  ETF trading has grown to account for about one-quarter of overall share turnover, according to Goldman. That’s up from 10% to 15% in 2004.  MOST ETF TRADES don’t affect the underlying stock market at all. The majority take place between buyers and sellers, just like stocks. But ETFs require a separate layer of traders—at the institutional level—whose function is to keep ETF prices in line with the value of their stock baskets. These specialized market makers, called authorized participants, regulate the number of outstanding ETF shares based on supply and demand.  And this layer may be producing tighter correlations.

Employers report limited premium increases in wake of ACA (Employee Benefit News)  Health care in the U.S. is a hot button issue but the early consensus is that the Affordable Care Act has been integrated well by employers.  Costs of employer sponsored group plans have not risen as widely predicted by critics of Obamacare.

A Short History of Postal Banking (Slate)  As the debate over reinstituting postal banking heats up, we should know the U.S. had it. And it worked.  Now Deutsche Bank appears ready to reverse it's merger of postal banking into the global banking behemoth.  This 2014 article from Slate gives some perspective on some history and gives some ideas about what may lie in the future.  The following articles are some of those on postal banking (and the more general topic of public banking of which postal banks are a special case) which have been posted by GEI:

The Lost City of Z (The New Yorker)  This will fascinate those interested in Amazonia and haunt anyone who has ever visited there.  See also Ancient "Lost City" Discovered in Peru, Official Claims (National Geographic News) and Under the Jungle (The New Yorker)

The Pusuit of Beauty (The New Yorker)  Hat tip to Barry Ritholtz, The Big Picture.  A great study of the life built around the mind of a mathematical genius.

7 Things Worth Paying More For (Money Talks News)  Lowest cost is not always the best buy.

Your brain on weed (CNN)  Hat tip to Alun Hill.


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