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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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Day Trader in Leather Jacket Far Cry From Wall Street Flash Boy (Liam Vaughan,John Detrixhe and Suzi Ring, Bloomberg) Great review of the "financial terrorist" arrested for causing the 2010 Flash Crash. The more that comes out about this case the fishier it becomes. How could one small trader in London, with several thousand miles of latency, significantly impact a market dominated by billion dollar HFT (high frequency trading) operations all trying to minimize distance latency to a few miles?
Remco Lenterman, managing director at market maker IMC Financial Markets in Amsterdam is quoted:
How do you spell scapegoat?
Articles about events, conflicts and disease around the world
China Margin Lending: Extreme Edition (The Wall Street Journal) How about margin debt in China at 3X the level of the top of the dot.com bubble in the U.S. On the basis of market free float it is just about 3x. On the basis of market capitalization China is 1.3x the earlier U.S. mark.
Keep It Simple And Complex, Stupid (Steve Keen, Forbes) A good discussion of nonlinearity in economic systems. The graphic below shows 42 years of U.S. data points in 3-dimensional space. The debt ratio is for private debt. What better demonstration could be given for the futility of trying to apply linear equilibrium models to gain an understanding of relationships between debt, employment and wages? That futility describes the efforts of all too many highly regarded economists. Go to the article to see some more illuminating graphics, including one of a debt-deflation spiral.
New-Home Prices Are on Fire (The Wall Street Journal) Historically new homes have commanded a 10% to 20% premium over equivalent existing homes. Currently the spread has widened to 40%, driven in part by the large number of poorly maintained existing homes that experienced more wear and tear than usual due to the flood of foreclosures in recent years. What you may not realize is that new homes have median prices nearly 20% higher than the peak of the housing bubble. Bubbling again?
Other Economics and Business Items of Note and Miscellanea
Largest Structure in Universe a Supervoid 1.3 Billion Light Years Across (Scientific Computing)
The dismal failure of supply-side economics on vivid display (AJC.com) All about Kansas.
Twilight Zone Economics (SilverSeek.com) A valiant attempt to compare U.S. government debt to personal debt. Wouldyou buy silver from this man? That's what he appears to be doing.
The Three Cs of Economics (The Vermont Cynic) Disclosure: This editor wrote for this paper when in college.
Should Asia’s Governments Spend More? (The Wall Street Journal) Are Asian governments also abandoning the "fiscal tool"?
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