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What We Read Today 30 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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Articles about events, conflicts and disease around the world

Global

  • Sales of $100 Million Homes Rise to Record Worldwide  (Bloomberg)  The ultra-luxury housing market is scaling new heights as a record number of properties around the world command prices topping $100 million.  Wealthy buyers seek havens for their cash and search for alternative investments such as art and collectible real estate.  Econintersect:  This is an example of why wealth is not creating economic growth which was discussed yesterday in this column (WWRT).  Great wealth is being "invested" in non-productive assets.

U.S.

  • The Dollar Is on Its Longest Losing Streak Since 2011  (Bloomberg)  Dollar bulls are growing concerned their pain is only just beginning.  More on this below.
  • Tesla's grid battery ambitions hinge on three crucial factors (Fortune)  Tonight we might find out what the business is that Tesla wants to be in. In a highly anticipated (and hyped) media event hosted by Tesla at their design studio in Hawthorne, Calif., Elon Musk plans to fill in the details–or so we hope—on Tesla’s energy storage plans.  The three crucial factors? 
    • (1)  Will the Tesla endeavor go far beyond the potentially problematic home storage smarket? 
    • (2)  Will the cost be workable for utility solar farm implementation. 
    • (3)  Will the cost for residential systems get below the critical $1,000 per kWh benchmark?
  • Freddie Gray: New lead over police van journey (BBC News)  Review of security tapes has revealed the police van carrying Freddie Gray made a previously undisclosed stop after he was on board.  Details have not been released.
  • Leaked Lyft Document Reveals a Costly Battle With Uber (Bloomberg)  Behind the friendly pink mustaches and fist bumps, Lyft is spending furiously to maintain second place in the U.S. ride-sharing industry, and steal market share from the distant leader, Uber Technologies.
  • Jim Cramer Explains Why Google Should Buy Twitter (TheStreet)  Cramer would turn Google into a media giant.  There are a few other big deal suggestions in this article as well.
  • George Soros May Face a Monster Tax Bill  (Bloomberg) George Soros likes to say the rich should pay more taxes. A substantial part of his wealth, though, comes from delaying them. While building a record as one of the world’s greatest investors, the 84-year-old billionaire used a loophole that allowed him to defer taxes on fees paid by clients and reinvest them in his fund, where they continued to grow tax-free.  The loophole was closed in 2008 with a "due date" of 2017.  Soros could be facing a tax bill up to $6.7 billion (or possibly even more).  Econintersect:  Could Soros follow the Warren Buffet lead and give it all to the Bill and Melinda Gates foundation?  Or does he really believe the rich should pay more taxes as he has publicly stated?

Turkey

Saudi Arabia

  • Saudi Arabia Is Burning Through Its Foreign Reserves at a Record Pace (Bloomberg)  The kingdom spent $36 billion of the central bank’s net foreign assets -- about 5 percent of the total -- in February and March, the biggest two-month drop on record, data released this week show. The fall was in part due to King Salman’s order to give government employees and pensioners a two-month bonus after he ascended to the throne of the world’s biggest oil exporter in January.  Econintersect:  The decision to conduct a price war to keep market share cannot be a long-term succussful strategy for the Saudi's.  In this article analysts are quoted who say fiscal adjument for Saudi Aarabia will be necessary even if oil returns to $70 to $80 a barrel.

saudi.arabia.foreign.reserves

Indonesia

  • Indonesia executions: Brazilian was 'unaware until end' (BBC News)  Father Charlie Burrows has said that Rodrigo Gularte was hearing voices and did not understand that he was to be shot by firing squad until the end.  Gularte had been diagnosed with paranoid schizophrenia and bipolar disorder.  Seven foreigners and one Indonesian were executed on Wednesday on various drug charges.

Nepal

  • Nepal earthquake: Two rescued after five days (BBC News)  Two people have been rescued from the rubble of buildings in Kathmandu, five days after an earthquake that killed at least 5,500 in Nepal.  Yesterday a four-month-old baby was rescued from the rubble.  The injury total now exceeds 11,000.  More than 70,000 homes are known to be totally destroyed so far.

Mexico

  • The 100-year view (The Economist)  Mexico, a country that has lived longer in moratoria than with access to capital markets, has, over the past five years, sold more than the equivalent of $5 billion in 100-year bonds denominated in dollars, sterling and euros.  The most recent sales have been euro denominated.  Econintersect:  Wow!  Talk about blind faith - on many levels.


U.S. Money Vs. Corporation Currency, "Aldrich Plan.": Wall Street Confessions! Great Bank Combine - Primary Source Edition (Alfred Owen Crozier, Amazon)  Hat tip to Roger Erickson.  Alfred Owen Crozier (1863-1939) was a Midwest attorney who wrote eight books on the political, legal, and monetary problems of the United States.[1]  He is best known for his work US Money Vs Corporation Currency, "Aldrich Plan," Wall Street Confessions! Great Bank Combine (1912), which argues against the formation of The Federal Reserve. He feared national banking, but he feared private control of the United States money system even more.  The following illustration from the book could have been (but as far as we know was not) the inspiration for Matt Taibbi's 2010 characterization of the TBTF (too big to fail) banks in The Great American Bubble Machine (Rolling Stone).

fed.octopus.1912


The Dollar Is on Its Longest Losing Streak Since 2011  (Bloomberg)  See also next article.

The greenback weakened for a seventh straight day Thursday, the longest losing streak since April 2011, after Federal Reserve policy makers indicated they’re in no rush to raise interest rates amid slowing growth. The losses cap the U.S. currency’s first monthly decline since June.

The drop has surprised speculators who were the most bullish on the dollar in at least six years, leading investors to question the $5.3 trillion currency market’s biggest one-way trade. The divergence between a Fed that’s seeking to normalize rates, and the more than 20 central banks worldwide that cut borrowing costs this year, had made betting on the dollar seem almost a sure thing.

dollar.spot.index.12.mo.600x499


U.S. Dollar Index Year-to-Date (Investing.com)  Here is the wild ride for 2015.

dollar.index.ytd.2015.apr.30


Is SPX Recreating This Pattern? (Chris Kimble, Investing.com)  Chris Kimble has contributed to GEI.  In 2000 and 2007 the S&P 500 created bullish ascending triangle patterns, which two-thirds of the time suggests that higher prices are ahead. The key to this pattern is support holding. Both times multi-year support failed to hold and you know the rest of that story.  Could the same thing be happening for the third time?  Or is the third time a charm?

breakout.or.failure.600px


40 Years of the American Home (CNN Money)  Click on image for animated infographic at CNN Money.  Watch the median American home expand in size by 56% and increase in market cost by 800% over 40 years time.  Econintersect:  The median house price in 1973 was not given in the video.  The value for January 1973 was $29,900, according to the U.S. Census BureauNote:  The CPI inflation from January 1973 through December 2013 was nearly 450%.  So the value of median home ownership over the 40 years was a real (inflation adjusted) gain of 177% before any adjustments are made for property taxes, costs of maintenance, homeowners insurance premiums, mortgage costs, opportunity costs for capital used, etc (all of which reduce the gain) and rent that would otherwise have been paid (which would add to the gain).

Click for animated infographic at CNN Money.
house.1973


Other Economics and Business Items of Note and Miscellanea

What is Warren Buffett's Net Worth In 2015?  (Investopedia)  Headline could be accused of false advertizing because the author can't figure it out.  His best estimate is that it is somewhere greater than $70 billion.

Corporate power without responsibility on the board (Financial Times) Two board actions in the last week are cited as examples of short-term "self-indulgence" rather than striving for "stability and long-term growth" at Industrivärden (Sweden) and Volkswagen (Germany).

Academic Journal Tells Female Scientists: Work With a Man If You Want to Get Published  (Bloomberg)  A paper on gender bias in academia was recently rejected by an academic journal, whose reviewer told the two female authors to "find one or two male biologists to work with" if they wanted to get their work published.  That work was a scientific survey of how and why men in academia tend to publish more papers, and in more prestigious academic journals, than women.   Econintersect:  You couldn't make this stuff up.  Well, yes you could and , if well written, it could win awards in literature.

Save More Tomorrow: Using Behavioral Economics To Increase Employee Saving (ValueWalk)  Save More Tomorrow (hereafter, the SMarT program) involves people commit in advance to allocating a portion of their future salary increases toward retirement savings.  this has been shown to increase retirement plan savings significantly.

Community Bankers Push Lawmakers to Fill Vacant Fed Seat (The Wall Street Journal) Senate Banking Chairman Richard Shelby (R., Ala.) heads the panel must consider the nomination of former Bank of Hawaii chief executive Allan Landon to fill one of two empty seats on the Fed board. Shelby said he told the White House a couple of weeks ago he won’t schedule a hearing for Mr. Landon until the president nominates a candidate for the other open seat at the Fed.  Nearly 1,000 small bankers are in Washington for a policy summit hosted by the Independent Community Bankers of America, a trade group, have appealed to Shelby to hasten the approval of Mr. Landon.

Five warning flags that a business is failing (The Conversation)

Review: Generation Jobless by Peter Vogel (Financial Times)  A new book takes an optimistic view of possible solutions to the youth unemployment problem.  Generation Jobless? Turning the youth unemployment crisis into opportunity by Peter Vogel.



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