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What We Read Today 12 May 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

U.S.

Germany

  • Bund “tantrum” warns of future accidents (Gavyn Davies, Financial Times)  The bund market interest rate surge has been only a minor event so far, but it could be a warning of the shape of things to come, and on a much larger scale.

Sweden

New Zealand

  • New Zealand May Join Region Cutting Rates (The Wall Street Journal)  In a dramatic shift from just last month New Zealand’s central bank is now set to cut interest rates due to weak inflation and tough times for dairy farmers, with some economists calling for a reduction as early as June.

Nepal


 

 


  • Bond selloff continues (Walter Kurtz, The Daily Shot)  The following charts are as off market close Monday.  Today (Tuesday) bonds closed virtually unchanged from yesterday. bond.selloff

"Leverage, as measured by debt in relation to book equity, has fallen dramatically and now stands at the lowest level since the late 1980s.  After increasing steadily from the mid-1980s until 2007, leverage has now declined seven years in a row.

"This is a unique occurrence.  Based on our 42 years of data, leverage had never before fallen more than three years in a row, let alone seven. What began as a reaction to the credit crisis has turned into a secular trend, with implications for stock prices."

sp500.leverage


  • Econintersect note:  Collapse of Corporate Credit Costs (John Lounsbury)  The following graph shows the imputed relative ccredit costs for S&P 500 companies using the data from Sam Ro, Business Insider (previous article) and the prime interest rates every year since 1973.  The data is the estimated averages for each year, rounded to nearest whole percentage.  Will develop this concept more and post later.

SP500.debt.service.index



Other Economics and Business Items of Note and Miscellanea

  • Nobel Laureate Joseph Stiglitz: 'There is no magic bullet' to fix income inequality (Business Insider)  Stiglitz traces the start of growing income inequality to the cutting of top marginal income tax rates from 91% to current levels (and occasionally lower) plus deregulation.  He says that rising inequality of the past several decades has been a policy choice.  The choices made have not created free markets but have increased monopoly power, according to Prof. Stiglitz.  Here is a summary of inequality data from the article:

Over the past three decades, the share of household wealth by the top .1 percent has increased from 7 percent to a whopping 22 percent

Since 1980, the share of national income for the bottom 99 percent of workers has decreased by 15 percent.

At the end of the day, it will be the utility and large-scale commercial installations that really move the needle. For most homeowners, having the utility provide storage through the grid is far more economical. But the large-scale users will continue to stir the pot, making new investments in solar and wind, more attractive than ever, and yes, that will continue to change the game.

mortgage.purchase.apps



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