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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Articles about events, conflicts and disease around the world
FBI inquiry extends to awards of 2018 and 2022 World Cups – live updates (The Guardian) The FBI’s investigation of Fifa includes scrutiny of how the organisation awarded the 2018 World Cup to Russia and the 2022 competition to Qatar, a US law enforcement official says. The U.S. action follows similar investigations launched by Switzerland over a weekago. See next article.
Fifa scandal: What took Switzerland so long to investigate? (BBC News) This article was released 28 May. Potentially then what the Swiss investigators come up with could have wider implications than the US case. The Swiss enquiry is into Fifa itself, and more specifically into the way in which the 2018 and 2022 World Cups were awarded to Russia and Qatar.
Despite Obamacare, gap health insurance market explodes (Reuters) The number of people applying for non-compliant, short-term health insurance policies was up more than 100 percent in 2014, according to new data available from companies who broker these policies. This type of health insurance is exactly the kind that the ACA, known commonly as Obamacare, was supposed to upgrade. Short-term plans provide low-cost coverage for major medical events like hospital stays, with high deductibles and out-of-pocket costs, and are subject to denial if applicants have pre-existing conditions. They do not offer the protections of Obamacare for preventive care or maternity coverage, for example.
Entire Treasury Department Competing For Same Goldman Sachs Job Opening (The Onion) Goldman Sachs human resources manager David Browning reported Thursday that a high-level position with the investment bank had attracted applications from every official in the United States Treasury Department. Browning added that the new hire was needed to take over the responsibilities of a former Goldman Sachs executive who had recently left for a high-ranking position in the Securities and Exchange Commission.
Greek stocks up as compromise details emerge (CNBC) Hat tip from Marvin Clark. Greek stocks rose on Wednesday after reports of a compromise plan from its international creditors -- although Greece insisted it had not formally received any new proposals. On Wednesday, the Financial Times reported details of the proposals, including the requirement for Greece to post a primary budget surplus of 1 percent of gross domestic product (GDP) this year. This would be expected to rise to 3.5 percent in 2018 and is significantly below the target of 3 percent included in the country's existing EU/IMF bailout. Econintersect: Any budget surplus for a country with a negative current account deficit (which Greece has) will be a deficit for the private sector equal to the budget surplus plus the current account deficit. This isa guarantee of shrinking GDP in excess ofthe reduction in government debt. Greece can never reduce debt to GDP ratio under such a regime, only increase it, unless money arrives from some external source.
Bus carrying Italian tourists collides with truck, killing 3 (Associated Press, MSN News) A bus accident killed the driver and two passengers on a charter headed from New York City to Niagara Falls. The accident occurred on Interstate 380 near Mount Pocono,Pennsylvania, There were a total of 17 Italian tourists aboard the bus.
Riksbank Sees Increased Risks to Swedish Financial System (The Wall Street Journal) Risks to the health of the Swedish economy and financial system have increased as a result of households’ continued debt buildup, and authorities urgently need to implement reforms to reverse the trend, the Swedish central bank said in its twice yearly financial stability report. Sweden’s financial system is currently working well but the risks of external shocks have grown recently as low interest rates have fueled investors’ demand for more high-risk assets and encouraged households to continue borrowing.
China is censoring news and discussion about the Yangtze cruise disaster (Quartz) As China races to rescue hundreds of people still trapped inside a capsized cruise ship on the Yangtze River, authorities are following a familiar playbook of media control and online censorship. Only 14 passengers (out of 458) have been rescued, including the ship’s captain and chief engineer who are in police custody for questioning. Eighteen are confirmed dead and over 400 are still missing.
Here's What Defaults Did to Other Countries as Greece Teeters (Jennifer Ryan and Alex Tribou, Bloomberg Business) Default is probably the best solution for Greece. This is a good article but does not include the Iceland story which may be the most favorable. The history of previous economic cataclysms suggests that changes in currency values can work as escape valves that quickly, though not painlessly, relieve pressure on an economy. Massive depreciations allow countries to become more competitive internationally, enabling them to draw back from the brink more quickly. The following are some of the graphics from the article. Note: In order for the histories to apply to Greece there would have to be a Grexit - otherwise the benefits of devaluation would not be available.
Other Economics and Business Items of Note and Miscellanea
Jeb Bush: Dad wrong about voodoo economics (The Detroit News) Jeb Bush defended Reaganomics on Tuesday, saying his father was wrong to criticize lower tax rates on income and capital gains during the 1980 presidential campaign.
"The new behavioral economics is Wall Street's secret mind-control brainwashing machine. Call it behavioral economics, psychology of investing, the new science of irrationality, it is Wall Street's most powerful weapon because you can't see it. They even try to make you think they're helping you. Bull!"
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