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What We Read Today 04 June 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


  • FIFA ExCo Member Chuck Blazer Admitted Bribes for World Cup Votes (abc News)  "Beginning in or around 2004 and continuing through 2011, I and others on the FIFA executive committee agreed to accept bribes in conjunction with the selection of South Africa as the host nation for the 2010 World Cup," Blazer told U.S. District Judge Raymond J. Dearie in November 2013.  Blazer also said he was involved in bribes around 1992 in the vote for the 1998 World Cup host, won by France over Morocco 12-7.
  • No, economics doesn’t say free trade is best (The Hill)  There is a myth in circulation that economics has vindicated free trade as the best policy across the board, and that anyone who doesn’t believe this “doesn’t understand economics.”  But America’s free-trade agreements, like the mooted Trans-Pacific Partnership, don’t entail free trade at all. They entail free trade on America’s part combined with mercantilism on the part of China, Japan, Germany, and other nations running trade surpluses against us.  Furthermore, economics doesn’t actually vindicate real-world free trade.  It only vindicates a blackboard construct whose differences from reality are legion.  Econintersect:  We will have more on this later.


  • IMF Urges Fed to Postpone Rate Liftoff to First Half of 2016 (Bloomberg Business)  The International Monetary Fund waded into the debate over when the Federal Reserve should raise interest rates, calling on the central bank to wait until the first half of 2016 and cutting its U.S. growth forecast for the second time this year.  The lender also said that the dollar was “moderately overvalued” and a further marked appreciation would be “harmful,” in a statement released in Washington on Thursday on its annual checkup of the U.S. economy.  Econintersect:  Has any global financial organization ever before made an explicit recommendation of this sort?
  • Hunting for Hackers, N.S.A. Secretly Expands Internet Spying at U.S. Border (The New York Times)  The Obama administration has expanded the National Security Agency’s warrantless surveillance of Americans’ international Internet traffic without public notice or debate.  Justice Department lawyers authorized this in mid-2012 in two secret memos permitting the spy agency to begin hunting on Internet cables, without a warrant and on American soil, for data linked to computer intrusions originating abroad — including traffic that flows to suspicious Internet addresses or contains malware.
  • EPA Study of Fracking Finds 'No Widespread, Systemic' Pollution (Bloomberg)  Hydraulic fracturing has contaminated some drinking water sources but the damage is not widespread, according to a landmark U.S. study of water pollution risks that has supporters of the drilling method declaring victory and foes saying it revealed reason for concern.  The draft report released today covered a 3-year study.  An EPA spokesman said:

“the number of documented impacts on groundwater resources is relatively low.”

  • Exclusive: Inside Washington's Quest to Bring Down Edward Snowden (Vice News)  Declassified government documents obtained exclusively by VICE News in response to a long-running Freedom of Information Act (FOIA) lawsuit reveal a bipartisan group of Washington lawmakers solicited details from Pentagon officials that they could use to "damage" former NSA contractor Edward Snowden's "credibility in the press and the court of public opinion."  The documents say that Snowden downloaded files that "could negatively impact future military operations"  but the pages that might specify those operations were redacted for national security reasons.


  • Grand Central: Has Mario Draghi Lost His Touch? (The Wall Street Journal)  The European Central Bank’s president dropped plenty of friendly hints to bond and currency markets at his press conference Wednesday: the recent rise in inflation is no surprise; economic figures have been a bit disappointing; and, most importantly, the ECB will implement its EUR1 trillion-plus quantitative easing program to completion and is even willing to add to it if needed.  But market reactions were the opposite of what might have been expected as German bund yields soared and the euro strengthened against the U.S. dollar.


  • Germany's Merkel open to EU treaty changes for UK (BBC News)  German Chancellor Angela Merkel says the EU may have to consider treaty change if that is what it takes to keep the UK in.  She is confident that conditions can be created for the UK to stay in and she is "not losing sleep" over it, she said in a BBC interview.



  • Ukraine's Poroshenko warns of 'full-scale' Russia invasion (BBC News)  President Petro Poroshenko has told MPs the military must prepare to defend against a possible "full-scale invasion" from Russia, amid a surge of violence in eastern Ukraine.  Russia has denied that its military is involved in Ukraine, but Mr Poroshenko said 9,000 of its troops were deployed.  Clashes involving tanks took place in two areas west of Donetsk on Wednesday.


This is the best time to quit paying for TV, and it’s only going to get better (Business Insider)  There have never been more ways to watch TV without actually paying a cable or satellite company each month for a bundle of channels, many of which you probably never watch.  Streaming services over the internet are offering customers the opportunity for paying only for what they want to watch.  The forces driving this change are at least partially demographic as younger viewers are more and more opting out of the traditional TV distribution model.

Illicit Financial Flows and Development Indices: 2008–2012 (Joseph Spanjers and Håkon Frede Foss, Global Financial Integrity)  Hat tip to Michael W. HudsonEconintersect:  We have four problems with this work - to try to remove our questions (specified below) would require detailed review of the data.  We are not going to do that now, but will simply make note of our questions.  First, slopes in the following graphs appear to be little different from zero, which would indicate no variation of illicit financial outflows with increasing poverty.  Second, the correlation coefficients are not displayed with the graphs,but we expect that they may be 0.70 or less.  Correlation greater than 0.7 is required to reach the criterion of "fair" correlation by our definition. (See Correlation Concepts.)  From 0.5 to 0.7 is 'weak' correlation and below 0.5 is 'poor'.  Third, for the first graph below the definition of a linear trend line seems arbitrary; a better fit might be a quadratic, higher at low poverty, declining to 20% - 25% and then rising slightly toward higher poverty.  Fourth, if the correlations are in fact weak or fair, what does that mean?  Is the inference that higher illicit financial outflows (IFF) CAUSE greater poverty or greater income inequality?   There is, in our estimation, a high standard to prove correlation in fact is defining causation.  And if there is causation, does IFF cause poverty (inequality) or does poverty cause IFFs?  We will cover more of this story in coming days in GEI News.



This map renames each US state with a country that has a similar population (Andy Kiersz and ElenaHolodny, Business Insider)

We took population estimates for each country in the world from the CIA World Factbook and for all 50 states and the District of Columbia from the US Census Bureau's 2014 population estimates. For each state, we found the country with the closest population. 

MAP: US states re-named with countries of similar economic size (GDP) (Mark J. Perry, Twitter)

Other Economics and Business Items of Note and Miscellanea

  • Twenty-Three Geniuses (James Howard Kunstler, Doomstead Diner)  Kunstler accuses The Times as being entrapped in the "camp of techno-narcissism" and completely ignoring the major crises facing the world today. 

If there is a Pulitzer Booby Prize for stupidity, waste no time in awarding it to The New York Times’ Monday feature, The Unrealized Horrors of Population Explosion (see next article). The former “newspaper of record” wants us to assume now that the sky’s the limit for human activity on the planet earth. Problemo cancelled. The article and accompanying video was actually prepared by a staff of 23 journalists. Give the Times another award for rounding up so many credentialed idiots for one job. 

  • The Unrealized Horrors of Population Explosion (The New York Times)  The NYT devotes a major effort to describing why the forecasts by biologist Paul Erlich of coming disaster from population explosion have come to be wrong.  See the preceding article by William Howard Kunstler who finds the NYT article also has major shortcomings as well.

William Davies’ new book The Happiness Industry is a fascinating and vivid journey through the history of economics, advertising, psychology, management and more.  As a long-time researcher on the subject of wellbeing, the book had me flipping between ardent agreement and disagreement within the space of a single page on multiple occasions. It’s not hard to see why.

  • Top Universities for Economics in 2015 (Top Universities)  The list does not include some universities which Econitersect thinks are likely to contribute to shaping the profession in coming years.  From Top Universities:

QS World University Rankings by Subject 2015 provides a ranking of the world’s 200 top universities for economics and econometrics, based on a methodology which assesses academic reputation, employer reputation and research impact.

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