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What We Read Today 05 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".).


Every day most of this column ("What We Read Today") is available only to GEI members.

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Articles about events, conflicts and disease around the world


  • The Agency (The New York Times)  Hat tip to Alun Hill. Subverting social media to spread propaganda and disruptive rumors is a big business for a company that hires hackers and trolls to carry out its mischief around the world.  The company is Internet Research Agency in St. Petersburg, Russia and most likely is a contractor to the Kremlin.  Other such operations are used by others, including ISIS.



  • Europe’s Bond Shockwaves Magnified by Liquidity Drain — Analysts (The Wall Street JournalThe sharp selloff in German government bonds is being exacerbated by a liquidity shortage, analysts say, a recurring theme for bond markets lately.  The change in liquidity conditions is partly because of tougher regulation requiring banks to hold safer assets on their balance sheets.  And the banks are competing with the ECB for access to government bonds in the face of QE bond purchases.  Econintersect:  The same shortages of government bonds that drove EU sovereign bonds to record high price highs when banks and investors were scrambling to find bonds needed to fill their asset requirements is now playing out in reverse as all those same agents are trying to change their allocations in the opposite direction at the same time.


  • The Myth of a Mighty Germany (Foreign Affairs)  Germany is an economic superpower, reigning World Cup holder (football-soccer) and a global leader in green energy, but it is far from a significant military factor in the world.  In terms of real influence in the world  it must "rely on the initiative of the European Union or the United States".


“The proposals from the creditors are clearly unrealistic. The Greek government cannot consent to unreasonable proposals that call for devastating measures for pensioners and Greek families. I want to believe that it was a bad negotiating trick.”


  • Why Israel Is Attracting Chinese Investors (Investopedia)  China is investing primarily (but not exclusively) in new technology.  Israel has the second largest expenditures on R&D as a percentage of GDP in the world.


  • ISIL wins support from Iraq's Sunni tribes (Al Jazeera)  Influential sheikhs and tribal heads in Anbar province pledge allegiance to group and condemn Iraqi government.  More discussion on the decay of Iraq (and Syria) below.


  • OECD sees lower growth for Japan (The Japan News)   The Organization for Economic Cooperation and Development said Wednesday it has revised down its estimate for Japan’s real gross domestic product growth in 2015 to 0.7% from the previous projection of 1.0%.  The OECD’s latest Economic Outlook report noted Japan’s slow recovery in consumer spending after the consumption tax hike in April last year, as well as the sluggish corporate capital spending despite earnings recovery.  The OECD left the 2016 growth forecast for Japan unchanged from the March projection at a 1.4%.


  • China’s IPO Market Leaves U.S. in the Dust (The Wall Street Journal)  Chinese companies have raised nearly US$29 billion from IPOs in the mainland and Hong Kong stock markets in 2015, topping the US$15 billion raised in the U.S.
  • China Opens Repo Market to Overseas Banks in Push on Yuan Usage (Bloomberg)  China opened a market for short-term loans to foreign banks, giving them access to cheaper yuan funding as policy makers encourage greater global use of the currency.  All overseas yuan clearing and settlement banks that participate in the interbank bond market can conduct repurchase agreements and move the funds abroad

The Time of the Kurds (Council on Foreign Relations)  The Kurds are one of the world's largest peoples without a state, making up sizable minorities in Iran, Iraq, Syria, and Turkey. Their history is marked by marginalization and persecution. Yet some Kurds may be on the verge of achieving their century-old quest for independence in a Middle East undergoing the convulsions of Syria's civil war, Iraq's destabilization, and conflict with the self-proclaimed Islamic State.  This is a comprehensive review of Kurdish history and current reality.  The graphics are extensive, the ones reproduced below have interactive features at the source site.  The final graphic is from What We Read Today (14 June 2014).  The three sectarian regions of Iraq could be defined as parts of three new countries, "kurdistan", "Sunnistan" and "Shiastan".  Sunnistan and Kurdistan could be extended into what is now Syria, leaving a smaller "rump" state or subdividing Syria completely.





Syria: A Country Divided (Al Jazeera)  Weakened by years of war, Assad's government now controls only a sliver of Syrian territory.

Other Economics and Business Items of Note and Miscellanea

  • Justice Department Readies New Bank Settlements (The Wall Street Journal)  Federal and state officials are preparing the next round of billion-dollar mortgage settlements involving U.S. and European banks.  The Justice Department and state officials, which already have reaped almost $37 billion from the largest U.S. banks for mortgage securities malfeasance, are now targeting both U.S. and European banks. Settlements with Goldman Sachs Group Inc. and Morgan Stanley could be finalized as early as late June.  Econintersect:  A total for the next round is not given in the article but, based on what information contained we estimate the sum could reach near $10 billion, possibly more.  The protection racket continues.
  • Better Than Cash Alliance Has an Orwellian Plan (Seth Mason, Solidus.Center)  SM contributes to GEI.  Seth calls "BS" on the claim that a cashless society would "stimulate entrepreneurship among the poor".  He says it would do just the opposite and "reduce a great many opportunities for entrepreneurship for people of few means".  The real purpose according to Seth is to increase government power and

... enable them to track and tax every purchase made with sovereign currency within their borders. In addition to producing new government revenue streams, the payment systems would increase governments’ social engineering capabilities: They would compel consumers to purchase goods and services from tax-paying, licensed organizations. Freelance service providers such as barbers, music teachers, and tutors would be forced to either jump through the hoops of incorporation or seek work with licensed businesses (which would inevitably take a cut of their earnings and subject the remainder to payroll taxes). The black market would also be squeezed, escalating the War on Drugs, and subjecting every “sin” and self-defense purchase to government scrutiny. Under the guise of “national security”, of course.

  • SEC Gets Statistical In Search For Median Employee’s Pay (The Wall Street Journal)  The disclosure rule under Dodd-Frank is intended to expose the income disparity between a company’s top executive and average worker – specifically the median annual total compensation of a company’s employees.  Companies are seeking to exclude overseas employees because of costs and the SEC is seeking statistical methods that will provide methods that can be used to estimate overseas compensation.
  • Convertibles Competition: A new Convertible Bond ETF Launches (ETF TrendsiShares Convertible Bond ETF (BATS: ICVT) seeks to track the investment results of an index composed of U.S. dollar-denominated convertible securities, specifically cash pay bonds, with outstanding issue sizes greater than $250 million.  It is the second ETF in this space, joining the 2 1/2 year old SPDR Barclays Convertible Securities ETF (NYSEArca:CWB).
  • Think The Net Neutrality Fight Is Over? Think Again. (Huffington Post)  In February, the Federal Communications Commission voted along party lines to adopt rules that ban Internet service providers such as Comcast and Verizon from charging content providers such as Netflix for more reliable broadband access. ISPs and many Republican lawmakers despise the new rules, claiming that they will hamper innovation.  Econintersect: Clearly (to us) those in a position to exercise monopoly power do not want that power restricted.  From the HP article:

In April, a number of industry groups and companies challenged the new regulations in the U.S. Court of Appeals for the D.C. Circuit Court. The groups later asked the court to issue a stay delaying the government from reclassifying broadband as a utility under Title II of the Communications Act, which is the legal basis underlying the new rules that ban Internet blocking, throttling, and paid prioritization. The ISPs argue that the FCC can use a different bit of telecom law to implement net neutrality rules. They also don't want the FCC to have the authority to police certain violations.

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