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 dayin the early am at GEI News (membership not required for access to "The Early Bird".).
A Speech of Hope for Greece – a Project Syndicate Op-Ed (Yanis Vaaroufakis) The Greek finance minister draws a parallel between the Germany of 1946, destroyed by military war and the Greece of 2015, destroyed by economic war. Econintersect: We don't wonder why the Greeks can't negotiate a settlement with the Troika. Varoufakis operates on an intellectual level beyond the ken of his counterparties, historically, politically and economically.
Israel, Saudi Arabia admit secret diplomacy for first time (The Jerusalem Post) Israel and Saudi Arabia have held five secret meetings since the beginning of 2014 to discuss the common threat Iran posses to the region, it was revealed for the first time Thursday at the Council on Foreign Relations in Washington, according to Bloomberg.
In Major Escalation, Yemen Rebels Fire Scud Missile Into Saudi Arabia (Zero Hedge) On Saturday, Riyadh claimed the Houthis, in concert with forces loyal to former President Ali Abdullah Saleh, fired a scud missile at Saudi Arabia for the first time. The scud, which apparently targeted the city of Khamis Mushait in southwest Saudi Arabia, was intercepted by two Patriot missiles. This came two days after Yemeni rebels agreed to peace talks - see next article.
Economics, history and the Russian stock market (Khaleej Times) Economic catastrophe has been a recurrent theme in Russia’s tragic history and this commentator says Putin has continued the theme. "Putin failed to expand Russia's economic base despite a tenfold rise in oil prices in his first decade in power."
Pricing In A China Hard Landing Is Just Whistling In The Dark (Seeking Alpha) Pricing in a China hard landing is something of an oxymoron. Properly pricing in a future event requires specifics. Being on standby to dump the portfolio in case something awful happens is not pricing in anything at all. It's just whistling in the dark. Specifics, however, are conspicuous by their absence when it comes to defining a China hard landing. Even by the simplistic measure of GDP, the investment community is divided.
Little Belize Offers A Lot (Including Tax Advantages) (International Living) Hat tip to Alun Hill. Among other benefits, those in the program can import household goods and vehicles (cars less than three years old, a boat, or a light plane) tax-free within a year of approval. They are also exempt from paying any tax on income or investments generated outside Belize.
Looming rental crisis in the United States (Walter Kurtz, Sober Look) Renting is the option for those who cannot afford to buy. But what happens when there is not enough rental property available? And when it costs more to rent than to buy? Remember that many are renters because they cannot afford to buy. Graphs (some with our annotations) to support what Kurtz says are below (more charts at source). Watch for GEI Analysis by Keith Jurow this coming week on why the entire U,S. residential real estate market is in trouble. Here Kurtz says:
The United States is not building enough homes to meet the nation's housing demand. It's difficult for many to accept this fact given some of the over-building that took place during the housing bubble. However that wave peaked around ten years ago and residential construction had since declined to historically low levels. This unprecedented weakness in construction activity has persisted over the past 6-7 years, with only limited signs of recovery.
Other Economics and Business Items of Note and Miscellanea
Student-Run Economics Club Connects Elite Chicago High School Entrepreneurs (Chicago Inno) The recently formed nonprofit Junior Economic Club of Chicago (JECC) was started by Lincoln Park High School junior Sam Lurye who found his school didn't provide the economics curriculum rigor he desired. He started it as a school club but has expanded the organization to include students in other Chicagoland high schools. The club brought in speakers, partnered with outside organizations, and created a loose curriculum that gave teens a space to discuss finance, investment, and other business topics. It helped pave the way for Lurye to head to a summer accelerator where he began work on his recently released crush app, Kiss.
The Glass Half Empty Recovery (Seeking Alpha) One of our favorite analysts, Cullen Roche, says the glass is still half full. With all the weak economy and stock market peak articles we are publishing, we all should take a look at this short essay which says: "Not yet."
“The Great Depression was a Calamity of Unfettered Capitalism” (Foundation for Economic Education) Hat tip to John O'Donnell. This is part of a series entitled the "Cliches of Progressivism". This is a collection of real data and a summation of conclusions from that data. Econintersect: Unfortunately the data is cherry-picked and real comparative analysis is replaced with unsubstantiated generalization. We expect there is considerable truth hidden in this essay but it is so mixed with economic jingoism that determining just what is the truth is almost impossible.
Real World Economics: 'Social capital' confounds economists (Twin Cities Pioneer Press) Few, if any, economic thinkers have worked on a theoretical framework for such activities and organizations as church, charity, neighborhood activities, arts, sports and youth development. The traditional definition for microeconomics is "the study of how resources are allocated at the level of the individual, the household and the firm. But none (or very little) of the "social capital" production ends up in GDP which supposedly measures economic wellbeing. Not mentioned above is the production of unpaid stay-at-home parents, possibly the biggest unmeasured social capital production of all time.
In economics an exogenous shock is one that comes from outside the model and is unexplained by the model. The Federal Reserve has a problem. In their efforts to lift the U.S. economy they are relying upon economic models which are currently subject to many exogenous shocks.
Even while facing a budget gap of $400 million for the next budget, Gov. Sam Brownback has protected his costly income tax cuts for thousands of Kansas businesses and his “march to zero” on income taxes for individuals.
But how long can the Kansas Legislature — which entered its record-breaking 108th day of the session on Sunday — hold off on changing unfair tax breaks that are siphoning hundreds of millions of dollars from a budget needed to provide services to Kansans?
How long can the members ignore the factual evidence that Brownback’s voodoo economics scheme is not leading to dramatic increases in either jobs or new tax revenue for the state?
The frustrating debate in Topeka is taking its toll on thoughtful and reasoned governing.
Late Saturday night, Sen. Les Donovan, a Wichita Republican who’s been trying to put together a tax plan to balance the next budget, threatened to resign.
“I am ashamed of how you are behaving,” he told his colleagues. “I’ve been used as a pawn and I’m sick of it. Find another tax chair.”
But Donovan made it to yet another meeting later that night and appears ready to resume the grind in Topeka.
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