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".).
The Most Powerful Person at the Federal Reserve You've Never Heard Of (Bloomberg) Scott Alvarez is the Fed’s chief counsel, but he is much more than that. He is, in the view of many, the power behind the throne, the backroom officer who, while prominent appointees come and go, quietly makes himself indispensable to them through dedication, mastery of detail and unparalleled knowledge of the Fed’s secrets. He played a key role in the controversial bailout of American International Group Inc. He is central to how Dodd-Frank is put into practice. Most everything of significance at the Federal Reserve Board goes across his desk.
Guns rights advocates say Charleston pastor could have prevented killing (Al Jazeera) Gun Owners of America spokesman and NRA board member criticize pastor who was killed for voting against concealed carry. The gun rights supporters said the pastor could have prevented the massacre if he had been carrying a weapon. Econintersect: This makes the questionable assumption that the pastor could have drawn his weapon and successfully fired it accurately at a gunman who was already shooting. What odds do the guns rights people give the pastor for being successful?
Greece’s Ruling Party Goes to War With Its Own Central Bank (Bloomberg) The Greek government sees a lot of enemies in its campaign to reach an eleventh-hour deal on the country’s finances. Including its own central bank. Last night in Luxembourg, Finance Minister Yanis Varoufakis launched a broadside against the Bank of Greece, accusing it of encouraging liquidity fears in an “astonishing” fashion. Earlier this week, the parliamentary speaker refused to accept the central bank’s annual monetary policy report, which urged a deal with creditors, instead releasing a document arguing that “odious” debts shouldn’t be repaid.
Greece and Europe as a whole are teetering on the brink. A flurry of proposals and counter proposals as been made – and rejected. This column discusses the main features of the recent proposal by the Greek government, grouped roughly under the headings macroeconomic policies, fiscal measures, and structural reforms. It asks how realistic are they and how appropriate to resolving the crisis? It identifies missing commitments. Where appropriate, suggestions for possible lines of compromise are indicated as are areas in which one side or the other needs to shift position. The analysis suggests that the Greek proposal offers a good basis for an “honourable compromise” that would permit Europe to finally move on from the endless, debilitating horse-trading, permit Greece to remain within the euro area, and to kick-start a growth process that would enable it to pay its debts to the creditors without substantial haircuts.
MERS spreads to Thailand (Al Jazeera) Officials say a businessman from Oman tested positive for virus, while cases in South Korea appear to be leveling off.
Are Surpluses Normal? (Steve Keen, Forbes) Steve Keen has contributed to GEI. England’s Chancellor George Osborne took the Conservative Party’s claim to fiscal responsibility one step higher last week when he announced that they will enact a law which will require British governments to run surpluses “in normal times”. Keen points out that surpluses in "normal times" are not "normal" and offers the economic history of the United States as evidence (see graph below). During the 20 years from 1954-1973 U.S. debt to GDP ratio declined from 68% to less than 40%, but it had nothing to do with running surpluses (paying down national debt). It resulted from sufficient money being provided to support economic growth. Keen demonstrates the extreme volatility of private debt and how that drives boom-bust cycles. He maintains it is not public debt which is the problem but private debt. He concludes:
Cameron’s claim that it’s fiscally responsible to run a surplus “during normal times” is thus a fallacy. The responsible thing is to run a deficit so that the private sector doesn’t have to rely excessively upon borrowing money from the banks.
David Paul Laipple (google.com) What should we call this chart pattern for the S&P 500? The 'headless and shoulders'? Or the 'Ichabod Crane'? Here is the author's descruiption of this graphic:
This graph illustrates the relationship between equities prices (S&P 500), Total Industrial Capacity Utilization (TCU) and Initial Unemployment Claims (IC4WSA) in the U.S. from the period 1967 to present. To improve graph readability: the S&P 500 is inflation-adjusted, TCU is multiplied by a factor of ten, and IC4WSA is divided by one thousand. Trendlines are added in yellow to Total Capacity Utilization and Initial Unemployment Claims to highlight trend boundaries. Graph updated monthly at the Federal Reserve Board of Governor's Industrial Production/Capacity Utilization release. See also: Economic Expansion Boundary Trendlines: 1967 - May 2015.
The Chart That Explains the Fed's Thinking Behind the Next Rate Rise (Bloomberg) Chair Janet Yellen has found an unusual pacifier for financial markets anxious for clues about the Federal Reserve’s intentions: a chart with 68 blue dots (shown below). The dots represent Fed officials’ forecasts for their main interest rate over the next three years. In the video below the chart, Yellen comments on Fed policy and the U.S. economy. Watch all of the key moments of Yellen's news conference in Washington after a meeting of the Federal Open Market Committee in two minutes. (Excerpts. Source:Bloomberg)
Other Economics and Business Items of Note and Miscellanea
The lessons of famous science frauds(The Verge) Statisticians have been successful in uncovering fraudulent scientific publications. The increasing use of statistical analysis has led to a ten-fold increase in the number of scientific papers withdrawn after publication. Now free and open statistical critiques of scientific publications could "dramatically speed up science’s self-correction process". Econintersect: When will these processes be applied to economics? How would self-correction be applied to past Nobel awards?
10 Types of Seafood You Really Shouldn't Eat (and 10 You Should) (Thrillist) It may seem like the ocean is just a bottomless pit of fish sticks and sushi, but the reality is that our supply of seafood is finite. Through rampant overfishing and just generally treating the ocean like a cheap buffet, we've depleted the populations and ruined the habitats of some truly delicious fish.
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