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What We Read Today 10 July 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

Global

U.S.

  • NYSE, WSJ and UAL Outages: A Simple Coincidence? (Hedge SPA, LinkedIn)  No official sources are admitting that the multiple computer system failures this week may have been cyber-espionage.
  • Background check mix-up let suspected Charleston shooter buy gun - FBI (Reuters)  The suspect in the killings of nine black churchgoers in Charleston, South Carolina, was able to buy a gun because of mistakes in a background check that should have revealed an admission of drug possession.  The examiner of suspect Dylann Roof's federal background check did not see a police report in which Roof admitted to drug possession, which would have barred him from buying the weapon.  Econintersect:  We can just hear the argument now:  'See, laws don't work so we don't need laws.'

UE

  • Half-Century of European Integration at Stake in Greece Meeting (Bloomberg)  Will the Germans insist on imposing retribution on Tsipras for having argued for Greece's interests?  Will others in the EU resist that vengance?  Can trust in (and therefore existence of) the Eurozone survive?  Can the EU itself survive? Or will it go the way of previous European 'empires'?

UK

  • U.K. to End 300 Years of Deep Coal Mining as Prices Slump (Bloomberg)  Britain plans to close its last deep coal mine in December, spelling the death of an industry that’s kept the nation’s economy humming since the Industrial Revolution.  Econintersect:  The Energy Revolution continues.

Greece

  • Tsipras Seeks Greek Support for Plan Hailed by France (Bloomberg)  France praised a package of measures proposed by Greece, as lawmakers in Athens prepared to debate whether to support Prime Minister Alexis Tsipras’s plan to access a bailout of at least 53.5 billion euros ($60 billion).  The packet of spending cuts, pension savings and tax increases was being studied on Friday by the European Commission, the International Monetary Fund and the European Central Bank after it was submitted late the previous day.  The taciturn Germans are withholding comment.  Econintersect:  It is hard for us to understand what is going on.  Tsipras has agreed to propose a plan diametrically opposed to his campaign platform in the January elections and which is essentially the same as rejected by 62% of Greek voters in the referendum last Sunday.  Is it possible that there is a "double agent" strategy here?  Could Tsipras have proposed something that he doesn't support?  His tactic could be aimed at getting the parliament to support the plan and then call a new election since the parliament is approving what a landslide result rejected just days earlier?  If the parliament rejects the plan then Tsipras could resign 'because of the rejection' which would also precipitate a new election.  The absence of a government in either case would then create a justifiable case for temporary extension of Troika Institution support until a new government was established.  Is Tsipras desperately trying to create a temporary breathing bubble for Greece?  If not this convoluted strategy then is he really a man of no principle or reason?
  • Greece debt crisis: Greek MPs debate controversial reforms plan (BBC News)  The latest as this is posted is the the Greek parliament is still talking.

Russia

  • Russia Navy Developing ‘Carrier Killer’ Subs (The Washington Beacon)  The Russian Navy is investing in two new submarines, one of which is being described by the head of Russia’s state-owned shipbuilding corporation as a “carrier killer,” according to the independent Moscow Times.  The second boat would be designed to protect Russian ballistic submarines from enemy attack.
  • Putin Calls U.S. Debt ‘Serious Problem’ as He Defends Greece (Bloomberg)  Russian President Vladimir Putin warned of dangers to the global economy from U.S. borrowing while saying Greece isn’t solely to blame for its debt crisis.  He says the dollar as a reserve currency "allows the U.S. to act like a “parasite” on the global economy."  Econintersect:  There is a reverse argument that says the world is a parasite on America becausae the dollar the reserve currency.  See Being the reserve currency has its privileges and costs (Washington Center for Equitable Growth):

 "The benefits accrue primarily to firms and financial institutions while the costs fall primarily on average workers."


The Oil Price Roller Coaster (Amory Lovins, Rocky Mountain Institute, Medium)  This article is about how renewable energy sources can not only produce energy more cheaply than fossil fuels but, it is argued, with less volatility.  But the most important thing in the article is the demonstration of the complete lack for oil of supply and demand curve behavior described in the standard neoclassical, neoliberal economic models.  See next article.

oil.price.consumptio


Economics Basics: Supply and Demand (Reem Heakal, Investopedia)  The simplest form of supply and demand modelling is illustrated by the first graphic below where both supply and demand are represented by straight-line functions.  Price is defined by the point where supply and demand quantities are in equilibrium.  The second graph belwo is from Wikipedia and shows a more complex model where supply and demand curves are well defined curvilinear functions.  Shown in the second graph is the price change predicted by the model when demand increases.  It is obvious that these widely used models bear no relationship to the supply and demand history for oil.  See previous article.  Thus it is not clear a priori that less volatility in price might derive from increasing the use of stable and scalable supplies of renewable energy because price history for energy is clearly decoupled from both supply and demand (previous artilce). 

price.demand.equilibrium

supply.demand.curves

Other Economics and Business Items of Note and Miscellanea

  • Raising your Digital Quotient (McKinsey)  Most corporations are "below average" in implementation of digital technologies which means a few are way above average.  McKinsey presents a summary of key factors for "getting digital":
  • First, incumbents must think carefully about the strategy available to them. The number of companies that can operate as pure-play disrupters at global scale—such as Spotify, Square, and Uber—are few in number. Rarer still are the ecosystem shapers that set de facto standards and gain command of the universal control points created by hyperscaling digital platforms. Ninety-five to 99 percent of incumbent companies must choose a different path, not by “doing digital” on the margin of their established businesses but by wholeheartedly committing themselves to a clear strategy.
  • Second, success depends on the ability to invest in relevant digital capabilities that are well aligned with strategy—and to do so at scale. The right capabilities help you keep pace with your customers as digitization transforms the way they research and consider products and services, interact, and make purchases on the digital consumer decision journey.
  • Third, while technical capabilities—such as big data analytics, digital content management, and search-engine optimization—are crucial, a strong and adaptive culture can help make up for a lack of them.
  • Fourth, companies need to align their organizational structures, talent development, funding mechanisms, and key performance indicators (KPIs) with the digital strategy they’ve chosen.
  • Dawn Prolongs 2nd Reconnaissance Orbit at Ceres After Orientation Issue (Aviation Week)  NASA's ground breaking Dawn mission at the large asteroid Ceres provided some recent drama.  Lost in all the media attention on the imminent close encounter of the probe New Horizons with the dwarf planet Pluto (see next article), some astounding images have been received from Dawn.  Ceres, which is a resident of the asteroid belt and the size of a dwarf palent, has gained fame for its mysterious bright spots, hints of a tenuous atmosphere and speculation that it may host subsurface water.*  In March, Dawn earned the distinction of becoming the first spacecraft to visit a minor planet -- four months ahead of New Horizons' Pluto flyby.*See also The weird white spots on Ceres might not be ice after all (The Washington Post).  Much more detail is expected later this year as Dawn has planned two much closer orbital passes around Ceres, 900 feet elevation in October and 270 feet in December.  The orbit in June was at 2,700 feet. 

ceres.white.spots

  • New Horizons spacecraft now within Pluto's sphere of influence (The Verge)  The New Horizons spacecraft has officially entered Pluto's neighborhood. NASA mission specialist Alex Parker tweeted today that the probe has entered the area of space where Pluto exerts more gravitational influence than the Sun does. That means New Horizons has entered into Pluto's sphere of influence — also known as its Hill sphere.  However, New Horizons will only be mildly affected by Pluto's gravity (earth is 6 times larger in diameter with 458 times the mass). The spacecraft is flying so fast (more than 30,800 miles per hour) that its trajectory will hardly be altered as it makes its way toward the dwarf planet for its July 14th flyby before heading on out of the solar system.  The most recent photograph released by NASA as New Horizons approaches Pluto is shown below the video,  The smaller object is Charon, one of Pluto's five known moons.  The picture was taken 08 July from a distance of approximately 3.7 million miles. (The Washington Post mistakenly printed "3.7 billion".)

pluto.charon


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