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What We Read Today 23 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


  • NASA finds 'Earth's bigger, older cousin' (CNN)  The planet, Kepler-452b, is about 1,400 light-years from Earth in the constellation Cygnus. It's about 60% bigger than Earth, NASA says, and is located in its star's habitable zone -- the region where life-sustaining liquid water is possible on the surface of a planet.  A visitor there would experience gravity about twice that of Earth's, and planetary scientists say the odds of it having a rocky surface are "better than even".  This is one of 12 new planets just discovered that are potentially habitable - see next article.  
  • Scientists discover 12 new potential Earth-like planets (Science)  The latest update from Nasa's Kepler space telescope - designed to spot distant exoplanets - adds more than 500 new possible planets to the fray. That's in addition to the 4175 planets already found by Kepler.  And of those 500 new potential planets, scientists say, a dozen could be remarkably Earth-like. That means they're less than twice as large as Earth, are potentially rocky and are at the right distance from their host stars to harbour liquid water.  The most promising of this dozen is Kepler 452b - see preceding article.


  • Amazon Posts Surprise Profit; Shares Soar (Bloomberg) Inc. reported a surprise second-quarter profit on top of sales that beat analysts’ estimates, showing investors -- as it has done before -- that the Web retailer can make money when it puts the brakes on investments.  Shares in Amazon jumped as much as 19 percent after it reported that revenue rose 20 percent to $23.2 billion, exceeding analysts’ average projection of $22.4 billion. Net income was $92 million, or 19 cents a share, the company said in a statement Thursday, compared with the prediction for a loss of 14 cents.  CEO Jeff Bezos just became $7 billion richer.


  • Meet Denmark’s ‘Iron Lady’, who could cost Google $6.6 billion (MarketWatch)  Margrethe Vestager, the EU’s new competition commissioner, is living up to her nickname “The Iron Lady of Denmark” by taking on industry giants such as Google , MasterCard , Starbucks  and Amazon with investigations of competition stifling practices.   She is also going after companies such as Apple and GE, as well as Russia's Gazprom, for "tax arrangements", anit-competitive acquisitions and pricing policies.


  • How Does Euro Membership Help Germany? (The Wall Street Journal)  The relative weakness of the euro versus a hypothetical Deutschmark is an advantage for Germany. In addition to the fiscal orderliness of Germany, the currency union also includes countries like Italy, Spain, France and Greece all of which haven’t been as successful as Germany in recent years.  This weighs on the euro’s strength, which helps German exporters. As is well known, exports are a key driver of Germany’s economy. A stronger currency would almost certainly make life harder for German exporters by making products more expensive on a global market.


  • The Troika Returns to Athens as Cowed Tsipras Submits to Demands (Bloomberg)  The troika is back.  Six months after former Finance Minister Yanis Varoufakis gave them the boot, Greece’s three main official creditors are sending representatives back to Athens starting Friday.  In effect the Greek government has again become the puppet regime fronting for an occupation force.


  • Turkey agrees to allow U.S. military to use its base to attack Islamic State (The Washington Post)  Turkey has agreed to allow the United States to use Turkish soil to launch attacks against the Islamic State, signaling a major shift in policy on the part of the once-reluctant American ally.  The U.S. will use the southern Turkish airbase at Incirlik which is convenient for attacking into Syria and Iraq.


  • Mexico Meets its Elusive Inflation Target (The Wall Street Journal)  After more than two decades trying, Mexico can finally declare victory over inflation.  Annual inflation in Mexico eased to 2.76% in early July, its lowest level since 1970, when consumer prices began to be measured nationally. It’s also below the Bank of Mexico’s 3% target for a third consecutive month.  This puts Mexico in Latam class of its own as a country that can control inflation.

These countries are sitting on mountains of gold (Elena Holodny, Business Insider)  China revealed that it was hoarding way less gold in its central-bank reserves than everyone previously thought, and a huge amount of gold was dumped on the market by China early this week during a two minute window.  That contributed to a sharp drop in the price of gold.  Other countries are not loaded with gold either, except for the U.S, and even there the amount id not out of line with other countries when pro-rated according to GDP.


IBM Vs. The Dow Jones Industrial Average (Investopedia)  IBM has had a miserable stock performance over th past two years.  The reason?  The business has been bringing in less revenue.  The IBM business plan under CEO Virginia Rometty has been to buy back stock and increase dividends rather than investing in building the business.  That has not been working very well.  Disclosure:  Econintersect Managing Editor has a sizable holding of IBM stock (more than 5% of portfolio).


Other Economics and Business Items of Note and Miscellanea

  • After the crash, can biologists fix economics? (New Scientist)  Orthodox economics is broken. Applying what we know about evolution, ecology and collective behaviour might help us avoid another catastrophe.  Earlier this year, several dozen quiet radicals met in a boxy red building on the outskirts of Frankfurt, Germany, to plot just that. The stated aim of this Ernst Strüngmann Forum at the Frankfurt Institute for Advanced Studies was to create “a new synthesis for economics”. But the most zealous of the participants – an unlikely alliance of economists, anthropologists, ecologists and evolutionary biologists – really do want to overthrow the old regime. They hope their ideas will mark the beginning of a new movement to rework economics using tools from more successful scientific disciplines.  This group is critical of the mainstream "neoliberal" economics as depending too much on "mathematical formulae" and "ignoring the complexities of human beings and their interactions".   Econintersect:  This argument is missing the key problem - it has nothing to do with using mathematical formulas, but has to do with constructing models depending on the actions of individuals.  The common practice of trying to describe macroeconomic characteristics using "representative agents" is a prominent manifestation of these shortcomings.  Economics is the study of measurable quantities and these will only be effectively understood if analyzed mathematically - but the mathematical formulas must include terms that cover the interactions between individuals and different measured parameters.  The "cross-terms" may be more important in the end analysis than the individual linear terms commonly used in economic models.  As frequent GEI reader and occasional contributor Roger Erickson says, the result of human activity is often a greater quantity than the sum of the individual parts, what he calls "return on coordination".  
  • The Apple Watch’s Insanely Great Economics! (Empire State Tribune)  The most compelling case you can make for the Apple Watch is that it frees us from our phones: the ones Apple sold us. No longer will we have to pull them out to hail Ubers, check Instagram, or send texts.  This is a watch that "saves time".
  • Scott Jurek’s Champagne Problems (Outside)  This story concerns events on one the ten "best hikes" from the article above.  Last week, ultrarunner Scott Jurek set a new record for through-hiking the Appalachian Trail, finishing in 46 days 8 hours and 7 minutes. When he reached the summit of Maine’s Mount Katahdin—whose  5,269-foot summit sits within a state-administered wilderness area in Baxter State Park—he popped the cork on a bottle of champagne, NASCAR style. His supporters were there to greet him. So was a ranger with a summons for violating park and wilderness regulations—specifically being up there with a group of more than 12 people (at least 35 were visible in one photo at the finishing party), drinking (the champagne), and littering (the champagne hitting the ground).
  • Gillibrand Pushes Ban On Microbeads (Adirondack Almanack)  Standing at Champlain Park on Monday, U.S. Senator Kirsten Gillibrand (D, NY) joined by Bill Howland, Director of the Lake Champlain Basin Program, and Staff Scientist Mike Winslow, announced a new push to ban plastic microbeads in personal care products. Senator Gillibrand has introduced the Microbead-Free Waters Act of 2015, legislation to federally ban cosmetics containing synthetic plastic microbeads.  These tiny particles are too small to be removed in water treatment plants and are now found in 74% of New York State water treatment facilities that have been tested.  Illinois has already enacted legislation banning microbeads and 13 other states have legislation pending.

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