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What We Read Today 30 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



  • EU's Moscovici optimistic on third Greek bailout talks (Reuters)  European Economic and Monetary Affairs Commissioner Pierre Moscovici said on Wednesday that talks on a third bailout plan for Greece were taking place in "good conditions" and that the risk of an exit of Greece from the euro zone was gone.  Econintersect:  Wow!  Is all the turmoil "full of sound and fury and signifying nothing"?  


  • Encouraging Work (Project Syndicate)  From Andres Velasco, Columbia University professor and former finance minister of Chile: 

Some policies are economically illiterate, for they cause avoidable inefficiency. Others are heartless, for they cause avoidable human suffering. Few policies manage to be economically illiterate and heartless all at once. But Britain’s Conservative government has achieved just that, by cutting tax credits for low-income workers.


  • Germany Should Exit Euro, Not Greece, Economists Say (ThinkAdvisor)  some very prominent economists are now calling for the opposite of "Grexit": an exit from the eurozone by Germany, not Greece. Germany’s strong economic condition is not just a divisive factor in the struggle to aid Greece to survive economically - many of the calls for a “Grexit,” after all, came from Germany - but it also handicaps more countries within the eurozone than Greece.  The article points out that a German exit would enable a floating exchange rate to "correct" the curreny valuation discrepancies among the current Eurozone members.


The International Monetary Fund’s board has been told Athens’ high debt levels and poor record of implementing reforms disqualify Greece from a third IMF bailout of the country, raising new questions over whether it will join the EU’s latest financial rescue.

The determination, presented by IMF staff at a two-hour board meeting on Wednesday, means that while IMF staff will participate in bailout negotiations currently under way in Athens, the Fund will not decide whether to agree a new programme for months — potentially into next year.High quality global journalism requires investment.

That delay could have significant repercussions, particularly in Germany, where officials have long said it would be impossible to win Bundestag approval for the new €86bn bailout without the IMF on board.


  • Erdogan’s dangerous gambit (The Economist)  Turkey's allies in the West have felt increasingly queasy about its wayward president, Recep Tayyip Erdogan. At home he has become authoritarian and wants to change the constitution to give himself more power. Abroad he has been indulgent towards militants passing through his country to fight in Syria. In the year since the jihadists of Islamic State (IS) declared their caliphate in parts of Iraq and Syria, and America gathered a coalition to “degrade and ultimately destroy” them, Mr Erdogan has refused to let NATO allies use Turkish bases.  Now he has opened limited access and has started bombing ISIS.  But by also bombing the Kurds Turkey is adding to the chaos in the Middle East


  • S&P Lowers Brazil’s Credit Outlook to Negative (The Wall Street Journal)  Standard & Poor’s Ratings Services on Tuesday downgraded its outlook for Brazil’s sovereign debt, saying the government will have to show firmer resolve to tackle the country’s fiscal woes if it hopes to maintain the nation’s investment-grade credit rating.  S&P cut the outlook for Brazil’s foreign-currency debt to negative from stable, while keeping the rating at BBB-, its lowest investment-grade level.  See next article.
  • S&P threatened to downgrade Brazil to junk (New Economic Perspectives)  This summary criticizes rating agencies' lack of understanding of sovereign currencies:

Once more, credit rating agencies are clueless in their assessments. They have specialized in making wrong assessments regarding sovereign government’s capacity to pay its local-currency debt. They have downgraded sovereign governments like the US, UK, Japan, and now Brazil. Paradoxically, credit rating agencies, which have a track record ranging from arbitrary, imprecise, and clueless (HereHere , herehere) still can dictate the outcomes of fiscal policy of sovereign governments.

Emerging Currencies Collapse (Oxford Economics, Twitter)

Debt Once Too Cheap is Now Too Dear (IDEAeconomics, Twitter)

7 "Saves" in 7 Months (Lee Adler, Wall Street Examiner via Twitter)  Lee Adler contributes to GEI.

Trends in U.S. Military Spending (Dinah Walker, Council on Foreign Relations)  Hat tip to John O'Donnell.  This article was published one year ago, 15 July 2014.

Other Economics and Business Items of Note and Miscellanea

  • Faster pace of Fed hikes could spook market (USA Today)  Many analysts are suggesting that there will be a Fed hike sometime during the next six months.  But what if there are two or three?  And what is one of them is 50 basis points?  Econintersect:  We think that even one hike by January is only about 50:50.
  • Opinion: What Nikkei’s takeover of the FT tells us about Asia (MarketWatch)  The center of the world is drifting east. It may be too early to see the move as the beginning of a gradual rise in Asian influence over English-language international business media. This sector is firmly in the clutch of well-entrenched Anglo-American information groups. They seem unlikely to abandon their hold any time soon.  But, just as Asian banks and financial companies make greater inroads into Western markets, it would be logical to expect more Chinese, Indian, Singaporean and Malaysian capital to be deployed in international business media in coming years.
  • The Markit Economics PMI Report Is a Key Scorecard for Economies (Market Realist)  The Markit PMI reports for much of the globe serves as a business activity scorecard for each economy under survey. This monthly economic survey provides insight into the private-sector economy by tracking variables such as output, new orders, employment, and prices across key sectors. Its importance is enhanced by the fact that many policymakers use this data while making interest rate decisions that affect the economy at large.  Econintersect follows these reports and reports on highlights.

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