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What We Read Today 31 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

U.S.

Israel

  • West Bank attack puts Israel’s settlement policy in the spotlight (Al Jazeera)  The murder of baby Ali Saad Dawabsha highlights the occupation’s impunity for settler violence.  The baby died in Friday’s fire-bomb attack on a Palestinian village by masked Israeli settlers that also left his parents and 4-year-old brother critically injured.

Pakistan

China

  • Why Capital Outflows From China May Be No Cause for Alarm (Bloomberg Business)  Massive capital outflows from China over the past four quarters have been viewed as a symptom of the moderation in growth prospects for the world’s second-largest economy and a possible cause of further weakness.  According to JPMorgan chief China economist Zhu Haibin, capital outflows—the net amount of assets leaving China—totaled $450 billion in the past four quarters, after adjusting for changes in the valuation of foreign exchange reserves.  But we should not panic.  Much of the capital outflows can be attributed to seemingly prudent management of corporate-sector balance sheets.

Japan

  • Utility chiefs to be charged over Fukushima nuclear crisis (Al Jazeera)   TEPCO (Tokyo Electric Power Co.) executives have been accused of negligence in protecting power station despite being aware of tsunami risks by a Japanese judicial committee.  The 11-member committee's second decision supporting the indictment overrides Tokyo prosecutors' two earlier decisions to drop the case, so the three men are to be charged with professional negligence. It will be the first criminal case involving the utility's officials to be tried in court in relation to the disaster. In September 2013 and again in January this year, prosecutors cited lack of evidence to prove the executives could foresee the danger of a tsunami and decided not to file charges.  Econintersect:  Sounds similar to the bankster defense for the Great Financial Crisis:  "No one saw it coming."  Which statement is, of course, not true.  The problem was that those who did see problems were ignored.

Canada

  • Canada’s economy shrinks for fifth month in row (Financial Post)  Canada’s economy continued to shrink in May, declining 0.2% - well below analysts’ expectations - as output in the energy sector fell along with manufacturing activity, adding to concerns the country is headed for another recession.  NHot waiting for the sixth month, Business Insider has declared that Canada is in Recession.

Weekly Market Outlook (Moody's Analytics)  U.S. corporate and financial institution credit instruments have been getting rapid improvemnt so far in 2015. 

us.credit.ratings.2015.july


King dollar has cost S&P 500 companies $244 billion of balance sheet pain (Sam Ro, Business Insider)  The strong dollar is one of the biggest stories in the global financial markets right now. At 97.47, the US dollar index is up over 19% from a year ago.  This has been costly for U.S. exporters and the net effect on U.S. corporations in the first quarter of 2015 amounted to nearly a quarter of a trillion dollars.

us.corp.fx.losses.2007.2015


The Worst Mutual Fund in the World (Fund Reference)  This article doesn't actually name the worst mutual fund.  But it does a good job of discussing how management fees and expenses diminish realized investment returns over a lifetime of investing.  The author discusses S&P 500 index funds which have fees ranging from 0.07% annually all the way up to 1.44%.  An example of the cost impact of 0.60% fees (expense ratios) vs. 0.10% for $6,000 a year invested in two S&P 500 funds totals about $115,000 over the 31 years graphed (see graph below).  Econintersect estimates that the highest expense ratio listed in this article would have cost nearly a quarter of a million dollars for an S&P 500 index investor.

index.funds.expense.ratios

Other Economics and Business Items of Note and Miscellanea


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