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".).
New Rand Paul video basically calls Donald Trump a closet Democrat (The Washington Post) Video uses Trump's own words. Paul and Trump engaged in a tense back and forth during the first Republican primary debate last Thursday, in which Paul called into question Trump’s party loyalty after the real estate tycoon said he would not pledge not to run as an independent if he loses the GOP nomination. Trump fired back at Paul, insinuating that Paul was being bought by donors.
Hillary Clinton to hand over email server to the FBI (BBC News) Hillary Clinton has agreed to hand over to the FBI the private email server that she used as secretary of state. Her use of private email has generated a barrage of criticism as Mrs Clinton runs for president. Critics say that her set-up was unsecure, contrary to government policy and designed to shield her communications from oversight. The FBI is investigating whether classified information was improperly sent via the server and stored there.
Ifo Index of European Economy Mixed (Constantin Gurdgiev) CG contributes to GEI. Latest Ifo Index of Economic Climate for the Euro Area fell from 129.2 for 2Q 2015 to 124.0 for 3Q 2015, running ahead of 118.9 reading in 3Q 2014 and at the second highest level since 4Q 2007. Present Situation Index reading, however, is up at 148.3 in 3Q 2015, compared to 145.5 in 2Q 2015 and 128.7 in 3Q 2014. Expectations for the next 6 months period Index slipped significantly in 3Q 2015 to 109.8 from 119.7 reading for 2Q 2015 and matching rather poor expectations reading recorded in 1Q 2015.
The reforms proposed by the Greek administration differ from the past one in that the reforms lower Value Added Tax (VAT) for hotels to 13% and raise VAT for food products and restaurants to 23%. The reforms also postpone the minimum retirement age to 67 in order to ease the tension on pension system. On top of that, they agree to a raise in corporate tax and cuts in military spending. Cumulatively, these policy proposals should add up to 13 billion euros- a budget surplus of 3.5 per cent of gross domestic product by 2018, and raise approximately 1% of GDP for the government.
Russian 2Q growth: beating forecasts on the wrong side (Constantin Gurdgiev, true economics) CG contributes to GEI. Signs of stabilization in the Russian economy are still present, but robustness of these signals is now more under question than a week ago with the 4.6% year-over-year decline in GDP in 2Q 2015. In simple terms, we will need to see Q3 data posting closer to 0% change in GDP and beating 1Q 2015 reading (-2.2%), if we are to confirm expectation for growth recovery in 4Q 2015 - 1Q 2016. This article will appear later in GEI Analysis.
The More China’s Currency Falls, the More It Looks Like a ‘Currency War’ (The New York Times) There were two stories for why China allowed the value of its currency to fall beginning on Tuesday, one of which makes the government look shortsighted and the other farsighted: It is looking to boost its export sector to combat a weakening economy or it is trying to liberalize its financial system as it ascends the global financial stage. After Wednesday’s events, the shortsighted, export-boost story is looking like the more powerful explanation of what China is up to. See also GEI News: China Joins the Currency Wars.
China blasts: Shipment explodes in Tianjin port (BBC News) Massive explosions have hit China's northern city of Tianjin, reportedly injuring at least 300 people and causing at least seven deaths. According to Chinese state media, the blasts occurred when a shipment of explosives blew up in the port city at about 23:30 (16:30 GMT).
Other Economics and Business Items of Note and Miscellanea
Student loan refinancing company expands offerings (Employee Benefit News) A specialty finance company is working in the area of refinancing student loan debt. Debtors with a high credit score in four states (California, Colorado, Illinois and Texas) can refinance student loans at lower interest rates with SimpleFi. But many debtors will not qualify: a credit score of at least 720 is required.
The Teflon Toxin (The Intercept) Hat tip to Roger Erickson. Corporate profits again trump human wellfare. For decades C8 (perfluorooctanoic acid) has been used in U.S. manufacturing and consumer products - and the chemical is responsible for a number of diseases including serious intestinal disordwrs and cancers. (Econintersect: Turns out there is a reason we have been told to discard teflon coated cooking utensils whenever the surface integrity has failed.) From this article:
In some ways, C8 already is the tobacco of the chemical industry — a substance whose health effects were the subject of a decades-long corporate cover-up.
It is still a fact that within mainstream economics internal validity is everything and external validity nothing. Why anyone should be interested in that kind of theories and models is beyond my imagination. As long as mainstream economists do not come up with any export-licenses for their theories and models to the real world in which we live, they really should not be surprised if people say that this is not science, but autism!
Studying mathematics and logics is interesting and fun. It sharpens the mind. In pure mathematics and logics we do not have to worry about external validity. But economics is not pure mathematics or logics. It’s about society. The real world. Forgetting that, economics is really in dire straits.
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