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".).
Hacker's Ashley Madison data dump threatens marriages, reputations (Reuters) Love lives and reputations may be at risk after the release of customer data from infidelity website Ashley Madison, an unprecedented breach of privacy likely to rattle users' attitudes towards the Internet. Hackers dumped a big cache of data containing millions of email addresses for U.S. government officials, UK civil servants and high-level executives at European and North America corporations late on Tuesday, the latest cyber attack to raise concerns about Internet security and data protection.
Mystery surrounds Egyptian-Israeli trade ties (Al Monitor) The issue of economic normalization between Egypt and Israel by successive Egyptian regimes is back on the front burner. On July 10, the Israeli newspaper Maariv reported that Israel plans to open a 5,000-worker factory in Egypt. See article under Israel below.
“The basic reason for the fall of Aleppo and Idlib to armed groups is the terrorists sent from Turkey and the support Turkey gives to them.”
Russia’s Gazprom Might Be Regretting Its Oil Export Deal With China (Business 2 Community) Russian energy firm Gazprom is facing mounting challenges thanks to a tightened market and political tensions with Europe. Gazprom’s massive $400 billion, 30-year export deal with China, signed last year, is also being questioned by analysts today with Morgan Stanley projecting that delays will push the start date for oil exports from Russia to May 2019, almost a year behind schedule. China reportedly suspended a second pipeline, this one planned to pump 30 bcm per year from Western Siberian gas fields to China’s norther-western Xinjiang region. That comes after the Russian economy ministry projected an historic low for natural gas production. And Gazprom’s market valuation is only 17% of where it stood seven years ago, before the global financial crisis. So it looks like Gazprom signed up for more than they can deliver.
Putin Economic Aide: $40 Oil Might Halt Russia Rate Cuts (Business 2 Community) Russia has been cutting interest rates to try to stem a recession brought on by western sanctions in response to Russia's aggression against Ukraine. Andrey Belousov, a key economic aide to Russian President Vladimir Putin, is predicting that a dip in oil prices to $40 a barrel could mean his country’s central bank stops its run of interest rate cuts.
China’s Economics Are All About Its Politics (Business 2 Community) All of turmoil due to declining exports, falling stock prices and the decison to devalue the country's currency has officials concerned about where the Chinese economy is heading. That’s especially true because of Beijing’s overriding desire to maintain control. Many countries’ politics and economies are intertwined, in ways that are usually difficult to disentangle, but China’s economy is defined by its politics. And right now those politics are unusually turbulent. Xi Jinping has centralized his power to an unprecedented degree since becoming president in 2012, pursuing a robust anti-corruption campaign and encouraged a cult of personality not seen since the days of Mao five decades ago.
China is having its first fully-fledged capitalist crisis. To date its response to it has been to try to sustain the unsustainable: to transfer the bubble from housing to the stockmarket, and to keep the stockmarket rising like some production target for wheat from the bad old days before the fall of the Gang of Four. It can’t be done. At some point, the Chinese government is going to have to make the transition from generating a credit bubble to trying to contain its aftermath. How they might do that rather more intelligently than has the West will be the subject of a future post.
Oil Glut (Walter Kurtz, The Daily Shot) The pictures need no explanation:
Other Economics and Business Items of Note and Miscellanea
Facebook Should Pay All of Us (The New Yorker) The author's thesis is that there is an "arbitrage scheme at the core of Facebook’s business model" based on "the ridiculous degree to which people undervalue their personal data". The entertainment and media business has changed from the tradition of selling content to readers and advertisements to sellers. Now it is based on selling targeted access to potential buyers for sellers. The argument here is that the potential buyers should be compensated for the access that targets them based on their revealed personal data. See next article.
The Economics Of Facebook: It Would Be Absurd If They Were To Pay Us (Forbes) Here the author counters the arguments of the previous article. The basis of the position is that personal data once revealed is a "public good". (See excerpt below.) The weakness in the argument is "once revealed". The proposition of the previous article is that the individual should be paid for the revelation, whereas the argument here is that the individual cannot be paid for the use of the personal data once it has become a public good.
Econintersect: Both arguments do not focus sufficiently on the correct question (although this second article does a better job than the first, above) - are Facebook users sufficiently compensated by messaging and blogging services they receive to warrant the $3 billion in profits recorded by the corporation in a year? We maintain that is a very individual question and can only be answered in the aggregate by whether Facebook attracts and retains users. The only reason the market "judgment" may not be entirely valid would be asymmetry of information, where the users do not have the awareness of the data that Facebook and Facebook seller clients do. So what should happen? We say nothing as long as the current operating model is working. If Facebook starts to wane they could then consider "paying" thier messaging members a "profit share" or "participation bonus" to return to a stable and/or growing business.
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