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.
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Articles about events, conflicts and disease around the world
Vote tally in favor of Iran deal climbs to 30 in Senate (Associated Press) Democratic Sen. Tom Carper of Delaware on Friday became the 30th senator to announce support for the Iran nuclear deal, as momentum for the White House-backed agreement grows. If Senate Democrats can amass 41 votes in favor of the deal, they could block passage of a congressional resolution to disapprove of the deal. If that doesn't happen and the GOP-led Senate votes to disapprove of the deal, President Barack Obama has vowed to veto it. Democrats then would need 34 votes — four more than they have now — to prevent a congressional override of the presidential veto.
Rout Ruins Another August as Years of Peace End for U.S. Stocks (Bloomberg) More than $2 trillion of share value was erased from U.S. markets between the end of July and the worst levels of this week, a sum equal to roughly two years of Standard & Poor’s 500 Index earnings, data compiled by Bloomberg show. At Tuesday’s close, stocks in the measure were down more than 12 percent from the May peak, the first correction since 2011. But prices have risen since Tuesday, not withstanding a decline today (Friday).
Vanished: 4,000 jobs paying $6.5 million (Al Jazeera) The ability to earn a huge paycheck one year and none the next illustrates how tax rules favor the richest Americans. When taxes went up for the top income bracket in 2013, more than 4000 households who earned an averaged of $6.5 million in 2012 reported no income in 2013. By arranging to take bonuses and other pay before the tax hike took effect, these 4,008 households saved almost $1.3 billion in taxes in 2013. Average Americans have pay subject to withholding and cannot aggregate income for tax advantage so this type of tax minimization is only available to the elite.
Will a Turkish border deal block IS recruits? (BBC News) Measures are proposed that could seriously disrupt the Islamic State's supply of recruits. In co-ordination with Washington and other NATO allies, Turkey is now considering imposing a buffer zone along part of its 700-mile common border with Syria. The stated aim is to deny access by would-be jihadists to IS-controlled areas of northern Syria.
Refugee boat sinkings claim at least 100 off Libya, hundreds more missing (Al Jazeera) Authorities have been observed removing corpses from waters off city of Zuwara — a launch pad for migrant ships headed for Europe. The bodies of scores of refugees have been recovered by Libyan authorities responding to two off-coast sinkings of smuggling ships thought to be carrying hundreds of people.
We should worry about China’s politics not the economics (Financial Times) For years, we have been told that one of China’s great advantages is that its authoritarian government is better able to make and implement decisions and steer economic change than our feeble, navel-gazing democracies. What we are watching is a test of whether there is any truth in this claim beyond simply the ability to sweep people out of the way when new high-speed railway lines or airports are to be built.
Other Economics and Business Items of Note and Miscellanea
Researchers efficiently charge a lithium-ion battery with solar cell (R&D) Researchers at Case Western Reserve Univ., however, have wired four perovskite solar cells in series to enhance the voltage and directly photo-charged lithium batteries with 7.8% efficiency - the most efficient reported to date, the researchers believe. The device represents a prototype of a solar rechargable system that could be used to extend the range of electric cars driven during daylight hours.
Titling Mistakes Can Disrupt Estate Plans (ThinkAdvisor) Mistitling of assets is one of the prominent causes of failed estate plans. This can be a problem for even the most elementary estate plans that are documented by a simple will. (And even for small estates when there is no will.) The most common errors are titling of bank accounts, beneficiaries for life insurance and for IRA accounts and ownership designations for investment accounts. A circumstance that can often lead to estate problems involve situations where one child is primarily responsible for assisting a parent with finances and the convenience of JTWRS (joint tenancy with right of survivorship) is used for asset titling. Other children have no standing as heirs for those accounts in such cases, even when the accounts are specified as part of a "share equally" clause in a will. The JTWRS supercedes the inclusion of those assets in the will in spite of the specification of the document.
Economics of a Stock Market Crash(Market Oracle) The title belies the narrow perspective of the author who is an unabashed gold bug. He maintains the over inflation of stock prices is a result of global reliance on fiat currency decoupled from a peg to gold. Econintersect: He does not discuss how the grand daddy of all stock market crashes occurred 1929-1932 when all global currencies were on a gold standard.
There's No Escaping Austrian Economics (Wealth Daily) The "Austrian School" has a basic strength in that it offers a rudimentary analysis of the business cycle that transcends descriptions by other (mainstream) economic "theories". Here is an excerpt from this article:
To sum it up, when the central bank (in this case, the Fed) creates money out of thin air and keeps interest rates artificially low, it causes distortions in the economy.
This leads to an unsustainable boom.
The degree of distortions in the economy will generally be proportional to the degree of the Fed’s loose monetary policy.
When we talk about a business cycle, it is important to realize that a boom does not have to be artificial. If you have real savings and investment in an economy that leads to greater production and technology, you will get real prosperity that increases living standards.
But when a boom is fueled by an artificial stimulus of loose money, the boom is not sustainable. Perhaps people are spending more and feel wealthier, but it is an illusion — it cannot keep going on.
Economic Governance today: The Credibility Problem and the Clarity Problem (Society for Institutional & Organizational Economics) How should institutions be structured such that the incentives of individual players to free-ride on their companions' efforts are mitigated? The author cites the work of Avinash Dixit (2003b), who constructed a model that addresses the long-standing criticism of sociologists that economic models lack social structure and the integration of social relations (Powell 1990, Nee 2003). But weaknesses in all this work is based on the assumptions that individuals and organizations are "honest" and will meet commitments rather than accept profits to be obtained by subterfuge. This is the "credibility" problem. The "clarity" problem refers to the asymmetry of information that exists in many transactions where a superior knowledge (the used car dealer) can take advantage of the less informed (used car buyer). The assumptions of economic models in most cases are that these two problems do not exist.
Is economics being taught correctly? (BBC World Service) Economics students at Manchester University in the UK set up the Post Crash Economics Society in 2013, after complaining that their curriculum was too narrow, and ignored the fact that mainstream economists had failed to predict the financial crisis. Zach Ward-Perkins was one of the society's co-founders, and is now writing a book about economics education.
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