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What We Read Today 04 October 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



  • East Coast likely to dodge hurricane, but flooding looms (Associated Press)  Millions along the East Coast breathed a little easier Friday after forecasters said Hurricane Joaquin would probably veer out to sea. But a freakishly powerful rainstorm fueled in part by the hurricane threatened to bring ruinous flooding to parts of the Atlantic Seaboard over the weekend.  With the soil already soggy and roads swamped in places from days of rain, East Coast states braced for what forecasters said could be deadly and unprecedented downpours.  See also Hurricane and rainstorm are locked in a dangerous dance.  Satellite image below taken midday Friday 02 October shows the massive rain storm covering most of the eastern half of the U.S. and tightly wound hurricane Joaquin over the Bahamas east-southeast of Florida and north of Cuba.





  • Hope dims for finding survivors of deadly Guatemala mudslide (Associated Press)  Hope faded Sunday for finding any survivors of a mudslide that killed at least 87 people as the smell of rotting bodies spread across the enormous mound of earth and rescuers reported that the buried dwellings they reached were filled with water, suggesting anyone trapped inside would have drowned.  Authorities said about 300 people may still be missing. But they left open the possibility that many of them had simply fled and taken refuge with relatives without contacting authorities, or that they were not in the 125 buried homes when the mudslide struck.

States With Tighter Gun Control Laws Have Fewer Gun Deaths (Chris Kirk, Slate)  The data compiled by The Law Center to Prevent Gun Violence cannot be used to prove that tighter gun kaws produce a lower rate of gun deaths because correlation does not prove causation.  But correlation can prove a negative to causation.  In this case the correlation proves that there is no basis in fact to support the theories that more guns and/or less regulation will reduce gun deaths.  Also, there is an indication in the data that not all states have the same gun regulation needs.  This is evidenced by two outliers, Vermont and South Dakota, with a low level of gun control and a low gun death rate.


Market history is calling, and it's saying stock performance will be crappy for another ~10 years (Henry Blodget, Business Insider)  Stock performance has been weak for the past 15 years.  If history is a guide, it's likely to stay weak for at least another 10 years.  Why?  Because stocks are still fantastically expensive relative to most of recorded history.  And in the past, when stocks have been this expensive — or close to this expensive — performance over the next decade has been lousy.  Econintersect:  In addition, as others have pointed out, past bear markets have not been exitted without a bottom in PE ratio in single digits.  The 13x in 2009 is quite away above the historical mark.  With extraordinary monetary policy (ZIRP - zero interest rate policy) the theoretical "fair" valuation of stocks based on the "risk-free" return available has been elevated.  But when interest rates return to more customary levels the valuation formulas for stocks will produce much lower "fair value" PEs and that is when the bottom of the current bear market may be reached. 


Other Economics and Business Items of Note and Miscellanea

  • One of the most unpopular CEOs in recent history is finally facing justice (Business Insider)  In a rare event a top coal mining executive, Donald Leon Blankenship, former CEO of Massey Energy Company, now a part of bankrupt coal giant Alpha Natural Resources is going on trial for the deaths of 29 miners in the explosion at the company’s Upper Big Branch deep mine at Montcoal, West Virginia on April 5, 2010.  Three investigators have concluded that his methods contributed to the explosion.  This is the first time in 150 years of Appalachian mining that the top boss of a coal firm has ever had to answer for how he ran his company.
  • Young Americans Are Giving Up on Getting Rich (Bloomberg)  Young Americans’ incomes are depressed, their retirement nest eggs are microscopic, and their rate of employment is weak. The trend lines aren’t promising, either, which likely explains why there’s no shortage of pessimism out there. In a Bloomberg poll of Americans age 18 to 35 (the millennial generation) 47% said they do not expect their cohort to live better than their parents.

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