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What We Read Today 09 November 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".).


Every day most of this column ("What We Read Today") is available only to GEI members.

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Today there is a section discussing why the open market may not respond as some expect (higher rates) when the Fed raises interest rates.

Articles about events, conflicts and disease around the world



  • A decade into a project to digitize U.S. immigration forms, just 1 is online (The Washington Post)  The government awarded a major contract without product specifications and then blamed the contractor for failing to meet requirements.  Meanwhile there is effectively no automation in the immigration processing system.

  • Economic myths are a bipartisan affair (Dean Baker, Al Jazeera)  DB has contributed to GEI.  Baker says the growth effects of tax cuts and budget balancing are greatly exaggerated.  And he explains why the ignorance is bipartisan.

  • University of Missouri president resigns after race protest (Reuters)  The University of Missouri's president stepped down on Monday after protests by the school's football team and other students over what they saw as his soft handling of reports of racial abuse on campus.

  • Jeremy Mardis: Driver's hands 'were up' when boy killed (BBC News)  Body camera footage shows that the father of a six-year-old autistic boy was attempting to surrender before police opened fire, killing his son, a lawyer has said.  Mark Jeansonne said his client, Chris Few, had his hands up and was not threatening police when gunfire began.  Two city marshals in Louisiana have been charged with second-degree murder.



As we’ve pointed out repeatedly in our coverage of Greece, the lenders are hell-bent on seeing Greece remake its economy in ways that are guaranteed to make their loans fail, or perhaps more accurately, produce even greater losses than if they allowed for more investment and spending, rather than insist on punitively high budget surpluses and other destructive measures.

Why this fixation on implementing failed policies? The reasons vary by actor, but they include: delusion (as in they believe austerity “works” as in makes economies better), political necessity/survival (governments that implemented austerity programs at high costs to their citizens can’t be seen to be letting the greatest profligate, Greece, get off easy), a fixation with morality (Greece must suffer pour decourager les autres).

But irrespective of the proximate causes of what looks like an exercise in sadism dressed up as economic orthodoxy, the creditors appear united, or at least united enough, to cram yet another set of punitive reforms on the already prostrated Greeks.


  • Was the Turkish election rigged?  (The Independent)  In pre-election surveys polling companies did not detect any significant shift from voting patterns in the June election.  Some (not all) independent observers have expressed concerns about tampering. And the AKP party of President Erdogan added 4.5 million votes in less than 5 months following ther previous election (a shift of approximately 9%).  Here is an excerpt from this article:

If you do the math, all of this adds up to the 4.5 million extra votes the Justice and Development Party (AKP) got compared to June 7. In other words, it could be that the AKP got all the possible votes it could; most of the defections from other parties as well as the additional votes. Add in other possible factors, such as the speed of the vote count and early victory declarations in the pro-government media, and you can see why people are suspicious.


  • Russia faces ban from athletics for widespread doping offences (Reuters)  Russia could be banned from international athletics, including the 2016 Olympic Games, after an anti-doping commission report on Monday alleged widespread corruption and collusion that added up to a state-sponsored drugs culture in a sporting superpower.  The commission, set up by the World Anti-Doping Agency (WADA), found a "deeply rooted culture of cheating" in Russian athletics, which it said Russian state security services colluded with, and also identified what it called systemic failures in the global governing body, the International Association of Athletics Federations (IAAF).


  • Narendra Modi: the divisive manipulator who charmed the world (The Guardian)  This week the Indian prime minister makes a triumphant visit to the UK after cosying up to everyone from Silicon Valley CEOs to Rupert Murdoch. What’s behind the uncritical embrace of a man who has presided over a rising tide of assassinations and religious zealotry, and driven the country’s writers and artists into revolt?  Here is an excerpt from this far from flattering essay:

Modi was always an odd choice to lead India into the 21st century. Meeting him early in his career, the distinguished social psychologist Ashis Nandy assessed Modi as a “classic, clinical case” of the “authoritarian personality”, with its “mix of puritanical rigidity, narrowing of emotional life” and “fantasies of violence”. Such a figure could describe refugee camps with tens of thousands of Muslim survivors of the 2002 pogrom as “child-breeding centres”. Asked repeatedly about his culpability in the killings, Modi insisted that his only mistake was bad media management. Pressed repeatedly over a decade about such extraordinary lack of remorse, he finally said that he regretted the killings as he would a “puppy being run over by a car”.


  • Chinese Buyers Seek Dollar Assets as Promise of Yuan Gains Fades (Bloomberg)  Chinese investors, jolted out of complacency by the yuan’s Aug. 11 devaluation, are chasing dollar-denominated assets to guard against currency volatility, according to Western Asset Management Co.  There is increased interest in hedging currency risks.

  • China Crisis: IMF And Others Awaken (Bert Dohman, Forbes)  Hat tip to Keith Jurow.  Ken Dohmen warns about the dire consequences of a broken real estate bubble followed by an overbuilding of the manufacturing sector.  The decline in manufacturing is illustrated by the decline in electricity consumption and rail freight traffic.  See also Checked By China (GEI Feature).


Is U.S. Treasury market, once a safehaven, the latest flashpoint for market manipulation? (Pedro da Costa, Twitter)  See also following articles.

A Spooky October for Bond Traders (The Wall Street Journal)  October saw bond-trading activity fall to its lowest level since the trading doldrums hit in the second half of 2013. Average daily trading volume was 16.2% lower than it was the prior October, according to data from the Securities Industry and Financial Markets Association.  Much of the decline was driven by a dramatic drop in trading of Treasurys, the largest U.S. bond market. This was off 22.3% compared with the same month a year earlier. With just $436 billion of Treasury bonds trading hands, October saw fewer bonds traded than any other time in the past 34 months.  If things don't heat up it could be a cold winter for banks' trading profits.  For more see preceding article.

Fed Proves Irrelevant in $2.6 Trillion Slice of U.S. Debt Market (Bloomberg)  There is a shortage os short-term govenrment debt.  Money-market rules may push $650 billion into safest assets and even with Treasury's plans to increase bill issuance there won't be enough to meet demand.  See next article for more on this.

Monthly Budget Review: Summary for Fiscal Year 2015 (Congressional Budget Office)  Here is part of the problem:  The government deficit has been shrinking and a lot of the issuance in 2010-2014 was bought up by the Fed, so there is a shortage of "risk-free" securities to meet market needs. So, even if the Fed starts raising rates there may be relatively little impact on the open market.  See GEI for complete discussion and full CBO report


Other Economics and Business Items of Note and Miscellanea

In this post, I’m going to take what might at first sight look like a deep dive into the text of the TPP. However, as I’ve discovered, international law, and international trade law, are both insanely complex, and so, in reality, this dive is very shallow.[1] (Of course, in finance, we know what complexity means: Opportunities for accounting control fraud and looting. But that is a topic for another post.)

  • WordPress Now Powers 25% of the Web (Slashdot)  The announcement (excerpt below) does not give much detail.  Econintersect:  Although GEI started on Wordpress we have moved away through a progression of platforms as our publication structure requirements have become more complex.  Among the restrictions we have had to address are server load peaks which can occur almost always without warning and must be mitigated or service is interupted by the host to protect server integrity.  For operations with one blog the flexibility of Wordpress is very attractive with almost innumerable templates available for personalization.  For more complex operations, such as ours, this flexibility is washed out by needs for server efficiency.  Here is the announcement:

According to data from W3Techs one in four websites is now powered by WordPress. According to the report: "WordPress is used by 58.7% of all the websites whose content management system we know. This is 25.0% of all websites.” Venturebeat reports: "Today is a big day for the free and open-source content management system (CMS). To be perfectly clear, the milestone figure doesn't represent a fraction of all websites that have a CMS: WordPress now powers 25 percent of the Web.

  • The war against Exxon Mobil (The Washington Post)  Apologist Robert J. Samuelson says that corporations have a right to be "wrong, offensive and ignorant" and that is why they should not be held responsible for misleading investors and the public as crticis have suggested.  (Econintersect:  We guess that goes right along with right to buy elections?)  Here is an excerpt from Samuelson:

To crystallize this complex problem into a conspiracy controlled by Exxon Mobil is to engage in political make-believe. This is a dangerous and self-serving exercise that brings us back to free speech. Genuinely free speech transcends accepted and respected beliefs. It includes viewpoints that are wrong, offensive and ignorant. We take pride in the marketplace of ideas — a dividend of free speech — to sort the worthy from the unworthy. If government assumes that function, you no longer have free speech.

  • For Profit College, Student Loan Default, and the Economic Impact of Student Loans (Angry Bear)  Hat tip to Yves Smith at Naked Capitalism.  There are a number of measurements showing how the dramatic rise in student loan debt has affected the rest of the economy.  The most dramatic observation is that credit scores are significantly lower at ages 25 and 30 for those with college loan debt than those without.  That is undoubtedly influenced by the high rates of student loan defaults (see first graph below) which have been occurring sooner in borrower's age with each passing year.  The graph indicates that college loan debt defaults are of the order of 25% but it can be suggested the graph indicates they will likley go higher, especially for the newer vintages.  But interestingly the presence of student loan debt is not a significant factor in obtaining mortgages by age 30 (second graph below) and car loans.  Both have fallen by similar amounts following the Great Recession for both cohorts (with and without college loan debt).

  • Cartoon forwarded by email (Roger Erickson)


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