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What We Read Today 15 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".).

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Articles about events, conflicts and disease around the world

Global

  • The Genesis and Growth of Global Jihad (The New Yorker)  Jihad's many tentacles have now terrorized Western targets on six continents.  At 1:05 P.M. on April 18, 1983 a dark delivery van laden with explosives blew up the U.S. Embassy in Beirut killing more than 60 people.  Later that years another bombing in the same city killed 283 U.S. marines  That was the beginning of Jihad and it has now become a fixture in our lives.

  • TPH&Co: Why The Oil Market Is Tighter Than You Think (Oil Pro)  Tudor Pickering Holt & Company Managing Director and Head of Macro Research, David Pursell has bullish oil views based on analysis that idicates global crude oil markets are nearly 'balanced'.

U.S.

  • Marc Andreesen is selling out his stake in Facebook (Seeking Alpha)  The legendary internet entreprenuer Marc Andreeson has been unloading his Facebook shares at an unusual rate.  Since Oct. 30, Andreessen has sold 73% of his Facebook (NASDAQ:FB) stake for about $160M. He also sold 90% of his class A shares.  Even though these sales were made according to a prearranged plan, it’s uncommon for executives to sell at this pace and quantity.

Sweden

  • Sweden’s six-hour workday has been vastly exaggerated (Al Jazeera)  The reality of Sweden’s six-hour workday is a little less revolutionary. Starting early 2015, the town of Gothenburg initiated a yearlong trial at a local nursing home: some 60 nurses switched from eight- to six-hour days, with the same salary as before. Researchers are looking at changes in productivity, overall health and happiness among the staff, number of sick days and staff retention, as well as satisfaction among the elderly residents. A handful of other places, including some small private companies, have followed suit.  The trial is ongoing and its effects have yet to be fully evaluated, which means that even in Sweden, the study has generated a great deal more debate and opinion than it has, so far, any concrete facts or analysis. 

Russia

  • Putin Goes From G-20 Pariah to Player With Obama Talk in Turkey (Bloomberg)  The meeting on Syria lasting more than 30 minutes was the first since the Russian president surprised his American counterpart in September by sending in his warplanes to prop up Bashar al-Assad, the Syrian leader the U.S. wants deposed. Since then, Islamist terrorism has taken over the global agenda and provided common purpose.

China

  • What's Next for the Yuan After Joining the IMF's Currency Club? (Bloomberg)  The yuan is set to join the IMF’s exclusive club of reserve currencies, with the fund’s staff supporting its inclusion after months of persuasion and policy changes by China.  Approval by the International Monetary Fund’s executive board would mark a major milestone for the yuan, officially known as the renminbi, or literally the “people’s currency.” It will make more countries comfortable including it in their foreign-exchange holdings, while boosting President Xi Jinping’s efforts to open up the world’s second-largest economy.  The new status will likely increase the flow of money into China from abroad.

Other Economics and Business Items of Note and Miscellanea

  • Mark Thornton: Cannabis Legalization Starting to Advance Rapidly (The Daily Bell)  This is an interview of Mark Thornton, the author of The Economics of Prohibition who has long been an outspoken critic of 'The War on Drugs'.  (Mark Thornton has contributed to GEI.)

  • Federal Reserve Actually Propping Up Interest Rates: What This Means For mREITs (Seeking Alpha)  The author says that mortgage REITS are extremely underpriced today and are a compelling buy.  The reason, he says, is that the money supply is being completely misread by the market and it is far lower than many believe.  He argues that interest rates are artificially high (most think they are being held at artificially low levels by the Fed). The author says that without the 0.25% yield in reserevs at the Fed that short-term rates would be negative today.  Thus he expects that raising the Fed funds rate will have little effect on short-term market rates and maintain a profitable spread for leveraged mortgage securities which are currently being sharply discounted by the market in anticipation of rising rates.  Here are a couple of related comments by the author attached to another article:

Today it is mostly your credit card that allows you to spend. We no longer have a fiat money system. Today we have a credit money system. Just because there is still some fiat money does not negate the fact that we are on a credit money system.

A reasonable ballpark estimate of the credit money supply is that it was $70 trillion in 2007 compared to $50 trillion today.  The effective money supply is the sum of the traditional fiat money aggregates plus the credit money supply. Thus, despite the claims of Ron Paul and Ted Cruz to the contrary, the effective or true money supply has fallen drastically over the last few years...."

  • Book Review: Phishing for Phools: The Economics of Manipulation and Deception by George A. Akerlof and Robert J. Shiller (London School of Economics)  This is a discussion of the new book by Nobel Prize winners George A. Akerlof and Robert J. Shiller, Phishing for Phools: The Economics of Manipulation & Deception.  The key point of the book is aimed at the mythology of free markets. Simply stated they are an ideal that does not exist. According to the two authors, big corporations take advantage of the ‘stories we tell ourselves’ and of our ‘monkey-on-our-shoulder tastes’. Our propensity to make choices according to multiple cognitive and psychological biases makes us easy targets for the phishermen. If one sentence could epitomise their thesis, it would be Jean-Paul Sartre’s’ famous saying: ‘We are what we make of what people want to turn us into.’


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