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What We Read Today 05 December 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


  • Vikings’ mysterious abandonment of Greenland was not due to climate change, study suggests (The Washington Post) From about the year 985 for almost 500 years the Norse maintained settlements of up to several thousand people on Greenland, and made it further west to Newfoundland as well.  The settlement and subsequent abandonment has traditionally bee attributed to climate change.  New geological data on the extent of glaciers in the region at the time, finding that during the era of Norse settlement the area, glaciers were almost as far advanced as they were during the subsequent Little Ice Age which had been hypothesized as "driving them out".  Other factors were in the rise and decline of Norse colonalization of Greenland and these are discussed in this article.  See the research paper Glacier maxima in Baffin Bay during the Medieval Warm Period coeval with Norse settlement (Science Advances).


  • Fed chair Janet Yellen is learning the importance of politics in economics (The Washington Post)  Janet L. Yellen stepped into the top job at the Federal Reserve last year with more experience than anybody who has led the central bank in its 100-year history. But she is finding that success demands not just economic expertise, but a political prowess she is still learning to master.  Econintersect:  Much of what is called economics is not about facts but about what economists and others think they know.  Some of that is related to "fact" (reality) and some to "belief" (fantasy).  And even some of the "experts" cannot distinguish between the two.

  • The Least and Most Popular Modern U.S. Presidents (Inside Gov)  The six most unpopular modern era (since 1932) presidents for the average of polling during their time in office (Obama's popularity is not final) are (order is least popular and up):  Harry Truman, Gerald Ford, Jimmy Carter, Barack Obama, George W. Bush and Richard Nixon.  For the more recent poorly regarded presidents they may take hope from the much higher esteem for Truman today than when he held office.

  • US can't access NSA phone records in California terror case (Associated Press)  

The U.S. government's ability to review and analyze five years' worth of telephone records for the married couple blamed in the deadly shootings in California lapsed just four days earlier when the National Security Agency's controversial mass surveillance program was formally shut down.

Under a court order, those historical calling records at the NSA are now off-limits to agents running the FBI terrorism investigation even with a warrant.

Instead, under the new USA Freedom Act, authorities were able to obtain roughly two years' worth of calling records directly from the phone companies of the married couple blamed in the attack. The period covered the entire time that the wife, Tashfeen Malik, lived in the United States, although her husband, Syed Farook, had been here much longer. She moved from Pakistan to the U.S. in July 2014 and married Farook the following month. He was born in Chicago in 1987 and raised in southern California.


  • Govt: Triple suicide bombings in Chad kill at least 15 (SF Gate)  A triple suicide bombing Saturday at a market on an island in Lake Chad killed at least 15 people and injured 130, Chad's government said. A top police official blamed the carnage on Nigeria's Islamic extremist group Boko Haram.  What is especially noteworthy news here is the suicide bombers were all women.


  • The U.S. is running out of bombs to drop on ISIS (CNN)   The U.S. Air Force has fired off more than 20,000 missiles and bombs since the U.S. bombing campaign against ISIS began 15 months ago, according to the Air Force, leading to depleted munitions stockpiles and calls to ramp up funding and weapons production.  As the U.S. ramps up its campaign against the Islamist terror group in Iraq and Syria, the Air Force is now "expending munitions faster than we can replenish them," Air Force chief of staff Gen. Mark Welsh said in a statement.


  • Anger surges over government response to floods in Chennai, India (Al Jazeera)  Floodwaters recede, but more rain is expected as thousands are evacuated to army camps.  Public anger has surged over the state government’s alleged failure to warn residents of the likelihood of flooding and slow response after torrential rain began to fall.

The November Jobs Report in 14 Charts (Nick Timiraos and Josh Zumbrun, The Wall Street Journal)  Hat tip to Pedro da Costa.  Here are four of the 14 charts:


Other Economics and Business Items of Note and Miscellanea

  • How Illiquid Are Bond ETFs, Really? (  “Transcendent liquidity” is a somewhat silly-sounding phrase coined by the equally silly Matt Hougan, CEO of, to discuss the odd situation in fixed-income ETFs—specifically, fixed-income ETFs tracking narrow corners of the market like high-yield bonds.  But it’s increasingly the focus of regulators and skeptical investors like Carl Icahn. Simply put: Flagship funds like the iShares iBoxx High Yield Corporate Bond ETF (HYG | B-68) trade like water, while their underlying holdings don’t. Is this a real problem, or a unicorn?  This author says the problem is real and not easily addressed (see also next article):

Already only about one-third of corporate bonds actually trade more than once every few months, and just 11% of the listed corporate ponds represent almost 60% of the actual dollars trading in corporate bonds, according to Tabb group.

The dealer market has collapsed, and all that’s left are investors trading the same few bonds back and forth, leaving pricing services guessing with bigger and bigger margins of error on the real value of illiquid debt.

That’s the real problem. And it’s not one the SEC can fix by targeting “transcendent liquidity” in ETFs.

  • Managing ETF Liquidity (Seeking Alpha)  Over the years, certain ETFs have had problems with pricing in the face of extreme market events. This first came to the fore in the fall of 2008 for fixed income funds, when the bond market didn't function correctly for a short while.  Since then, there have been a couple of other instances where ETFs "didn't work" for a very short period.  Part of the equation, as we learned in 2008, was that ETFs trade more regularly than the things they track. However, this can be true for fixed income markets, for example, but typically not for domestic equities, which is a point Dave Nadig explores in great detail in the preceding article.  It has been three months since that 1000-point down open for the Dow, when a lot of these ETF issues popped up again in conjunction with investors and advisors getting whipsawed badly, as stop orders selected were based on an inefficient open, where funds traded at very wide discounts. As an "oh by the way," if you missed it, the NYSE and Nasdaq will no longer accept stop orders, reflecting the recognition of market inefficiency.  For much more on this, the characteristics of sudden market dislocations and major crashes have been described by GEI contributor Clive Corcoran in his outstanding book Systemic Liquidity Risk and Bipolar Markets: Wealth Management in Today's Macro Risk On / Risk Off Financial Environment.

  • Downscaling of Economic System (Economic & Political Weekly)  Review of Degrowth: A Vocabulary for a New Era edited by Giacomo D'Alisa, Federico Demaria and Giorgos Kallis, New York and London: Routledge, 2015; pp xxii+220.  The central connecting thread in derowth literature holds economic growth responsible for stagnation, impoverishment, inequality, socioecological disaster, pollution and alienation from means of livelihood— or, in short, the econo-socio-ecological crisis faced by the humanity. One of its most prominent interpretations, from ecological economists, calls for downscaling the economic system.  In a degrowth society everything will be different: different activities, different forms and uses of energy, different relations, different gender roles, different allocations of time between paid and non-paid work, different relations with the non-human world.  Here is the conclusion of the book review:

To conclude, this volume has brought together a valuable collection of entries against the most important “keywords,” knowledge of which is essential to understand degrowth. This is especially so because degrowth is sweeping a large number of European countries and making its presence felt in Latin America. In India, like in many other locations, degrowth is still a “missile word.” Quite obviously the debate is yet to pick up in academic arena, leave alone the policy space. The only event in India so far has been a symposium, “Growth, Green Growth or Degrowth? New Critical Directions for India’s Sustainability” organised by the Indian Society for Ecological Economics, National Institute of Science, Technology and Development Studies and TERI University in September 2014 at the India Habitat Centre, New Delhi. The organisers are bringing the papers together through an edited volume (Gerber and Raina forthcoming). Hope it can provide the necessary impetus to an Indian variant to degrowth. One can hardly disagree with the authors of the Foreword that one may “[l]ike or hate the term degrowth, [but] [...] can’t deny that it opens up all sorts of debates that were previously closed.”

  • ‘Economics Rules’, Dani Rodrik’s love letter to his discipline (Oxfam Blogs)  Dani Rodrik's work has been hugely influential, helping to stem the tide of unthinking trade and finance liberalization, stressing the importance of institutions and national context, and developing (with Ricardo Hausmann) a methodology – growth diagnostics – which has been widely used not just to promote growth, but to identify and tackle bottlenecks and pinchpoints on many other issues, rather than try and reform everything at the same time.  His latest book, Economics Rules, continues in that tradition, a 200 page love letter to his beloved discipline, and a lament over how it has been misused. The problem, it seems, is always the economists, never economics itself.  Econintersect:  Is this like saying there is nothing bad about war, only those who wage it? 


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