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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Topics today include:
The Next Oil Crash May Be the Last, with No Recovery
Global Warming Slowdown
Economics of Climate Change
Geology of Pluto
Democracy or Bust in Europe
Behavioral Economics and Insurance
New Social Security Rules
Economic Disparities in Health Care
Washington Battle Over Investment Advice Rules
Can Trump Be Stopped?
There are More Millennials than Baby Boomers
More Evidence Against Russian Soldiers for Downed Plane in Ukraine
Articles about events, conflicts and disease around the world
Global Warming "Hiatus" Debate Flares Up Again (Scientific American) The latest salvo in an ongoing row over global-warming trends claims that warming has indeed slowed down this century. An apparent slowing in the rise of global temperatures at the beginning of the twenty-first century, which is not explained by climate models, was referred to as a “hiatus” or a “pause” when first observed several years ago. Climate-change sceptics have used this as evidence that global warming has stopped. But in June last year, a study in Scienceclaimed that the hiatus was just an artefact which vanishes when biases in temperature data are corrected. Now a prominent group of researchers is countering that claim, arguing in Nature Climate Change that even after correcting these biases the slowdown was real. Note the use of the word "slowdown" rather than "hiatus".
Economics: Current climate models are grossly misleading (Nature) The twin defining challenges of our century are overcoming poverty and managing climate change. If we can tackle these issues together, we will create a secure and prosperous world for generations to come. If we don't, the future is at grave risk. Researchers across a range of disciplines must work together to help decision-makers in the public, private and non-profit sectors to rise to these challenges. Economists, in particular, need more help from scientists and engineers to devise models that provide better guidance about what will happen if we succeed or if we fail. Current economic models tend to underestimate seriously both the potential impacts of dangerous climate change and the wider benefits of a transition to low-carbon growth. There is an urgent need for a new generation of models that give a more accurate picture.
U.S. Labor Dept., SEC clashed over retirement advice rule: report (Reuters) Staffers at the U.S. Securities and Exchange Commission and the U.S. Labor Department clashed over a controversial plan to curb potential conflicts of interest among brokers who give retirement advice, Senate panel Republicans said in a report on Wednesday. Evidence of the discord between the two agencies is likely to be seized on by critics of the Labor Department proposal. The plan would require brokers to act in clients' best interests when advising about individual retirement accounts (IRAs), a savings vehicle for millions of investors. But the Department, which regulates retirement plan advice, rejected numerous recommendations from the SEC and other agencies, wrote Republican Senator Ron Johnson, chairman of the Senate Homeland Security and Governmental Affairs Committee, in a 39-page report released on Wednesday. Econintersect: This is a classical battle between consumer protection proponents and those wanting to preserve flexibility for providers and suppliers to consumers.
Despite a great deal of attention on health disparities in recent years, some aspects of the disparities discussion have received less attention. On the positive side, the Affordable Care Act (ACA), passed in 2010 (and with most aspects of implementation beginning after 2014) may be making historic inroads to narrow disparities. However, a new concern is that these gains are being dissipated by an uneven implementation of the ACA, in particular since the expansion of Medicaid is a voluntary decision left up to the states, and only 32 of the 51 states (including DC) have adopted a Medicaid expansion (see map).
Democracy or Bust in Europe (Yanis Varoufakis, Project Syndicate) YV has contributed to GEI. He writes here that Europe’s current disintegration is all too real. New divisions are appearing seemingly everywhere one looks: along borders, within societies and economies, and in the minds of Europe’s citizens. He says that “Europe will be democratized or it will disintegrate!” This comes from the manifesto of the Democracy in Europe Movement – DiEM25. Varoufakis writes:
Europe’s loss of integrity became painfully evident in the latest turn in the refugee crisis. European leaders called upon Turkish President Recep Tayyip Erdoğan to open his country’s borders to refugees from the war-torn Syrian city of Aleppo; in the same breath, they chastised Greece for letting the same refugees into “European” territory, and even threatened to erect fences along Greece’s borders with the rest of Europe.
Similar disintegration can be seen in the realm of finance.
MH17 Ukraine disaster: Report names suspected Russian soldiers (BBC News) A UK-based online investigative team says it has identified Russian soldiers who were likely involved in the shooting down of a Malaysian plane. In a report, the Bellingcat team links personnel from the 2nd Battalion of the 53rd Anti-Aircraft Missile Brigade to the tragedy in eastern Ukraine in 2014. A Dutch report last year said the plane was hit by a Russian-made Buk missile. The West and Ukraine say pro-Russian rebels brought down Flight MH17, but Moscow blames Ukrainian forces.
This word ‘generation,’ I do not think it means what you think it means (Family Inequality) There are more Millennials (about 90 million +/-) than Baby Boomers (about 76 million +/-) in spite of a declining birthrate. See first graph below. And in both 1990 and 1991 the number of babies born exceeded the baby boom peak of 1962. The racial composition of the baby population has been changing over the years so that now more are born into other ethnic/racial groups than to white families. See second graph (source unknown).
[I]n a new review from the Bureau of Labor Statistics, the economist Carol Boyd Leon paints a sociological portrait of America as it was 100 years ago, when technology was meager, financial ruin was one downturn away, war was ongoing in Europe, and the choices that Americans have come to expect—in their cars, clothes, food, and homes—were preceded by a monotonous consumer economy. In 1915, Americans walked everywhere (or took a streetcar, if they lived in cities), lived in three-generation homes that they rarely owned, ate almost as much lard as chicken, and spent Friday nights dancing to player pianos. In short: Everything was worse, except for the commute.
Putting Behavioral Economics to Work for Insurance (Gen Re) Insurance business models are usually based on individual rational behavior. But many human activities are irrational and insurance efficiciency could be improved if behavioral economics thinking were involved.
The Financial Economics of Gold – A Survey (Fergal A. O’Connor, PDF) The most strongly correlated factor found in this research is the correlation of published research activity with the price of gold: When the price is rising there is more research. Other areas were extensively researched as described in the paper abstract:
We review the literature on gold as an investment. We summarize a wide variety of literature, including the papers in this special issue of International Review of Financial Analysis to which this survey acts as an editorial introduction. We begin with a review of how the gold markets operate, including the under researched leasing market; we proceed to examine research on physical gold demand and supply, gold mine economics and move onto analyses of gold as an investment. Additional sections provide context on gold market efficiency, the issue of gold market bubbles, gold’s relation to inflation and interest rates, and the very nascent literature on the behavioral aspects of gold.
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