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:
New View of Quantum Mechanics
Bonds and Gold Diverge of View of Inflation
Is the Declining Silver/Gold Ratio About to Change?
Can World Central Banks Do Anything to React to Brexit Vote?
Economics of Gun Control
SCOTUS May Review State Assault Weapons Bans
Container Traffic at Ports Improves
UK Polls Swing to Narrow Favoring of 'Remain'
Turkey Border Guards Kill Syrian Family
Qatar Thinks Taxes Will Push Up Inflation
Canada's Wildfire Was Man-Made
Articles about events, conflicts and disease around the world
Beyond the Turmoil, Central Bankers Dread Brexit’s Long Shadow (Bloomberg) Finally, a financial flare-up that the world’s central banks will have seen coming. On Friday morning London time -- when the result of a U.K. referendum will show whether the nation has chosen to leave the European Union -- the Bank of Japan and the Swiss National Bank’s Singapore desk could already be selling yen and francs. They and their peers are also primed to pump liquidity into banks fearful of running dry and to push back against capital flight from sterling. It’s what comes later that monetary-policy makers are less ready for. If emergency action is needed, they can cite the centerpiece of preparedness -- a six-way currency swap arrangement between the U.S. Federal Reserve, the European Central Bank, the Bank of England, the Bank of Canada, the BOJ and the SNB. Those lines, established during the financial crisis and made permanent in 2013, allow central banks to offer funds to lenders in each others’ currencies. That would be critical if the internationalized banking system finds itself in a global alarm with liquidity problems. (Econintersect: Is liquidity even a possible problem? See graph below.)
So far, so reassuring. Yet once the initial impact passes, it may become apparent that a British vote to leave the EU is a shock too far for an already slowing global economy. Europe’s growth outlook is fragile enough that a downturn in the U.K. poses a significant threat.
The world’s most-powerful central bank is well aware of that. It was on the mind of Fed Chair Janet Yellen last week, when policy makers kept rates on hold. The vote “could have consequences for economic and financial conditions in global financial markets,” she said.
“My concern is about the negative feedback loop into the real economy,” said Vincent Juvyns, global market strategist at JPMorgan Asset Management in Luxembourg. “I’m pretty convinced that there would be a lower growth potential in that case, both for the euro area and the U.K. The probability is that the ECB, for example, would be asked to do more.”
Supreme Court may take action on state assault weapon bans (Reuters) The U.S. Supreme Court may weigh in this week on gun control, an issue smoldering again following the June 12 Orlando massacre, with the justices due to decide whether to hear a challenge by gun rights advocates to assault weapon bans in two states. The Connecticut and New York laws prohibit semiautomatic weapons like the one used by the gunman who fatally shot 49 people at a gay night club in Orlando in the deadliest mass shooting in modern U.S. history. The Supreme Court will announce as soon as Monday whether it will hear the challenge brought by gun rights groups and individual firearms owners asserting that the laws violate the U.S. Constitution's Second Amendment guarantee of the right to bear arms. The court has not decided a major gun case since 2010.
The EU Empire is going to fail. On Thursday, we can protect Britain from the chaos of its death throes (The Telegraph) This is a real rant by columnist Simon Heffer against "the careerists, the big businessmen, the Bilderbergers, the Davos groupies and that tragic subset of my own trade that sees the journalist’s job as being to propitiate the governing elite". There is no logic here, just pure emotion. That is quite appropriate since the Brexit vote will be decided on an emotional battlefield. Here is an excerpt:
In the real world, as some politicians have belatedly recognised, people want change. They dislike being told that the United Kingdom cannot run itself. They deplore doomsayers who have lost faith in their country. They are angry that their country’s borders are open not just to geniuses with PhDs, nurses, teachers, plumbers, electricians and others who can contribute to it, but to welfare tourists, pickpockets, rapists and murderers.
They resent a foreign power overruling their courts and their elected government. They are frustrated at being unable to change key policies when they vote. They detest contributing £8.5 billion a year net for Brussels to spend in countries less efficient, less productive and more corrupt than ours. They have had enough, above all, of being told that unless the UK concedes in perpetuity to foreign rule it will be worthless, and face ruin, danger and unremitting failure.
The ruling elite has forgotten one eternal truth: that the British people don’t like being told what to do, and we especially don’t like being told what to do by those who patronise us or use their clout to control us (as with big business).
Britain's rival EU camps resume campaign as polls show momentum for 'In' (Reuters) Campaigning for Britain's vote on EU membership resumed on Sunday after a three-day hiatus prompted by the killing of a pro-EU lawmaker, but pledges of a more respectful tone were quickly tested by a fresh row over immigration. Three opinion polls ahead of Thursday's vote showed the 'Remain' camp recovering some momentum although the overall picture remained one of an evenly split electorate.
Turkish border guards kill 11 after 'firing indiscriminately' at Syrian refugees (The Telegraph) Hat tip to Edward Harrison. Turkish border guards have shot dead nearly a dozen Syrian refugees, including children, as they tried to cross into the country. At least 11 people were killed after they were “fired on indiscriminately” at the unofficial Khirbet al-Jouz crossing, around 30 miles south of the Turkish city of Antakya. Many of the victims were from the same family, which had recently fled the northern Islamic State-held town of Jarabulus. Local activists gave their names as Obaid al-Abo, 50, and his children; Hassan, six, Waed, 15, Walaa, 17, Fatoum, 20 and Amani, 21. His wife and another son were injured. Footage purportedly taken after the incident showed a woman weeping as she cradled the body of a young girl of around two years old, who appeared to have been shot in the stomach.
VAT, tobacco tax 'to push up inflation', says Qatar ministry (Arabian Business) Qatar’s consumer price inflation will increase with the proposed introduction of value added tax (VAT) and other taxes on harmful items such as tobacco, according to an official report. The Ministry of Development, Planning and Statistics’ Qatar Economic Outlook 2016-2018 said consumer price inflation is expected to increase gradually from 2.7% to 3.4% over the period. Econintersect: What happened to the idea that increased consumption taxes decreases consumption? See next article.
Other Scientific, Health, Political, Economics and Business Items of Note - plus Miscellanea
New Evidence Could Overthrow the Standard View of Quantum Mechanics (Wired) Hat tip to Roger Erickson. The dual nature of matter (particle and wave) continues to be tricky concept in quantum physics. The widely accepted Heisenberg Uncertainty Principle has commonly been interpreted as meaning that if you exactly define the energy of a particle, then its location is very uncertain. That leads to particles in defined energy states existing in a probability distribution of physical locations in space (a probability cloud). Now experiments indicate that particles may actually behave differently, following a theoretical description known as the de Broglie-Bohm definition (also called Bohmian interpretation). Both the traditional and Bohmian view use the Schrodinger Wave equation to calculate the spatial coordinates and energy of a particle, but, in the Bohmian view, the particle is always located exactly in space. This leads to simpler descriptions of things we observe on a local level but greatly complicates descriptions of motion over great distances. Some of the things that can come out of Bohmian mechanics are parallel universes (that may not need black holes for interconnection?) and instantaneous interactions of particles over great distances that could only occur if there was "communication" faster that the speed of light. Econintersect: The more we learn, the more we find we do not understand.
This is Your Life(New Yorker) Instead of feeling that we should have a better life, we should just live, as gratifyingly as possible, the life we have. Otherwise, we are setting ourselves up for bitterness. What makes us think that we could have been a contender? Yet, in the dark of night, we do think this, and grieve that it wasn’t possible. In discussing the book “Missing Out: In Praise of the Unlived Life” by Adam Phillips (Farrar, Straus & Giroux), this author says for a meaningful life, "just deal with it". Waste no time on "what might have been". Otherwise:
“Our lived lives might become a protracted mourning for, or an endless trauma about, the lives we were unable to live.”
Inflation, Deflation And Associated Trading Prospects (Gary Tanashian, Seeking Alpha) If gold is an inflation hedge, then the bond market and gold traders are looking a two diametrically opposed outlooks. Bonds are forecasting deflation while gold days inflation is coming.
Inflation, Deflation And Associated Trading Prospects (Gary Tanashian, Seeking Alpha) Yes, this is the same article as above, but a different specific point. Is the long downtrend of the silver/gold ratio about to reverse? When it does there is a potential double for being long silver and short gold. But if gold does rally during that increase in the silver/gold ratio being long both will be a huge winner. Is there going to be a clear breakout above the 35 day MA which has been the resistance level definer for the past 3 years?
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