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What We Read Today 13 August 2016

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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Topics today include:

  • Was Genghis Khan the Most Progressive Ruler in History?

  • Two Vicious Political Cartoons

  • Did Heterodox Economists Not Have a Clue that the Great Financial Crisis Was Coming?

  • What is the Role of Mathematics in Economics?

  • Debt Deflation in China

  • The World Energy Engine is Slowing

  • Dropped Out of College?  Student Loan Debt is Still Due and has High Default Rate

  • Unprecedented Flooding Along U.S. Gulf Coast

  • Macy Closing a Lot of Retail Space

  • Turkey Will Not Compromise on Requested Gulen Extradition

  • Green Pools in Rio

  • And More

Articles about events, conflicts and disease around the world


  • The World’s Energy Engine Is Slowing (Bloomberg)  China is not helping.  China’s imports of crude oil, coal and natural gas slowed in July, offering no solace for producers hoping demand from the world’s largest energy consumer may help mop up global gluts of the fuels. Removing the global glut for oil will face the headwind of increasing replacement by natural gas.  Well, natural gas has it's own glut:

Global gas markets will remain oversupplied until 2018, and demand and supply won’t align until 2021 as capacity to liquefy and export natural gas jumps 45 percent through 2021, the IEA said in June.

  • Describe three effects that came about because of the Mongolian Empire? (Quora)  The Mongolian Empire was established by Genghis Khan, the first Great Khan of Khans of Khans in Mongolia to extend controled territory to other parts of central and western Asia.  Many liberal and democratic doctrines were instituted by the Monguls within their empire.  See Who was the most liberal ruler in history?  The Mongul Empire temporarily extended into eastern Europe in 1279 under Kublai Khan, grandson of Genghis.  See first graphic below.  The empire established by Genghis is shown in the second graphic below, along with the other areas of influence and governance during the 1200s.


  • The Feds Don't Care If You Dropped Out of College. They Want Their Money Back (Bloomberg)  When it comes to collecting on student loans, the U.S. Department of Education treats college dropouts the same as Ivy League graduates: They just want the money back. New data show the perils of that approach:  Half of recent dropouts are delinquent on their student debt.  Econintersect:  Hard to repay these loans on flipping burgers wages.

  • 'Unprecedented' flooding slams U.S. Gulf Coast; at least two dead (Reuters)  Torrential rainfall along the U.S. Gulf Coast has caused "unprecedented" flooding in parts of Louisiana, Governor John Bel Edwards said on Saturday, while claiming at least two lives across the region.  The National Weather Service issued flood watches for parts of eastern Texas early on Saturday and extended its flash flood warning further west in Louisiana, according to its website.  It also maintained a flash flood watch and flood warnings for eastern regions of the state, including New Orleans, and southern Mississippi. Over 17 inches (43 cm) of rain had battered parts of Louisiana by Saturday morning, with another several inches expected later in the day and on Sunday, the NWS said.

  • Too many stores, too much luxury: Macy's looks to rewrite retail (CNBC)   Retail investors can finally release that breath they've been holding in. Well, some of it at least.  Macy's CEO Terry Lundgren on Thursday delivered a long-awaited jolt to Wall Street, when he admitted the United States has too much square footage dedicated to retail. The company announced plans to shutter 100 of its 728 traditional Macy's stores — a strategy bearish investors have been begging the company to pursue for more than a year.  By Lundgren's own admission, industrywide there is 7.3 square feet of retail space per capita in the United States. That compares with roughly 1.3 square feet in the U.K. and 1.7 square feet in France.   This saturation has caused retailers to invest too little in many of their stores, particularly the ones that aren't delivering adequate returns. It's also tied up capital that could have been put toward better uses, such as investing in e-commerce. Meanwhile, it's dented their profitability.  But Macy's did have a good quarter:


  • Turkey says no compromise with Washington on cleric's extradition (Reuters)  Turkey will not compromise with Washington over the extradition of the Islamic cleric it accuses of orchestrating a failed coup, Prime Minister Binali Yildirim said on Saturday, warning of rising anti-Americanism if the United States fails to extradite.  Yildirim's comments, at a briefing for local reporters, were the latest to take aim at Turkey's top NATO ally and coincided with a report that an Istanbul prosecutor wrote to U.S. authorities asking f/4or the detention of 75-year-old cleric Fethullah Gulen.  Turkey says Gulen, who has lived in self-imposed exile in rural Pennsylvania since 1999, masterminded the failed July 15 putsch when a group of rogue soldiers commandeered tanks, warplanes and helicopters in an attempt to overthrow the government. Gulen has denied the charge and condemned the coup.


  • Doping: Sole Russian athletics competitor Klishina suspended from Games - IAAF (Reuters)  Russia's sole track and field competitor at the Rio Olympics, Darya Klishina, has been suspended from the Games, the international athletics federation (IAAF) said on Saturday, confirming it had withdrawn her special eligibility status.  The exemption to a blanket ban on Russian competitors over allegations of state-sponsored doping had been given to the long jumper after she had proved she was not involved in the system and had been subject to drug tests outside the country.  Klishina insisted on social media that she was a clean athlete and said the decision, which she is appealing against at sport's highest tribunal, was politically motivated.


  • How Silicon Valley may get hit by China's 'virtual reality' economy (CNBC)  Picture the scene: Asia's largest economy, a counterweight to U.S. global hegemony and flush with cash from a near-miraculous expansion that's lasted decades, is on a shopping spree for American assets.  The country amasses more worldwide influence, and its companies both compete against and provide a financial lifeline to key U.S. companies.  To the casual observer, the scenario sounds a lot like modern day China. In fact, it fits the description of pre-1990 Japan—a parallel that hasn't escaped some observers.  Just as Japan's forgone economic clout—and the alacrity with which it lavished money on U.S. assets—was once a source of domestic alarm, the $18.4 billion the Chinese have sunk into U.S. investments this year is stoking new concerns. The country's struggles have sent investors running for the exits, with most of that flood of cash has found a welcome home in Silicon Valley, where startups are beginning to encounter some culture shock with their Chinese paymasters.  See next article about warning signs from China.

  • China Bond Yields Drop To Decade Lows As Economy Sinks After New Loan Creation Tumbles (Zero Hedge)  China is slowing under the burden of debt deflation.  Following an unprecedented credit expansion by China, which in the first few months of 2016 injected well over a trillion dollars in total credit, the payback is coming. As reported earlier, overnight China reported that a swath economic activity, from factory output to investment and retail sales, slowed last month, reflecting renewed weakness in China’s economy.


Organizers shut pool to treat green water (Reuters)  Algae bloom? Olympic organizers canceled diving training on Friday morning and shut the pool in an attempt to restore the water to its original blue color, three days after its emerald hue stirred concern among competitors.  The pool turned green on Tuesday, becoming the subject of numerous jokes and creating a headache for organizers. An adjacent pool used for water polo and synchronized swimming has also started to change color.

Other Scientific, Health, Political, Economics and Business Items of Note - plus Miscellanea

There’s no question that mainstream academic macroeconomics failed pretty spectacularly in 2008. It didn’t just fail to predict the crisis -- most models, including Nobel Prize-winning ones, didn’t even admit the possibility of a crisis. The vast majority of theories didn’t even include a financial sector.

Many among the heterodox would have us believe that their paradigm worked perfectly well in 2008 and after. As an example, take a recentblog post by British economics writer Frances Coppola. Coppola likens mainstream macro to classical music, which walled itself off from the innovations of rock and jazz. Like the musical innovators of the 20th century, she claims, the heterodox have found something that works better than the ossified old ways of the elite...

This is dramatically overselling the product. First, heterodox models didn’t “predict” the crisis in the sense of an actual quantitative forecast.

This is because much of heterodox theory is non-quantitative. Basically, people write down English words explaining their conceptual ideas about how the economy works.

Noah Smith — like so many other mainstream economists — obviously has the unfounded and ridiculous idea that because heterodox people like yours truly, Hyman Minsky, Steve Keen, or Tony Lawson, often criticize the application of mathematics in mainstream economics, we are critical of math per se.

I don’t know how many times I’ve been asked to answer this straw-man objection to heterodox economics– but here we go again.

No, there is nothing wrong with mathematics per se.

No, there is nothing wrong with applying mathematics to economics.


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