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 dayin the early am at GEI News (membership not required for access to "The Early Bird".).
Some economists counter my concerns by saying that post-real macroeconomics is a backwater that can safely be ignored; after all, "how many economists really believe that extremely tight monetary policy will have zero effect on real output?" To me, this reveals a disturbing blind spot. The trouble is not so much that macroeconomists say things that are inconsistent with the facts. The real trouble is that other economists do not care that the macroeconomists do not care about the facts. An indifferent tolerance of obvious error is even more corrosive to science than committed advocacy of error. It is sad to recognize that economists who made such important scientific contributions in the early stages of their careers followed a trajectory that took them away from science. It is painful to say this so when they are people I know and like and when so many other people that I know and like idolize these leaders. But science and the spirit of the enlightenment are the most important human accomplishments. They matter more than the feelings of any of us. You may not share my commitment to science, but ask yourself this: Would you want your child to be treated by a doctor who is more committed to his friend the anti-vaxer and his other friend the homeopath than to medical science? If not, why should you expect that people who want answers will keep paying attention to economists after they learn that we are more committed to friends than facts. Many people seem to admire E. M. Forster’s assertion that his friends were more important to him than his country. To me it would have been more admirable if he had written, "If I have to choose between betraying science and betraying a friend, I hope I should have the guts to betray my friend."
Everything Known So Far About Alleged NYC Bomber Ahmad Khan Rahami (The Daily Beast) Ahmad Khan Rahami, the man suspected by authorities to be behind this weekend’s series of bombings in New York and New Jersey, has been arrested. The 28-year-old was found sleeping in the doorway of a bar in the town of Linden by a police officer late Monday morning. When he was awakened, Rahami allegedly shot the officer, who returned fire. The arrest came hours after police and the Federal Bureau of Investigation raided Rahami’s family residence in the neighboring city of Elizabeth. Law-enforcement officials said they believe Rahami is responsible for three separate bombings that began Saturday morning at a 5K race in New Jersey, continued with a large explosion in Manhattan’s Chelsea neighborhood Saturday night, and ended with pipe bombs at a New Jersey train station discovered Sunday evening. Video below is from surveillance camera near the NYC Chelsea neighborhood bomb explosion Saturday night.
Deutsche Bank Said to Securitize Corporate Loans to Offload Risk (Bloomberg) Deutsche Bank AG, under pressure to bolster its balance sheet before resolving a U.S. mortgage probe, is working to securitize billions of dollars of corporate loans to offload risk, according to a person with knowledge of the matter. The bank is structuring the transaction as a synthetic collateralized loan obligation, which means the firm would keep servicing loans while transferring risk to investors, said the person, who asked for anonymity because the deal is pending. Germany’s biggest bank has been doing similar deals for years to manage risks from corporate lending, the person said.
U.S. May Have Killed Prisoners, Not Troops, in Syria Strike (The Daily Beast) The U.S. military currently is investigating whether the Syrian troops it supposedly bombed on Saturday were, in fact, former prisoners turned into makeshift conscript soldiers for Syrian President Bashar al Assad. That’s according to two U.S. defense officials who spoke with The Daily Beast on condition of anonymity. It is the first explanation the Pentagon has put forth for why coalition warplanes mistakenly attacked Syrian forces in a strike that was supposed to target the self-proclaimed Islamic State. But it is only one of several theories being examined as investigators try to find out why the strikes, which killed at least 62 people and injured 100 more, went awry.
Aid trucks hit by air strikes as Syria says ceasefire over (Reuters) Air raids hit aid trucks near the city of Aleppo on Monday, a monitoring group reported, as the Syrian military declared that a week-long ceasefire was over. The attacks were carried out by either Syrian or Russian aircraft, the Syrian Observatory for Human Rights said, adding that there had been 35 strikes in and around Aleppo since the truce ended. The Observatory said the aid trucks had made a delivery organized by an international organization to an area west of Aleppo. The United Nations and Red Cross said they were investigating the reports. A local resident told Reuters by phone that the trucks were hit by around five missile strikes while parked in a center belonging to the Syrian Red Crescent in the town of Urm al-Kubra, near Aleppo. The head of the center and several others were badly injured.
Putin firms control with big win for Russia's ruling party (Reuters) Vladimir Putin cemented his supremacy over Russia's political system when his ruling United Russia party took three quarters of the seats in parliament in a weekend election, paving the way for him to run for a fourth term as president. Opposition activists and European observers questioned how free and fair the vote had been, however, although there were no immediate signs the result might spark street protests of the kind which erupted after the last such election in 2011. Overall turnout fell to 48% from 60% ihn the last election, exposing growing apathy about a political system and elite which critics say tolerates no genuine opposition.
Japan to provide $2.8 billion in refugee aid over three years from 2016: Abe (Reuters) Japan will provide an additional $2.8 billion in humanitarian aid to help deal with the global refugee crisis over three years from 2016, Japanese Prime Minister Shinzo Abe on Monday. Abe made the pledge at a United Nations summit on refugees on the sidelines of the annual U.N. General Assembly.
Canada to impose carbon taxes nationwide (The Hill) Canada’s federal government is planning to impose taxes on carbon dioxide emissions in provinces that do not enact them. After months of discussions on the topic and meetings with provincial leaders, Environment Minister Catherine McKenna made clear Sunday that the system will start sometime in October. But she stressed that provinces, which have the primary authority on matters such as carbon pricing, will have the first opportunity to figure out how to reduce greenhouse gases.
Other Scientific, Health, Political, Economics and Business Items of Note - plus Miscellanea
US companies are 'hoarding' a record $2.5 trillion in cash overseas (Business Insider) The recent fight among Apple, Ireland, and the European Union has once again shined a spotlight on the growing trend of US companies storing cash overseas to avoid taxes. In fact, the amount of cash held by US-based companies in foreign countries hit a record $2.5 trillion in 2015, which is roughly 14% of the US's total GDP, according to Andrew Hunter, an economist at Capital Economics, who described the increase as companies "hoarding" cash overseas. Econintersect: This condition is an example of why "savings" does not equal "investment", depending on the definition of "investment". Cash which is "stored" in the form of deposits or financial instruments cannot logically be categorized as "invested" if investment is defined as money used to purchase "the means of production of goods and services". See next article for discussion of the various meanings of "investment". An interesting sidebar to this discussion is the reverse analysis of savings and investment recently discussed by Dirk Ehnts. In that discussion Prof. Ehnts argues that investment produces savings, and in that view "investment = savings". That definition is consistent with the reverse starting point which produces the logic that "savings = investment + hoarding". In other words, all investment produces savings (either positive or negative), but not all savings are used for (or correspond to) investment. See Investment Equals Savings: Keynes In The General Theory 1936 (Dirk Ehnts, GEI Opinion).
Investment Definition (Finance Maps of the World) Here is an excerpt that makes a clear distinction between the finance definition of investment and the economic one:
The word investment can be defined in many ways according to different theories and principles. It is a term that can be used in a number of contexts. However, the different meanings of “investment” are more alike than dissimilar.
Generally, investment is the application of money or other assets in the hope that in the future it would appreciate or generate more income.
According to economics, investment is the utilization of resources in order to increase income or production output in the future. An amount deposited into a bank or machinery that is purchased in anticipation of earning income in the long run are both examples of investments.
Although there is a general broad definition to the term investment, it carries slightly different meanings for different industrial sectors.
Investment Definition: According to economists, investment refers to any physical or tangible asset, for example, a building or machinery and equipment.
On the other hand, finance professionals define an investment as money utilized for buying financial assets, for example stocks, bonds, bullion, real properties, and precious items.
According to finance, the practice of investment refers to the buying of a financial product or any valued item with the anticipation that positive returns will be received in the future.
The most important feature of financial investments is that they carry high market liquidity. The method used for evaluating the value of a financial investment is known as valuation.
Business theories define investment as that activity in which a manufacturer buys a physical asset, for example, stock or production equipment, in expectation that this will help the business to prosper in the long run.
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