Every day our reading list article discusses things we found interesting in the news, in journals, blogs and media.  Most of the articles we list we find worthy of some comment or short discussion.  Sometimes the discussion gets a little longer than what could be called brief.  The following is the full WWRT (What We Read Today) article posted for a week ago Friday.

There are some interesting things ‘behind the wall’.

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What We Read Today 11 April 2014

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 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.

• Someone from This Billion-Dollar Fraud Machine Needs To Go To Jail (Shah Gilani, Wall Street Insights & Indictments) Shah Gilani is a seasoned Wall Street veteran who contributes to Global Economic Intersection, most recently yesterday GEI Investing: The Real Reason the Stock Market is Rigged. He summarizes the ridiculousness of a $727 restitution agreement with a $45 million fine for Bank of America who committed outright fraud in misrepresenting customer account protection services which they sold. Shah says that if the right thing were done they’d have to build bigger jails.

• Why the CFPB’s Crackdown on Add-On Products Isn’t Over (Rachel Witkowski, American Banker) In an otherwise factual summary of the BofA fraud story (see previous article) this American Banker article stuck in a little self-serving aside (emphasis:)

Cordray [Consumer Financial Protection Bureau (CFPB) Director Ricard Corday] has also repeatedly cautioned companies that this would be an area the agency would heavily focus on. Most of these companies have since either stopped offering or changed their credit card add-on products. But that has not slowed down the agency.

• The Gloomy Future Of The Tax Preparation Industry (Mark P. Cussan, Investopedia) Taxpayers now have more options than ever when it comes to filing their returns, and preparers have been forced to offer an ever-wider array of products and services in order to maintain their business.

• Future of Education is At Hand: Online, Accredited, Affordable, Useful (Michael Shedlock, MISH’S Global Economic Trend Analysis) Hat tip to John O’Donnell. Mike reviews the deflationary pressures on soaring college costs. There are reasons to think that online education may become a significant factor in bringing college costs down dramatically.

• Off-exchange options flew under enrollment radar (Bruce Shutan, Employee Benefit Advisor) It has been estimated that millions of Americans who aren’t eligible for HIX subsidies chose health insurance options off the exchanges, including young and healthy adults who are most desirable in any insurance risk pool. Only about 25% of those between the ages of 18 and 34 signed up for coverage on public exchanges, according to the federal government’s most recently released enrollment figures. While no one was paying attention about 40% of that same age group bought off-exchange plans in the fourth quarter through the online comparison-shopping site eHealth.

In addition people were getting health insurance the old fashioned way – about 20% of 1 million new customers for WellPoint were completely “off exchange”, public or private. Highpoint reported 30% of new customers enrolled by the middle of last month obtained coverage outside of exchanges.

Another complication: Off-exchange (public HIX) coverage could have been non-ACA compliant in 4Q 2013 but will sunset in the second half of this year. Since 01 January 2014 new policies were required to be ACA compliant no matter where obtained to avoid the tax penalty.

Private exchange options and off-exchange options include ACA compliant insurance but there are no data available to assess how many ACA compliant policies are now in force that are in addition to the public exchange total of 7.1 million. And if a significant number of non-compliant policies are going to sunset in 2014 how will that affect the the number of additional ACA policies for 2015?

And does anybody have any information about how the employer sponsored group insurance space has been changed? We don’t.

Econintersect suggests it will be months, if not years, before we really know how the health insurance marketplace has been changed by the ACA (Affordable Care Act). How many of the previously uninsured now have coverage? How many will have coverage in another 2-3 years? Any number you see today is strictly a SWAG, in our opinion.

• The Richest Rich Are in a Class by Themselves (Peter Coy, Bloomberg Businessweek) Hat tip to Marvin Clark. The bottom 90% of the top 1% are not getting any bigger slice of the wealth pie than a generation ago. The very top, the 1% of the top 1% is where the most rapid wealth growth has occurred; 16,000 households have seen share of wealth quadruple over the past 33 years. Thomas Piketty’s new book has review article discussed ‘behind the wall’.
  

Today there are 15 more articles discussed ‘behind the wall’. Eight of the articles are on investing topics.

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• Newly started foreclosures head higher in 19 states (Ruth Mantell, MarketWatch, The Wall Street Journal) The foreclosure filing numbers have been declining (with significant volatility along th way) for nearly five years if you look at the national totals. See first graph below. But hot spots keep showing up. See second graph below. For a complete list of the 19 states with increasing foreclosure action, go here.

• Surprise! Every American really does understand the basics of Monetary Sovereignty (Rodger Malcolm Mitchell, Monetary Sovereignty) Rodger Malcolm Mitchell has contributed to Global Economic Intersection. Nice essay comparing corporate stock with sovereign stock.

• Lew Urges China to Show Commitment to Pursue Market-Set Currency (Kasia Klimasinska and Ian Katz, Bloomberg) Nothing new here EXCEPT for this statement from Lew (significant phrase emphasized):

“They need to get back on the path of demonstrating that they’re committed to moving towards a market-determined exchange rate,” Lew said in an interview on CNBC yesterday. “If they want it to be a reserve currency some day, they need to demonstrate that,” he said, referring to the yuan.

• Can You Identify These Cities From Their Light Signatures? (Rose Eveleth, Nautilus) Sixteen cities from the air at night. Identifying them is not easy.

• Why We’re in a New Gilded Age (Paul Krugman, The New York Times Review of Books) This is a lengthy review of Thomas Piketty’s new book “Capital in the Twenty-First Century“. A worthwhile read. It seems, after digesting Krugman’s view that the title of the book might well have been “The Return of Patriarchal Capitalism“. A graph from Piketty suggests another possible title: “The Fall and Rise of Capital Supremacy“.

• The Best SEC Speech Ever (Jonathan Weil, Bloomberg) Jim Kidney retired last month as from a longtime position as a trial attorney for the SEC (Securities and Exchange Commission). His retirement speech is a barnburner which laid out an indictment of the SEC that should be taken to court. The text of the speech can be read here.

• Top 20 most popular work-from-home jobs (Employee Benefit News) Slideshow. We’ll give you number 1: Writer; and number 20: Marketing Manager. Now you’ve only got 18 to go.

• The Paradox of Transparency (Thomas Hirst, Pieria) The single most interesting thing here is the note that the Fed is losing confidence in the usefulness of DSGE (dynamic stochastic general equilibrium) models. As the name indicates these models are the essence of logical contradiction unless you believe the economy operates in a state of equilibrium. Dynamic and stochastic definitely are a logical combination, but not used with equilibrium.

• The Accidental Success of the 401(k) Plan (Richard Rubin and Margaret Collins, Bloomberg) A throw-away section written by a 28-year old lawyer in a 1978 tax law was kept in the bill because it was a concession to Republicans who wanted to encourage saving for retirement. No one thought it would ever lead to much of significance – in fact most didn’t even know it was there. What was the section of that 1978 bill? It was Section 401(k). Click below for infographic:

• Trillions in Subsidies, but Banks Still ‘Struggle’ (Rick Ackerman, Rick’s Picks) Rick Ackerman has contributed to Global Economic Intersection. The banks are seeing “earnings stressed” even though QE has amounted to a huge subsidy. Ackerman points out that hasn’t stopped their CEOs from continuing to rack up million dollar raises. And now their front-running trading schemes are under question another profit center may follow the one closing down in consumer credit fraud. And the Fed is saying that large backs will have to raise billions more in capital. How will these poor behemoths survive? Maybe they won’t. Maybe they will crave up into real banks and perform real banking functions, leaving the speculation to others and the fraud to the “other Mafia”.

• Jamie Dimon says Fed stimulus exit will be easy (Stephen Gandel, CNN Money) In his annual letter to shareholders CEO of JPMorgan Chase CEO Jamie Dimon said there is “little question” that the Federal Reserve’s QE program boosted the economy and hastened the recovery. He said also that ending the stimulus would not end the recovery. He projects that interest rates will double, to 5% on the 10-year Treasury bond. He apparently hasn’t read (or doesn’t agree with) the next article.

• Central Banks See What They Want in Ignoring Deflation (Rich Miller and Simon Kennedy, Bloomberg) Almost 2/3 of the 121 national economies tracked by Bloomberg have very low and declining inflation. Central bankers are still fighting the last was. Debt deflation is not in the lexicon of many.

• Global solar dominance in sight as science trumps fossil fuels Ambrose Evans-Pritchard, The Telegraph) Solar power will slowly squeeze the revenues of petro-rentier regimes in Russia, Venezuela and Saudi Arabia. They will have to find a new business model, or fade into decline. As optimistic as Pritchard is, there is still a way to go. Solar cost is still well above that of other electricity generation sources as pointed out in a WWRT discussion two days ago: U.S. Wind Power Blows New Records. Again. And Again. (Tom Randall, The Grid). Pritchard quotes Sheikh Ahmed-Zaki Yamani, the veteran Saudi oil minister (in 2000):

“Thirty years from now there will be a huge amount of oil – and no buyers. Oil will be left in the ground. The Stone Age came to an end, not because we had a lack of stones, and the oil age will come to an end not because we have a lack of oil.”

See also GEI Analysis article today about the parabolic growth of solar in the U.S.