What We Read Today 30 May 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.

• Premature US Victory-Dancing on Ukraine (Ray McGovern, Consortiumnews.com) Hat tips to Chuck Spinney and Roger Erickson. The author , a 27-year veteran of the CIA, including a term as chief of the agency’s Soviet Foreign Policy Branch, says the full consequences of the U.S. orchestrated putsch in Ukraine are far from clear. The actions “presented Russia’s leaders with what they saw as a last-straw-type deceit by the U.S. and its craven satellites in the European Union“. McGovern says that “earthquakes” may result.

• Paper money is unfit for a world of high crime and low inflation (Kenneth Rogoff, Financial Times) Eliminating paper money and going to electronic money only would kill two birds with one stone, according to Rogoff. (1) Negative interest rates could be implemented. (2) Tax evasion and and illegal transactions would be impossible without detection because anonymity of money would be no more. Econintersect guesses that Rogoff will never be a libertarian.

• Pluto Bids to Get Back Planetary Status (Ken Croswell and Steve Mirsky, Scientific American) In 2006 astronomers agreed to declassify Pluto as a planet because it was “too small”, at the time though to be smaller than another body, Eris, orbiting the sun three-times farther out than Jupiter. Since then the Hubble Space Telescope has determined that Pluto is slightly larger than Eris, is circled by at least five moons and has a methane atmosphere. The new information certainly boosts Pluto’s credentials to be classified as a planet once again.

• Sugar Is Not the Enemy (David Despain, Outside Magazine) This article is a strident criticism of the acclaimed documentary “Fed Up” which identifies sugar as the cause of obesity. The author says that sugar is a critical fuel for exercise and quotes a number of nutrition authorities who are critical of the film, including one of the film’s advisors, Dr. David Katz of Yale University’s Prevention Research Center:

“In terms of overall health outcomes, the evidence overwhelmingly indicates the conjoined importance of what we do with our forks and what we do with our feet.”

• Japan consumer spending, factory output skid after sales tax hike (Tetsushi Kajimoto and Stanley White, Reuters) Consumer spending fell at the fastest rate in three years in April and industrial production took an unexpected drop. Hello, President Abe: That’s what happens when you increase sales taxes by more than 60%. And the Bank of Japan is considering winding down monetary stimulus because the economy is strengthening? And inflation is reported at 1.5% after correcting for effects of the tax hike (Nasdaq.com). What doesn’t add up here? See the next two articles which were ‘behind the wall’ yesterday.

• Bank of Japan, more confident about recovery, quietly eyes stimulus exit (Leika Kihara, Reuters) The 13-month monetary stimulus program of the BoJ (Bank of Japan) may soon be coming to an end. This article reveals that “former central bankers familiar with internal discussions” say that “informal debate” is underway to end the quantitative easing which has been a key part of Prime Minister Shinzo Abe’s program to end nearly two decades of deflation. With inflation above 1% are the central bankers ready to declare victory and go home? Haruhiko Kuroda, BoJ Governor has previously said that monetary expansion would continue until the 2% inflation target “was in sight”? Just how farsighted is the BoJ? See also next article.

• Bank of Japan Seeks to End Stimulus, Currency Market in Disbelief (Mike Shedlock, MISH’S Global Economic Trend Analysis) Hat tip to John O’Donnell. Shedlock says that if the economy were strengthening then currency would be appreciating and bond yields would rise. Neither has happened in the last three months so he thinks the consensus about economic growth is wrong.

Today there are 12 articles discussed ‘behind the wall’.

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