Early Headlines: Osborne Proposal is Ignorant, Deflategate Didn’t Happen?, TPP Setback No Big Deal for Wall Street, Australia Housing Bubble, China Housing Bubble Over and More

Early Bird Headlines 13 June 2015

Econintersect: Here are some of the headlines we found to help you start your day. For more headlines see our afternoon feature for GEI members, What We Read Today, which has many more headlines and a number of article discussions to keep you abreast of what we have found interesting.

U.S.

• Deflating ‘Deflategate’ (The New York Times) If the facts are as reported here, the report that led to sanctions of the Patriots and quarterback Tom Brady is defective with very flawed analysis. Econintersect: The data as reported here would more likely lead to sanctions against the Colts and their kickers for overinflating their footballs. We expect the review of the sanctions will result in a quiet removal of sanctions and there will be no “Inflategate”.
• White House Ponders How to Get Back on the Fast Track (Bloomberg Politics) Obama’s willingness to lock arms with Republicans and the business community to push forward on an issue that is so divisive within his own caucus is evidence enough that this pitch will be made over and over in the days ahead-and as strong an indication as any that the fight isn’t over. Here is what the president had to say about the only part of the trade fast-track package that was actually defeated after the vote Friday:

“Trade Adjustment Assistance is an initiative that would give roughly 100,000 American workers access to vital support each year,” the statement said. “But it’s currently set to expire soon. Republicans and Democrats in the Senate have renewed it. Republicans and Democrats in the House failed to renew it today-and inaction will directly hurt about 100,000 workers and their communities annually if those members of Congress don’t reconsider.”

• Trade Deal’s Setback Left Wall Street Unmoved. Why? (The New York Times) Wall Street’s apparent indifference to this latest development tells us something, although it’s not quite clear what, says author Justin Wolfers. One possibility is that perhaps this trade deal just isn’t such a big deal for the bottom lines of these firms – it adds only millions to the bottom lines of companies that are worth billions. Wolfers says: “If that’s right, then perhaps the stakes here aren’t as high as the agreement’s most fervent boosters have suggested.”

UK

• Osborne plan has no basis in economics (The Guardian) According to this article, Osborne’s budget plans do not recognize the existence of sectoral balances, In other words, it’s like an accountant giving a financial statement without looking at the books. Econintersect: But if banks can simply create money out of thin air by issuing credit, then why can’t Osborne pull money out his own dark place? (Hint: Satirical rhetoric.)
• Is the UK’s austerity myth about to crumble? (Business for Scotland) The UK just gave a mandate to the Tories to deepen austerity when it’s not only not necessary but actually likely to be counter-productive. This article maintains that this may bring the growth through austerity myth crashing down to reality. By the Way another sharp criticism is in this article in a quote from Steve Keen that Chancellor Osborne “Kindergarten level understanding of economics”.

Greece

• EU Prepares for Worst as Greece Drives Finances to Brink (Bloomberg) Prime Minister Alexis Tsipras is sending a delegation to Brussels with a new set of proposals for Greece’s creditors following a barrage of demands to get serious about making concessions or assume responsibility for a default.
  

Romania

• Romanian PM survives no-confidence vote amid corruption claims (Hurriyet Daily News) Romania’s parliament on June 12 rejected a motion of no-confidence in the government of Prime Minister Victor Ponta who has been embroiled in a corruption inquiry. For more background on corruption in Romania see GEI Feature: Corruption in Eastern Europe.

China

• Ex-Security Boss Zhou Yongkang Jailed for Life by Tianjin Court (Caixin) Zhou Yongkang, who once headed the domestic security apparatus as one of China’s most powerful people, has been sentenced to life in prison for taking bribes, abusing his power and leaking state secrets, the official Xinhua news agency said on June 11. Zhou, 73, who had a seat on the ruling Communist Party’s all-powerful Politburo Standing Committee before retiring in 2012, was handed the sentence by the Tianjin No. 1 Intermediate People’s Court. He becomes the highest-ranking party figure to be prosecuted since the Gang of Four was deposed in the late 1970s, paving the way for Deng Xiaoping to launch China’s reform and opening to the outside world.
• Idle Home Builders Hold China’s Economy Back (The New York Times) After years of being a leading sector in China’s rapid economic growth, home building is now growing more slowly than the economy overall. Only in the depths of The Greta Recession has residential real estate development growth been lower.

Australia

• The housing crash we had to have: A Gen Y perspective on the bubble (Rational Radical) This post says the veil has been permanently lifted on Australia’s 16-year housing bubble and that means to bust is near. Recognized by many but not by the government:
  

So bubble mania has finally hit the mainstream. The housing bubble question has landed squarely at the feet of the Prime Minister and his treasurer, and only 10 to 15 years late… What a relief it is then to hear our fearless leaders assure us that there is no bubble, endless house price rises are universally a good thing, and that only poor people try to live in houses they can’t afford.

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