Media Worth Consuming – October 2023

Top Five Articles

Talk of a future debt crisis for the US Government is becoming mainstream.

Childcare can’t be cheap when stringent minimum staff ratios apply, so it adds little to the economy.

The CSIRO’s modelling of the cost of renewable energy makes a deliberate and significant error that makes renewable generation appear cheaper.

Joe Aston’s final column on speaking truth to power.

Charles Feeney quietly gave away almost all of his $8 billion fortune while alive, shaming other philanthropists with their smaller and ostentatious donations.

Finance

US GDP continues to be strong with consumers, businesses and government all spending freely. US jobs numbers continue to indicate that the American economy is robust.

Australian housing has become even more unaffordable with prices rebounding and another Cash Rate rise likely. On average, Australians devote more of their income to mortgage payments than any other developed nation. Meta has paid the equivalent of seven years of rent to escape a London office lease that had 18 years left, pointing to the dire state of London’s office market.

Following America’s example, the Chinese government is ramping up its deficit to stimulate its economy. Chinese are buying property in Japan to protect their wealth from their own government as well as using hawala networks to get funds out of the country. Vietnamese EV maker Vinfast Auto issued shares in August and saw its market capitalisation peak at $230 billion soon after, before collapsing to $17 billion in six weeks. The funding environment for start-ups has dramatically reversed in the last year. A helpful list of investment red flags.

A high profile Houston bankruptcy judge has resigned after the disclosure of a six year, romantic relationship with a partner at a law firm who worked on cases that came to his court. Double dip financing is allowing some American companies to forestall bankruptcy. The Germany construction industry is seeing widespread bankruptcies as higher interest rates bite. Bank of America estimates that private credit defaults could reach 5% in 2024.

Nominal returns on catastrophe bonds have jumped from both higher base rates and higher risk premiums. Debt investors are buying up convertible bonds where the equity optionality is almost nil. JP Morgan is planning to ramp up its securitisation volumes to offset higher risk weighted asset calculations.

Creditors of Credit Suisse have launched litigation against the Swiss banking regulator, the Swiss government and UBS seeking to recover their losses. Holders of tier 2 bonds in UK’s Metro Bank are set to take a 40% haircut in a restructure aimed at keeping the bank solvent. Goldman Sachs is sending its agreement with Malaysia over 1MDB to arbitration. A Goldman Sachs employee busted for insider trading won an ethics award in 2018.

Politics & culture

Robert F Kennedy Jr running as an independent Presidential candidate could take more votes from Trump than Biden. Joe Biden has been caught out allowing only pre-approved questions from journalists. Most media outlets don’t understand that Argentina’s presidential frontrunner is a libertarian not a populist.

Department of Defence schools in the US outperform state government run schools. 79% of grades at Harvard are in the A range. Studies have shown that early daycare is linked to worse mental health and behavioural outcomes for children. Portland’s population is finally realising that open and widespread drug use is damaging everyone.

Economics & work

Claudia Goldin won the 2023 Sveriges Riksbank prize in economic sciences for her studies on gender and work which found that women earn roughly the same as men until children come along. The award of the prize for helping understand how the world works is a good example of where economics is most useful. Employees are taking more sick days, often seeing them as a benefit for coping with general life. Working from home has been a positive for productivity and profits.

Sweden’s central bank is set to ask its government for additional capital after it lost money on QE. Interest rates have risen but the US Government keeps spending as if they are stuck at zero. Five ways that higher interest rates flow through the economy.

There’s four ways to finance big government and none are good for taxpayers or the economy. Raising taxes on the rich is a near impossible dream, apart from land and consumption taxes. Lower taxing, small government American states are growing faster than their big government peers. The 1930’s New Deal was a disaster.

Belarus, Venezuela and Argentina top the list for having the worst tax systems. Developing economies would be better off implementing free markets and small government rather than chasing foreign aid. S&P has raised Greece’s credit rating to BBB-, despite a debt to GDP ratio of 171%.

Eight concepts to help you think like an economist. One of chief lessons of economics is that there is no “free stuff”, someone always pays. Regulation favours the better resourced and often leads to worse outcomes for society.

Miscellaneous

An American start-up is using new technology to breakdown “forever chemicals” into safe to handle substances. Some scientists are concerned that zombie viruses may escape as ice levels recede, but others are conducting experiments on them. What the research says about how many microbes it takes to make you sick. Hong Kong beat out the US and Australia for the title of being the biggest meat eaters per capita.

A long article on the many accusations of fake studies in behavioural science. Gambling addiction amongst teens and young adults has exploded due to easily accessible online gambling. Four men have been arrested after a theft of over two million ten cent coins, with the stolen coins weighing about two tons. A K-Pop group attempted to win over Texan fans by wearing jerseys from the local baseball team, but instead ended up wearing jerseys from a Glasgow soccer team. Disney is being sued for wedgie injuries sustained on a waterslide.