Economics and Investing:

How Do You Know When Your Society Is In The Midst Of Collapse?

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Unsocial Insecurity: Social Security Fund loses money for the first time since 1983. The new retirement model will have you working until you fall over from a heart attack.

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Items from Professor Preponomics:

US News

Are Government Regulators More Virtuous than Everyone Else? (Mises) Excerpt: “One can’t help but notice the central contradiction in this analysis. On the one hand, it is assumed that markets fail because of “normal human weakness.” On the other hand, it is assumed that regulation, which must necessarily be implemented by human beings with equal or greater “weaknesses,” will somehow solve the problem.”

10.2 Million “Detached”, Jobless Millenials, Potential Lost Generation (Washington Examiner) Tragically, this is a crisis not likely to be understood for a very long time. Excerpt: “Teens and young adults were among the groups hit hardest by the global financial crisis. And while many young people have since regained their footing – as employees, students or both – there are still millions in the U.S. and abroad who are neither working nor in school.”

Puerto Rico Plans Debt Exchange Offer Friday (Market Watch) Commentary: The proposal is interesting in that it includes one fixed rate return and a second variable rate return tied to Puerto Rico’s fiscal health. However, it really is just old debt exchanged for new debt. Based on the history of a spendthrift government, it’s difficult to imagine a successful outcome in this endeavor if the goal is to truly reduce debt. Fiscal discipline always sounds good on paper, but its application over the long run is much more difficult. This is especially true where politicians are involved. Furthermore, the amount of debt in the context of all other conditions affecting Puerto Rico may simply be beyond repayment. It is my opinion that write downs are inevitable, although all parties will attempt to kick the can still further down the road.

International News

Bank of Japan Stuns Markets with Surprise Move to Negative Interest Rates (Reuters) Excerpt: “In adopting negative interest rates Japan is reaching for a new weapon in its long battle against deflation, which since the 1990s have discouraged consumers from buying big because they expect prices to fall further. Deflation is seen as the root of two decades of economic malaise.”

It’s Starting to Look Like Russia Will Have the Biggest Impact on Oil Prices This Year (Business Insider) Despite the tough talk, the collapse in oil prices may be creating economic strain sufficient to bring the most powerful decision makers back to the negotiating table. Will they come to a new agreement on production? We’ll see.

Goldman Sachs Calls Brazil a MESS After Warning on Depression (Bloomberg) Excerpt: “We don’t know the bottom…. It’s hard to talk business when the person across from you will go to jail. We don’t know which government will be there tomorrow.”

Personal Economics and Household Finance

How “Mean Moms” Teach Their Kids About Money (Living on Cheap) Excerpt: “How much do your kids know about money? I don’t mean, how much do they know about how to wheedle a dollar out of your wallet for the vending machine; I mean, how much do they know about how money is earned, saved, invested, spent?”

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