Economics and Investing:

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Kmart gets into the liquidation business. Why be surprised? The entire company is going bankrupt. Why not take somebody else’s unwanted garbage along for the ride. – RBS

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Items from Mr. Econocobas:

You Are Here – I am not a chart expert by any means, but this is worth a quick peek.

Negative Rates Are a ‘Dangerous Experiment’, Warns Morgan Stanley

Items from Professor Preponomics:

US News

Regulator: Feds Face Rising Risks for Managing Fannie, Freddie (Washington Examiner) Excerpt: “The current situation is unsustainable, Watt said, not only because of the lack of capital at the two enterprises, but also because they cannot effectively compete against each other right now and create market discipline….”

Less Than 1 Out of 3 California Families Can Afford to Purchase a Home: The Number of Millenials Living at Home Continues to Grow (Doctor Housing Bubble) Excerpt: “The last time we were in the 20 percent range of affordability for California was when we were deep in the last housing bubble (on the manic mortgage days and also leading to the implosion). You need to understand what this means. Household incomes are fully stretched. We are now at the stage that companies are offering exotic products to circumvent the inability for households to save for a down payment.”

International News

The Big UH-OH (US News) Excerpt: “Eight years after the financial crisis, the world is coming to grips with an unpleasant realization: serious weaknesses still plague the global economy, and emergency help may not be on the way.”

Still No Deal for Britain on EU Reforms After All-Night Talks (Reuters) Excerpt: “No country has ever voted to leave the Union. Britain is the EU’s second largest economy and one of its two permanent members on the UN Security Council. Its exit would end the vision of the EU as the natural home for European democracies and reverse the continent’s post-World War Two march toward “ever closer union”.”

China’s Subprime Crisis is Already Here – Bad Loans Soaring (Contra Corner) Excerpt: “China’s bad loans have grown 256 percent in six years even as their ratio to total lending dropped. The true amount of debt that isn’t being repaid is open for debate. One example of how the data can be distorted: Banks are making increasing use of their more opaque receivables accounts to mask loans and potential losses, as Bloomberg News reports today.”

Stocks Knocked Back as Oil Rally Falters(Reuters) Will any agreement hold? Excerpt: “Oil prices rose more than 14 percent in the three days to Thursday after Saudi Arabia and Russia, supported by other exporters including Venezuela and Iraq, moved to freeze oil output at January’s levels. Iran endorsed the plan without commitment on Wednesday.” International Business Times is tracking developments… Oil Crisis: Prices Decline Again After Saudi Arabia Refuses to Cut Production

Venezuela’s Maduro Announces String of Emergency Economic Measures (Venezuela Analysis) The problems faced by Venezuela are more severe than most of the rest of the world can truly imagine. Reading the news nightmare is hardly the equivalent of living it. In an attempt to address these, Maduro’s address to the nation lasted five hours. Excerpt: “The economic initiatives include changes to the country’s multi-tiered exchange rate, an increase in the domestic price of gasoline, the implementation of a new tax system, and expansion of community control over food distribution.”

Personal Economics and Household Finance

Central States Pension Fund Proposes Drastic Cuts (Kansas City Business Journal) Anticipate that problems of pension solvency will spread. Plan for your personal solvency independent of any program benefits you’re otherwise anticipating. Don’t believe for a moment that funding cuts always affect someone else. Excerpt: “…In an effort to avoid the fund’s collapse, the Central States Pension Fund is proposing cutting benefits by 50 percent or more for a number of retirees.”

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