Black Coffee: My Favorite Blogs, Money News & Opinions #55 (The No More Leaks! Edition)

It’s time to sit back, relax and enjoy a little joe…

Blogs I’ve Been Following This Week

Welcome to another rousing edition of Black Coffee, your off-beat weekly round-up of what’s been going on in the world of money and personal finance.  Here’s what caught my attention over the past week…

I am happy to announce that, after 85 days, a handful of engineers from British Petroleum has finally managed to plug the embarrassing leak in my readership numbers.  In fact, I’d like to say that I am cautiously optimistic, but after I finished rereading this column as part of my daily editorial duties, well, I suspect we’ll all be back at the drawing board again tomorrow.

Now, before I permanently tick off any more people with the always-irritating Credits and Debits commentary, let’s go over some of my favorite posts from the past week.  (There’s a reason Credits and Debits come at the back end of this column.)

Control Your CashToo Big to Stop Failing.  Have you heard the joke that’s been making the rounds regarding the reason BP took so long to mop up the oil leak in the Gulf?  Apparently, it was because they used the same people who clean their restrooms.  I know.  Speaking of British Petroleum, before you consider, um, tar and feathering (sorry) BP CEO Tony Hayward, you might want to move a few other guys to the front of the queue first.

Little House in the ValleyThe Newlywed Financial Bliss Box.  Hey hey hey!  No, it’s not Fat Albert.  Little House’s little sister is getting married!  But here’s the rub: Her unemployed sis is turning 29 this year and still lives at home.  What about her fiancee, you ask?  Well, he lives with his parents too – and he’s pushing 40.  He doesn’t have a steady paycheck either.  Thankfully, Little House has devised a plan to try and save the day – the question is, will it work?  (Besides, it could be worse.  At least the future groom is not the CEO of British Petroleum.)

Money FunkKeeping Your Pet Safe with Spot-on Flea and Tick Control.  Readers of mine who have problems with fleas – or whose pets have fleas – might find this post interesting.

…And Here’s Some Other Posts You Might Enjoy:

Balance JunkieWhy Do Bears Always Wear Black Hats? (Perhaps because the green hats clash with their fur?)

Monevator - Beware the Lure of the Exotic.  (Like bears wearing green hats.)

Money and Risk12 Steps To Trick Yourself Into Saving Money.

Financial BondageWhy Kids Should Not Get Allowances.  (For those who want a better explanation than the one I gave to my kids: because I said so.)

Centsible LifeCredit Scores: What, Why, and Where?

Oblivious InvestorCalculating Real Estate Investment Returns.

Planting DollarsMultitasking Doesn’t Work.

The Way-Back Machine: Past Posts Of Mine You May Have Missed

From July 2009:

Kids and Money: Our Decision to Let Our Impulsive Spender Fail – For every kid that seems to have a natural ability to grasp the value of a dollar and a real determination to save as much as they can, there is another who has their money spent almost as soon as it touches their little hands.  Last year I wrote about how my now 13-year-old son is a textbook example of the latter – and why I have decided to not stop him from throwing his money away on utterly frivolous things.

Credits and Debits

Debit: CNBC reported this week that Arun Motianey, director of fixed income strategy at Roubini Global Economics but better known as “Deputy Doom,” warned that the global economy is at risk of folding in on itself unless policy makers face up to the threat of inflation and exchange rate inflexibility.

Debit: Ironically, despite all the money currently being printed by the major central banks around the world, Motianey believes the real problem down the road won’t be inflation, but deflation.

Debit: How is that possible?  CNBC quotes Motianey as saying:  “If we slide into deflation – the likely fate of the developed market – a Japan-style outcome will become inevitable.  In Japan, the BoJ has lost the ability to create inflation and is condemned to deflation.  Central banks may now need to talk about the necessity of inflation…before it is too late.”

Credit: Never mind for a minute his Armageddon-like prediction – even though I think it is off-base.  Unlike the US, Japan has unenviable demographics; their shrinking population is rapidly aging and continues to decline.   Let’s get to the real issue here: how can I get a cool moniker like “Deputy Doom?”

Credit: It turns out Motianey is a protege of Nouriel Roubini, a.k.a. “Doctor Doom.”   Many people today believe Roubini is the most accurate economist (there’s an oxymoron for ya) of our time.  As early as 2005 he was predicting rampant speculation would result in disaster for the American economy.  Despite being widely criticized for his views, in 2006 he correctly predicted that “The United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence, and, ultimately, a deep recession.”

Debit: So what does Doctor Doom currently think about the direction of the global economy?  Well, on Monday, Roubini said at his website that, because of expiring austerity programs (read: stimulus programs), “It’s heading for a serious slowdown.”

Credit: That’s it, Doctor Doom?  Just a serious slow down?  I was expecting you to tell us we were headed for something straight out of The Book of Eli, Mad Max or, dare I say it?  Return of the Planet of the Apes.

Debit: You better watch your back, Doc.  If you keep making such rosy predictions,  your apprentice is going to take your crown.

Debit: Then again, everybody has a bad day now and then; so let’s see if I can’t lend the good doctor a hand today.  On Thursday, Reuters reported that in the first half of the year foreclosure filings were made on 1.65 million properties.   One.  Point.  Six.  Five.  Million.   In six months.

Debit: Not gloomy enough?  Okay, how about this one: this week the head of the House Democratic Campaign Committee was adamant his party would (cover your eyes, boys and girls) avoid losing the House of Representatives to the Republicans – a result that would most certainly derail President Obama’s legislative agenda.  Chris Van Hollen (D-Maryland) told reporters this week, “We will maintain a majority in the Congress.”   Gulp.  Let’s see Deputy Doom top that one.   (So, um, how did I do?)

By the Numbers

Here are some demographics on Japan that may help explain why their economy has been essentially stagnate for the past 20 years – and will remain that way for the foreseeable future.

127 million The population of Japan as of March 2009.

10 Japan’s rank among the world’s most populous countries.

1.5 The estimated Japanese fertility rate in 1993.  The number has been less than the replacement fertility rate of 2.1 since the late 1970s.

0.17 The percentage decline of the Japanese growth rate in 2009.  It is estimated the population will contract another 0.22 percent in 2010.

11.6 The percentage of the Japanese population in 1989 that was over the age of 65.

21.2 The percentage of the Japanese population in 2010 that was over the age of 65 – the highest in the world.  The US percentage is roughly 12 percent.

40 The estimated percentage of the Japanese population in 2055 over the age of 65.

18 The estimated percentage decline in the Japanese workforce by 2030.

8 The estimated percentage decline in the consumer population by 2030.

Letters, I Get Letters

I got good news and bad news from the Letters Department this week.  The good news was I received two letters.  The bad news is they weren’t fan mail…

BlueSky, regarding my response to his (or her) letter in last week’s Black Coffee column:

“Are you for real?  What planet are you living on anyway?”

Hold on, let me look out my window.   The sun.

Meanwhile, Dizzy121078 opines:

“I’m with Blue Sky.  You ARE a wacko but I like to keep coming back so I can watch you put your foot in your mouth week after week. lol!”

I’m here to please, Dizzy.  In fact, putting my foot in my mouth is something that just seems to come naturally to me.  (Ah, shoot.  There I go again.)

If you have a question you’d like to ask, or a comment you’d like to make regarding some of my irritating opinions, please feel free to drop me an e-mail at: Len@LenPenzo.com

I’ll feature the most interesting question or comment I get each week here on Black Coffee – assuming I get one, that is.

If you’re lucky enough to be the only question in the mail bag I’ll highlight your letter, whether it’s interesting or not. ;-)

Other Useless News

Here are the top 5 referring sites to Len Penzo dot Com so far during the month of July:

1. Tip Hero
2. Time Magazine: It’s Your Money
3. Mint
4. The Daily Crux
5 (tie). Consumerism Commentary
5 (tie). Frugal Dad

Thank you to everyone who has been kind enough to share one of my blathering rambling articles with your readers.  As always, the link love is always appreciated, folks!

And to make sure I include more of the smaller blogs that tend to get overwhelmed by the larger sites, at the end of the month I will highlight the Top 25 referring blogs for the entire July!  (Hooray!)   :-)

Oh yes, and here’s another friendly reminder for ya: if you happen to enjoy what you’re reading – or not – please make sure you follow me on Twitter.  And, if you’ll be so kind, don’t forget to subscribe to my RSS feed too!  :-)

Carnival News

This week I had articles featured at the following carnivals:

No carnivals this week.  (I lost all my tickets.)

12 comments to Black Coffee: My Favorite Blogs, Money News & Opinions #55 (The No More Leaks! Edition)

  • Len,

    Thanks for the mention.

    About all that deflationary talk. I can’t help but wonder if it’s leading to the big amnesty discussion. Just like Japan the US population is aging and declining. We need a younger and more prolific group to prop up the native population. Low and behold…well, you know where this is going.

    Just to be clear, I have NO problem with legal immigration. I don’t even have a problem lifting the immigration limits if limited access to social services. Everyone who wants to be productive and successful is welcome to come here. But they should come with the knowledge that there is no free lunch.

    Also, if you can afford it…have babies. :-)

    • My pleasure, Betty. Interesting theory tying deflation talk to amnesty for illegals. I think controlled, legal, immigration is essential to America’s long-term well-being. I’m not so sure I am willing to blow off immigrant limits in lieu of them signing away their access to social services though. I think too much too soon could wreak havoc by lowering our standard of living. I think it would end up lowering wages across the board, even for even high-skilled occupations (including the higher paying ones like doctors and engineers).

      Re: Japan… I saw a theory once that said instead of continuing to waste trillions and trillions of yen on failed gov’t stimulus programs, Japan would be better served using the money to offer couples the equivalent of $100,000 for every new child they can produce. It would not only be a cheaper way to jump start and turn around their sputtering economy, but it would also reverse their population decline, ensuring continued expansion over the long term.

  • I’m afraid I’m in the deflation camp too Len. It turns out the Fed hasn’t actually been printing money as part of their QE (quantitative easing) program. (http://www.investorsinsight.com/blogs/john_mauldins_outside_the_box/archive/2010/07/12/recession-deflation-and-deficits.aspx)

    The money supply is actually contracting and banks aren’t lending as much because a)they are actually doing more than checking for a pulse before they lend and b)loan demand is falling due to persistent deleveraging at all levels of the economy. This is deflationary and will be for some time to come.

    Thanks for mentioning my article and have a great weekend!

    • Interesting. So are you using M2 to make the point that the Fed is not “printing money” per se because purchasing power generated by asset backed securities is currently depressed? I say that because as I understand it, M2 has been trending downward primarily because a big chunk of that number, the credit component, is currently locked up in the financial institutions. If so, what happens when that credit comes off the sidelines and becomes money again as the economy eventually thaws? All of that pent-up credit currently held by the banks and sitting on the sidelines can eventually be unleashed into the market. Obviously, I’m not an economist, but that’s my story and I’m sticking to it! LOL :-)

      If my prediction is incorrect, then I’m in the wrong camp and deflation is definite possibility. And of course, all of this ignores the fact that, historically, no country has ever been able to rack up the amount of debt we have on the books (especially when one considers all of our unfunded liabilities) and not eventually encounter severe inflation.

  • Thanks for the mention Len.

    Did you check out @BPGlobalPR twitter stream? Anonymous guy who tweets as though he’s the PR department. Some pretty funny stuff.

  • I think you may be riding the wrong horse Len.

    Take a look at the reasons for Japan’s continuing deflation woes:
    1) Fallen asset prices (primarily real estate)
    2) Insolvent companies & individuals (many of whom were heavily invested in real estate)
    3) Insolvent banks (many of whom had lent to the real estate investors)
    4) Fear of insolvent banks (flight to quality investments)
    5) Cheap imports-especially raw materials from China
    6) Low unemployment rates and low population growth

    Except for the unemployment rates, we look a lot like Japan. Bottom line is that we’re over leveraged and are now facing debt deflation.
    How do we recover from debt deflation?

    Wait for it
    .
    .
    .
    inflation.

    • @Betty: Well, Betty, it looks like we all agree inflation is the final destination. The question is, do we have to drive through Deflation City to get there or not. :-)

      Re: 2, 3 and 4… Government meddling in Japan is wholly responsible for keeping those insolvent institutions afloat too. I think things would be a lot better – both in Japan and here in the US, for that matter – if capitalism’s great equalizer, creative destruction, was allowed to take its course.

      @Little House: You’re welcome! But I don’t think the US will be going platinum anytime soon.

  • First, thanks for mentioning my Bliss Box post. I know, it’s a wacky idea. But I’m really good at coming up with them!

    Second, looking at your debits and credits, I can only presume things are going to get a bit shakier! What’s crazy, is it feels like we’re on a bit of a roller coaster. I’m really hoping for a 2011-2012 boomerang – where the US goes platinum. Of course, this would coincide with me needing to get hired as a teacher, as I would be right at the finishing point in my credential program, and my hope of moving to Ojai (only a wee bit more expensive than where I live now!) So, can we make that happen?! ;)

  • I’ve lived in Japan before and I can say that when a Fuji Apple cost $2.00 to $3.00 – I actually welcome deflation!

    But consider this – when our “workers” demand $75 an hour (whether it is a mechanic or plumber) and a “factory worker” in China is paid a small fraction of that, someone has got to face inflation and someone has got to face deflation.

    We have lived in a world where labor cost across countries are simply out of whack. Something has gotta give. There is also a huge supply increase in certain industries (think IT folks from Bangalore!)..So in a sense, perhaps deflation of wages here is inevitable because our labor cost is just too high relative to others?

    • Well said, Mr. CC – as usual! The scary part is, yes, globalization is putting a tremendous strain on the wages of jobs that can be done outside of the US. Manufacturing jobs, for example.

      However, as long as we can (reasonably) control illegal immigration, their impact here on skilled jobs like plumbers and mechanics should be small enough such that they are able to keep their wages somewhat stable.

      That’s my two cents anyway.

  • This is the most interesting weekly roundup I have ever read. I love the blogs you mentioned (Little House is one of my favorites too). The reader comments are funny too. I don’t get any, but if I do, I’m stealing your idea, lol. :-)

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