It’s time to sit back, relax and enjoy a little joe…
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…
Last weekend we picked up our new puppy, Jack. He was just under eight weeks old when we got him.
Our other dog, Major, is still a bit wary of his new friend, but he’s slowly coming around.
From a care perspective, puppies are worse than babies if only because the latter wear diapers. Unfortunately for the Honeybee, because Jack is being trained to become a spoiled housedog, that lack of protection requires almost constant vigilance right now. After six days of puppy boot camp, my wife is finally starting to show some signs of wear.
The good news is Jack understands where he is supposed to, um, go “number 2.” He’s only had one accident in that regard, and that was on his first day home.
As for “number 1” … well, the pup’s success rate is running about 80% right now. Not bad, but we won’t declare victory until Jack consistently records perfect scores — so the bad news is the Honeybee still has miles to go before she sleeps. So to speak.
The Way-Back Machine: Past Posts Of Mine You May Have Missed
From May 2009:
9 Personal Finance Lessons I Learned from Watching the Simpsons – If you aren’t familiar with the Simpsons, don’t bother reading this — it won’t be very funny. On second thought, if you are familiar with the Simpsons, it probably won’t be very funny either.
And Here’s Some Other Posts You Might Enjoy …
Monevator – Risk and Investment
Yes, I Am Cheap – I’m Unemployed and Coming Out of the Closet
Investor Junkie – Will You Have Enough for Retirement?
Finance Inspired – A Guide to Avoiding Long-term Debt Problems
Budgets are Sexy – Total Baby Costs Hit $10,000!
Credits and Debits
Credit: The US economy added 236,000 new jobs last month, which helped bring the unemployment rate down to 7.7%. That’s the lowest unemployment rate since December 2008, when it was 7.3%. Hooray!
Credit: The employment surge was led by relatively big job gains in construction, which have coincided with recent increases in home sales and prices.
Credit: More good news: When the closing bell rang on Friday, the Dow Jones Industrial Average sat at 14,397. That’s yet another all-time high for the index after six straight days of gains. The Dow is now up 9.9% for the year — and we’re barely into March.
Credit: So if the economy is going so well, why is the Fed still pumping $85 billion into the economy every month as part of its quantitative easing program? After all, this money is clearly juicing the stock market.
Debit: One of the most serious impacts of all that money printing is inflation. In March 1999, the Dow could buy 10,718 gallons of unleaded non-premium gasoline. Today, the Dow — despite being at an all-time high — will fetch only 3812 gallons.
Debit: The most recent labor participation data suggests things aren’t as rosy as they seem. In February, the number of Americans not in the labor force surpassed 89.3 million people — that’s an all-time high.
Debit: That news might explain a somewhat surprising new study that found median-income families in only one major American city can afford to buy a brand new car. What isn’t surprising is the city: Washington, D.C.
Debit: Let’s face it; you know Washington D.C. is awash in a sea of cash when the White House can pay a “Chief Calligrapher” $96,725 per year — and two assistant calligraphers annual salaries of $94,372 and $85,953, respectively. I know.
Credit: In fact, the White House will be paying more than $1.1 million to people over the next four years to make out invitations with ink-dipped feather quills. No waste there. I wonder how much “chief calligraphers” get in the private sector.
Debit: Did you see this? More than 1 in 4 Americans have taken out 401(k) loans to pay their bills. I suspect they’re raiding them to buy new cars. Clearly, the market needs to create more calligraphy jobs.
Debit: If we did have more calligraphers, you can bet total gasoline retail sales by refiners wouldn’t have dropped by nearly 50% since the last market crash in October 2008. You can’t attribute a drop that large solely to telecommuting and Chevy Volts.
Debit: The truth is, the “booming” US economy is only a illusion. It’s an extremely fragile house of cards that’s become completely dependent on the Fed’s economic welfare. However, that welfare will eventually have to stop — and when it does, it’s going to end very badly.
Credit: Our politicians have been reluctant to let the economy take its medicine since the 2008 bank bailouts. The trouble is, those bailouts, along with the stimulus, and the Fed’s quantitative easing campaigns have been the economic equivalent of putting a band-aid on a bullet wound.
Debit: Unfortunately, the wound has been festering for five years now. But the longer we continue to ignore the problem before us, the more expensive the proper treatment becomes — and the greater the pain will be that accompanies it.
Credit: Finally … The Daily Currant reported that Keynesian economist Paul “No Deficit Is Too Big” Krugman declared personal bankruptcy last week.
Debit: Okay, Krugman didn’t really declare bankruptcy — it was a satirical piece. But it was quite funny. Nobody will be laughing, however, after the unlimited-spending policy he advocates results in the de facto default of America.
By the Numbers
The 2008 bank bailouts have been a boon for the bankers:
$700 billion Officially advertised cost of the Troubled Asset Relief Program (better known as TARP).
$160 billion Amount of TARP funds received by the six biggest banks: Bank of America, Citigroup, Goldman Sachs Group, JPMorgan Chase, Morgan Stanley, and Wells Fargo.
$7.7 trillion Amount in undisclosed loans the Fed committed to financial institutions that were in distress.
$460 billion Amount the “Big Six” banks borrowed from the Fed. Unlike the TARP funds, the Fed money came with virtually no restrictions.
$13 billion Estimated profits the Big Six banks took in as a result of the Fed’s below-market rate loans.
$86 billion Amount that Bank of America owed the Fed when its CEO claimed on Nov. 26, 2008 that he was at the helm of “one of the strongest and most stable banks in the world.”
$9.5 trillion Total assets held by the Big Six banks in 2011. (That’s $2.7 trillion more than they held five years earlier.)
Source: The Week
The Question of the Week
Other Useless News
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Letters, I Get Letters
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Why are you always so negative?
Well, Saul, if you really must know, it’s because my glass is always half-empty.
I’m Len Penzo and I approved this message.