Black Coffee: The Economy (and the Fine Line Between Puppy and Dog Breath)

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

Our new puppy, Jack.

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 …

MonevatorRisk and Investment

Yes, I Am CheapI’m Unemployed and Coming Out of the Closet

Investor JunkieWill You Have Enough for Retirement?

Finance InspiredA Guide to Avoiding Long-term Debt Problems

Budgets are SexyTotal 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

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Other Useless News

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Letters, I Get Letters

Every week I feature the most interesting question or comment — assuming I get one, that is. And folks who are lucky enough to have the only question in the mailbag get their letter highlighted here whether it’s interesting or not! You can reach out to me at:

From Saul:

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.


    • 2

      Len Penzo says

      Um … good point, Jane. LOL

      To be fair, I’m not the one who made the decision to get a new pup. The Honeybee knew a two-week stint in puppy boot camp was part of the deal.

  1. 4

    Volfram says

    Already finished my taxes. No federal refund, but my state refund came in about 2 weeks ago.

    Good news is that people are starting to wake up and realize just how sustainable the current federal financial system is, and when the crash does come, the people who want to keep it in place anyway are… not going to be around much longer.

    Bad news is that until a crash like that actually occurs, those people will continue sit back and leech money off of those who actually work for a living.

    (Fun fact: I’m currently in neither camp)

  2. 5

    Beckybeq says

    Sorry to rain on your credits – but of the “236,000 jobs created”, 102,000 came out of the CES Birth/Death model. So those are imaginary. Only reason the percentage is going down is because 130,000 more folks just “disappeared” from the work force. Not a happy thing.

    Second “I’m Debbie Downer” – Dow hits an all time high, but if you adjust for inflation, it still hasn’t come back. To meet the 2007 high with inflation, Dow would have to hit over 16k.

    But, boy is that a cute puppy!! :)

    • 6

      Len Penzo says

      I’m with you on all counts, Becky — especially your puppy comment. Even 236k new jobs is less than stellar. At the high-point of the recovery after the next-worst recession we had in early 80s, the economy was creating 1 million new jobs per month — and the economy was much smaller then. Now THAT is something to really cheer about. We should be seeing similar numbers before we can claim we’re really in recovery.

      As for the Dow … what is particularly frustrating to make year-over-year comparisons — even though that didn’t stop me (LOL) — because they occasionally change the players that make up the index.

  3. 9

    Lola says

    Oh… my… god….. PUPPYYYYYYYYYYYYY!!! Sooooo cute…!!!

    Tax refunds: My tax returns were submitted in the first half of January. My small state refund hit my bank account in the last week of January, and my slightly larger federal refund hit my account in the first week of February.

  4. 10


    For my black coffee is the best. I used to make a pot but then I would drink too much for the day.

    I make instant coffee now. Half cup about 6AM and half cup about 10AM. Not too strong though.

    I am starting to work on my tax return. I use TaxACT software.

  5. 12

    deRuiter says

    The official (but sadly, fake) unemployment figures vastly under rate the problem to keep the current president looking as good to the ignorant. When you add the number without a job who have dropped off the unemployment rolls after 99 weeks (!!!) and the large number holding part time jobs who need full time jobs and can’t get them, the unemployment figure is around 15%. Then factor in the large number of professional leaches who suck down food stamps, section 8, free medical care at emergency rooms, WIC, aid to dependent children (these children are popped out in volume by the welfare class like an agricultural product for which there are subsidies, which there are!, and their future is to become the newest members of the criminal under class and the next generation of welfare unwed mothers) who will never have to hold a job because they are coddled with government largesse to insure they vote Democrat. Then add in the fact that 60% of our legal immigrants end up on the dole permanently, and you have the current recipe for disaster developed by the political class which wants the destruction of America in the name of “fairness.” “Capitalism is the unequal distribution of wealth.” “Socialism is the equal distribution of misery.” unless you are the leader who takes all the vacations with Air Force One and plays round after round of golf, he, his family and his cronies don’t share the misery. The American people are too stupid to see that, as Margaret Thatcher said, “Eventually you run out of other people’s money.”
    On a more appealing note Len, what breed of dog is Jack, (he’s got big paws!) and did you buy or adopt?

    • 13

      Len Penzo says

      He’s a Rhodesian Ridgeback, just like my other dog, Major. Major is currently 104 lbs. I suspect Jack will be close to that weight when he is full grown.

      I bought him from the same breeder we got Major. She is one of the top breeders in America for Ridgies. Her reputation is beyond reproach. Litters are rare … limited to two per year, and a maximum of one litter (lifetime) per bitch.

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