Black Coffee: The Engine Is Redlined and the Wheels Are Falling Off

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.

I hope y’all had a great Christmas. I know I did.

I’ve got lots of credits and debits today, so off we go …

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

From March 2009:

Gordon Gecko Would Be Proud: It’s Time to Let AIG Fail – I’ve always said that capitalism’s creative destruction process is necessary for ensuring a healthy vibrant economy. It’s certainly not taxpayer-funded bailouts, which only make things worse over the long run.

And Here’s Some Other Articles You Might Enjoy…

Joseph Anthony Writes – An Epic Life

Scordo – The Italian Pantry: 12 Ingredients to Keep In Your Kitchen at all Times

Free Money Finance   – Seven Steps to Get Out of Debt

Jay S. Fleischman – Don’t Play Someone Else’s Game

Frugal Healthy Simple – Sometimes It Helps to Do the Math (Again)

Credits and Debits

Debit: On Thursday manic investors sent Twitter’s ballooning market cap past the $40 billion mark. Really? In comparison, Ford Motors is currently valued at $60 billion. Reality had set in with some investors by Friday, however, as Twitter’s stock price retreated more than 13%.

Credit: If you think that’s nuts, consider this: On the same day, the Dow recorded an all-time high — for the 50th time this year.   Yes, 50. Does anyone believe that would be possible without the Fed’s $85 billion per month quantitative easing (QE) campaign? Neither do I.

Debit: The stock market isn’t the only thing that’s been revved to the redline. Home prices have never been more unaffordable; the average US home price is now 6.7 times the average salary. As late as 1997, it took less than half that amount to buy your typical home. I know.

Debit: If you’ve noticed lots of new cars on the road, there’s an explanation for that: it’s called an economic mirage. More than one in four new autos — and 55% of all used cars and trucks — are being financed today via so-called subprime loans to people with poor credit histories.

Debit: Relax. is reporting that all of those subprime loans aren’t signalling trouble on the horizon: “Experts said another cataclysmic financial meltdown is unlikely, given the differences between the housing and automobile markets.” Wanna bet?

Credit: For his part, David Marrota, a Wall Street expert, financial advisor and contributor to Forbes, is recommending that Americans have guns and ammunition on hand in the event of a financial collapse. Don’t laugh. Especially if you live in the middle of a large metropolitan area.

Debit: The reason we never saw such dire warnings from “mainstream” economists ahead of previous economic downturns is because, now, the Fed and other central banks are printing money faster than ever before. As a result, they’re putting our currency and the world’s entire financial system at great risk.

Credit: The interest rate on the 10-year Treasury bond hit a low of 1.39% in July 2012; this week it crossed 3.00% — despite the backdrop of the Fed’s monthly $45 billion bond purchases via QE. That suggests interest rates will rise even quicker when the Fed starts tapering next month.

Debit: Rising rates could be signaling that the Fed is losing control of the bond markets. Or not. But, if that is true, then US interest payments could eventually overwhelm the federal budget, revealing America’s insolvency. It’s one reason to be skeptical of the Fed ever ending QE.

Credit: Did you see this? Cuba is now giving its citizens the right to buy new and used vehicles from the state without permission. Isn’t that great? Before the policy change, only government officials and the well-connected elite were permitted to own cars built before 1960.

Debit: Sadly, Obamacare has America’s healthcare system on a parallel trajectory. It’s not just lost liberty; only government officials and their cronies enjoy exemptions and tax breaks necessary to escape the repression foisted upon the rest of us now in the name of “fairness.”

Debit: Last week the President partly suspended the individual mandate for those whose old health insurance was canceled by the law. That was the 14th arbitrary change to his signature healthcare law without Congressional approval. Mel Brooks was right.

Credit: The “good” news, as the Wall St. Journal wryly noted: “If Obamacare’s redistribution requirements made your old, cheaper, better health plan illegal, you now have the option of going without coverage without the government taking your money as punishment.”

Debit: That hasn’t stopped the government from, as Forbes puts it, “muscling” healthcare insurers to provide free or discounted care to those who have lost their healthcare insurance due to Obamacare. Sounds like tyranny to me.

Credit: Thankfully, despite all of the press-room edicts and decrees being made by the Executive Branch, the government has been unable to stop the fatally-flawed law from falling apart. Imagine that.

Debit: In fact, Obamacare is so poorly-drafted that, according to the Washington Post: “Beginning Jan. 1, regulators expect it will be literally impossible for an individual to buy a new policy in the Northern Mariana Islands, and difficult in other (US) territories.” In other words, just like here in the US.

Debit: You think I’m kidding? Oregon signed up just 44 people through November — despite spending $300 million on its state-based exchange. Hey, that’s only $6.8 million per person.

Credit: Despite early Obamacare advocate claims that Oregon was off to a “great start”, its state exchange has been such an epic failure that, earlier this week, administrators all but admitted defeat when they began sending Oregonians elsewhere for health insurance.

Debit: A nationwide demographic analysis of Obamacare enrollees by Forbes indicates that the scheme is unraveling. It turns out that most people signing up are older, sicker, and poorer — the exact opposite of what Obamacare needs to work. Oops.

Debit: Even worse, Forbes notes that 64% of those who have signed up so far, didn’t get private insurance. Instead, they were added to the Medicaid rolls, which are fully covered by … taxpayers. Uh huh. Get ready for skyrocketing premiums in 2015.

Debit: And yet, the same people who insisted that Obamacare would result in more affordable healthcare for almost everyone are now arguing that the best way to avoid the coming premium death spiral resulting from their failed law is even more government involvement via a single payer system. Sick.

Credit: The wheels have come off the Obamacare clown car — too bad the occupants inside can’t see that. Instead, they’ll just keep insisting that things will get better as long as the driver keeps pressing the pedal to the metal. Forward!

By the Numbers

I’ve already presented facts in this space regarding your typical clown car. Here are few numbers on the clowns themselves:

1560 Year of the earliest known clown on record.

1947 Year the oldest known clown society, Clowns International, was founded.

1963 Year that Ronald McDonald first appeared on a television commercial. (He was played by Willard Scott.)

1971 Year that President Richard Nixon proclaimed August 1 – 7 to be National Clown Week in the United States.

20,000 Number of professional clowns in the world.

5 Number of names listed on the birth certificate of The Simpson’s Krusty the Clown: Herschel Shmoikel Pinchas Yercham Krustosky.

68 Height of the average clown, in inches. (The one’s who work for Ringling Brothers, not the federal government.)

Sources: Circus Mania; Car and Driver

The Question of the Week

Sorry, there are no polls available at the moment.

Last Week’s Poll Results

What is your favorite season?

  • fall (35%)
  • spring (32%)
  • summer (24%)
  • winter (7%)
  • I’m not sure. (2%)

More than 200 people responded to last week’s question and, in a surprisingly close decision, the battle of the seasons went to autumn, which topped springtime by a few percentage points. (Autumn is my personal favorite season too.) I also found it interesting that 7% of Len Penzo dot Com readers preferred winter — I wonder what percentage of them live in areas with relatively warmer climates.

Other Useless News

Here are the top 5 articles viewed by my 5505 RSS feed and weekly email subscribers over the past 30 days (excluding Black Coffee posts):

  1. What Everyone Should Know Before Depositing Their Money in a Bank
  2. How to Make Your Dreams Come True — Even on a Tight Budget!
  3. Why Doing Lines on Black Friday Isn’t All It’s Cracked Up to Be
  4. 3 Reasons Why Imposing a Parent Tax on Your Kids Is a Good Idea
  5. 9 Great Gift Ideas for People Who Have Everything

Hey, no matter how you got here, please be sure to:

1. Click that “Like” button in the sidebar to your right and become a fan of Len Penzo dot Com on Facebook!

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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:

America’s servers continue to visit the Len Penzo dot Com Complaint Department. This week,  Cindy made her case against my claim that 15% tips are perfectly acceptable for good service:

“Mr. Penzo, please. Until you have worked (as a server), you have no right to comment, so shut up. Fifteen percent tips were back in the eighties when things were cheaper.”

Of course; how stupid of me. Thanks for showing why it’s always better to remain silent and be thought a fool, than to comment and remove all doubt.

I’m Len Penzo and I approved this message.


  1. 1


    Your server friend must not understand that the price of meals has gone up as expenses have gone up so the 15% is probably pretty close to the same as it was back then. Servers just feel more entitled to earning as much as people in other professions I guess.

    • 2

      Len Penzo says

      What most people like you and me realize, but Cindy doesn’t seem to understand, is that a tip’s percentage is simply the ratio of the gratuity (numerator) to the price of the meal (denominator) — so, all things being equal, the value (purchasing power) of a 15% tip to any server remains constant regardless of whether meal prices rise or fall over time.

      We should all try to use her logic on our bosses at raise time: Hey boss, I got a 3% raise last year. Due to inflation I deserve a 4% raise this year — and a 5% raise the year after that! Heck, at that rate, by the time we retire we’d all be earning 40% annual raises!

  2. 5

    Spedie says

    Hey, Len, can we have an article on Global Currency Reset? I was reading that fiat systems do not last long, and the USA has just finished it’s 42nd year – if you count the dollar as true fiat since Nixon removed the gold standard in 1971.

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