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.
Okay, let’s get right to it …
Reports of a hurricane are unfounded.
— BBC meteorologist Michael Fish, hours before the Great Storm of 1987
Credits and Debits
Debit: I see it’s not just Deutsche Bank that’s having problems. Germany’s second largest financial institution, Commerzbank, announced they are going to lay off 18% of its workforce; that’s 9,000 jobs in all. Imagine that.
Credit: Never mind the commercial banks … with almost $16 trillion worth of sovereign debt trading with a negative yield, the real question everyone needs to be concerned about is how much longer will investors trust central banks? Frankly, I lost faith in 2012. And if I was smarter, it would have been much sooner than that.
Debit: Need proof of the Fed’s incompetence? Behold their handiwork: Since 1999 year-end through 2015 home prices have risen 76% while household mean real income has grown less than 2%. After all, where do you think the cash came from that enabled such price disparity in the face of stagnant wages?
Debit: Wait, there’s more: Without the Fed, the US wouldn’t have been able to end the 2016 fiscal year with $1.4 trillion more debt either. As Simon Black notes, the US managed to increase the National Debt this year by a larger percentage of GDP than the entire cost of the New Deal, Marshall Plan, and 2008 bank bailout — and what do we have to show for it?
Debit: If former Treasury Secretary Larry Summers’ recent proposal to allow sustained government stock purchases is any indication — no, really — then that $1.4 trillion of additional debt obviously didn’t buy us much. Well … unless you consider keeping Americans’ artificially-high standard of living going a bit longer a wise “investment.” (Psst. It’s not — especially for our kids.)
Credit: The bottom line is that the world’s economic system is on its death bed and real economic growth will never return until a new system is put in place. Just don’t tell that to the folks who prefer to keep their head buried in the sand — or inserted in dark and smelly orifices.
Debit: Our failing economic system is the reason why corruption is now rampant. In fact, some people say we’re in a state of peak corruption. The good news is that widespread graft is signaling we’re quickly approaching the end of the road for our current international monetary system. Yes, the health of our monetary system and the level of corruption are inversely related.
Debit: Incredibly, despite all of the financial turmoil in the markets over the past fortnight, on Friday gold fell for the ninth consecutive day. Nope, nothing strange about that. Nothing at all. Of course, only a nut would say there’s something wrong with the price discovery process. Why? Because, Silly, the markets are transparent, fair, and free!
Credit: Financial analyst Dave Kranzler suggests the attack on precious metals may be signaling an imminent bank failure. Specifically, the Fed is manipulating the market “to prevent gold from alerting the public that a potentially catastrophic financial hurricane is offshore.”
Credit: Then again, the falling price of gold may not be signaling an imminent bank failure. But something bad is coming — so watch out. More Kranzler: “If the masses were allowed to see gold’s ‘canary’ die in the ‘coal mine’ behind the elitists’ ‘curtain,’ it would enable those paying attention to get their money out of (the system) before it’s vaporized by whatever financial hurricane is brewing.”
Credit: Whether that storm is just offshore or still far out to sea, one thing is certain: the US dollar’s days are numbered. So make sure you’re prepared because, just like with Hurricane Katrina, the government won’t be around to save you when you find yourself underwater.
By the Numbers
Over the past week, Hurricane Matthew seemed to steal all the headlines. Here’s a few numbers on the massive storm:
300 The approximate number of people killed by the storm through Friday evening.
4 States of emergencies declared in the US as a result of Matthew. (Florida, Georgia, South Carolina, North Carolina)
130 Speed, in miles per hour, of the storm’s maximum sustained winds while it was in Florida.
3785 Number of flights cancelled as a result of the storm.
4,800,000 Number of customers served by Florida Power & Light.
2,500,000 Number of customers who were expected to lose power as a result of the storm.
Source: USAToday
The Question of the Week
[poll id=”132″]
Last Week’s Poll Result
Does your stove, oven and clothes dryer run on electricity or natural gas?
- Electricity (59%)
- It’s a mixed bag (21%)
- Natural gas (20%)
Nearly 1000 people participated in last week’s poll and, not surprisingly, almost 3 in 5 have major home appliances that run on electricity. Although I have an electric oven, my stove and clothes dryer run on natural gas. I have to say, I’m especially glad that my stove is natural gas because I hate cooking on electric stovetops — I just find it too hard to control the temperature.
Other Useless News
Here are the top — and bottom — five states in terms of the average number of pages viewed per visit here at Len Penzo dot Com over the past 30 days:
1. Nevada (2.07 pages/visit)
2. Texas (1.97)
3. Ohio (1.88)
4. Michigan (1.80)
5. North Dakota (1.73)
46. Vermont (1.58)
47. Oregon (1.49)
48. Delaware (1.33)
49. Maine (1.29)
50. Florida (1.21)
Whether you happen to enjoy what you’re reading (like my friends in Nevada) — or not (ahem, Florida … probably preoccupied with Matthew) — please don’t forget to:
1. Click on that Like button in the sidebar to your right and become a fan of Len Penzo dot Com on Facebook!
2. Make sure you follow me on Twitter!
3. Subscribe via email too!
And last, but not least …
4. Consider becoming a Len Penzo dot Com Insider! Thank you.
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: Len@LenPenzo.com
I received this note from Donna S. who, I can only assume, works at the Department of Redundancy Department:
I don’t like your Credits and Debits. I think your blog would be a lot nicer if it were more informative and nicer.
Nicer, eh? Okay … Here’s a nice joke: What did 0 say to 8? “Nice belt!”
I’m Len Penzo and I approved this message.
Photo Credit: public domain
I remember gold and silver had a sustained sell-off prior to the collapse of Bear Sterns and Lehman. Precious metals are a beacon that indicate the health of the financial markets. They are the only truth we have left in the face of all of the manipulation now going on. I believe gold and silver are being manipulated too, but even so they are still able to signal to the rest of us that something is terribly wrong. Keep up the good work.
Well said, William. I just find it amazing that with so much financial turmoil going on, nobody in the mainstream media is questioning why precious metals are behaving contrary to what is expected. Then again, my tin foil hat is on extremely tight.
I couldn’t agree more. Remember also that these price drops are excellent buying opportunities and the powers that be have been, and are continuing to be, some of the biggest buyers of PM’s. Driving the price down is a win-win for them.
Yep, Ed … I bought 50 more ounces of silver myself yesterday. I love a sale!
The government is already in the stock market. Who does this Summers guy think he’s kidding?
Agreed. Even David Stockman, who was the Director of the Office of Management and Budget under Ronald Reagan, admits it. Per Stockman, “It’s usually done by private proxies via dark pools or offshore accounts or by state agencies–investment funds, retirement funds, etc. When things get very serious, the central bank can buy assets directly, and in such massive quantities that the markets are forced to respond appropriately.”
Have a good weekend Len!
You too, Sara!
Thanks for another great recap Len. I read a Jeffrey Gundlach quote this week wherein he asked who would bail out credit suisse, for instance. Even if DB eventually gets saved there are some pretty systemic problems.
My pleasure, Jay. And you’re right … Credit Suisse seems to be on the ropes too. The next crisis is going to make 2008 look like a picnic — and remember … if not for the central bank bailouts, with that one we were just hours away from the financial system seizing up. This time, the central banks will have to destroy their currencies to save the day.
Yes, the SDR may be able to buy some time, but I am not sure if that bird will ever fly, since it will require nations to give up monetary control to an outside entity. A lot of Constitutionalists in the US will have a problem with that (they may tolerate the Fed, but the IMF is a whole other can of worms).
Len,
Mike Maloney Hidden Secrets of Money #7 was a great watch! I recommend everyone here watch it. Most likely will happen, but who knows how long it will take for it to happen.
Jared
Saw it this week, Jared. And I agree; the entire series is a must-watch IMO.
I find it hard to believe the current system can continue much more than another year or two. It seems as if the Fed and the rest of the world’s central banks are running out of tricks and gimmicks to put off the inevitable.
Einstein said compound interest is the most powerful force in the universe. I am beginning to think it is actually normalcy bias — that’s why most people still can’t fathom the dollar ever falling from its perch as the world’s premier currency.
The Fed is simply a financing mechanism to bypass sound money. Upon reviewing its history one sees and endless succession of panics, crashes, depressions, and recessions all of which were the reasons that the central bank was created to prevent. I’ll go ahead and issue it an F for that mandate. But more impressive is the looming $20 trillion federal debt. Say THAT a couple a times out loud. Then do basic math and holy shit Batman! THERE IS NO WAY IN HELL IT EVER GETS PAID.
Oh, it will get paid, WA — in full. That’s the good news. The bad news — especially for anyone with a 401k or a pension — is that it will be repaid in hyper-inflated (worthless) currency.