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.
Another glorious week comes to an end. Off we go …
“I’ll gladly pay you Tuesday for a hamburger today.”
— J. Wellington Wimpy
“Hope in reality is the worst of all evils because it prolongs the torments of man.”
— Friedrich Nietzsche
Credits and Debits
Credit: The last time daily US crude output is about to hit the eight-digit mark was in the early 1970s — and it’s about to do it again. Hooray! The bad news is our decreasing reliance on foreign oil causes problems for the petrodollar; that’s because the fewer barrels of petroleum we buy from exporters, the less incentive they have to force everyone else to pay for oil in US dollars.
Debit: Meanwhile, with empty shelves everywhere, and starving mobs now brazenly slaughtering grazing cattle, hyperinflation in the People’s Socialist Paradise of Venezuela has pretty much run its course. The only step left is for those same mobs to begin gathering rope and hunting down the politicians responsible for their needless suffering. Er, assuming they can still find rope in their completely collapsed economy.
Debit: Of course, North America has its own Socialist Paradise: the great failed State of California. Its politicians are now complaining that, with the federal tax bill cutting off deductions that benefited wealthy Californians, its well-off citizens may leave. Wait a minute! Socialists love it when “the wealthy” are forced to pay their “fair share.” Hmm. I guess that only applies when they’re not affected. Forward!
Debit: In other news, home prices in Southern California have surpassed levels of the last housing bubble, yet real wages are still hovering around levels from two decades ago, when home prices were much lower — so nothing has been fixed. Frankly, the economic imbalances are worse than ever. For example, only 22% of LA County households can now afford a house at the median price, compared with 42% in 2012. Ouch.
Debit: Then again, if you dig below the surface, you’ll see that the current economic boom fueling the housing bubble in California — and most markets worldwide, including stocks and bonds — isn’t really a boom at all. In fact, it’s a mirage based upon an orgy of debt via long-term synchronized central bank currency-printing campaigns. It’s just too bad that the mainstream media generally refuses to acknowledge it.
Credit: For now, however, the orgy continues: the Dow, S&P, and Nasdaq all closed the week on record highs. Again. In case you’re wondering, the Dow has gained 44% since election day — yes, that’s just 14 short months ago.
Debit: I see that long-term care insurance has turned out to be the latest Ponzi scheme, as some insurers are now doubling premiums just to keep their losses manageable. Sad. And yet more evidence that the growing financialization of America during the past 40 years — and the resulting monetary hocus pocus that comes with it — is finally nearing its mathematical limit. There really is no such thing as a free lunch.
Credit: You can bet that fast-approaching mathematical limit is why questions from China and Russia about US gold reserves are growing louder. As Bill Holter notes, such previously unthinkable public grousing from two of the world’s major gold holders is only the opening salvo of an eventual “cash call” on America’s yellow metal, with the aim of ending the long-held dominance of the US dollar. Uh oh.
Debit: Did you see this? Once upon a time, Nicholas Cage was one of Hollywood’s biggest stars, with a net worth of $150 million. But, as CNBC notes, Cage has since “squandered it away on a string of expensive and eccentric purchases, eventually facing foreclosure on several properties, and owing more than $6 million in property taxes.” As a result, he’s now worth “just” $25 million — and working overtime to pay off his debts.
Credit: Speaking of blown fortunes, according to Peter Schiff, “The (US) economy is going to blow up like a bomb; it’s the end game, and Trump’s going to be the fall guy.” On the bright side, Schiff also says, “In the long run, maybe America comes back. But first we’re going to have to pay the piper.” There’s no “maybe” about it, Peter. America will come back, and stronger than ever — but there will be pain as it adjusts to reality.
Debit: That sentiment was echoed this week by the BIS, which is the central banks’ central bank; they warned that the world financial system is as dangerously stretched today as it was during the last bubble peak in 2008. The BIS also acknowledged this time the central banks are stuck in a “policy trap” with no way out. Well … short a return to a global financial system based on real money. I know. But one can always hope.
By the Numbers
Here is a little more detail on how Nicholas Cage managed to blow a $150 million fortune:
2 The number of European castles purchased by Cage.
15 Multi-million dollar residences Cage once owned, including a $25 million waterfront home in Newport Beach, California, a $15.7 million countryside estate in Newport, Rhode Island, and an $8.5 million abode in Las Vegas.
$3,400,000 Amount Cage paid for the infamous LaLaurie mansion in New Orleans, known as one of the most haunted houses in America.
$3,000,000 Price Cage paid for a private island in the Bahamas.
$450,000 Amount Cage spent to purchase a Lamborghini previously owned by the late shah of Iran.
$150,000 The price tag for Cage’s pet octopus.
$276,000 Price that Cage paid for a 70 million year old dinosaur skull. However, the artifact was stolen, and Cage was forced to return it to the Mongolian government.
Source: CNBC
The Question of the Week
[poll id="199"]
Last Week’s Poll Results
Did you grow up in a household with a stay-at-home parent?
- Yes (59%)
- No (32%)
- Occasionally (9%)
More than 1500 people responded to last week’s question, with 1 in 3 saying they were raised in a home without a stay-at-home mom or dad. As a point of reference, the latest data available shows that, in 2012, 29% of all US households had a stay-at-home mom. Another 4% of homes had stay-at-home dads.
Other Useless News
Here are the top five articles viewed by my 18,949 RSS feed, weekly email subscribers, and other followers over the past 30 days (excluding Black Coffee posts):
- 11 Dollar Store Bargains You’d Be Crazy to Buy Anywhere Else
- 8 Ways to Make Money on Your Morning Commute
- 5 Ways to Ring in the New Year by Cleaning Out Your Financial Garage
- How Banks Work vs. How People Think They Work
- You Can Call Me Almost Anything, But Don’t Call Me Cheap
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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: Len@LenPenzo.com
After reading my article explaining why smart people aren’t impressed with people who drive luxury cars, cj, had a question for people who don’t mind driving their vehicles until they can’t be driven any more:
“I just want to know why (some people) are willing to drive an old car for 30 or 50 years? What are they saving the money for?”
You’ll eventually figure it out, CJ. I promise — although it may take 30 or 50 years.
I’m Len Penzo and I approved this message.
Photo Credit: brendan-c
I never understand why the H’wood celebrities who promise to leave the country if a republican is elected, never move to their perceived socialist utopias. Why aren’t they rushing there to participate in the beauty of socialism? Hmmm.
Our long term care premiums went up by 50% last year and we have a group plan. I can’t imagine how much premiums rise for people with individual policies. We were able to absorb the increase but if they raise it again, I’m not sure what will happen. We feel we have to keep it but at some point it simply become unaffordable. I suppose we could give up eating.
Yes, Kathy, it is interesting why flaming socialists/statists like Sean Penn, Danny Glover and Harry Belafonte prefer living here to Cuba, Venezuela or North Korea.
My group healthcare plan went up almost 70% this past year too. I don’t care what the Obamacare apologists say, my premiums never saw annual increases like before it became the law of the land. Not even close!
Cage enjoys buying homes and castles. Not sure what anyone needs with 15 of them though no matter how rich they are.
I’m not sure how many of those he owned simultaneously, but I get your drift, James. The property taxes on those residences have got to be a huge burden.
By the way, property taxes are the reason why I say nobody ever owns their home “free and clear” after they retire the mortgage.
“its just too bad that the mainstream media generally refuses to acknowledge it.” – Len
That’s most of the trouble, but there’s something else going on, as well : ignorance. Its amazing how little background some of our U.S. media presenters have.
When I was a patent examiner, stories in the local press (pretty much limited to the Washington Post, in those days) about the Patent System contained major errors in fact about non-controversial things. Every one of them did.
On a major network TV show one morning, I saw a young commentator expressing her abhorrence that an automobile dealership was giving away an AK-47 with each automobile sold. She said, as if to solidify her argument: “Ive never even had a gun in my hands”.
I remember the days of Edward R. Murrow and Morley Safer and compare them with the cocktail-party formats on TV today – comely young women sitting facing the cameras in short skirts with their legs crossed, talking all over each other.
As to what’s happened to our money – the abandonment of precious metals, the rise of fiat currencies, particularly the petrodollar, there’s a comprehensive article on that history in this morning’s ZeroHedge: https://www.zerohedge.com/news/2018-01-26/economic-collapse-and-dollar-hegemony-how-did-start
Having just railed against folks with lack of background displaying their ignorance in the media, Ill have to admit I can’t vouch for its accuracy – maybe Len can help us with that.
In many ways, IMO, our “progressives” have retrogressed us.
Dave: If we had a truly unbiased press, people wouldn’t be buying into the misrepresentations and, in many cases, outright lies that cause many voters to choose politicians who push for those “progressive” ideals.
Hi Len. Although I buy wealth insurance (silver) on a regular basis but I dont think confidence in US dollars will ever break no matter how much debt there is. It’s like the Energizer bunny!
Sara
We’ll see, Sara … but I think you’re wrong. No national currency has been able to maintain its reserve currency status forever. When the dollar loses its status, I think a break in confidence will quickly follow.
U.S. oil production may be booming again but have you noticed the prices? They have been quietly rising too for the past month or so.
Yes … blame it on the plunging dollar. Look at the dollar index’s technical chart. It suggests an even steeper decline than the one it has been on since last year is in the works. As the dollar falls, the price of oil and other imported commodities is going to increase. It is quite possible we’ll have $5 per gallon gasoline here in California by the end of this summer.
That’s an interesting prediction. I hope you’re wrong.
I remember when Venezuela used to be one of the richest countries in South America. Then in 1998 the citizens decided that socialism would make everybody’s fanciful dreams come true so they elected Hugo Chavez. Fast forward 20 years later and the people are so hungry they are killing cows (inhumanely I must add) to survive. From riches to rags that fast! Socialism always ends up eating itself because eventually there’s nothing else on the shelves to eat.
Again … I blame the press for allowing people like Chavez to gain power in the first place. Rather than openly question how socialist politicians’ policies can work in the long term, they simply accept — and even promote — their vacuous promises because they are ideologically aligned with them.
The big difference between the last housing bubble and the current one is there is more cash floating around the system to keep it inflated longer. For that reason I don’t think there will be a housing crash for a long time yet.
I don’t know, Nick. Unlike sovereigns, there comes a point where people are unable to take on more debt. The disconnect between wages and home prices is very real and no amount of additional liquidity the central bankers make available to lenders is going to change that, in my opinion. If you’re making $50,000 per year, there is a limit to how much house you can afford.
Never ever trust a prophet making a profit !!!
You should trademark that phrase, Mik.
I was getting a haircut this week and the girl cutting my hair was having a conversation with another employee about having kids. They each had one. She said No, just one child for us, kids are a luxury. That is the ponzi scheme of Social Security and Medicare in real life.
Great point, Jack. I think at one point there were double-digit workers for every person drawing SS. Now I believe that that number is less than 2.
Nothing is what it seems to be on Wall Street anymore. Stocks are on an endless staircase upwards, but thanks to the abandonment of GAAP accounting, most company earnings reports haven’t reflected reality for years. The real economy is under a cloud of fog so thick you need a chainsaw to break through it.
Well … you know what they say, Adam: “Stocks take the stairs up — and the elevator down!”
I’m shocked that only 35% of people would stop to pick up a penny on the street.
And I’m shocked that 35% would!
Pennies can die as far as I’m concerned… In the time it takes to consider the penny, bend over and pick up the penny, you already spent more than a penny’s worth of time… Look I just wasted $0.07 writing this comment!
I feel the same way. For me, it’s got to be at least a quarter to get my attention these days.