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Len Penzo dot Com

The offbeat personal finance blog for responsible people.

Black Coffee: Fashion, Facebook, Free Markets and Other Freakouts

By Len Penzo

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 whats been going on in the world of money and personal finance. Heres what caught my attention over the past week

Let’s get right to it this week!

Blogs I’ve Been Following This Week

Monevator – Capitalists Must Address the Causes and Consequences of Income Inequality. Let’s get one thing clear: The Investor is a capitalist at heart — but I firmly disagree with the titular assertion of this post. In fact, it’s a red herring. In order for the growing income gap between rich and poor to be a legitimate indictment of the free market system, capitalism has to make the rich richer by making the rest of us poorer. That’s clearly not true. As wealthy as they are, the tremendous success of guys like Henry Ford, J.P. Getty, Bill Gates and Larry Ellison didn’t do anything to reduce our standard of living. If anything, they made it better.

Financial Uproar – Is Fashion an Investment? Says Nelson: “For me, clothes dont mean a whole lot. Theyre just something I need so Im not naked.” Me too, Nelson. By the way, I hope you weren’t expecting me to try and follow that with anything more because — let’s face it — there’s nothing I can say that will top it.

The Chicago Financial Planner – Lousy 401(k)? – Maybe It’s You and Not Them. Has the performance of your 401(k) been so poor that you’re now among the growing crowd of people derisively referring to your retirement account as a 201(k)? Well, as Roger explains, the odds are you’ve got nobody to blame but yourself. The good news is, that means you can do something about it — and, best of all, Roger shows you how.

So Over This – Mini Freakout of the Week. Why do our kids grow up so fast? According to Andrea, her newly-minted teen, Jayden, now locks himself in his room, playing Minecraft or watching YouTube videos all day long. Welcome to my world, Girlfriend. I wouldn’t be surprised if our sons are Minecraft buddies and we don’t even know it. It’s gotten so bad, last week I asked my son if he wanted to go outside and toss a ball around. His reply: “What’s an ‘outside’?” Okay, not really — but I can see it happening any day now.

The Finance Buff – Lifestyle Design: Choose What You Do. I really enjoyed this post by TFB for a whole lot of reasons. I loved how he used a photo from his trip to Machu Picchu in Peru to illustrate how higher-paying jobs aren’t necessarily harder than lower-paying positions. What really got me though was finding out that the starting pay of the average ballet dancer is $60,000 per year. I bet there are a lot of college graduates out there right now wondering what the heck they were thinking when they chose to major in English Literature or Philosophy.

And Here’s Some Other Posts You Might Enjoy …

Afford Anything – Renovating the Rental Property

Control Your Cash – You, CFA

Debt Free Teen – Rent College Textbooks

Mighty Bargain Hunter – What Would Happen if the Military Just “Went Shopping”?

Personal Finance Success – My Experiences from Working Comcast Technical Support

Walking to Wealth – Is Using Your Credit Card a ‘Threat to Thrift’?

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

From November 2009:

No, I’m Not Cutting Up My Credit Cards! (Maybe You Shouldn’t Either.) – A few years ago there was a real backlash by some financial bloggers against credit cards. This was my counterpoint.

Credits and Debits

Credit: Non-farm US payrolls rose in July to their highest level in five months.

Credit: Thanks largely to that news, the Dow Jones Industrial Average surged 217 points on Friday; that ended a four-day losing streak for the market.

Debit: Apparently investors didn’t realize that the US unemployment rate actually increased to 8.3 percent because the 163,000 new jobs created still weren’t enough to keep pace with the number of new workers entering the workforce.

Credit: Then again, the president’s economic adviser felt oddly compelled to report on the White House website that the actual unemployment rate was overstated; it’s really only 8.254 percent. I know I feel better about the economy now.

Debit: Of course, rounding issues will be the least of our problems if Robert Wiedemer, author of Americas Bubble Economy and Aftershock is to be believed; he sees 50 percent unemployment, stocks dropping 90 percent, and 100 percent annual inflation coming soon.

Credit: You might think Wiedemer’s prediction is why Georgia voters rejected a $7.2 billion transportation tax this week. But pundits are saying the real reason is citizens no longer trust the government — at any level — to spend their money wisely.

Debit: With massive government “investments” in boondoggles like green energy, and nationalizing part of General Motors to preserve business-killing union contracts that could be nullified by bankruptcy, it’s hard to disagree with them.

Debit: Speaking of General Motors, the bailed-out car company currently owes the taxpayers $42 billion, but that isn’t stopping its plan to sponsor European soccer team Manchester United for $600 million. I know.

Debit: Did you see this? Facebook admitted this week that as many as 83 million of its more than 900 million accounts are fake — and another five percent of its users have duplicate accounts.

Debit: On Thursday Facebook stock touched $19.82 per share — almost 50 percent off its IPO price in May — before finishing the week on Friday at $21.09.

Credit: As for Facebook founder Mark Zuckerberg, even if the company’s share price goes to zero he’ll still be $1.1 billion ahead after selling 30.2 million shares at $37.58 on the stock’s opening day.

Debit: And finally … Here’s reason #234,596 why, aside from national defense, the government can do NOTHING better than the private sector: Over the last ten years, taxpayers lost $833 million on food and beverages supplied by Amtrak.

Debit: For example, even though Amtrak charged passengers $9.50 for a cheeseburger, somehow, someway, they managed to cost Amtrak $16.50 each. At the very least, I hope they were made with Angus beef.

Debit: It was the same story with soft drinks. Passengers paid $2 for a Pepsi — but Amtrak was paying $3.40 apiece. Apparently, that was the best “deal” on sodas the government could find. Unbelievable.

Credit: Hey, Amtrak, I’ve got one word for you: Costco.

Debit: A show of hands: How many people still believe that the recent commitment toward increased government control of our healthcare system is ultimately going to be cheaper than when things were run by the private sector?

The Question of the Week

Sorry, there are no polls available at the moment.

By the Numbers

It’s time for a closer look at the National Railroad Passenger Corporation, better known as Amtrak:

1970 Year Amtrak was created by Congress.

82,000 Passengers that ride Amtrak daily. Last year, 32 million passengers traveled on Amtrak trains.

46 States served by Amtrak.

3 Canadian provinces served by Amtrak. (British Columbia, Quebec, Ontario)

10,899,889 Passengers carried in 2011 on its most popular service: the portion of Amtrak’s Northeast Corridor serving Boston, New York, and Washington, DC.

2 Rank of Amtrak’s Pacific Surfliner service, serving San Diego, Los Angeles and San Luis Obispo, in terms of total passengers carried in 2011 (2,786,972).

75 Percentage of Amtrak trains with Wi-Fi connections.

150 Top speed, in miles per hour, of Amtrak’s Acela Express. It’s the fastest train in the Western Hemisphere, reaching its top speed on a 35-mile stretch of rail between Boston and New Haven, Connecticut.

$1.24 billion Net operating loss for Amtrak in fiscal year 2011.

Source: Amtrak

Other Useless News

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Top 25 Referrers for May

Its the first weekend of the month, which means its time once again to thank the top 25 referring websites to Len Penzo dot Com.

1. MSN: Smart Spending
2. Money Talks News
3. Business Insider
4. The Simple Dollar
5. Kiplinger
6. Budgets Are Sexy
7. Time Magazine: Moneyland
8. Sound Mind Investing
9. Financial Uproar
10. Control Your Cash
11. The Finance Buff
12. Budgeting in the Fun Stuff
13. The Quest for $85,000
14. Wisebread
15. Afford Anything
16. The Free Financial Advisor
17. Wealth Pilgrim
18. The Griper’s World
19. Mr. Money Mustache
20. Money Crashers
21. Green Panda Tree House
22. Lazy Man and Money
23. Money Help for Christians
24. Do Not Quit Your Day Job
25. So Over This

Thank you to everyone who refers their readers to this little ol blog! Its much appreciated.

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!

For the second consecutive week, I received another complaint on my post explaining why only suckers buy corner lots. From what I can tell, this one comes from a corner lot owner named John:

wow ok so your too lazy to cut grass and do some work on a corner house i have a corner house my garage is right next to my house and have a big back yard and front yard a little work will never hurt any one i never have any problems with noise and selling them people jump for corner lots trash wow whats every couple months might have to pick up some trash never had problems with any one in the area about how my house looks just seems like u dont like corner house because your afraid to work and lights i have one street lite a little down the street so people if your ok with doing a little yard work thats fine yards are not that big. [sic]

You can’t even be bothered to use periods and capital letters, but you’re calling me lazy?

I’m Len Penzo and I approved this message.

16 Comments August 4, 2012

Comments

  1. 1

    Evan @ HSA Edge says

    Len – a lot of great content in this post.

    I consider any government reporting of employment figures as misleading at best. Consider their motive and the statistical massaging and butchering that occurs to those #’s. If you are not familiar with it, research the U6 unemployment figures.

    Same goes for inflation and government debt.

    Reply
    • 2

      Len Penzo says

      Oh, I’m very familiar with the U6, Evan. And I’ve discussed the statistical massaging of those figures here in this column many times!

      Reply
  2. 3

    maria@moneyprinciple says

    I agree that The Investor’s title is a bit misleading – it is not ‘capitalists’ but ‘capitalism’. Changing this word will make it clear that income inequality is a structural rather than personal matter; who addresses the issue and how is a bit more problematic, though.

    Reply
    • 4

      Len Penzo says

      Agreed, Maria. With capitalism, income inequality comes with the territory; the system is designed such that there are winners, losers, and a broad spectrum of people somewhere in the middle.

      Reply
  3. 5

    Lance@MoneyLife&More says

    len penzo you so lazy you write blog post and make fun of me but you no spend extra money on corner lot with light and grass but I not lazy because my yard look like trash but I like trash so it look goooooood to me here is the punctuation I forgot. . .
    . . . . ! . . ? $$ .

    Reply
    • 6

      Len Penzo says

      lance you very funny guy thank you for all the punctuation I go to next reader now

      Reply
  4. 7

    Roger @ The Chicago Financial Planner says

    Thanks for including my post. Interesting facts about Amtrak. Just discussed last week with some friends from Milwaukee, they have four round trips daily between Milwaukee and Chicago, charge almost $50, the trains are largely full and Amtrak is losing big money on this route. Doesn’t make any sense.

    Reply
    • 8

      Len Penzo says

      It all makes sense to me, Roger — it’s run by the government! It’s a good thing the government doesn’t have to compete in the private sector like the rest of us or it would be run out of business.

      Reply
  5. 9

    Ornella @ Moneylicious says

    I would like people to move on from Facebook. It had a lot of hype going in and, I think, everyone knew that. Facebook sells ads.. It’s not surprise to me that they have duplicate accounts or “fake” accounts…I’m sure it’s not that difficult to create. But I still like Facebook.:-)

    Interesting figures about Amtrak.

    The unemployment rate is a lagging figure. It doesn’t mean it isn’t important and that it doesn’t provide some indication of our economy’s status, but we need not make the focus about our economy. If you were in my neck of the woods, you would see cars filing up lanes and people shopping for goods and services whether they needed it or not.

    Capitalism is part of American’s creation, but rich people making other people poorer?? not sure about that.

    And the “hater” needs to stop being lazy and add a period here-n-there.

    Reply
    • 10

      Len Penzo says

      You know what’s interesting, Ornella? Although my daughter has been begging for her own Facebook account for over two years now, the Honeybee and I have made her wait until she turns 13 (per Facebook’s policy).

      Well, she’ll finally turn 13 later this month but now she’s lamenting that most of her friends hardly use Facebook anymore. So the younger crowd seems to be moving on to the next “new” thing, whatever that is — as they always do.

      Reply
  6. 11

    TFB says

    Thank you for including my post. I’m with you and Nelson on clothes.

    Reply
  7. 12

    Debt Free Teen says

    Thanks for the mention Leo! I appreciate it.
    Chase

    Reply
  8. 13

    mc says

    “In order for the growing income gap between rich and poor to be a legitimate indictment of the free market system, capitalism has to make the rich richer by making the rest of us poorer. That’s clearly not true. As wealthy as they are, the tremendous success of guys like Henry Ford, J.P. Getty, Bill Gates and Larry Ellison didn’t do anything to reduce our standard of living. If anything, they made it better.”

    I don’t know how you know this and to just assert it is begging the question, akin to saying “capitalism didn’t make us poorer because…it didn’t make us poorer.” How do you know? What’s the comparison case?

    I think it’s an open question: it may be the case that the more the system facilitates the creation of Larry Ellisons, the more it also facilitates the creation of more and more poor people, either here or in other countries.

    Isn’t it, when you really go down to the metal, a zero sum game?

    Reply
    • 14

      Len Penzo says

      Capitalism is absolutely NOT a zero sum game, mc. To say capitalism is a zero sum game assumes nobody can win without a corresponding loss somewhere else. The simplest example I can give to refute that assertion is this: Consider a businessman who starts up a consulting business that provides a new and unique service that society finds beneficial. He becomes wildly successful over time and brings in hundreds of thousands of dollars in income (in exchange for services desired by the public that didn’t exist before he went into business). He eventually uses that income to expand his business, which creates additional jobs.

      Who lost out in that scenario? The answer is nobody! Not the businessman’s customers, who simply exchanged a portion of their money (which measures a share of their wealth) for information they deemed to be valuable (another form of wealth, just not in monetary form). Meanwhile, the new employees he hired are also improving their lot in life with additional income.

      Thankfully, unlike the first law of thermodynamics — which states that the amount of energy in the universe is constant — wealth is NOT constant. That is, it CAN be created by us, in many cases from nothing more than our own intellect and industriousness.

      Of course, just for the record, there are other ways wealth can be created too, including via economies of scale, production efficiencies and other economic mechanisms.

      Reply
  9. 15

    mc says

    I’ll have to think about it further. I’m still not quite sure if, ultimately, any new wealth is really created de novo or that if one person accumulates a large amount of *cash* money it is not at the cost of others not having that money. Thanks for your thoughts.

    Reply
  10. 16

    Michael in SoCal says

    After reading your comment of the week, to quote the movie ‘Ferris Bueller’s Day Off’ – I weep for the future.

    Reply

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