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.
Summer is finally here! Hooray! As I’ve mentioned here before, it’s my favorite season of the year — after spring and fall.
Anyway, I’m not going to spend a lot of time behind the keyboard today because I’d rather be outside enjoying a little of that glorious summer sunshine.
I hope you all have a great weekend! Let’s get on with the show …
The Way-Back Machine: Past Posts Of Mine You May Have Missed
From April 2012:
My Cola Taste Test: Is Coke Really Better than Pepsi? – What’s the best-tasting cola? When I was a kid I drank Pepsi. Then, for some reason, after I got to college my preference switched over to Coke. In this post, I gathered 11 of my family members — including the family dog — for a blind taste test to settle the age-old question once and for all.
Credits and Debits
Credit: Samoa Air has introduced a new, more expensive “XL” class for airline passengers that weigh more than 286 pounds. The higher fare won’t get you a jumbo-sized bag of in-flight peanuts, but it does entitle you to sit in a row that’s between 12 and 14 inches wider.
Debit: On a related note, last Wednesday the so-called “Hindenburg Omen” — a rarely-seen economic indicator that has presaged previous US stock market crashes — made its seventh appearance in less than a month. Batten down the hatches, folks.
Debit: The most recent Hindenburg sighting was likely sparked by remarks from Fed Chairman Ben Bernanke, who suggested that he might begin taking his foot off the accelerator of his latest epic money-printing campaign, known as quantitative easing, by the end of this year.
Debit: Of course, Bernanke’s suggestion sent markets across the world into a tailspin; the Dow dropped 560 points over the next two days before the bleeding finally stopped on Friday with a modest 41-point gain. Overall, US stocks had their worst week of the year.
Debit: Economists who continue to insist that all is well need to answer this: If the economy is so rosy, why did the mere hint of tapering the Fed’s easy-money injections cause so much market turmoil? Hello; is this thing on?
Debit: Perhaps a more ominous question is this: Never mind tapering, how spooked will the markets be after the Fed finally stops the party and pulls the monetary punch bowl away? The answer is obvious, and that’s why some economists insist that the Fed has painted itself into a corner.
Credit: Despite Wall Street’s market woes, and its dependence on the Fed to continue buoying stock values, the folks on Main Street now have the most optimistic view of the economy in five years. You can thank rising home prices for the improved consumer sentiment.
Debit: For its part, the bond market also tanked this week. The yield on US 10-year treasury bonds hit a 22-month high on Friday, while the 5-year note’s yield climbed 37% — that was its worst week in 50 years.
Credit: Yes, folks; although it may seem crazy, bond yields really can make significant moves in both directions.
Credit: On first blush, the sharp movement in the bond market seems to be validating former Goldman Sachs Asset Management chairman Jim O’Neill, who claimed last week that a bond crash could be around the corner. Only time will tell.
Debit: While rising interest rates may or may not be signalling a coming crash in the bond market, one thing is certain: higher interest rates mean higher borrowing costs. That’s not good news for a country like the US, that has nearly $17 trillion on its national credit card bill.
Debit: Rising interest rates are also bad news for the housing market; since May, mortgage rates have increased by more than a half-percent. Unfortunately, the Fed’s grand plan was for housing to lead the country into a full-fledged economic recovery. Oops.
Debit: If the US isn’t careful, it will soon be following in the footsteps of Detroit; last week the Motor City defaulted on obligations totaling $2.5 billion. I know. I was as surprised to hear that as you are.
Credit: And before you flood my inbox with letters telling me the US can’t default on its obligations, you’re right. Technically. But try telling that to bond holders who one day may end up getting paid in worthless fiat currency caused by a loss of faith in the US dollar.
Debit: In case you’re wondering, those trusting bondholders who were crazy enough to put their faith in the hands of Detroit’s irresponsible municipal politicians will be lucky to get less than 10 cents on the dollar. So much for security in bonds.
Debit: Speaking of broken government promises, Ohio is the latest state facing higher health insurance costs and fewer choices, thanks to Obamacare. The Ohio Department of Insurance says the average individual-market health insurance premium in 2014 will be 88% higher relative to 2013.
Credit: I suspect the same people who are saying they never saw that coming — or try to argue that the state of Ohio’s figures are illegitimate — probably also thought Detroit was a paragon of fiscal responsibility. Hey, I’m not saying. I’m just saying.
The Question of the Week
Last Week’s Poll Results
How many kids do you have?
- Zero (42%)
- Two (28%)
- One (12%)
- Three (8%)
- Five or more (7%)
- Four (3%)
By the Numbers – Contest Time: Win $100 Trillion or a $20 Starbucks Gift Card!
Yep, it’s contest time again! Below is a list of the top 10 movies of 2004. I’ve got a $20 Starbucks gift card — or a $100-trillion bill from the Federal Reserve Bank of Zimbabwe — for the person who can correctly guess one of the three movies in the list that I haven’t seen.
Please place your answer in my blog’s comment section; I’ll only accept one answer per email address. If multiple folks pick the correct answer, then I’ll select the winner by a random draw among everybody who got it right.
And if nobody enters or gets the correct answer, then I’ll use the card myself.
The contest closes on Friday, June 28 at 5 pm, Pacific Daylight Time. Good luck!
1. Shrek 2 (Total gross: $441M)
2. Spider-Man 2 ($374M)
3. The Passion of the Christ ($370M)
4. Meet the Fockers ($279M)
5. The Incredibles ($261M)
6. Harry Potter and the Prisoner of Azkaban ($250M)
7. The Day After Tomorrow ($187M)
8. The Bourne Supremacy ($176M)
9. National Treasure ($173M)
10. The Polar Express ($163M)
Source: Box Office Mojo
Other Useless News
Here are the top 5 articles viewed by my 4019 RSS feed and weekly email subscribers over the past 30 days (excluding Black Coffee posts):
- Why Some Who Cut Expenses to the Bone Still Can’t Make Ends Meet
- Eight Smart Alternatives to Payday Loans
- Yet Another Reason Why I Hate Buying Tickets from Ticketmaster
- Smart Tips for Traveling Abroad During the Economic Downturn
- 100 Words On: One of the Biggest Mistakes a Household CEO Can Make
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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
This week, Kim commented on my tipping policy of 20% for exceptional service, 15% for average service, and 10% or less for poor service:
“I really wish I was a server and you sat down at one of my tables because I would give you exceptional service, but I would spit in your food right after I rubbed it on the side of a garbage can. Of course serving it to you with a smile.”
Well, Kim, you certainly have a twisted definition for what constitutes “exceptional service.” Do you enjoy eating boogers too?
I’m Len Penzo and I approved this message.