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.
A couple of days ago, in this post from my “Are You Smarter than a 5th Grader?” series, I asked my readers to guess which emotion is more powerful in the battle of greed versus fear. I’m happy to say that the majority came down on the side of fear — and they are correct!
As Mike Moloney succinctly pointed out last week in an excellent piece at Zero Hedge:
“The most entertaining part of monetary history is the study of their byproducts; manias, panics, bubbles, and crashes. When you study these you quickly learn the meaning of the old saying ‘The bull climbs the stairs, but the bear jumps out the window.’ (That) means it can take years to create a bubble, but only days or weeks for it to burst. This is because, when it comes to greed and fear fear is by far the more powerful emotion.”
OK, I’ve got an extra-large mug of Black Coffee for you this week — and it’s filled to the brim. So, off we go …
The Way-Back Machine: Past Posts Of Mine You May Have Missed
From June 2009:
Money Slang: Tired of Money? Here’s 101 Alternatives – Little did I know when I was putting this piece together that it would become of my 10 most popular articles ever — and since then, more than 100 people have added to my original list.
Last Week’s Poll Results
What was the biggest bill you ever racked up at a bar or restaurant (including the tip)?
- $250 or less. (61%)
- $251 – $500 (22%)
- More than $1000 (10%)
- $501 – $750 (4%)
- $751 – $1000 (3%)
More than 200 people responded to last week’s question. As expected, most of you have never had a restaurant bill over $250. However, I was shocked to discover that 1 in 10 Len Penzo dot Com readers have spent more than $1000 at least once in their lives on food and drink. Wow! I’m really hoping some of you big spenders will be kind enough to invite me out to dinner one of these days.
The Question of the Week
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Credits and Debits
Debit: Into the abyss: I see Seattle voters just elected a socialist university economics professor to the city council. Kshama Sawant ran on a platform of rent control and increasing the minimum wage to $15 per hour — which is yet more proof that there are plenty of misguided economists with PhDs who believe in Utopia.
Debit: I probably shouldn’t be too surprised she won. Back in 1995, Seattle erected a 16-foot statue of Lenin — next to a taco restaurant. Yes, that Lenin. Forward!
Credit: In other news, China has been importing gold at breakneck speed; more than 2200 tons have been transferred into their national vaults since September 2011.
Debit: It’s true that he who has the gold, makes the rules — and China’s growing reserves of the precious metal are positioning it to eventually challenge the dollar’s hegemony on the world stage. When that day comes, middle-class American living standards will drop. Precipitously.
Debit: In what would have been unheard of ten years ago, China is now openly attacking the dollar on multiple fronts. This week China announced that it is no longer interested in increasing its foreign exchange reserves. If true, one of America’s highest-limit credit cards is about to be canceled.
Debit: That’s not all. China also announced a plan this week to price crude oil futures in yuan — that threatens the petrodollar, which is another key pillar supporting the US dollar as the world’s reserve currency. China’s assault on the dollar should be bigger news, but it’s not. So most Americans will remain blissfully in the dark until it’s too late.
Debit: My guess is that most of the shoppers who started lining up outside of local big box retailers in the suburbs of Akron, Ohio a week before Thanksgiving are completely oblivious to the tenuous nature of the dollars they’re itching to spend.
Credit: What a waste. Even if those folks value their time at the absurdly low rate of $10 per hour — those sitting in line for the entire eight days would have to bag almost $2000 in real (not nominal) savings just to break even. Oblivious indeed.
Debit: Did you know that the number of Americans collecting disability payments from the federal government has jumped 20% since 2009? It has. The disability program has run annual deficits for five years running. There were only six deficits in 52 years prior to that.
Debit: More proof the world has turned upside down: The European Central Bank is once again talking about negative interest rates. Yes, that means depositors would pay the bank to keep their savings. Think about that the next time you want to complain about your pitiful savings account returns.
Credit: If you want high returns, visit Wall Street. On Thursday the Dow Jones Industrial Average closed above 16,000 for the first time ever. For the year, the Dow is up more than 22% — and there are still five full weeks left in 2013.
Credit: It’s not just the Dow either. All 10 industry groups in the S&P 500 have a real chance of ending 2013 with gains of at least 10%. The last time that happened was 18 years ago.
Debit: Unfortunately, the stock markets don’t reflect economic fundamentals anymore because they’re being badly distorted by the Fed’s $85 billion per month quantitative easing campaign. In fact, the markets would crumple like a cheap suit without it.
Debit: The booming stock market isn’t the only thing raising eyebrows — US job data is too. A whistle blower says the final set of government unemployment numbers ahead of the 2012 election were altered to make them look better than they really were. Surprised? You shouldn’t be; I warned you about that here last October.
Debit: Ministry of Truth: I expect manipulation of key economic data in banana republics — but not the United States. Plenty of others reviewed the evidence and publicly questioned those unemployment figures at the time but, sadly, many of them were ridiculed.
Debit: With annual inflation raging at 54%, the Banana Republic of Venezuela jailed more than 100 “bourgeois” businessmen for “price-gouging.” With no hint of irony, the nation’s chief wealth redistributor, President Nicolas Maduro, also accused his new-found scapegoats of being “capitalist parasites.” Forward!
Debit: By the way, this week Venezuela’s socialist lawmakers gave Maduro decree powers to help him double down on his “economic war.” Uh oh. Talk about adding gasoline to a house fire.
Credit: Apparently, Venezuela’s lawmakers fail to realize that the crumbling economy there is due to their financially unsustainable pie-in-the-sky policies. Er, with all due respect to Seattle’s new socialist economics-professor-turned-councilwoman. I think.
Debit: Speaking of ruling by decree, on Friday President Obama unilaterally amended the Affordable Care Act by declaring that he pushed back the second Obamacare enrollment start date until November 15, 2014. Funny … I thought only Congress could write and amend laws.
Credit: Obviously the President is trying to prevent as many voters as possible from assessing Obamacare’s impacts on them until after the 2014 elections. Of course, one voter he can’t fool is the so-called Obamacare “success story” that the President touted to the press back in October; it turns out even she can’t afford the premiums.
Debit: Even so, I’m sure she’ll be happy to know that the Department of Health and Human Services is planning to spend up to $7 billion so they can evaluate ways to reduce Obamacare costs. No, really. But such is life in the Theater of the Absurd.
By the Numbers
Here are the Top 10 movies of 2013 — so far. How many of these have you seen?
1. Iron Man 3 (US domestic gross: $409 million)
2. Despicable Me 2 ($366M)
3. Man of Steel ($291M)
4. Monsters University ($268M)
5. Gravity ($242M)
6. Fast & Furious 6 ($239M)
7. Oz the Great & Powerful ($235M)
8. Star Trek Into Darkness ($229M)
9. World War Z ($202M)
10. The Croods ($187M)
Sources: Box Office Mojo
Other Useless News
Here are the top 5 articles viewed by my 5421 RSS feed and weekly email subscribers over the past 30 days (excluding Black Coffee posts):
- 10 Big Reasons Why I Love (and Hate) My Credit Cards
- A Life Insurance Primer for Newbies
- 100 Words on Why Excessive Debt Leads to Indentured Servitude
- 8 Misleading Claims People Often Make to Close a Deal
- How I Live on Less Than $40,000 Annually: Fawn from Illinois
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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
Last week I found this strange request from Kate in my inbox:
“I’m doing a homework assignment on snakes. Do you know the most important snake?”
I’m tempted to give you an answer, Kate — but I’m tired of making an asp of myself.
I’m Len Penzo and I approved this message.
We are so screwed.
God help us all.
A fabulous read despite the dreadful meaning shrouding most of it…
At least you toss in some humor and mindless fun to counter the disheartening truth of the important stuff. Still, I’m addicted to reading these posts!
I am glad you enjoy them, Ree! Thank you.
Lots of your stores are opening on Thanksgiving Day so it seems your holiday of giving thanks for the harvest is dead and it is now just a time for the employees to restock the shelves before the stampede of shoppers begins.
You’re right, Jane. Supposedly, the best deals are to be had on Thanksgiving Day now — so maybe Black Friday is becoming irrelevant.
I have seen exactly none of those films! I think that its time for a date night!
I can’t believe that 10% have spent over $1000 in a restaurant. I’m not sure I could physically do that, even if I was a billionaire!
I’ve only seen 3 of them myself, MS.
As for the $1000 restaurant/bar tabs … my biggest tab was a little over $800. For my Dad’s 70th birthday I took him and and 14 other family members out for prime rib. It was worth it – but definitely not something I would do all the time.
Len, I don’t think a few socialist laws(or whatever) are bad. I mean, free basic healthcare, better free education and some support for extreme-poverty are fine, the problem is when you go bonkers and try to give everyone things that your country can not support.
And that is the extent of my opinion on socialism, because I know nothing of that, so please ignore me if I said something stupid.
Len, the china/dollar thing you said is reaaally scary. I mean, if it would crumble the US economy, what it would do to economies that live thanks to the US(like us in Mexico)? Do you have links about that or could you write about what kind of repercussions that could do to the rest of the world?
Spuky, thanks for the comment. I certainly have no qualms with safety nets for people who really truly need them for short periods of time. That’s not what we have now, however.
And don’t make the mistake of thinking federally-provided healthcare (not permitted by our Constitution — no matter what 5 of 9 Supreme Court justices believe), education (not permitted by our Constitution), and welfare (not permitted by our Constitution) are “free.” They’re not. We’re all paying for them — either via our taxes, or deficit spending, which eventually leads to currency debasement that ends up lowering everyone else’s standard of living.
You see, I don’t mind paying taxes for useful things, like education and healthcare, the problem to me is promising stuff that you can’t keep up. The government here does that all the time and pays a lot of money with our taxes for a lot of thing that shouldn’t be paid with taxes(like dry-cleaning of our senate. Really!)
(btw: I don’t know about healthcare but in Mexico basic education is “free” by the constitution, is not the best or even good in some cases, but tto some people is all they can get. I had a great-aunt that would have died of cancer if not for this “free” healthcare*)
*And I’m using “free” because I totally understand your point: When talking about ANY government, nothing is ever really free
I am one of those people that spent over $1000 on a restaurant tab. It was just this month to show appreciation for all the wonderful people who have influenced my life. As my 70th birthday approached, I felt I had to do something to bring together those folks who had been close and supported me in many life trials. In all, 96 of us enjoyed an evening together and it was worth every penny. As you say Len, I won’t be doing that very often if ever again. The most troublesome part of the whole thing was limiting the guest list.