It’s time to sit back, relax and enjoy a little joe …
Let’s get right to it this week …
International News
This past week, I was interviewed by Doug Goldstein for a segment on his terrific money show, Goldstein on Gelt, which is featured on Israel National Radio. No, really!
Anyway, we had a great conversation and I had a lot of fun chatting with him — while we see eye-to-eye on most financial matters, we didn’t agree on everything — so please be sure to stop by Doug’s site and check it out! (Hit the “Listen Now” button on the upper left side of the website. My interview starts at about the 7:30 mark on the recording.)
Stacking Benjamin’s Podcast
Of course, as many of you know, my friend, Joe Saul-Sehy, has a fantastic — not to mention quickly-growing — money show too: Stacking Benjamins. You can find me there most weeks as a regular contributor on his Money Roundtable segment.
Credits and Debits
Debit: Argentina shirked its obligations to creditors this week by officially defaulting on its debt. Meh. The free-spending South American country previously defaulted back in 2001; and since 1826, Argentina has left its lenders holding the bag eight times. I know.
Debit: While Argentine president Cristina Fernandez gave her bondholders the shaft, the people of Argentina will be the biggest losers after they suffer the consequences that come with decreased foreign investment and a dearth of future credit opportunities.
Debit: Apparently, Argentina isn’t the only one repudiating its debts. According to USA Today, 35% of all Americans currently have debt that is so far in arrears that the creditor has closed the account and hired a collection agency to recover it. Unbelievable.
Debit: Call me crazy, but such a high default rate seems impossible in a country that is five years into an economic recovery, with an initial GDP print of 4% last quarter, low inflation, and unemployment at just 6.2%. Well … Unless it’s all a mirage. (Hint: It is.)
Debit: It’s hard for anyone to make a case that we’re on the right track considering that the average American household’s inflation-adjusted net worth is 36% lower today than it was in 2003. Then again, maybe they changed the meaning of the term “economic recovery” when I wasn’t looking.
Credit: And another thing: If the economy expanded at a blistering 4% clip last quarter — after contracting almost 3% the previous quarter — you would think that single family home sales would be booming. Instead, they fell 8.1% in June. Are you paying attention, flippers?
Debit: Unfortunately, US economic growth is all smoke and mirrors. As ZeroHedge points out, more than half of the reported growth in nominal US GDP over the past year is the result of businesses accumulating inventory, as opposed to actually selling their goods to the public. That’s definitely part of it — but not the whole story.
Credit: This week, Peter Schiff broke down what’s really happening to the US economy: “The growth is a fantasy. It’s a result of the assumption that there is no inflation — (but) there really is. What we have is inflation masquerading as economic growth.”
Credit: In fact, according to Schiff: “The economy is contracting. That’s why the labor force is shrinking, we’re using less energy, the standard of living is (declining), real incomes are falling, and job(s) are disappearing. We’re in a recession and no one wants to admit it.”
Debit: Recession? Economist Jim Rickards says that we’re actually in a depression. He’s right; and the only reason people don’t realize it is because the effects are being masked by massive Fed money printing and government welfare via EBT cards, unemployment benefits, disability payments and other handouts.
Debit: The scary part is, the Fed will eventually lose control — then the charade will end and the complacent and oblivious will finally come to grips with the real state of the US economy because most Americans’ artificially-high standard of living will drop. Precipitously.
Credit: Finally … Last week, a semi-truck carrying 45,000 pounds of butter hit a barrier and overturned on an Indianapolis highway. The accident is yet another example of why truckers absolutely hate hauling butter. After all, they know there’s no, ahem … margarine for error. (Sorry.)
By the Numbers
I love butter. In fact, I’m not ashamed to say I eat a pat or two every once in awhile — without the bread!
1860 Year the first butter factories appeared in the US. (New York)
1940 Year that butter production peaked in the US. That’s because shortages brought about by World War II ushered in the margarine era.
1957 Year that margarine consumption surpassed butter consumption in the US.
21 Pounds of whole milk required to make one pound of butter.
5 Current approximate annual US per capita butter consumption, in pounds.
1.75 Pounds of salted butter that Donald Lerman consumed in five minutes; a world record. (Okay. I love butter, but I don’t like it that much.)
Source: FoodReference.com
The Question of the Week
[poll id="19"]
Last Week’s Poll Results
Squirrels: Love ’em or hate ’em?
- Hate ’em. (40%)
- Love ’em! (38%)
- I’m not sure. (22%)
More than 200 Len Penzo dot Com readers weighed in for this week’s squirrel survey — and people are pretty much evenly split. One in five of those surveyed are so torn, they admit to having a love-hate relationship with the bushy-tailed rodents. As for me: I hate ’em. (My pesky squirrel is still stealing my homegrown tomatoes. I really need to get down to Home Depot and get some critter repellent.)
Other Useless News
Programming note: Unlike most blogs, I’m always open for the weekend here at Len Penzo dot Com. There’s a fresh new article waiting for you every Saturday afternoon. At least there should be. If not, somebody call 9-1-1.
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Top 25 Referrers for July
It’s the first weekend of the month, which means it’s time once again to thank the top 25 referring websites to Len Penzo dot Com.
1. MSN
2. Business Insider
3. Kiplinger
4. Rockstar Finance
5. Money Talks News
6. Wisebread
7. Art of Manliness
8. Budgets Are Sexy
9. Creative Home Ideas
10. Lifehacker
11. DIY Craft Projects
12. Modest Money
13. Frugal Village
14. Don’t Quit Your Day Job
15. Stacking Benjamins
16. Save Outside the Box
17. Afford Anything
18. Sharing With You
19. Negocios 1000
20. Escaping Dodge
21. A Gai Shan Life
22. Money Crashers
23. Hull Financial Planning
24. Canadian Personal Finance Blog
25. The Money Principle
Thank you to everyone who refers their readers to this little ol’ blog! It’s 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! You can reach out to me at: Len@LenPenzo.com
Sheila Laurence had this to say after reading about my cereal taste test experiment:
We don’t buy cereal like that. We eat plenty of other processed, unhealthy things, though!
I hear ya, Sheila: The four major food groups in my house are: fats, starches, alcohol, and chocolate.
I’m Len Penzo and I approved this message.
Photo Credit: brendan-c
I realize that you intended to be funny, but I don’t like that you edited my comment and used it out if context.
Well … this is a first! I’m sorry you feel that way, Sheila. I thought your comment was great!
(And to be fair, if you take another look at the original article, you will see that your comment was edited for grammar, and truncated, but NOT taken out of context.)
So, how many times do you think the GDP growth will be revised down over the coming months? I’m guessing it will end up right around 2% which will once again show that the economy really isn’t growing at the rate that is needed. Great analysis on the report!
There will be revisions in September and October, Thias. Like you, I expect the final GDP number will be between 1.5% and 2%. That has been the government’s M.O. lately for all of its economic data (i.e., error on the positive side for the initial print — which gets the media attention — and then quietly revise the numbers downward when the bad news is out of the mainstream media limelight.)
Remember, last quarter’s GDP was initially announced — and widely reported — to be +0.1%. But the following month it was quietly revised down to negative 1.0%, then it was revised down again with no fanfare or coverage in the media to negative 2.9%. There is no excuse for such a large discrepancy between initial and final prints, short of deliberate deception or gross incompetence.
The deception is all part of the insanity that we are now living with. It’s really unbelievable how far things have devolved.
And for those reasons is why I believe that the media is doing the country a giant disservice. They treat each initial claim (jobs reports, GDP growth, etc) as the absolute truth when people who sit and think about it know there is no way to gather that kind of data as quickly as they do and have it be accurate.
Most people have no idea that these numbers are adjusted on a monthly basis because one sentence is normally committed to it and buried at the bottom of an article.
This is probably what I am most concerned about with the country right now because, as you said, deception is the new normal when it comes to the economy.
Good luck with the squirrels. Our previous home had a 40 yr old avocado tree the neighborhood squirrels loved, especially the smaller branches’ bark during the winter. After a weakened limb fell on the roof and damaged he tiles and flashing, I took action. I couldn’t shoot them for dinner (as we did when I was a kid), so I got a humane trap, baited it with peanut butter, and over the next two years, we caught more than 35. Since they’re territorial, the Animal Control Office releases them in one of the large local parks (more than five miles from my home). I went with them just to make sure they weren’t going to make squirrel stew. Happy trapping!