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.
Let’s get right to it this week …
Credits and Debits
Credit: Don’t look now, but Texas legislators are considering a bill that would legalize marijuana. Yes, that Texas.
Credit: Hey, did you see this? According to the latest government statistics, employers added 233,000 new jobs last month, bringing the US unemployment rate down to 5.4%. Hooray!
Debit: Unfortunately, as Zero Hedge points out, the quality of all these new jobs is dubious at best: The reported jobs increase was due entirely to part-time positions — that’s because there was a net loss of 252,000 full-time jobs in April.
Debit: If that wasn’t bad enough, the number of working Americans in their prime career-building years — folks between 25 and 54 — declined again in April. Incredibly, despite the “recovery” — and an increasing population — there are 4 million fewer people aged 25-54 working today than in 2007.
Debit: I guess that big bump in part-jobs goes a long way toward explaining why last month there was, sadly, only one manufacturing job created for every 26 waitresses and bartenders that were hired. Did I just hear “last call” for the US economy?
Debit: On a related note, for every manufacturing job in Baltimore, there are six government jobs. Yes, six. In a productive economy, those numbers would be reversed. In fact, 21% of all jobs in Baltimore belong to government bureaucrats.
Credit: One thing is certain: If there were more manufacturing jobs in America — and far fewer government paper pushers — the US wouldn’t have had its worst trade deficit since 2009 last month. Our wallets would be fatter too.
Debit: You know the US government is far too big when it’s expected to finish 2015 with yet another budget deficit, despite taking in record tax revenue this year. The IRS picked taxpayers’ pockets for $472 billion … in April alone.
Debit: Meanwhile, Greece, which straddles three seas — the Mediterranean Sea, the Aegean Sea, and the Sea of Red Ink — is imposing a surcharge for all cash withdrawals as a last-ditch measure to prevent citizens from making a run on the country’s banks.
Credit: Of course, although denial is widespread, the rest of the world is in the same financial boat as Greece — which they’ll discover soon enough. It’s probably why Russia recently joined China in aggressively increasing its gold hoard.
Debit:Can you guess which country currently has the most overpriced housing market in the world? Go ahead; I’ll wait while you think about it. If you said, Canada, well … give yourself a gold star.
Credit: Then again, if the People’s Democratic Republic of San Francisco was a country it would give Canada a run for its money. A 291-square foot “apartment” there just sold for $415,000 — after a bidding war increased the price by 40%. Suckers!
Credit: Market froth isn’t limited to housing. Despite April’s dubious employment data, the Dow had one of its best days of the year, as it surged 1.5% on Friday. As for the S&P 500, less than 10% of its 500 companies finished in the red. I know.
Credit: I’m not the only one who thinks there’s more than a little irrational exuberance in the markets. For her part, Janet Yellen recently admitted that she thought stock valuations were dangerously high too. No, really.
Debit: And finally … This week former Treasury Secretary Tim Geithner said that another financial crisis was going to happen again at some point. He also said it wouldn’t be anything like the last one in 2008. He’s right. It’s going to be worse. Please … prepare accordingly.
By the Numbers
Here’s a little postscript on potential impacts to the Lone Star State if the pot legalization effort there eventually succeeds:
2,000,000 Pounds of marijuana seized by the US Border Patrol in Texas during the last fiscal year.
1327 Prisoners incarcerated in Texas last year for criminal possession or distribution of marijuana.
$60 Amount that Lone Star State sheriff offices spend per day for each prisoner.
$230,000,000 Estimated taxpayer savings over next five years if marijuana is legalized (due to reduced incarceration and enforcement costs).
$7,400,000 Estimated fine and court revenue counties in the Lone Star State would lose annually if marijuana is legalized.
$76,000,000 Tax revenue collected by Colorado for recreational and medicinal marijuana in 2014.
0 Tax revenue Texas would collect if marijuana is legalized there. The current bill under consideration doesn’t call for any fees or taxes to sell weed.
Source: KSAT
The Question of the Week
[poll id="60"]
Last Week’s Poll Result
How many keys are on your key ring?
- 3 or 4 (32%)
- 5 or 6 (21%)
- 1 or 2 (18%)
- 7 or 8 (17%)
- 9 or 10 (7%)
- 11 or more (5%)
More than 600 people chimed in to answer last week’s question and all I’ve got to say is this: Although I can’t imagine why anybody would need to carry 11 or more keys around on a day-to-day basis, apparently 1 of every 20 Len Penzo dot Com readers do so. That’s got to be really comfortable.
(By the way, the maker of my polling plug-in updated his software this week. It appears as if that has fixed the frozen voting button issue that many people have had for the past several months.)
Other Useless News
Here are the top — and bottom — five states in terms of the average number of pages viewed per visit here at Len Penzo dot Com over the past 30 days:
1. New Mexico (2.24 pages/visit)
2. North Dakota (2.03)
3. Utah (2.00)
4. Alaska (1.94)
5. Pennsylvania (1.91)
46. Nebraska (1.44)
47. Kansas (1.40)
48. California (1.39)
49. Vermont (1.27)
50. Wyoming (1.26)
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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 suggestion regarding the smartest way to eliminate credit card debt, Walt shared a long list of his own personal finance tips and observations, including this one:
The evil cable company has lost its grip on me.
Me too, Walt! Unfortunately, I’m now in the clutches of the satellite company.
I’m Len Penzo and I approved this message.
Of course, the ACTUAL unemployment rate is about 11%, when it’s figured like it used to be figured (with ALL unemployed, underemployed and those who have given up looking.) And maybe it’s just me, but adding only 233,000 jobs at this time of year (right before summer tourist season) does NOT sound like good news. We’re living in Bizarro World.
You are right! Plus we all know that when the “new” jobs figure for next month is announced, they will quietly revise DOWNWARD the current jobs figure which is merely a lie floated with a straight face by the current administrations for press purposes. You might even be low with your 11% unemployed if you include the under employed who are hired for less than thirty hours so the beleaguered companies do not have to pay outrageous healthcare costs.
Lauren, I actually heard if they kept track of unemployment like they did in the Reagan years it’s actually around 23 percent unemployment. I think the reset can’t be more then a year or two away, it could possibly happen in Ocrober when the Chinese Yuan is made a world reserve currency.
WOW, 23% is obscene! I often wonder if the other countries in financial trouble (like the BRICs) have skewed their data like we do.
Good point, Jared. I think it is John Williams who has calculated the U3 number to be closer to 11%, and the U6 number at 23%.
All of the figures have been manipulated so badly now to maintain the illusion that “all is well.”
And to Lauren’s point, every country is skewing data now. China has been fudging its GDP numbers for at least a few years now — they are not supported by corroborating figures that are tougher to manipulate by the government (e.g., electricity consumption data).
Brics countries will be fine in the long run because those countries are backing their currencies with gold.
I also remember either Reagan or the first president Bush being torn apart in the media for a GDP growth of 4%. It is going to be a very rude awakening unfortunately!!!
Most Americans are asleep at the wheel, Jody. I blame our education system for failing to teach basic macroeconomic theory (and personal finance) to our kids.
Every child should understand this basic monetary law before they graduate: Ultimately, the strength of any currency is determined by what it produces. Countries that export more than they import are supposed to have stronger currencies (i.e. more purchasing power) than those that import more than they export. Likewise, looking at it from the other direction: Those that import more than they export have weaker currencies (i.e., less purchasing power).
Unfortunately, the US has been a net importer every year since the early 1980s — but we’ve been able to temporarily escape the economic law above for the last 30+ years only because the world hoards dollars as a reserve (savings) — if the dollar wasn’t the world’s reserve currency, it would be among the weakest currencies in the world.
Because the Fed has “printed” so many dollars since 2009 to keep the game going a few years longer, the world has now lost faith in the greenback (after all, it is backed only by confidence) and have begun turning away from it — so the dollar’s days as the world’s reserve currency are rapidly coming to an end. After all, all those freshly-printed dollars have only reduced the value of foreign nations’ dollar-based savings; so it’s only natural that they now resent the Fed essentially stealing their hard-earned wealth via inflation of the dollar supply.
When the dollar finally dies, America’s “consumer-based” economy will end and we will be forced to produce things again. Americans will once again return to saving as a means of buying the big-ticket things in life that they want and need — out of necessity, credit will be utilized much more judiciously than it is today.
The good news is: The US’s inability to import as much as we do today will eventually lead to a growing American economy again with more quality jobs here on our shores (manufacturing based as opposed to waiters, bartenders, bureaucrats and paper-pushers). It will also demand smaller government.
The bad news is: There will be a lot of pain in the transition, as our purchasing power will be greatly reduced until the US once again become an economic powerhouse. I suspect that will take a few years.
The Western world’s “salad days” — and the US’s consumer-based debt-driven economy, in particular — are almost over, but there is a happy ending at the end of this for all of us. We just have to get through the transition.
Len, you forgot to mention it’s not to late to purchase some insurance with gold and silver while the prices are still manipulated very low. There won’t be many folks with gold and silver because the majority have their heads in the sand, but those who do will fair much better in the transition.
You’re right, Jarod. But I believe time is getting short. The great Bill Holter believes serious bond market tremors on May 7, and again last night (5/11) are indicating we may be very close.
http://blog.milesfranklin.com/a-foundation-of-bad-credit-is-no-foundation-at-all
I think I was one of those people who benefited from the new jobs offered in the US. These last few months, I noticed more job posts compared with last year. Thankful for this drastic change. More jobs to come!