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.
I’ve been out of town all week, and I have a lot of honey-dos to take care of this weekend. As a result, I’m serving up an espresso edition for you.
Okay, off we go …
Credits and Debits
Debit: Even though Greek depositors are still only able to withdraw the equivalent of $67 per day, bankers there are imploring fellow citizens to return all of the cash they’ve withdrawn, promising there will be no “haircuts” later on if they do. Heh. Riiiiiiight.
Debit: Meanwhile, the US has its own debt issues. It’s been using accounting tricks to balance the books since reaching the $18.1 trillion debt limit last March. Now the GAO is warning that an economic catastrophe is in the cards if Congress doesn’t raise the limit by November. Heh. Riiiiiiight.
Credit: The GAO is right about one thing: an economic catastrophe is coming. But we’ve crossed the rubicon and there is no longer any legislation that Congress can pass to permanently stop it. That’s because every Ponzi scheme is mathematically doomed to fail.
Credit: That’s bad news for the growing number of government employees in their 50s with six-figure cost-of-living-adjusted pensions who end up making more in retirement than they did working. You don’t see pensions like that in the private sector — if you see them at all.
Debit: You’d think the trillions in fiat currency being conjured out of thin air by the world’s central banks would be reflected in skyrocketing gold and silver prices but, remarkably, it’s just the opposite. For now.
Debit: You can thank the Plunge Protection Team for keeping gold and silver on sale. I know I do. Heck, they’re so desperate now, they no longer even attempt to hide their blatant ham-handed efforts to manipulate the precious metals markets.
Debit: On a related note, other commodity prices such as coffee, sugar, wheat, silver and copper have been taking it on the chin all year too. In fact, this week alone saw the Bloomberg Commodity Index plunge 7.2%, putting it at a 13-year low. And it’s going to go lower.
Credit: David Stockman says collapsing commodity prices are the culmination of more than a decade of failed central bank interventions in the free market that ignited a debt-fueled consumption spree and massive malinvestment.
Debit: In other words, the financial party on Wall Street — fueled by years of ridiculously cheap money from the Fed — is just about over. What we’re witnessing now are the first pangs of a vicious economic hangover — although many people aren’t ready to admit it. Yet.
Debit: Finally … Not every worker in the progressive “paradise” of Seattle is happy the city raised the minimum hourly wage to $15. Apparently, some workers are now requesting fewer hours in a bid to limit their income so they don’t lose government subsidies for food, child care and rent. Forward!
Credit: Of course, McDonald’s and other fast food joints have found a way around Seattle and other socialist city governments’ attempts at manipulating the free market: self-serve kiosks. Now if only our government overlords would see the light and start using them too.
By the Numbers
At $4.7 trillion and counting, government pension liabilities are a growing nationwide problem — but nowhere is the problem worse than in California:
$750,000,000,000 Current high-end estimate of California’s pension liabilities.
17% Growth in California local governments’ pension spending between 2008 and 2012.
4% Growth in California tax revenue over the same period.
1841 Retirees pulling a $100,000+ pension from the California Public Employees Retirement System in 2005.
16,838 Retirees pulling a $100,000+ pension from the California Public Employees Retirement System in 2013.
2010 Year police in Oakland were asked to contribute 9% of their salary into their pensions in order to prevent layoffs.
80 Oakland police officer positions eliminated after its union voted in 2010 to continue contributing nothing into their taxpayer-guaranteed pensions.
44 Number of crimes that the Oakland police department no longer responds to, due to staffing cutbacks.
Sources: Orange County Register; The Sacramento Bee
The Question of the Week
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Last Week’s Poll Results
What is your favorite fruit?
- Watermelon (19%)
- Something else (16%)
- Apple (15%)
- Banana (13%)
- Strawberry (10%)
- Peach (9%)
- Orange (8%)
- Raspberry (5%)
- Pineapple (5%)
- Grape (3%)
More than 400 people responded to last week’s question and the most favorite fruit among those who responded was watermelon. Apples, bananas and strawberries and peaches rounded out the top 5.
Other Useless News
Here are the top 5 articles viewed by my 7053 RSS feed and weekly email subscribers over the past 30 days (excluding Black Coffee posts):
- The Real Secret to Achieving Financial Freedom on a Modest Income
- 20 Things I’m Willing to Pay More For
- How the Fancy Hotels Giveth … and Then Taketh Away
- 9 Ways to Save Money on Your Next Car Purchase
- 4 Smart Reasons Why College Isn’t for Everyone
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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 Jenny wrote in to share her concerns about the results of the favorite-fruit poll:
Len, love your blog! But how in the world could you forget to leave cantaloupes off the list?
You’re right, Jenny. That’s an oversight I wouldn’t normally make in a mellon years.
I’m Len Penzo and I approved this message.
Photo Credit: brendan-
Len,
Let’s see, the U.S. mint has sold more physical gold this past month then in over two years and they have even ran out of physical silver (I’m waiting on APMEX to get more silver Buffaloes as I type this) yet the prices are continuing to drop, if anything by the rules of economics the exact opposite should be taking place. I can truly see now that our government and most definitely the Fed is severely corrupt! I hope the reset occurs very soon because things are getting ridiculous!!!!
Jared: You will drive yourself crazy waiting for the reset. Just carry on with life and continue putting aside a portion of your savings into precious metals. The financial charade could go on for awhile still …
When we were looking for a new house, we considered buying a house with a pool. We decided to get one with a pool for relaxation purposes and because it is wonderful exercise to the kids and even to the adults and adds value to our house. However, when we tried selling our house, I had few prospect buyers because most of them did not want a pool at home.
Len,
Besides gold and silver what are other good investments to make to be prepared for the fall of our fiat currency?
Anything tangible — especially tangible items capable of generating income all by themselves, or used to help you generate income.
You should also be sure to have food stores to get you through any potential temporary supply chain disruptions.