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: And so it begins; China is now liquidating its US Treasury bonds in rapid fashion — $106 billion worth in the past two weeks alone. Why is that important, you ask? In essence, China has canceled America’s biggest charge card — and they’ve sent us the first bill.
Debit: By the way, China isn’t the only one selling: On Monday, the Dow was down almost 1100 points at the open — no, that’s not a typo — before “recovering” to finish the day 588 points lower on heavy volume.
Debit: Somewhat surprisingly, the hemorrhaging continued into Tuesday — despite being up 442 points earlier in the day — and didn’t stop until midweek, when the Plunge Protection Team’s frantic efforts to apply a tourniquet finally succeeded.
Credit: And although the stock market seems to have stabilized — for now — there are those who believe the Dow could eventually end up falling another 11,000 points before this is all over. I agree.
Debit: Then again, why is there so much panic selling on Wall St. when we all know that a “booming” Main St. economy is providing a stiff wind for its sails? Hey — don’t be “a denier.” It’s the truth; not only is unemployment near all-time lows, but the US revised its 2nd quarter GDP figure this week to 3.7% too. No, really.
Debit: Yes, yes. I realize that 20% of all US households are on food stamps, 15 million Americans are on “disability,” almost 95 million aren’t in the work force, and wages have been stagnant for years — but you know me: I’m a “glass-half-full” guy.
Debit: On the other hand, when you consider that 7 million American college graduates have gone at least a year without making a federal student loan payment, maybe the recent stock market panic selling is justified after all.
Debit: Stop me if you’ve heard this before: Hyperinflation in the People’s Socialist Paradise of Venezuela is resulting in increasingly dire food shortages there. Oh, and long lines and looting too. Does Danny Glover knows about this? Forward!
Credit: The good news is that the Venezuelan government announced its latest economic relief plan this week: add more zeros to its worthless currency. Hey, it won’t solve the food shortages, but it will allow shoppers to once again carry their cash in a wallet instead of wheelbarrows. Well … for a few days anyway.
Credit: Now that Venezuela’s socialist, um, lifestyle is reflecting the reality of its something-for-nothing ideology, folks may be finally waking up. One person in line observed that: “The people that used to give us work — the private companies, the rich — have all gone.” Imagine that.
Debit: Of course, not all Venezuelans are struggling to survive. Just ask the nation’s richest person: Maria Gabriela Chavez. She has a net worth of $4.2 billion. The fact that she also happens to be the daughter of the late Venezuelan dictator, Hugo Chavez, is probably just a coincidence. Right, Danny?
Credit: Remember that the next time some moron tells you that capitalism exploits the poor — and socialism is the antidote. Socialism is the problem.
Credit: Finally … Earlier this week, Burger King got the royal brush off after McDonald’s declined its rival’s offer to collaborate on a Whopper/Big Mac hybrid — dubbed the “McWhopper” — in a bid for world peace. Frankly, I always saw Mayor McCheese as a pacifist. Guess I was wrong.
By the Numbers
Amaze your family at the dinner table tonight with these fun facts about Burger King’s famous Whopper sandwich:
1957 Year Burger King introduced the Whopper.
$0.37 The Whopper’s price in 1957. ($3.27 in current-year dollars.)
8 Items needed to create the classic Whopper. (Beef patty, sesame seed bun, mayonnaise, lettuce, tomato, pickles, ketchup, and sliced onion)
5 Additional items that can be added to the Whopper upon request. (American cheese, bacon, mustard, guacamole, jalapeno peppers)
650 Calories in the basic Whopper.
1985 Year that Burger King replaced the sesame seed bun with a Kaiser roll.
1994 Year that Burger King went back to the sesame seed bun.
221,184 Number of ways you can order a Whopper, according to Burger King.
Sources: Wikipedia
The Question of the Week
[poll id="77"]
Last Week’s Poll Results
Are you ready for summer to end?
- No (61%)
- Yes (31%)
- I’m not sure (8%)
More than 700 people responded to last week’s question and, not surprisingly, more than 3 in 5 readers are hoping for an endless summer — well, at least as of this week. As the dog days of summer wear on, people’s minds tend to change.
Insider Notes: Our Perverse Debt-Based Monetary System
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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 recent article on 12 Good Reason Why You Should (and Shouldn’t) Use a Credit Card, Laddester L Conyers shared this observation:
The credit card industry calls people like us who never carry a balance “dead beats.”
That’s mild compared to what most people call the credit card industry.
I’m Len Penzo and I approved this message.
Photo Credit: brendan-c
There are still plenty of buy and hold-ers out there, myself included. When you look at the long-term, even extensive bear markets don’t matter.
Market “meltdown” created some serious opportunity in the right sectors this week. The economic cycle tends to lag the market cycle . . . I think what we’re seeing is a market top, but the economy is still improving. Could be a great time for energy and commodities while they are still in the trough.
-DP
I like your optimism, DP, but there isn’t going to be any recovery until the current monetary system resets. The currency war that has been underway for the past few years just heated up last week with China’s relaxation of their yuan peg. Meanwhile, the world’s economies continue to tank because we’re in the early stages of a worldwide credit collapse.
Why have nations resulted to a currency war? Because after decades of mindless credit expansion, there’s too much debt on the books now and it can’t be repaid without expanding credit even more. You don’t fix a debt problem by piling on even more debt, but that’s what the bankers are doing because in our perverse debt-based monetary system, paying off debt actually collapses the system (it removes dollars from the system, which collapses our debt-based Ponzi scheme in the absence of continued growth in the money supply) — as a result, they’re darned if they do and darned if they don’t! It’s a math problem they can’t win!
Unless the powers that be wake up soon, the next stop on this downward cycle will be the final one: a currency crisis.
(There’s a reason fiat currencies last, on average, 27 years. The US dollar’s anchor to gold was severed in 1971 — 44 years ago. Tick tock …)
“One person in line observed that: The people that used to give us work the private companies, the rich have all gone. Imagine that! As Maggie Thatcher used to say, “Socialism is fine until you run out of other people’s money.” Or how about, “Capitalism is the unequal distribution of wealth while Socialism is the equal distribution of poverty.” and shortages!
I’m going to have to start using that one, Karen.