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 want to thank all of you who called 9-1-1 to report my absence last week. It turns out that I just had too big of a workload from my day job — you know, the one that actually puts the food on my table — and by the time I got home last Friday night, I was just too pooped to write. Then Saturday morning rolled around and I had a few more hours of work to do, so I just decided to skip last week altogether.
Anyway … I hope everyone is enjoying their Memorial Day weekend. And please be sure to take a moment to remember our soldiers, sailors, airmen and marines who made the ultimate sacrifice in defense of our nation.
Off we go …
Credits and Debits
Debit: How can anyone say the economy is doing just fine when one in five adults between 18 and 34 still live at home with their parents? And in Southern California and Miami it’s one in three. Yet more proof the economy died in 2008 and has been kept alive only with trillions in Central Bank currency printing.
Debit: Of course, the banks have noticed that Millennials can’t afford to buy homes, which is why they’re now offering home loans to borrowers with poor credit for a token down payment of just 3% — that can be provided by anybody. You know … they pulled a similar stunt right before the last housing bubble burst too.
Debit: I know what you’re thinking, but you can relax. The good news is Wells Fargo is partnering with Fannie Mae, so even though
some most of those new loans will probably end up in default, they’re guaranteed by the federal government. On second thought, it’s only good news if you don’t pay taxes. I think.
Debit: Meanwhile, I see Deutsche Bank is offering their Belgian clients who are willing to lock their cash up for 90 days an interest rate of 5.0%. Yes, the decimal point is in the correct spot. Three words for you: insolvent bank ahead.
Debit: You think I’m kidding? Washington Mutual tried offering above-market interest rates right before it went under in late 2008. The big difference is, unlike WaMu, Deutsche Bank is one of the largest banks in the world. If it goes under, the collateral damage could be catastrophic.
Credit: Speaking of bureaucracies with imploding balance sheets, Obamacare continues its descent into the depths of healthcare-coverage hell as three states will only be offering one health insurance company on their exchanges this year — and next year there may be several states with no insurers at all. Imagine that. Forward!
Credit: Needless to say, the twisted Utopian economics behind Obamacare’s slow-motion train wreck is just a small-scale example of why socialism always eventually breaks down on a more widespread basis, as it’s now doing in the People’s Socialist Paradise of VenezuelaTM.
Debit: When pie-in-the-sky economically-illiterate nanny-state politicians insist on imposing price controls and subsidizing everything from rice and gasoline to telecommunications service and healthcare, the inevitable result will be crippling shortages that can rip the fabric of a civil society.
Debit: Even so, the promise of “free stuff” from the government is a siren song for those who prefer dependence over self-reliance. Too bad it always leads to economic collapse, where toilet paper is a luxury, and people stand in interminable lines all day long for scarce goods — although they often have no idea what they’re waiting to buy.
Debit: With that in mind, it should be no surprise to anyone that barter is now the order of the day in the People’s Socialist Paradise of VenezuelaTM despite its economic inefficiency. Then again, desperate times call for desperate measures. Oh, and a return to free markets.
Debit: More pie-in-the-sky promises: Another gravy train that’ll soon be running off the rails are all of those ridiculous government pensions that have many city and state employees retiring in their 50s with six-figure stipends — some upwards of $250,000 annually. No, really.
Credit: Take Chicago’s pension fund, for instance: it’s so badly underfunded there are only 32 cents for every dollar owed to retirees. (Psst. And if you think that’s bad, just wait until the bull market in stocks finally runs out of steam.)
Debit: Hey … Do you think Chicago politicians will order their already over-taxed citizenry to cough up even more cash so government retirees can continue to receive 100% of their unrealistic benefits? Yeah … I guess that is a stupid question.
Debit: By the way, Illinois’ biggest government-employee union is demanding $3 billion in additional salary and benefits for its workers, even though government union salaries increased more than 40% from 2005 to 2014. At the same time, median private-sector wages in Illinois remained flat. I know. This isn’t unique to Illinois, mind you; it’s a similar story all across America.
Debit: Twas a time when the government existed to serve the people. The trouble is, today we exist to serve the government — and we have only ourselves to blame.
Credit: Rest assured, there’s a light at the end of the tunnel; what can’t be sustained won’t. And although it’ll be painful, the coming economic reset will mercifully deliver us from this financial — and social — rabbit hole we currently find ourselves in, where black is white, down is up, bad is good, and good is bad. The sooner the better.
By the Numbers
Some facts on the Memorial Day holiday:
1873 Year the first state officially recognized Memorial Day. (New York)
25 American cities that claim to be the birthplace of Memorial Day.
260,000 Graves at Arlington National Cemetery that are adorned with US flags for the holiday.
1,300,000 Members of US armed forces who have lost their lives in conflict.
39 Percentage of Americans who plan to travel over the Memorial Day weekend.
55% Average increase in the cost of a Memorial Day hotel room this year compared to 2015.
62 Percentage of Americans who will barbecue this weekend.
818 Hot dogs consumed every second between Memorial Day and Labor Day.
Source: WCTI 12
The Question of the Week
Last Week’s Poll Results
How long could you willingly go without a smartphone?
- As long as it takes (55%)
- No more than a day (15%)
- No more than a week (13%)
- No more than a few hours (11%)
- No more than a month (6%)
More than 1700 people responded to last week’s question — okay, actually, the question from two weeks ago — and, I’m happy to see that more than half of all Len Penzo dot Com readers aren’t the least bit addicted to their cell phones. On the other hand, 1 in 9 admit to not being able to make it through the day if they go more than a few hours without theirs. That’s kind of scary, don’t you think?
Other Useless News
Here are the top 5 articles viewed by my 9444 RSS feed and weekly email subscribers over the past 30 days (excluding Black Coffee posts):
- 7 Modest Wedding Gifts that I’m Still Enjoying 20 Years Later
- The Pros and Cons of Dave Ramsey’s Baby Steps
- 5 Things Nobody Tell You About Being Poor — For Good Reason
- What Will Happen If Everybody Pulls Their Money from the Bank Today
- My Porch Remodel Project (Phase 2)
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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 I got a message from long-time reader Dan who sent me this note after getting my weekly blog round-up in his mailbox last Monday:
Len, I can’t find Black Coffee. It’s usually the best part.
Hey … What do you mean “usually”?
I’m Len Penzo and I approved this message.
Photo Credit: Community Coffee
Special Ed says
I was totally lost without my black coffee last weekend. I didn’t call 911, but I did find myself checking over and over in case it showed up. Glad you’re back Len.
Len Penzo says
Thank you, Ed.
“Twas a time when the government existed to serve the people. The trouble is, today we exist to serve the government”
Man, you got right to the heart of it here, huh?
I can’t count the number of times that bureaucracy has gotten in the way of growth in my daily experience… ugh
Len Penzo says
You’re not alone, Brian. I keep telling my kids that the US is a vastly different country today than it was 40 years ago when it comes to government intrusion in our everyday lives (no riding in the back of a pickup truck!, wear a helmet!, no more 100W incandescent bulbs!, no toilets allowed with a capacity above 1 gallon!, no, you can’t have extra salt or a large soft drink in my town!, no watering the lawn on Tuesdays or between 8 a.m. and 4 p.m.!, wear a seat belt!, no smoking in the park! … heck, no smoking in your apartment!, etc., etc.). Meanwhile, the number of people employed by the government to rule over is bigger than ever … along with their perks and benefits which are paid for out of the wages of those who work in the private sector. But this too, shall pass. Eventually.
Need your opinion on this: a stacker friend of mine shared something last week with me that blew my mind. He showed me the usdebtclock.org website and told me to look at the prices of gold and silver per dollar ratio. Gold was at $7300 and silver was at $800. Isn’t this a government site? Where did these numbers come from? Could this possibly be the true value of the metals in dollars without all the paper shenanigans? Wish someone like Holter, Kirby etc would talk about this. What’s your opinion? Oh yeah, it also showed dollar growth supply in a box constantly growing. Lmao, thought they stopped QE. Maybe I’ll find out what this is all about soon, but I was shocked to see that on a government site.
Len Penzo says
Frankly, Jared, I think those numbers are far too low when using M2 as the yardstick. Rickard calculations show that the number for gold is closer to $10,000 per ounce; that assumes the current M2 number and the dollar backed by 40% of available US gold reserves. Holter has said the number is probably north of $50,000. If you assume a gold-to-silver ratio of (conservatively) 20, then silver should be $500 per ounce if you believe Rickards’ math and $2500 per ounce if you believe Holter. I think number is closer to Holter’s estimate if only because, unlike Rickards, I do not believe US still has 8333 tons of gold in Foth Knox and elsewhere that they claim is on hand.