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 …
Credits and Debits
Credit: The Hill is reporting that Obamacare is on the verge of melting down because the young healthy people required to offset the medical costs of its older and sicker customers continue to refuse to buy expensive healthcare insurance most will never need. Wow. Nobody ever saw that coming. (Insert eye roll here.)
Credit: And here’s more good news: On Thursday, the Dow, S&P 500 and Nasdaq all hit record highs. The last time Wall St. had the opportunity to celebrate that stock index trifecta was way back on December 31, 1999.
Credit: Of course, stocks aren’t rising on fundamentals so much as the world’s central banks, who are doing everything they can — that is, running their printing presses day and night — to stave off a global economic depression. Never mind that said depression is largely a result of their own misguided financial policies.
Debit: Heck, even Reuters admitted this week that central bank “Money-printing has pushed stocks out of kilter with economic reality.” Ya think?
Debit: The truth is, despite the surging stock market, the economy is still hopelessly broken. In fact, the same day that the stock market indices were hitting new all-time highs, Macy’s announced it was closing 100 stores. Strange. I guess Macy’s execs are unaware there’s a booming economy out there.
Debit: Frankly, this is the oddest economic boom in US history — but, hey, who am I to argue? After all, a new study released this week discovered things are going so well that 81% of Americans are worse off now than they were back in 2005. I know … but at least it’s not 100%. Yet.
Debit: I’m convinced that one of the biggest reasons why the Fed is desperately propping up the stock market is because public and private pensions would implode if the markets crashed. Even with stocks at all-time highs, public pensions alone are most likely currently underfunded by more than $8 trillion. Then again, I’m sure they can make up the difference by looking under the couch cushions.
Debit: If honest accounting practices were used by state and local governments, they would stop assuming that pension funds can consistently earn returns approaching 8%. It’s bad enough that these governments lie, but now even the actuarial establishment is in on the ruse, as they recently suppressed a report that tried to point this out.
Debit: Why be deceptive? One word: desperation. As the American Interest points out: “There are powerful interests that don’t want public pensions to be governed by the same accounting principles used in the private sector because, if they were, public pensions would go from seriously underfunded to catastrophically underfunded.” Hmmm. I wonder what comes after catastrophically underfunded.
Debit: Take Chicago’s police and firefighter pensions — according to Mike Shedlock, property tax rates will rise in 2020 to “whatever it takes” to ensure police and firefighter pensions stay fully funded. Considering that the funded ratios of those two pensions are just 25% and 21% now, respectively, I suspect more than few Chicago homeowners will be taxed out of their residences.
Debit: The Chicago public pension debacle is just more proof that, today in America, government doesn’t exist to serve the people so much as the people exist to serve the government.
By the Numbers
With the 2016 Olympics here, let’s take a closer look at some numbers behind the 31st Olympiad:
1 Number of times South America has hosted the Olympics.
$261 Approximate melt value of a gold medal.
1.2% Percentage of actual gold in the Olympic gold medals.
206 Number of countries competing.
10,500 Number of athletes who are participating.
21 Athletes who pulled out of the Olympic games citing Zika or “other factors.”
40 Years since Bruce Jenner — now Caitlyn Jenner — won the gold medal in the men’s decathlon.
306 Events comprising the 31st Olympiad.
3 Olympic events that the US has not won a medal. (Badminton, table tennis, handball)
Source: The Daily Beast; Yahoo News
Last Week’s Poll Result
How much is the biggest tip you’ve ever given somebody?
- Less than $100 (85%)
- $100 to $250 (12%)
- More than $250 (3%)
More than 1100 people chimed in for last week’s question and I am happy to find out that 3% of my readers have actually given people a tip of more than $250. If you’re one of those folks, I just want to say that if you need somebody to come to your house and mow the lawn, I’m available.
The Question of the Week
[poll id=”124″]
Other Useless News
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46. Maryland (1.52)
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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 an article I featured entitled 11 Ways to Make Your Retirement Savings Grow Faster, Nicholas asked this question:
Look, it’s not a home run at work every day but … why live like a poor person so you can quit your job and live like a poor person?
Well, Nicholas, it’s because … Wait … Is that a trick question?
I’m Len Penzo and I approved this message.
Photo Credit: brendan-c
My sister just sold her home in Frankfort, Illinois, which is located 30 miles from Chicago. Property taxes were $16,000 per year. AND they wanted to start taking some of that property tax money to fund the Chicago city school system.
Also, I wondered what the federal government is doing with the money they are penalizing tax papers with My brother in law paid a $500 fine this year on a $30,000 salary for not having health insurance. He says he couldn’t buy Insurance for $500.
Before the Obamacare debacle, young people used to be able to buy extremely affordable catastrophic health insurance in lieu of “full service” plans — which made sense. But Obamacare made catastrophic plans illegal; the only way to get one now is if you ask our government masters for a “hardship exception.” Of course, you have to qualify first.
Isn’t socialism grand? Forward!
If I was young, I would avoid Obamacare’s oppressive premiums and high deductibles too. At the same time I’d make sure I did not overpay my taxes every year (that is, make sure I wrote the IRS a small check for taxes owed) so the IRS couldn’t take the fine out of my tax rebate — which is the only way they can legally extract the fine from individuals who fail to comply with the mandatory Obamacare sign-up.
That’s very sad, Belinda. I wonder why the rest of Illinois — which for the most part generally votes opposite of Chicago — doesn’t secede from Cook County and its nanny-state voters.
By the way, for me, this is another reason against paying off your home loan early. The truth is, because we can all lose our homes if we become unable to afford the property taxes, we never really own our homes free and clear … even if we retire the mortgage.
In truth, everybody rents their homes from the government, including homeowners who don’t have a mortgage.
I like the last line in the Reuters article :
“Analysts at Unigestion describe the gold price rise as a “classic” market response to stress triggered by Britain’s shock decision to quit the European Union and fears of negative rates but it was difficult to predict how long these circumstances supporting a rush into gold might last.”
I’m not sure if these people and others are deliberately ignoring the true trigger of gold + silvers rise. I can pin point it to the day it started to rise. It was in December (the 16th). The tiny rate hike spooked everyone, the rest of the “noise” since then has just added to that.
Spot on, Paul.
” The Hill is reporting that Obamacare is on the verge of melting down because the young healthy people required to offset the medical costs of its older and sicker customers continue to refuse to buy expensive healthcare insurance most will never nee.”
Newflash: This 53 year old female in pretty good health refuses to buy ObamaCare also. I refuse to pay $800 a month with a $10K deductible. It is not a good value. Let’s hope ObamaCare collapses.
I don’t need a sex change operation and I have no desire to have more babies – no wonder the premium is so expensive! I wonder what the premiums would be if I could opt out of those two mandatory coverages?