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 today …
Thomas More’s Utopia was not a recommendation. It was a warning.
— A.E. Samaan
Credits and Debits
Debit: For months now, asset classes have been moving in a very narrow sideways pattern; somewhat ironically, such sustained paralysis is extremely rare and signals a market that is full of confusion.
Credit: In fact, as Jeffrey P. Snyder of Alhambra Investment Partners notes, as companies’ earnings continually fail to meet expectations on a quarterly basis, “The market appears to be waiting for earnings to ‘correct’ rather than prices.”
Debit: And as economic growth expectations continue to plumb new lows, those expected earnings aren’t anywhere on the horizon — despite government data showing that initial jobless claims have fallen to their lowest level in 53 years. Sure they have. Something is definitely rotten in Denmark.
Credit: Meanwhile, this week governor Mark Dayton (D-Minnesota) said Obamacare is “no longer affordable to increasing numbers of people.” No, really. Psst. Hey, Governor … it was never affordable.
Credit: Actually, as the Utopian economics behind Obamacare smash into the block wall of stark reality, insurance companies are discovering the “Affordable” Healthcare Act isn’t even affordable for them — so they’re bailing out. As a result, more than one million people are losing their plans next year. Forward!
Debit: The truth is, Obamacare is not a transfer of wealth so much as it is a transfer of insurance, where the government steals insurance benefits from the working class and pass them along to the dependent class. The end result: increased costs and fewer benefits for the self-reliant people who foot the bill for everyone else. What’s not to like about that?
Debit: Of course, with almost 70% of Americans having less than $1000 in their savings account, I suspect most people with Obamacare couldn’t afford to pay the absurd healthcare deductibles anyway. The big takeaway here being that health insurance isn’t the same thing as healthcare.
Debit: It’s not just Obamacare that was built on the back of Utopian economic principles; government pensions are too. Most are so badly underfunded now that it will be almost impossible for them to recover without massive benefit cuts, humongous tax hikes and/or a federal bailout. The good news is at least Social Security is still financially rock solid. Oh, wait …
Debit: The US isn’t the only country in debt up to its eyeballs — the world is so deep in debt it has little appetite for more. For its part, the IMF — also known as the central bank to the world’s central banks — recently warned that because global debt is now $152 trillion and 225% of global GDP, an unprecedented financial crisis may be just around the corner. Ya think?
Debit: As for the IMF’s solution, the answer is really quite simple: issue even more debt! Okay, Scotty … you can beam me up now.
Debit: For those of you keeping score at home, financial analyst Bill Holter says that $152 trillion debt edifice is currently supported by just $2 trillion of central bank gold. Yes, yes; since the central banks can print fiat currency to make up the difference, this isn’t a problem — well … until confidence evaporates. (And in case you haven’t noticed, it’s in the process of evaporating now.)
Credit: One thing is certain: When the central banks’ fragile and failing house of fiat does collapse, they’ll have to sharply revalue their gold to a much higher level — or grab picks and shovels and start digging for more. I think you know which way the bankers will go.
By the Numbers
Samsung announced this week that it would permanently stop production and sales of its Galaxy Note 7 smartphones after a spate of battery-related explosions and fires:
1,000,000 Number of Note 7 smartphones sold.
2,500,000 Number of Note 7 smartphones that have been officially recalled.
92 Reports of batteries overheating prior to the recall.
55 Reports of property damage prior to the recall.
26 Reports of burns prior to the recall.
994 Southwest airlines flight that was evacuated on October 5th after a Note 7 phone caught fire.
7.5 Percentage drop in Samsung’s share price after the recall announcement.
Source: Forbes
Last Week’s Poll Result
Which of Mother Nature’s furies do you fear the most?
- Tornados (42%)
- Earthquakes (18%)
- Floods (16%)
- Hurricanes (13%)
- Wildfires (11%)
More than 1200 Len Penzo dot Com readers chimed in last week and it turns out that slightly more than 2 in 5 of you fear tornados more than any other type of natural calamity. Without a doubt, it’s my biggest fear too.
The Question of the Week
[poll id=”133″]
Other Useless News
Here are the top — and bottom — five Canadian provinces and territories in terms of the average number of pages viewed per visit here at Len Penzo dot Com over the past 30 days:
1. Quebec (1.94 pages/visit)
2. Prince Edward Island (1.81)
3. Alberta (1.77)
4. Ontario (1.75)
5. British Columbia (1.67)
9. Manitoba (1.42)
10. Yukon Territory (1.40)
11. Saskatchewan (1.35)
12. Northwest Territories (1.33)
13. Nunavut (1.25)
Whether you happen to enjoy what you’re reading (like those crazy French Canadiens in Quebec, eh) — or not (you hosers living on the frozen Nunavut tundra) — please don’t forget to:
1. Click on that Like button in the sidebar to your right and become a fan of Len Penzo dot Com on Facebook!
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(The Best of) 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
Here’s a question I got from Brandy:
What’s it take to become a sulbmie [sic] expounder of prose like yourself?
Practice, Brandy. Lots and lots of practice.
I’m Len Penzo and I approved this message.
Photo Credit: brendan-c
Thanks for another great weekend round-up Len. I always like to hear your take on the market. The international debt situation is crazy. It’s hard to conceive the world is more leveraged than it was during the financial crisis!
Thanks, Jay. I know, huh? Instead of getting off the economic crack (more debt) and letting the financially dead banks go under in 2008, the Fed decided to up the dosage and turn them into zombie institutions. Eventually, the Fed will administer an overdose that kills the entire economy.
Before Obamacare my insurance premium were $250 per month. Since Obamacare they have climbed to $650 per month. And the deductibles tripled. What a scam.
I’m sorry to hear that, Wilson. That’s what happens when the government tries to fix something that wasn’t really broke in the first place. All it needed was a few tweaks — like portability across state lines to increase competition — not a complete overhaul.
Yes, it wasn’t perfect, but the vast majority of Americans were happy with the status quo before Obamacare became the law of the land.
Len, I agree with everything you’re saying with one exception. I don’t think confidence in US dollars will ever break. Have a great weekend!
Trust me, Sara … it will break. History — and mathematics — will ensure that it breaks in the relatively near future.
It’s unfortunate to have a medical problem, but it’s not other people’s responsibility to pay for it, no more than it’s other’s responsibility to house, clothe and feed them.
Sickness and death are an unfortunate part of life. If you voluntarily enter into an insurance arrangement to manage risk of future health problems, that’s one thing. Government forcing you to pay for other people’s health problems against your will is quite another.
I agree, WA. Nice take.
Hahhaa…this was hilarious. I found myself nodding in agreement to so many of these things.
Unfortunately you can’t spend your way out of stupid. Politicians need to get a grasp on this and figure out ways to lower debts instead of increasing the debt.
At some point the bill is going to be due and folks are not going to be happy with the end results.
Unfortunately, there are very few politicians who are truly interested in grasping the problem because if they did it would reduce their influence. The only solution is a return to sound money … and the only way that has a chance of happening — albeit a slim one — is the coming collapse (or preemptive overhaul) of the current international monetary system.