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.
Okay, let’s get right to it this week …
The F-word here, is ‘focus‘.
— Jan Koum
Credits and Debits
Credit: I see officials in the People’s Socialist Paradise of Venezuela are now threatening to expropriate bakeries which fail to abide by new government regulations aimed at stopping bread shortages. After all, everybody knows that when it comes to running a panadaria, nobody can do it better than a paper-pushing Caracas bureaucrat. Frankly, it makes you wonder why they didn’t think of that earlier.
Credit: Of course, the rocket scientists that make up Venezuela’s socialist government have absolutely no idea that those annoying bread lines and flour shortages are entirely the result of their own meddling regulations and price controls that interfere with the free market. Forward!
Debit: Speaking of socialist, um, paradises … San Francisco is facing a $848 million budget shortfall — despite a 3.2% unemployment rate and the typical home selling for more than $1 million. The reason: increases in government retirees’ gold-plated pension payments and other city employee payroll costs. Obviously, this wouldn’t be an issue if “the rich” paid their “fair share.”
Debit: In case you missed it, last week the Fed raised interest rates another 25 basis points. However, by hiking rates in a struggling economy, the Fed is actually playing a dangerous game of “chicken” — essentially pretending all is well. If the Fed is wrong, then the more they try to convince markets otherwise, the more they risk triggering a financial crisis.
Credit: Meanwhile, in an article at TheAntiMedia.org, Carey Wedler highlights one potential sign of a struggling economy: the “retail apocalypse” that’s officially falling upon America. Er … just in case you’ve been living under a rock for the past five years and hadn’t noticed.
Debit: To be sure, the implosion of the retail sector — at least when it comes to folding brick-and-mortar businesses — is accelerating, as evidenced by the 3500 retail outlets that are officially scheduled to close within the next few months. No — that’s not a typo.
Debit: Those shuttered stores are the continuation of a frightening trend that’s only going to get worse too. In fact, the US Census Bureau reports that US department store revenue today is 36% lower than it was in 2001. Yikes.
Credit: Of course, as you might expect, Internet sales are now more than three times that of department stores — which is why there are those who fault the retail sales slump solely on a change in consumers’ buying habits. In other words, what’s really occurring is not a retail apocalypse, but a retail revolution.
Credit: Legendary trader Art Cashin notes that retail revolutions are neither rare nor permanent. Although Sears is flatlining today, 50 years ago it was so popular that 1 out of every 200 (!) US employees worked there. It’s the same story with Blockbuster: as recently as 2004, the video chain had 8000 stores — now they have 50. Those who say WalMart — or Amazon — is invincible should remember that.
Credit: Even so, longtime retail analyst Howard Davidowitz isn’t buying the retail revolution argument. He passionately proclaims that stores are closing because customers no longer have, ahem … if you’ll pardon his French: “the fucking money.” Period. End of story. That’s true for most people living on Main Street. Unfortunately, the Fed only worries about Wall Street.
By the Numbers
The home selling season is heating up. To make yours stand out from a crowded field, many experts recommend staging it:
96% Percentage of homebuyers who report that they were at least partially affected by home staging.
81% Percentage of homebuyers who say staged properties are easier to visualize compared to those that are not staged.
34% Percentage of realtors who say they stage all of their homes.
3 Number of times faster that staged homes sell over a non-staged homes.
5% Maximum increase in price the typical homebuyer is willing to pay for a staged home.
$675 The median cost to stage a home.
The Question of the Week
Last Week’s Poll Results
Excluding credit card debt, how many loans are you currently making payments on?
- 0 (44%)
- 1 (30%)
- 2 (15%)
- 3 (8%)
- 4 or more (3%)
More than 1200 Len Penzo dot Com readers responded to last week’s question and, I’m happy to say, more than 2 in 5 report that they don’t have any open home, auto, student or other loans to tie them down. On the other side of the ledger, 11% have at least three loans on their books. I currently have two: a $640 mortgage payment and a $500 car loan, which will be retired early next year. In both cases, I have enough saved up to pay off both loans immediately, but I don’t because the interest rates are so low that it makes more sense to use my money for other purposes and keep those loans on the books.
Other Useless News
Here are the top 5 articles viewed by my 14,836 RSS feed, weekly email subscribers, and other followers over the past 30 days (excluding Black Coffee posts):
- 16 Reasons Why Whirlpool Tubs are for Suckers
- 8 Ways to Stay Motivated When Nothing Is Going Right
- Saving Money Is Easy for Those Who Know This Simple Trick
- True Story: My Spouse Skipped Town and Left Me Penniless!
- 7 Signs That Tell Smart Stock Market Investors It’s Time to Sell
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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
For some reason, Louie felt an overwhelming need to deposit this question in the Len Penzo dot Com mailbox:
Hey, Len! How many calories are there in a booger?
You don’t really expect me to bite on that one, do you?
I’m Len Penzo and I approved this message.
Photo Credit: brendan-