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.
Okay, away we go …
“He who goes a borrowing goes a sorrowing.”
— Benjamin Franklin
“A man in debt is a man in chains.”
— James Lendall Basford
Credits and Debits
Debit: Despite the Fed and mainstream financial media continuing to push the “booming economy” narrative, Adem Tumerkan wants to know, “If things are going so well, why are subprime loan delinquencies at a 22-year high?” Good question. Maybe because the economy really isn’t booming?
Debit: Frankly, Mr. Tumerkan may be on to something. Especially after a recent survey found that 12 million millennials between the ages of 24 and 36 still live with their parents.
Debit: I suppose a large chunk of those millennials who still haven’t left the nest must live in San Francisco because this week 6580 people applied for 95 subsidized low-cost apartments there. No, really.
Debit: Speaking of affordable housing — or a lack thereof — this week the Chicago Fed formally proposed that Illinois homeowners with houses worth $250,000 pay an additional $2500 per year in property taxes, while homes worth $500,000 and $1 million would see property taxes increase by $5000 and $10,000, respectively. I know — but it’s a desperate attempt to save Illinois’ crumbling public pensions.
Credit: Unfortunately for pension recipients, this absurd plan can’t save them because property values would simply fall until the tax burden returns to the level it was before that insane rate increase — leaving the government with the same revenue as before the increase. However, what the plan will do is put a lot of Illinois homeowners in a bad mood. How bad? Well … most likely this bad:
Debit: In other news, this week oil hit $80 per barrel for the first time since November 2014. Unfortunately, if oil prices keep rising, then they’ll wipe out the benefits that the US middle class is currently enjoying from the recent tax cuts.
Credit: During the past 50 days, China’s petroyuan has been a wild success — so much so that it has already taken 12% of the worlds futures contracts, that’s a 50% increase since March. If this pace keeps up, approximately one-third of all oil contracts could be settled via the petroyuan by the end of the year.
Credit: Financial analyst Jeff Brown asks us to, “Let that timeline and the magnitude of the petroyuan’s rapid acceptance sink in for a moment. Historically and practically speaking, it’s beyond breathtaking.” That it is, Jeff. Not to mention very bad news for the petrodollar and Americans’ artificially-inflated standard of living.
Debit: Meanwhile, China is also putting more pressure on the greenback by dumping them on other nations. How? By lending dollars to other nations and then getting paid back in something else of tangible value; usually oil. Hmm. It’s almost as if China knows the international monetary system has one foot in the grave and doesn’t want to be holding many US dollars when it finally implodes. Almost.
Credit: China may be on to something. After examining the latest US credit card statement — otherwise known as US Treasury market data — Chris Hamilton is warning that, “Every lever is being pulled (by the Fed) and future income continues being spent to maintain the appearance of growth and prosperity here and now. Sadly, there will soon be a terrible price to pay for this hubris.” Yes, Chris … it’s called reality.
Debit: The US has charged $20 trillion on the national credit card since 1981 — that’s $1.5 billion per day, $62 million per hour, $1 million per minute, and $17,000 per second. As Simon Black reminds us, “It’s foolish to think this has a consequence-free outcome. No nation has ever become prosperous by borrowing record amounts of debt to finance reckless spending.” Not yet, Simon. But they say there’s always hope …
Credit: To further drive home his point, Black offers another stark example of why America is in a financial death spiral that is rapidly coming to its terrible conclusion: It took the US more than 200 years to rack up its first trillion dollars of debt — and only 214 days to amass its most recent trillion dollars’ worth of IOUs. That’s a rate of $52,000 per second. Folks … it’s time to brace for impact.
By the Numbers
The nature of our debt-based monetary system ensures that global debt will continue rising at an exponential pace until the entire system collapses under its own weight:
$21,159,000,000,000 US National debt as of Friday, May 18, 2018.
$210,000,000,000,000 According to Forbes, US debt after including unfunded liabilities.
$237,000,000,000,000 Total global debt, excluding bank derivatives.
15 Number of zeros in a quadrillion.
$1,000,000,000,000,000 Total global debt, after including more than $750 trillion in bank derivatives.
Source: GoldCore
The Question of the Week
[poll id="215"]
Last Week’s Poll Result
Where do you get your most important information?
- News Aggregation Websites (33%)
- Blogs (26%)
- Print or Online Newspapers (22%)
- Spouse/Significant Other (9%)
- Social Media (5%)
- Somewhere else (4%)
- Books/DVDs (2%)
- Colleagues/Coworkers (0%)
More than 1200 Len Penzo dot Com readers answered this week’s survey question and it turns out that slightly more than 1 in 4 of them get their most important info from blogs. Who knew? Another one-third of respondents depend on news aggregation sites, while 1 in 20 actually depend on sites like Facebook, Twitter and Instagram for their most critical info.
This particular poll question was suggested by RD Blakeslee. If you have a question you’d like to see featured here, please send it to me at Len@LenPenzo.com and be sure to put “Question of the Week” in the subject line.
News
Yours truly was asked by the BiggerPockets blog to share an unusual savings method for their readers. So I did! You can read about it in their post: “14 Unusual But Possible Brilliant Savings Tips That Could Possibly Save You Thousands.”
Useless News: Banker Suit
A young banker decided to get his first tailor-made suit. As he tried it on, he reached down to put his hands in the pockets but to his surprise found none. So he said to the tailor, “What’s up with this? No pockets?”
The tailor replied, “You’re a banker, right?”
The young man answered, “Yes, I am.”
“Well,” continued the tailor, “whoever heard of a banker putting his hand in his own pocket?”
(h/t: Dr. Jerome)
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. Prince Edward Island (1.83 pages/visit)
2. Northwest Territories (1.50)
3. New Brunswick (1.37)
4. Newfoundland and Labrador (1.33)
5. Manitoba (1.30)
9. British Columbia (1.20)
10. Ontario (1.13)
11. Saskatchewan (1.11)
12. Nova Scotia (1.09)
13. Nunavut (1.00)
Whether you happen to enjoy what you’re reading (like those really crazy canucks on the Prince Edward Island, eh) — or not (ahem, 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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And last, but not least …
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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 me at: Len@LenPenzo.com
This week, Kim commented on my tipping policy of 20% for excellent service, 15% for average service, and 10% or less for poor service:
“I really wish I was a server and you sat down at one of my tables because I would give you excellent service, but I would spit in your food right after I rubbed it on the side of a garbage can. Of course, serving it to you with a smile.”
Well, Kim, you certainly have a twisted definition of “excellent service.”
I’m Len Penzo and I approved this message.
Photo Credit: (coffee) brendan-c
Subprime loan failures also peaked before the last meltdown in 2008 and the level is even worse today. That tells me the next crisis is going to be even worse than 2008.
$4+ gas prices popped the last bubble in 2008 too.
I could be wrong, but even if wages have NOT increased, I’ll bet increases in efficiency since then have more or less offset the pain that comes with any increase in gas prices since 2008, so the threshold for popping any bubbles should be higher this time around.
Baron, Wolf Richter essentially agrees with you. He believes the higher gas prices have a ways to go before they will begin negatively affecting the US economy:
https://wolfstreet.com/2018/05/15/why-rising-gasoline-prices-wont-cut-into-consumer-spending/
Gas prices in 1980 averaged $1.20. If you adjust that for inflation, that’s $3.62. So we’re paying the same amount today as 40 years ago. Toss in higher miles per gallon and we’re actually paying less for every mile driven.
I agree, Steve. That being said — and I should have clarified this in the Debit — Tumerkan is referring to subprime auto loans. It was imploding subprime housing loans that triggered the 2008 crisis, although those are now climbing too. I’m just not sure if they are at a higher level than 2007/08. I don’t think they are.
Hi Len! I don’t live in Illinois but I if I had to pay an extra $2,500 on my existing property tax bill I would not be happy either. Most Americans don’t have $400 in their savings to cover a simple emergency. Where will they come up with an extra $2,500?
Sara
I don’t know, Sarah. I’m sure the Fed policy wonk who recommended that ludicrous Illinois plan thinks everyone has $2500 in loose change hiding in between the sofa seat cushions and under their car seats.
The Chicago Fed plan is to trap middle class taxpayers in IL. The high property tax rates will drop the value of the home by repressing demand, and make the owners want to move. But many won’t be able to sell because the loan balance will be higher than what they can sell it for. The only real solution to drastically cut the pension promises that were never realistic in the first place.
“I suppose a large chunk of those millennials who still havent left the nest must live in San Francisco because this week 6580 people applied for 95 subsidized low-cost apartments there.”
Is this the same San Francisco where human excrement on the street is very common?
The very same. So sad to see how far that once-beautiful city has fallen.
The information in this article may be subject to psychic numbing:
https://www.gaia.com/lp/content/psychic-numbing-might-explain-our-desensitization-to-negative-news/
It’s important that we resist that, IMO.
Well, Dave … Thankfully, every Saturday here is a cornucopia of good news!
Didn’t you mention a couple weeks ago that Ford decided to only sell one sedan starting in 2020 in favor of more SUVs and trucks? Looks like they timed it perfectly with the outbreak of rising oil and gas prices. Ha ha ha ha ha!!!!!!
Yes, I did!
Suggestion for “Question of the Week”:
Question: How many ads on Len Penzo’s site lead to a ransomware attack?
Answer: At least the photo of Garcia from Criminal Minds
Solution: The only one I have is not to click on Len’s ads.
Suggestion for Len: Review your advertisers a little better.
Details: As soon as I clicked on Garcia, my screen went white and a small pop-up appeared showing “Microsoft tech support” at 888-552-2417. A repeating [very annoying] message said to call them because “Microsoft” had discovered someone trying to access my personal information. I didn’t call, but a search on the phone number came up with a similar attack. That person called the number, and they wanted access to his computer. He hung up.
I was locked out of my computer, so I had to do a hard re-set which appears to have solved the problem. I have control again, but I’ll be running a full scan to see if anything was left behind.
Sorry to hear that, aka. I will notify the ad agency of the issue immediately. By the way .. I have pulled the ad block until I get confirmation from the ad company that the problem has been fixed.
Unfortunately, otherwise legitimate ads do occasionally get hijacked by “malvertisers” who use those legitimate ads as a vector for targeted ransomware attacks on those who choose to click on the ads. It happens to even the biggest mainstream websites and, sadly, there is no way to prevent this 100% of the time. Not making excuses — just stating a fact. Again, I apologize for your misfortune and I am glad to know you were able to recover your computer without having to pay a ransom.
Wowza. That was a great 3/4 court shot. Pure luck, but a great shot. It’s going to take something much luckier than that to stop the coming economic train wreck that is already baked into the cake.
Maybe the same shot while wearing a blindfold?