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 hope everybody is having a great President’s Day weekend! Okay, away we go …
Let us all be happy, and live within our means — even if we have to borrow the money to do it.
— Charles Farrar Browne
If you think nobody cares if you’re alive, try missing a couple of car payments.
— Earl Wilson
Credits and Debits
Debit: Did you see this? If a task force created by Chicago Mayor Ron Emanuel gets its way, some Chicago families could start collecting a $1000 check every month with no strings attached. And why not? “Getting $12,000 worth of free government checks each year to spend on whatever I want will make me want to get off the dole as soon as possible,” said NO ONE EVER.
Credit: Apparently, the Chicago task force isn’t aware that Finland’s socialist government just cancelled a two-year program that provided an annual guaranteed basic income (GBI) of more than $7600 to 2000 jobless people after it failed to boost employment. Uh huh. The good news, according to officials, is it did improve the recipients’ well-being. As if anyone would get depressed from two-years worth of free lunches.
Debit: In other words, it took the authorities in Finland two years and $2.5 million to learn what most people with even a modicum of common sense already knew: Redistributing the wealth of productive citizens to people who aren’t is not a path to Utopia. Even so, you can bet that the folks who still think GBI is the answer will also complain that their cash no longer buys what it used to after it’s implemented. (h/t: NumberNone)
Credit: Perhaps the GBI trial balloon released in Chicago is a big reason why Gallup says Americans’ optimism about their personal finances has climbed to the highest level in 16 years; 69% now say they expect to be financially better off at this time next year. In fact, there was only one time in 114 previous polls since 1977 where Americans were more optimistic about their personal finances. Wow.
Credit: On the other hand, US Treasury Secretary Steve Mnuchin isn’t very optimistic. After all, as macroeconomist Lance Roberts observes, “Given that it’s highly unusual for the Treasury Secretary to call the heads of banks and the ‘Plunge Protection Team’ to try assuage market fears, it raises the question: What does the Treasury know that we don’t?” I think I’ve got the answer, Lance. But we should probably ask this guy … just to be sure:
Debit: One thing is certain: Officials within the Fed and US government are well aware that national, corporate, and consumer debt has reached all-time highs. They also know that at some point, the debt and credit party that has been going on for the past decade is going to come to an abrupt end. Some day. Eventually. At least that’s what my tin foil hat keeps telling me.
Debit: Despite the reports of high consumer optimism, there are signs consumers are already tapped out. One warning sign is especially troubling: 7 million Americans are now delinquent on their car loans by 90 days or more. What makes this particularly serious is that people tend to prioritize car loans — even more than a mortgage — because they need them to get to work and earn a paycheck. Uh oh.
Debit: Meanwhile, the US National Debt topped $22 trillion on Tuesday. I know. The good news is, unlike the people who have gone three months or more without making a car payment, the US can always print what it needs. The bad news is, unlike the people who have gone three months or more without making a car payment, the US can always print what it needs.
Credit: The media says the Fed’s $4+ trillion QE program saved us from the Great Financial Crisis. But as Chris Martensen notes, instead of addressing the GFC’s root cause: “We’ve literally papered over our problems with printed money — (and) all the central bankers have to show for it is the widest wealth gap in history coupled with stagnant wages.” In other words, in reality, the economy is … well:
Credit: Of course, as it becomes increasingly obvious that the so-called “cure” actually did more harm than good to the global economy, the Fed is beginning to feel the pressure. In fact, it is now openly suggesting that the US dollar’s role as the world’s dominant reserve currency won’t last forever. No, really. A little more than a decade ago, such an admission by the Fed was utterly unthinkable.
Credit: Then again, this week MN Gordon got right to the point when he declared: “It’s time for central bankers to stop bullshitting and admit they failed.” It’s a great sentiment — but I’m not going to hold my breath.
By the Numbers
Until it was cancelled this week, the largest public infrastructure project in the country was the California boondoggle dubbed the “Bullet Train to Nowhere” by critics. Here are a few numbers:
53% Percentage of California voters who, in 2008, approved a $10 billion bond for an 800-mile high speed rail line between Los Angeles and San Francisco. (No, I wasn’t one of them.)
$45,000,000,000 Estimated cost in 2008 to build the high-speed rail line connecting San Diego, San Francisco and Los Angeles.
$77,000,000,000 The latest revised estimate to complete the high speed rail line — from Anaheim to San Francisco only.
119 Miles of high-speed rail currently under construction in California’s Central Valley.
8 Number of years originally slated to build the entire high-speed rail project.
22 The number of years the project was expected to take, based upon the most recent estimated completion date of 2029.
$55 Projected one-way ticket price in 2008 for a two and a half-hour high-speed rail trip from San Francisco to Los Angeles.
$75 The one-way ticket price for a 90-minute plane flight from San Francisco to Los Angeles today.
Source: The Mercury News
The Question of the Week
Last Week’s Poll Result
Has the winter where you live been colder or warmer than usual?
- Colder (46%)
- Warmer (30%)
- About the same. (23%)
More than 1400 Len Penzo dot Com readers answered this week’s survey question and it turns out that, for almost half of them, this winter has been colder than usual. On the other hand, 3 in 10 say it’s been untypically warm. So there.
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.
Useless News: Honest Abe
A father noticed that his teenage son was spending way too much time playing computer games. So one day, in an effort to motivate the boy into focusing more attention on his schoolwork, the father said to his son, ”You know, son, when Abe Lincoln was your age, he was studying books by the light of the fireplace.”
The son replied, ”And when Lincoln was your age, Dad, he was the President of the United States.”
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. New Brunswick (1.94 pages/visit)
2. Quebec (1.62)
3. Nova Scotia (1.60)
4. Alberta (1.56)
5. Saskatchewan (1.52)
9. Newfoundland and Labrador (1.36)
10. Northwest Territories (1.35)
11. Nunavut (1.33)
12. Prince Edward Island (1.25)
13. Yukon Territory (1.00)
Whether you happen to enjoy what you’re reading (like those crazy canucks in New Brunswick, eh …) — or not (ahem, you hosers living on the frozen Yukon tundra) — please don’t forget to:
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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 me at: Len@LenPenzo.com
After reading my controversial rebuttal to an equally-controversial article about being poor on another website, rather than explaining why she disagreed with my commentary, Kathy decided to write this:
Are you an idiot or just talking about something you know nothing about?
Kathy, I’d give you a clever answer — but I refuse to have a battle of wits with an unarmed individual.
If you enjoyed this, please forward it to your friends and family. I’m Len Penzo and I approved this message.
Photo Credit: (coffee) brendan-c