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 had an enjoyable week. Without further ado, let’s get right to this week’s commentary …
The right thing to do never requires any subterfuge, it is always simple and direct.
– Calvin Coolidge
To swallow and follow is a weakness still dominating the human mind.
– Charlotte Perkins Gilman
Credits and Debits
Credit: Did you see this? Last month a Malaysian woman woke up to find one of her bank accounts had mysteriously grown by $86.3 million. However, when she tried to withdraw the cash, the system kept going down – so she took to Facebook to complain about the bank’s poor customer service. This quickly grabbed the attention of her bank, which eventually restored access to her account – but without the $86.3 million, which was an error. Oh, well. Easy come, easy go.
Credit: In other news, a recent study that gathered data from 330,000 vehicle owners of model years between 2000 and 2024 discovered that, contrary to convectional wisdom, electric vehicles (EVs) are 79% less reliable than cars with an internal combustion engine (ICE) – despite the fact that EVs have fewer moving parts and simpler drivetrain designs. And if you think that’s bad, plug-in hybrids are even worse when it comes to reliability, with a staggering 146% more problems versus traditional ICE-powered cars. Heh. So much for those who insist the only real problem with EVs was the need to recharge the batteries …
Debit: Meanwhile, both November manufacturing indices (PMI and SMI) came in this week below the 50 level that typically signals an economy in the midst of a contraction. That marks the 13th consecutive month that the PMI has indicated a contraction in manufacturing – and the 15th month in a row for the SMI – which, for reasons that I can’t quite put my finger on, doesn’t jive with last quarter’s robust 5.2% GDP figure reported by the government. For this to make sense, one has to assume that GDP is now predominantly a reflection of deficit spending and unfettered currency printing, rather than real wealth creation.
Debit: On a somewhat related note, the inflation rate as measured by the CPI has been steadily falling over the past year. The trouble is, the number is still positive, which means prices are continuing to rise – only at a slower pace. Furthermore, CPI is not an indicator of accumulated inflation; over the past few years, that amounts to roughly 25% on average. And the obfuscation is even worse when one considers that CPI is diluted by hundreds of categories and services instead of focusing on what really matters: food, fuel, and housing costs. It’s not a coincidence that’s where prices have risen the most. Even without those “little extras” …
Debit: Speaking of inflation, a new survey has found that Americans are feeling the pinch of higher prices, with more than 60% of them reporting that their wages are no longer able to maintain their previous standard of living. Imagine that. As for those American who managed to get a raise or better-paying job, more than half also say their earnings lost ground to inflation. In other words: Inflation is still eroding worker gains despite the much hyped decline in CPI the past few months. Then again, I guess it depends on where you live …
Debit: The inflation problem notwithstanding, if you listen to the typical media hacks – like, say, the ones you’ll find in the Atlantic – then you may be surprised to discover that, and I quote, “Most people … are in a more comfortable position, even if they’re not happy about it.” Wow. Who knew? Then again, these are the same statist ivory-tower hacks who also insist that “inflation is your fault.”
(h/t: @litgal)
Debit: Not surprisingly, the same person who blames inflation on you also wrote a book called Give People Money: How a Universal Basic Income (UBI) Would End Poverty, Revolutionize Work, and Remake the World. (affiliate link) Heh. Sounds like Utopia, doesn’t it? (h/t: Matt_)
Credit: Of course, as Zero Hedge points out, despite claims to the contrary, the cold reality is that there has “never been a point in US history when financial conditions were good, but everyone preferred they be bad.” Likewise, there has never been a nation that has been able to successfully end poverty – let alone make everybody prosperous – by printing currency out of thin air and giving it to the citizenry. In fact, the only people who believe that, also believe that canned corn is grown by this guy …
Credit: Then again, Zero Hedge isn’t the only one pointing out the blatant attempts by the government and its media lackeys to sugarcoat what’s really happening. This week, author James Kunstler observed that “The net effect (of this) is that, increasingly, nothing in the life of our nation is real. Every action taken is a swindle of one kind or another; a cavalcade of switcheroos aimed at zeroing out the consensus about reality. What trickles down from all this cosmic activity is the dwindling possibility of a fruitful life for most Americans.” Indeed. And speaking of reality …
Credit: Here’s another reality check, based on analysis by Matthew Piepenburg: Next year the US “can reasonably assume a tax receipt decline of 10% at the same time entitlement spending is rising by 10%. And if one were to then include an average 4% interest rate for 2024, then all of these recessionary numbers add up to a stark bit of easy math – and hard days ahead. That is, we’re looking down the barrel of a true interest expense on Uncle Sam’s public debt equal to 120% of US tax receipts. Think about that.” Oh, I have, Mr. Piepenberg; I have. And if that comes to fruition, then it’s game over for the USD.
After decades of slowly gnawing away the USD’s purchasing power, it looks like the federal government’s job is almost done.
Credit: We’ll end this week with billionaire investor Warren Buffett, who once proffered a proposal that he claimed would instantly end the federal government’s spending problem: “You just pass a law that says that anytime there’s a deficit of more than 3% of GDP, then all sitting members of Congress are ineligible for reelection.” It’s a great idea. Why? Because it would work like a charm. Unfortunately, it would only eliminate future deficits – not the $34 trillion National Debt, or $100+ trillion in unfunded liabilities. We’ll all be paying for that via inflation and the resultant lower standard of living. As always intended, of course. (h/t: Antonio Fortunato)
By the Numbers
According to a new study, here are the ten states with the most affordable housing in 2023 based on average mortgage payments as a percentage of the each state’s median household income:
24.66% Indiana
24.54% Michigan
24.03% Mississippi
23.68% Oklahoma
23.56% Kentucky
23.46% Illinois
23.41% Ohio
22.69% Kansas
21.84% Iowa
20.45% West Virginia
Source: SelfStorage.com
The Question of the Week
[poll id=”514″]
Last Week’s Poll Result
How much is your Christmas gift budget this year?
- $100 to $500 (35%)
- $501 to $1000 (29%)
- More than $1000 (23%)
- Less than $100 (8%)
- Bah humbug! (5%)
More than 1800 Len Penzo dot Com readers responded to last week’s question and it turns out that 3 in 7 of you have budgeted $500 or less for Christmas gifts this year. And if you throw in the self-proclaimed scrooges, that number climbs to almost half.
If you have a question you’d like me to ask the readers here, send it to me at Len@LenPenzo.com and be sure to put “Question of the Week” in the subject line.
Useless News: Today’s Lesson …
(h/t: billhilly)
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More Useless News
Here are the top — and bottom — five states in terms of the average number of pages viewed per visit here at Len Penzo dot Com over the past 30 days:
1. Vermont (2.67 pages/visit) (!)
2. Kentucky (2.25)
3. West Virginia (2.17)
4. South Dakota (2.07)
5. Montana (2.06)
46. Missouri (1.49)
47. Mississippi (1.47)
48. Iowa (1.46)
49. New Jersey (1.45)
50. Virginia (1.30)
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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
This week I heard from Z, a triggered BMW owner who left yet another comment on my post explaining why smart people aren’t impressed by people who drive luxury cars:
What’s next? An article shaming people who live in Tudor styled homes vs. ranches?
I bet you’re only asking that because your Beemer is a sporty Tudor.
If you enjoyed this edition of Black Coffee and found it to be informative, please forward it to your friends and family. Thank you! 😀
I’m Len Penzo and I approved this message.
Hi Len,
Thanks for another great weekend cuppa!
I’m keeping my Christmas budget at a little bit over $100 this year. I’ve got 2 nieces who are getting a gift from me. Nobody else until the inflation bugaboo goes away.
Have a great weekend everybody!
Sara
My Christmas gift budget is pretty thin this year too, Sara.
I wonder if that lady really would have been able to get away with that $86 million if she had not complained on social media and waited for her account glitch to fix on its own. I have to say, it would be hard for me to not want to run off with that cash if I found it in my account.
Something tells me the bank would have eventually caught up to her anyway.
That beaver is so cute. I just want to give it a big hug!
LOL! I wish that beaver would do a number on a couple of my neighbor’s out-of-control trees that only get trimmed after multiple complaints.
Our Christmas budget is much higher than the surveyed average and this is why. We are buying grocery and clothing gift cards (+ cash) for our nephew who is trying to survive in Victoria BC. He makes a decent wage, but his girlfriend moved out about one month after they signed a 1 year apartment rental agreement. Due to the housing shortage, he cannot find anything cheaper and he is looking and phoning every day. He works full time and does other work on weekends, but….. He knows he has to leave and move elsewhere, but stuck as apartments are not any cheaper even up Island, and where there is affordable housing, there is obviously little work. All other family members are getting nothing as they do not need anything and the landfills have enough, already.
I am so glad not to be starting out these days. I remember when I just turned 24, had a wife at home with a new baby, an affordable mortgage, and my jerk boss laid most of us off on November 24th so he would not have to pay Christmas and Boxing Day stats. It was my first introduction to the black side of capitalism. It also explains why I/we worked so hard to get ahead to be in an eff you position the rest of our working lives. And, why I have never liked Christmas if I had to be honest. It was wonderful when the kids were little, and the dinners and get-togethers can be special, but ib those early years? Brutal.
Consumerism ruined Christmas in my opinion. For me it was tolerable until the media started making a big deal about Black Friday and those loss-leading BF deals created the circuses with the fist fights over big screen TVs and people camping out two weeks ahead of Thanksgiving to be first in line.
Since I became a parent five years ago, I’ve been working to focus on instilling the quiet magic of Christmas that I grew up with. The truly fun stuff like homemade decorations, baking, holiday crafts and a few simple gifts.
My kids will receive far fewer gifts from us as parents compared to their friends. I want them to appreciate what they receive. That way they don’t suffer from the crazy sensory overload that Christmas seems to be all about these days.
Good for you. When my kids were little we had some wealthy neighbours. (We had the smallest house on the street). On Christmas they would video tape their kids tearing into gifts. When we were asked over for a drink we had to watch the vid and being polite Canuckleheads we endured. Once. Anyway, we always had to ‘explain’, why we had a modest Christmas. As to what Fred says, those Christmas decorations sometimes come up before Halloween. Twisted.
Count me in as another one who thinks we all need to focus on celebrating the true reason for Christmas.
Great Calvin Coolidge quote. He was a very underrated president. Tried his best to reduce size of government.
I’m with you. Not surprisingly, most academic historians don’t look upon him too favorably.
Hi Len, thanks for this weekend’s enjoyable cuppa Joe.
Re: Christmas gifts, we’re spending more than normal, mostly due to not being able to do much the last 2 years as we cared for my dad. We’re not buying junk, but things like shoes, new bed linens, sweaters and good books. We’re also blessed to help fund food and heating for some friends in need. So a larger budget, but imo worth the money spent.
Hi Lauren! That sounds like the presents at my house: socks, underwear, and warm clothes. I know kids will disagree, but clothes makes some of the best Christmas gifts!
In regards to your question of the week about net worth. The largest contribution for most is unlisted: our contributions. Some who have saved vary long many eventually create a nest egg that 2x 3x due to the magic of compounding. But the setting aside cash is key, not up to chance like many of the other items.
Agree about cash savings, Frank. However, I think most people who contribute to their 401k or an IRA put their cash in stock funds of some sort.
Being Mini Mouse might be a fun job (at the right outdoor temperature). Brighten someone’s day. Of course if it is not what one wants to do, that would be a bummer.
A nice side hustle for those not looking to be a Disney character, the folks offering samples at Costco and such. That’s a job that pays fairly well. Conditioned space, friendly customers (who doesn’t love free food!).