Black Coffee: Running the Numbers

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 …

Numbers don’t always tell the whole story.

– Phillip Rivers

Credits and Debits

Debit: Did you see this? The largest producer of french fries in North America and a major supplier to fast-food chains, restaurants and grocery stores – Lamb Weston – was already having a bad year with shares of the company down 35% this year. And now the company says it is closing one of its production plants in Washington state and laying off nearly 400 employees in response to slowing customer demand. What? How is this even possible? After all, who doesn’t like french fries? Regardless … despite waning demand, we’re positive that french fries will never become rarer than these …

Debit: On a related note, Zero Hedge is reporting that, “The world could be on the cusp of another food inflation shock as the benchmark for world food commodity prices recorded the fastest monthly increase in 18 months in September.” So it looks like the Fed’s recent 50 basis point rate cut is already taking effect. Meanwhile, back on Main Street …

Debit: In other news, in yet more bad news for the commercial real estate bubble market, Home Depot has put up nearly 4 million square feet of warehouse space for sublease in the past year. Now … who still thinks we’re in for a soft landing?

Debit: Speaking of commercial real estate, a Freddie Mac commercial mortgage-backed securities loan for the rental portion of the once-iconic Detroit property Riverfront Towers has gone 30 days delinquent. For those not keeping score at home, the delinquent 10-year loan was for $85.5 million at an interest rate of 4.4% and was originated in June 2018. Now for the punchline: the towers have an 89% occupancy rate. And if you think that makes sense, perhaps you can also explain this:

Debit: The latest US jobs report was released last week and it shows that the private sector shed 458,000 jobs in September. On the other hand, government employment jumped by 918,000 positions. The net gain in employment is nothing to crow about, as none of those “jobs” provide any real economic growth. And that’s assuming the numbers are even real, of course. Right, ladies?

Debit: Speaking of struggling corporate entities, the deep-discount no-frills bare-bones airline, Spirit, is currently in bankruptcy discussions following the collapse of its planned JetBlue merger. Apparently, Spirit has been dealing with declining revenue and mounting losses to the tune of more than $3.3 billion. And now we all know how Spirit has been “able” to offer ridiculously cheap fares to various cities across America. It turns out that they couldn’t do it. Then again, to be fair, the economy has been struggling for a lot longer than many people want to admit …

Debit: When it comes to debt trouble, the Spirit Airlines has company. In fact, did you know the US National Debt has outpaced economic growth by 2.7 times over the last 16 months? It has. Needless to say, the difference between it and Spirit is the federal government can print its own currency to “pay” the bills.

Debit: If only the US could solve all its debt problems by simply collecting more taxes. To that aim, the IRS says that nearly 150,000 Americans with gambling winnings exceeding $15,000 between 2018 and 2020 failed to file tax returns, leaving more than $1.4 billion in gambling revenue for the government on the table. As a result, they’re planning a tax-enforcement crackdown to recover their cash. Then again, wouldn’t it be easier at this point to simply print it? Then again, I guess all those recently-hired IRS agents have to do something.

Credit: With all the economic and monetary system trouble, it’s no wonder that gold is up more than $600 this year alone. It’s also on pace to have its best year percentage-wise since 1979. Hey … does anybody remember when the US dollar (USD) was as good as gold? I’ll bet somebody out there does …

Credit: By the way, macro analyst Peter Schiff says that because the US has no choice but to conjure even more USDs out of thin air than it’s already doing, there is a distinct possibility that gold’s price could increase by many multiples over the next couple of decades: “If gold can go from $20 an ounce to $2600 an ounce, it can go from $2600 to $26,000, or even (higher). There’s no limit because, again, gold isn’t changing – it’s the value of the USD that’s decreasing.” In other words: As far the USD’s purchasing power is concerned, well … it’s not looking too good.

Credit: Of course, when it comes to precious metals use for monetary reserves, gold is the preferred choice of governments around the world. And while Russia is planning to significantly bolster its precious metal holdings over the coming years, what’s especially interesting is that the nation announced last week that it will also be buying silver for the first time ever. Meanwhile, over at Costco …

Credit: The good news is more and more people are beginning to wake up, as evidenced by a new Bloomberg survey that has found that 77% of Costco outlets that sell bullion bars were sold out in the first week of October. One can only imagine how fast they will sell out in a real financial panic. Got gold?

By the Numbers

Last week the Fed released data that found credit card debt hit a new record high of $1.3 trillion in August 2024. With that in mind, here are the key findings of a new US consumer survey on credit card debt:

$100,000,000,000 Increase in US consumer credit card debt from now until the end of the year.

20% The share of surveyed consumers who say that most of their debt comes from nice-to-have expenses, rather than necessities.

33% The percentage of respondents who say they can’t afford to save money right now.

35% The share of those surveyed who think the economy will go into a recession before they pay off their credit card debt.

35% Percentage of consumers who say they’re very stressed about their credit card debt.

51% Percentage of respondents who are worried about “buy now, pay later” loans showing up in their credit report.

62% The share of those surveyed who said they charge everyday purchases to credit cards they already carry debt on (so every purchase accrues interest).

Source: WalletHub

The Question of the Week

[poll id=”557″]

Last Week’s Poll Result

If you had a choice, which of these decades would you prefer to live in?

• 1980s (36%)
• 1950s (23%)
• 1990s (19%)
• 1960s (17%)
• 2000s (3%)
• 2010s (2%)
• 1970s (0%)

More than 1900 Len Penzo dot Com readers answered last week’s question and it turns out that almost everyone agrees that, when it comes the best decades to be alive in, the 1970s left a lot to be desired. Imagine that.

If you have a question you’d like 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: Old Timers’ Bar

An old man sees a sign that reads: “Old Timers’ Bar. All drinks 10 cents.”

He goes inside and the bartender says “What’ll it be, sir?”

The man orders a martini and the bartender serves one up and says, “That’s 10 cents, please.”

The man buys another, but his curiosity gets the better of him. He’s had two martinis and hasn’t spent a dollar yet and he says, “How can you afford to serve a martini for a dime?”

“I’m a retired tailor from Jersey,” the bartender says, “and I always wanted to own a bar. Last year I hit the lottery jackpot for $125 million and decided to open this place. Every drink costs a dime. Wine, liquor, beer it’s all the same.”

Noticing seven other people at the end of the bar who don’t have any drinks in front of them, the man asks “What’s with them?”

The bartender says, “They’re retired people from Wall Street. They’re waiting for Happy Hour when drinks are half-price.”

(h/t: Susan)

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More Useless News

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46. Nevada (1.53)
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48. Oregon (1.38)
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50. New Hampshire (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

Michelle had a suggestion regarding my most popular article of all time highlighting the 19 things your next-door millionaire won’t tell you:

You forgot #20: He’s a cheap bastard who doesn’t tip well or pay his service tradesmen what they worked for.

Sounds to me like somebody needs a hug.

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.