Black Coffee: Income & Outgo

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.

Well … another busy week is behind us. So with that in mind, let’s get this party started …

When your outgo exceeds your income, your upkeep becomes your downfall.

– Anonymous

Credits and Debits

Credit: Did you see this? After seeing his net worth rise by almost 5% in the past week alone, Elon Musk has increased the gap between himself and the world’s second richest man, Oracle founder Larry Ellison, by more than $30 billion; to put that in a better perspective, that’s 30,000 million dollars. For those not counting at home, Musk is currently worth nearly $318 billion. Needless to say, Musk also increased the wealth gap between himself and me too. Heh. As for the world’s third richest man, Jeff Bezos’ net worth is currently a “measly” $220 billion.

Debit: Who knows? Maybe Mr. Musk’s recent financial gains are why yet another out-of-touch ivory tower academic insisted this week that people are much better off financially than they seem to think.

Debit: Unfortunately, despite government claims to the contrary, core consumer prices in October rose on a month-over-month basis for the 53rd consecutive month, with the year-over-year pace re-accelerating to 3.3%. Even more alarming, the three-month annualized core CPI rose in October to 3.6% versus the prior 3.1%. Even so, costs for critical living expenses is up even more. For example, health insurance is up 6.8%, car insurance is up 14%, airfare is up 4.1%, and housing costs are up 5.2%. Now for the punchline: Despite these numbers, Social Security recipients are getting a 2.5% cost of living adjustment in 2025.

Credit: Heck, consumer prices have been so high for so long that even the wealthy are now feeling the pinch. Luxury brands routinely charge a markup of eight to 12 times on their production cost. For example, a basic cotton T-shirt with a Christian Dior logo will now set you back $1000. No; I didn’t leave out a decimal point. That being said, most luxury brands are currently experiencing an average sales decline of 4% year-over-year.

Debit: For those who avoid grossly over-priced crap like designer handbags, jeans, sunglasses, furniture and home goods, you should know that the average luxury product today is 60% more expensive than it was just five years ago. That’s quite an increase on top of an already steep luxury brand mark-up. So it shouldn’t be at least a little surprising that the luxury-product industry is going through one of its rockiest patches in years, led by Gucci, which has seen its sales decline 25% over the past 12 months. Cry us a river. That being said, 25% is a painful decline for any business – regardless of its profit margin.

Debit: In the meantime, all of the fiscal stimulus, super-low interest rates, and massive asset price appreciation has failed to do much for America’s bottom 50% of households. That’s because they’ve watched their share of the nation’s financial wealth fall from 3% in 2010 to 2.6% while tens of trillions in new wealth were added to the swollen portfolios of the top 10%, much of it via the latest housing market bubble. Too bad that’s not a recipe for a happy and cohesive society. In fact, it’s the complete opposite.

Credit: Of course, we all know that Wall Street has very little in common with Main Street. For proof, look no further than the stock market, which capped its best week of the year after the election was decided, driven by optimism that the incoming party’s policies are going to result in better days for the economy. The question is: Will it really?

Credit: The stocks aren’t the only assets whose prices are soaring; bitcoin is too, after touching more than $85,000. In other words: Bitcoin continues to reveal its true self by behaving as a highly-speculative asset, rather than the shills’ absurd claim of it being a safe haven similar to – if not better than – physical gold. Now for a reality check: These market bubbles will eventually come with consequences, as the Fed has birthed a moral hazard mania beyond its control in which all risk has vanished. You know … kind of like this:

Credit: According to former Wall Street money manager and financial analyst, Ed Dowd, the truth of the matter is that “the real economy has been rolling over, and we are just waiting for the financial markets to figure this out.” For those of you who prefer a visual representation of what Ed is talking about, consider this:

Debit: Mr. Dowd may be on to something because, although Christmas is a little more than 30 days away, 28% of shoppers who used credit cards haven’t paid off the presents they bought for their loved ones last year. No, really. At the same time, average credit card balances are now nearly 7% higher than last year and more than 20% higher since the end of 2022. At the same time, credit card interest rates have continued to rise, from 14% in February 2022 to 22% in August 2024. Oh … and making matters even worse, there’s also this:

Debit: Then again, consumers aren’t the only ones struggling with insane debt servicing costs – the US government is in the same boat. Meanwhile, the National Debt crossed $36 trillion on Thursday. Hey … nothing to see here, folks:

Credit: Meanwhile, additional evidence has surfaced indicating that Europe is preparing for the possible return of a gold-based monetary system, with the biggest movement being made by European nations outside the current Eurozone, including Poland, Hungary, and the Czech Republic. The goal is to ensure that all of the European nations hold hold reserves in proportion their respective gross domestic products (GDPs). So these countries are clearly preparing for a major monetary reset of some sort by ensuring they have enough yellow metal to preserve their national wealth. How about you?

By the Numbers

A recent study determined did extensive research into the net salary employees earn on average in 62 countries, including the United States. This data was used to calculate home affordability, based on the number of monthly wages were required to buy an average 1100 sq-ft home in each country. Here are the results (in total monthly wages) for ten of those nations:

71 South Africa

76 United States

132 Spain

177 China

179 Canada

184 Italy

185 Germany

202 Great Britain

211 Mexico

578 India

Source: BestBrokers

Last Week’s Poll Result

What is your favorite salad dressing?

• Italian 26%
• Blue Cheese 24%
• Ranch 17%
• Thousand Island 14%
• Honey Mustard 13%
• French 4%
• Russian 2%

More than 1900 Len Penzo dot Com readers answered last week’s poll question and it turns out that half of you are most likely to order a salad topped with either Italian of Blue Cheese dressing. As for yours truly, most of the time I’ll eat my salad with Ranch Dressing – that is, as long as it’s made fresh, not bottled.

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.

The Question of the Week

Useless News: Brains for Sale

A doctor noticed a sidewalk stand that said ‘brains for sale.’ So he went over to investigate and noticed that physician brains were selling for $8 a pound, paramedic brains were going for $12 a pound, and nurse brains $15 a pound – but lawyer brains were priced at $90 a pound.

Slightly miffed at the prices, the doctor asked the man behind the counter, “Hey! How come physician brains are only worth $8 while a lawyer’s brain is worth $90?”

The man replied, “Do you know how many lawyers it takes to make a pound of brains?”

(h/t: Salamander)

Buy Me a Coffee? Thank You So Much!

For the best reading experience, I present all of my fresh Black Coffee posts without ads. If you enjoyed this week’s column, buy me a coffee! (Dunkin’ Donuts; not Starbucks.) Thank you so much!

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More 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. Alberta (2.11 pages/visit)
2. Quebec (1.98)
3. Ontario (1.94)
4. Manitoba (1.85)
5. Yukon (1.75)

9. Saskatchewan (1.67)
10. Newfoundland & Labrador (1.50)
11. Nova Scotia (1.43)
12. Nunavut (1.33)
13. British Columbia (1.20)

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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

This week, Gael decided to share her thoughts on my extremely well-researched article explaining why only suckers buy waterbeds:

This post is utter rubbish!

Rubbish? Let me guess … you must be from Texas.

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.

Photo Credit: stock photo