{"id":25363,"date":"2014-05-31T09:00:14","date_gmt":"2014-05-31T16:00:14","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=25363"},"modified":"2023-01-06T13:50:05","modified_gmt":"2023-01-06T21:50:05","slug":"black-coffee-kabuki-theater-and-ever-optimistic-markets","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id25363-black-coffee-kabuki-theater-and-ever-optimistic-markets.html","title":{"rendered":"Black Coffee: Kabuki Theater and Ever-Optimistic Markets"},"content":{"rendered":"

\"\"<\/a>It’s time to sit back, relax and enjoy a little joe<\/em> …<\/p>\n

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.<\/p>\n

Let’s get right to it this week …<\/p>\n

Credits and Debits<\/strong><\/p>\n

Debit:<\/strong><\/span> New data shows that the US is on the verge of another recession as the economy contracted<\/a> for the first time in three years last quarter; the Commerce Department reported that the GDP fell 1%.<\/p>\n

Credit:<\/strong><\/span> It’s a good thing that stocks didn’t surge<\/em> to record levels after they made the announcement. After all, traders would never<\/em> be stupid enough to bid stocks to all-time highs on such terrible economic news. Oh wait<\/a> …<\/p>\n

Debit:<\/strong><\/span> If you think that’s<\/em> strange, check this out: In a properly functioning financial system, Treasury bond yields tend to fall as the economy weakens. Nevertheless, the 10-year bond yield<\/a> actually rose<\/em> on the dismal GDP data. So what’s going on here?<\/p>\n

Debit:<\/strong><\/span> The Fed’s reckless monetary policies<\/a> of persistent near-zero interest rates and quantitative easing have distorted the financial system so badly that it’s impossible to identify true value anymore. As a result, price discovery is now impossible.<\/p>\n

Credit:<\/strong><\/span> The markets are completely detached from reality. Eventually, the rapidly growing number of malinvestments<\/a> being encouraged by the Fed’s destructive loose-money policies will eventually reach critical mass and cause the entire system to fail. Until then, this kabuki theater will continue.<\/p>\n

Credit:<\/strong><\/span> The good news is that, after the implosion<\/a>, we’ll then be able to start over with a new financial system that is based upon sound money, rather than our current debt-based monetary system. Hopefully.<\/p>\n

Debit:<\/strong><\/span> Until then, however, the Fed will keep using those near-zero interest rates — even though real inflation is arguably pushing 10%<\/a> — to steal trillions from savers and people on fixed incomes who have no choice but to tap into their principal in order to maintain their living standards.<\/p>\n

Debit:<\/strong><\/span> In other news, the US Department of Transportation has fined Southwest airlines $300,000 for allegedly offering $59 fares from Atlanta to New York, Chicago, and Los Angeles that didn’t exist<\/a>. Oops.<\/p>\n

Debit:<\/strong><\/span> Did you see this? The government’s Consumer Financial Protection Agency has decided to discontinue employee evaluation<\/a> ratings because they say they’re too “discriminatory.” So now all employees will receive the highest rating, regardless of their performance. Unbelievable.<\/p>\n

Debit:<\/strong><\/span> US home sales are down 7% so far in 2014 with one notable exception, according to CNBC<\/a>: “Sales of the most expensive 1 percent of homes in the U.S. are up 21%.”<\/em> That’s because wages aren’t increasing<\/a> fast enough to sustain rising home prices for the lower 99%.<\/p>\n

Credit<\/strong>:<\/span> Then again, it ain’t all bad: An anonymous Bay Area real estate magnate who has profited handsomely from those continuing high-end home sales is now dropping cash-stuffed envelopes<\/a> around San Francisco and tweeting their locations on Twitter. His handle is @HiddenCash. You’re welcome.<\/p>\n

Debit:<\/strong><\/span> I know a Sacramento cabbie who could use some of that cash right now. He allegedly got stiffed<\/a> out of a $1200 taxi fare after driving a passenger 1500 miles to North Dakota. I know. Why he didn’t demand payment before<\/em> setting off on his five-state journey is beyond me too.<\/p>\n

By the Numbers<\/strong><\/p>\n

Speaking of taxi drivers, here are a few facts about the taxis in New York City:<\/p>\n

50,000<\/strong><\/span><\/span> The number of taxi drivers in New York City today.<\/p>\n

236,000,000<\/strong><\/span><\/span> Number of passengers who took a NYC taxi in 2013.<\/p>\n

90.3<\/strong><\/span><\/span> Percentage of all NYC taxi rides that originated in Manhattan last year.<\/p>\n

$13.40<\/strong><\/span><\/span> The average NYC taxi fare in 2013.<\/p>\n

30<\/strong><\/span><\/span> Average number of rides per 12 hour shift.<\/p>\n

180<\/strong><\/span><\/span> Average number of miles driven per 12-hour shift.<\/p>\n

1899<\/strong><\/span><\/span> Year that Jacob German, a NYC taxi driver, became the first person to be arrested for speeding in the Big Apple.<\/p>\n

10.5<\/strong><\/span><\/span> Percentage of NYC taxi license applicants in 1991 who were American. (I assume it is lower than that now.)<\/p>\n

Sources: PBS<\/a>; 2014 NYC Taxicab Fact Book<\/a><\/em><\/p>\n

The Question of the Week<\/strong><\/p>\n

[poll id=\"9\"]<\/code><\/p>\n

Last Week’s Poll Results<\/strong><\/p>\n

How many personal checking and\/or savings accounts do you have with a bank?<\/p>\n