{"id":43445,"date":"2017-06-24T05:15:59","date_gmt":"2017-06-24T12:15:59","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=43445"},"modified":"2022-02-05T12:44:54","modified_gmt":"2022-02-05T20:44:54","slug":"black-coffee-24-june-2017","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id43445-black-coffee-24-june-2017.html","title":{"rendered":"Black Coffee: Goodbye Pension, Hello Tension"},"content":{"rendered":"

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

Another glorious week comes to an end. Off we go …<\/p>\n

“Chase your passion, not your pension.”<\/em><\/p><\/blockquote>\n

— Denis Waitley<\/strong><\/p>\n

“Always be nice to bankers. Always be nice to pension fund managers. Always be nice to the media. In that order.”<\/em><\/p><\/blockquote>\n

— John Gotti<\/strong><\/p>\n

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

Credit:<\/strong><\/span> Evidence of the monetary madness on asset prices is everywhere — including the stock market. In fact, it’s so overheated that the Dow experienced new highs<\/a> on seven of the first 13 days in June, including another new all-time high on Monday.<\/p>\n

Credit:<\/strong><\/span> If you ask David Stockman, we’re currently witnessing “the most hideously overvalued stock market<\/a> in history.” Perhaps people are listening, because the the Dow actually finished Friday on a four-day losing streak.<\/p>\n

Debit:<\/strong><\/span> Stockman also notes that, during the past 5000 trading days stretching across two decades, the VIX — Wall Street’s so-called “fear gauge” — has closed below 10 on just 11 occasions. However, seven of those times<\/a> have been within the last month. Yes, any value below 10 means traders are extremely<\/em> complacent — but the VIX is a contrarian indicator.<\/p>\n

Debit:<\/strong><\/span> It’s not just stocks that are selling for a pretty penny these days. Last week a Hong Kong parking space<\/a> sold for $664,300. Hopefully it wasn’t one of those irritating “compact” slots that is incapable of properly accommodating 99.85% of the cars on the market.<\/p>\n

Credit:<\/strong><\/span> Meanwhile, the recently-announced Amazon\/Whole Foods merger has some analysts wondering if it’s this cycle’s AOL\/Time Warner debacle<\/a> — and a sign that the current stock market party is all but over. Take a look:<\/p>\n

\"\"<\/a><\/p>\n

Debit:<\/strong><\/span> On the bond front, I see that Argentina is now selling 100-year bonds<\/a>. Yes, the country has defaulted seven times during the past 200 years, but that didn’t stop government officials from offering them to investors<\/del><\/span> suckers anyway.<\/p>\n

Debit:<\/strong><\/span> You’d think intelligent investors wouldn’t touch an Argentinian 100-year bond with a 10-foot pole, considering the country routinely defaults on its obligations every 28 years or so. Think again — those long bonds disappeared<\/a> faster than Tums in a Taco Bell.<\/p>\n

Debit:<\/strong><\/span> In other news, I see that the Illinois state Comptroller is warning that the Land of Lincoln’s fiscal situation is now in a “massive crisis mode<\/a>.” Hmm. Perhaps they could try issuing 100-year bonds. Or placing antacid vending-machines in their local Taco Bells.<\/p>\n

Credit:<\/strong><\/span> Then again, if Illinois politicians are really<\/em> serious, they can start fixing things by eliminating their six-figure government pensions<\/a>, which are out of control. In the past year alone, the number of government retirees in Illinois drawing gold-plated pensions paying out more than $100,000 annually has ballooned by more than 18%. Of course, this issue isn’t limited to Illinois — it affects almost every state in the union.<\/p>\n

Debit:<\/strong><\/span> According to the Better Government Association (BGA), Illinois state workers drawing six-figure pensions include “retired cops, lawmakers, judges, teachers — and an oral surgeon from the University of Illinois believed to be the state’s only half-million-dollar-a-year government pensioner<\/a>. Leslie Heffez, 59, is believed to have the highest public-employee pension in the state: $547,862.” Now I need a Tums.<\/p>\n

Debit:<\/strong><\/span> By the way, the BGA also notes that, thanks to cost-of-living increases, “If Heffez lives another 22 years — the average life expectancy for a man his age — his pension would top $1 million a year, and he would have collected a total of more than $19 million from the retirement system.” Yes, it’s utterly absurd. It also helps explain why pension costs account for nearly 25%<\/a> (!) of the entire Illinois budget.<\/p>\n

Credit:<\/strong><\/span> Unfortunately, math is a bitch — and the accounting tricks can only go on for so long before fiscal reality reasserts itself — which is why Mr. Heffez and many other government workers drawing ridiculous annual six-figure retirement paychecks off the backs of hard-working taxpayers will one day receive a very<\/em> rude awakening<\/a>. Not to mention a little heartburn of their own.<\/p>\n

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

[poll id=\"169\"]<\/code><\/p>\n

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

What is your current net worth (including home equity)?<\/p>\n

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