{"id":43540,"date":"2017-07-01T05:15:57","date_gmt":"2017-07-01T12:15:57","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=43540"},"modified":"2017-07-03T19:45:32","modified_gmt":"2017-07-04T02:45:32","slug":"black-coffee-1-july-2017","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id43540-black-coffee-1-july-2017.html","title":{"rendered":"Black Coffee: Hope Is Not a Plan"},"content":{"rendered":"

\"\"<\/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

Off we go …<\/p>\n

“The track record of economists in predicting events is monstrously bad. It is beyond simplification; it’s like medieval medicine.”<\/em><\/p><\/blockquote>\n

— Nassim Nicholas Taleb<\/strong><\/p>\n

“<\/em>“I would rather get a PhD than stand to reach for toilet paper. Though some might emphasize the similarities between the two activities.”<\/em><\/p><\/blockquote>\n

— Rhoda Janzen <\/strong><\/p>\n

“He that lives upon hope will die fasting.”<\/em><\/p><\/blockquote>\n

— Ben Franklin<\/strong><\/p>\n

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

Debit:<\/strong><\/span> As I mentioned last week, Illinois has $14.6 billion in unpaid bills<\/a> and, without a budget, the state is now left to deal with the consequences: tens of thousands of lost jobs, a roadwork shutdown, and looming bankruptcy — among other things<\/a>.<\/p>\n

Debit:<\/strong><\/span> It doesn’t take a genius to see that Illinois is on the brink<\/a> of falling into a financial death spiral. Needless to say, that’s what happens when 25% of the state budget is used to fund gold-plated government pensions. No, really<\/a>.<\/p>\n

Debit:<\/strong><\/span> Things are so bad in the Land of Lincoln that, for now, lottery payouts over $25,000 are being delayed<\/a> and the nationwide Powerball lottery is pulling out of Illinois. Well … there goes the Illinois’ legislature’s best solution for finding the cash it needs to settle its bills.<\/p>\n

Credit:<\/strong><\/span> Did you see this? A study by the University of Washington has found that Seattle’s recent mandatory minimum wage hikes<\/a> backfired by crushing its job market. The decision by Emerald City politicians to interfere with the free market has resulted in the equivalent of 6500 lost jobs. So far.<\/em> Imagine that.<\/p>\n

Credit:<\/strong><\/span> Has the bitcoin bubble popped? After seeing the cryptocurrency gap downward 8% on Monday — and then end the trading day 15% lower — legendary trader Bill Flekenstein thinks so<\/a>. Since bottoming at $2363 on Tuesday, the price has stabilized somewhat and is now trading around $2450. But that’s no comfort to those who bought bitcoin at its all-time high of $3019 on June 11.<\/p>\n

Credit:<\/strong><\/span> Meanwhile, financial analyst Dave Kranzler believes that multi-billion-dollar investment-fraud king Bernie Madoff is jealous because Tesla and Amazon are “the greatest Ponzi schemes in history<\/a>.” Kranzler’s research shows that both companies rely on dubious accounting practices that effectively hide their true financial condition from casual investors.<\/p>\n

Debit:<\/strong><\/span> In other news … Am I the only one who wonders how many people are actually out there clamoring to buy Prada “paper clips” for $185<\/a>? Each. Yes, they’re imported from Italy, made from silver, have the Prada logo embossed on the side, and are designed to hold currency — but still …<\/p>\n

Credit:<\/strong><\/span> Then again, those Prada paper clips are nothing compared to the ultimate symbol of financial excess: the McMansion. I see the market for those annoying ersatz manors<\/a> is heating up once again — just like it did prior to the bursting of the last housing market bubble.<\/p>\n

Debit:<\/strong><\/span> Of course, some people never even recognized<\/em> the last housing bubble until it finally popped. Retired Fed Chair Ben Bernanke — who earned a PhD in economics from MIT — certainly didn’t. In fact, back in 2005, Mr. Bernanke told people that a housing bubble was “a pretty unlikely possibility<\/a>.” Apparently, statistical analysis isn’t one of Ben’s strong suits.<\/p>\n

Debit:<\/strong><\/span> Speaking of central bankers, managers at the central banks’ central bank — better known as the Bank for International Settlements (BIS) — said a financial crash in emerging markets<\/a> is brewing that could hit the rest of the world with “a vengeance.” There — now you can’t say they didn’t warn you.<\/p>\n

Debit:<\/strong><\/span> On the other hand, America’s top central banker, Janet Yellen, apparently didn’t get the BIS memo. This week the Fed chair told the world<\/a> that she doesn’t “believe” another financial crisis will occur “in our lifetime.” Heh. Silly statements like that usually signal a market top is close at hand. Usually.<\/p>\n

Credit:<\/strong><\/span> Oh, I know what you’re thinking: Obviously, Ms. Yellen knows her stuff because she has a PhD in economics from Yale!<\/em> That’s true; so did Irving Fisher. He’s the Roaring 20s economist who proclaimed that, “Stock prices have reached what looks like a permanently high plateau” — three weeks before Black Tuesday<\/a>. Uh huh. Now you know why PhD stands for “piled higher and deeper.”<\/p>\n

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

On July 4, 1776, the Continental Congress approved the Declaration of Independence, setting the 13 colonies on the road to freedom as a sovereign nation.<\/p>\n

2,500,000<\/strong><\/span><\/span> The estimated number of people living in the newly independent nation in July 1776.<\/p>\n

323,100,000<\/strong><\/span><\/span> The estimated current US population.<\/p>\n

65<\/strong><\/span><\/span> The percentage of Americans who own an American flag.<\/p>\n

$5,400,000<\/strong><\/span><\/span> The value of US flag imports in 2016.<\/p>\n

$27,800,000<\/strong><\/span><\/span> The value of US flag exports in 2016.<\/p>\n

94<\/strong><\/span><\/span> The percentage of all US flag exports that went to Mexico in 2016.<\/p>\n

$1,000,000,000<\/strong><\/span><\/span> Estimated beer sales for this year’s holiday weekend.<\/p>\n

150,000,000<\/strong><\/span><\/span> The number of hot dogs that will be consumed on July 4th weekend this year.<\/p>\n

16,000<\/strong><\/span><\/span> The number of public fireworks displays this year.<\/p>\n

23,959,441<\/strong><\/span><\/span> Americans who claimed English ancestry in the most recent US Census. That ranked third behind those claiming German (45,526,331) and Irish ancestry (32,713,324).<\/p>\n

Source: CtPost<\/a><\/em><\/p>\n

Insider Notes: A Lesson (or Three) on How Bonds Work<\/strong><\/p>\n

Hey! You need to be an Insider to view this section! If you’d like to join, please click “Insider Membership” at the top of my blog page.<\/em><\/p>\n

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

Are you eligible to receive a pension from a current or past employer?<\/p>\n