{"id":44472,"date":"2017-08-12T05:15:06","date_gmt":"2017-08-12T12:15:06","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=44472"},"modified":"2017-08-14T16:36:01","modified_gmt":"2017-08-14T23:36:01","slug":"black-coffee-12-august-2017","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id44472-black-coffee-12-august-2017.html","title":{"rendered":"Black Coffee: Money for Nothing (and Chicks for Free)"},"content":{"rendered":"

\"black<\/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 …<\/p>\n

“The financial markets are rigged by the big banks, the Fed, and the Treasury in the interest of big bank profits and the dollar’s exchange value, which is the basis of US power.”<\/em><\/p><\/blockquote>\n

— Paul Craig Roberts<\/strong><\/p>\n

“Taking money from small businesses, spending it in Washington on favored industries and favored individuals, picking winners and losers in the economy, that’s not pro-growth economics. That’s cronyism. That’s corporate welfare.”<\/em><\/p><\/blockquote>\n

— Paul Ryan<\/strong><\/p>\n

“That ain’t workin’. That’s the way you do it. Get your money for nothing, and your chicks for free.”<\/em><\/p><\/blockquote>\n

— Mark Knopfler<\/strong><\/p>\n

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

Debit:<\/strong><\/span> I see the only US employment gains<\/a> from the past year went to those with a high school diploma — or lower. That wouldn’t be so bad if the bulk of those positions were manufacturing jobs. But they’re not.<\/p>\n

Debit:<\/strong><\/span> Don’t look now, but the madness is back — homeowners are taking out mortgages to buy bitcoin, cars and fine wine. The Financial Times is reporting that British homeowners looking to make a quick profit<\/a> are once again borrowing against their property to invest in stocks, bonds, property and other investment alternatives. Uh huh. I think I’ve seen this movie before.<\/p>\n

Debit:<\/strong><\/span> Speaking of fast money, has the stock market bull market finally reached the euphoria phase? Well, it has if the most recent Yale Survey<\/a> is any indication: 100% (!) of institutional investors, and 99% (!) of individual stock buyers, expect higher stock prices a year from now. Nope … no irrational exuberance there.<\/p>\n

Debit:<\/strong><\/span> Frankly, it’s really no wonder everybody is so bullish on stocks: As Zero Hedge points out<\/a>, since the collapse of Lehman Brothers in 2008, the world’s central banks have bought $10.8 trillion in assets. I know. And you thought rising stock, bond and property prices were value-driven.<\/p>\n

Debit:<\/strong><\/span> To be fair, some stocks have been struggling lately. For example, Starbucks shares have plunged more than 17% since June. Hey … Do you think the fact that most Starbucks stores have four additional stores<\/a> within one mile of their own location has something to do with that? If it doesn’t, it probably should.<\/p>\n

Debit:<\/strong><\/span> Meanwhile, thanks to daily intervention by the European Central Bank, European junk bond yields are now equivalent — and in some cases, lower than — 10-year Treasuries, which further affirms the insanity<\/a> currently going on in the bond market.<\/p>\n

Credit:<\/strong><\/span> As Wolf Richter notes: “When no one can price risk anymore, when there’s no apparent difference<\/a> anymore between Euro junk bonds and US Treasuries, then all kinds of bad economic decisions are made and capital gets misallocated.” Well … yeah. But, Wolf, the bond bulls on Wall Street insist that you’re just howling at the moon.<\/p>\n

Credit:<\/strong><\/span> Of course, almost everybody agrees that Euro junk bond yields being equivalent or lower than 10-year US Treasuries is utterly inconceivable, but there is<\/em> one possible explanation that nobody other than me seems to be considering: This all makes perfect sense if the bond market is actually signaling that US Treasuries are now junk too<\/a>. Think about it. Am I crazy? Or crazy like a fox.<\/p>\n

Credit:<\/strong><\/span> The sad reality is, with corporate profits and commercial bank solvency almost completely dependent now on a tight correlation between asset prices and central bank liquidity, the entire global financial system is more reliant than ever<\/a> on the world’s central banks to hold the markets together — with monetary baling wire, duct tape and string.<\/p>\n

Debit:<\/strong><\/span> Unfortunately, all of that dastardly central bank liquidity from the Fed’s printing press also facilitates an American scourge that runs rampant today: crony capitalism<\/a>. Then again, I’m quite certain there are at least some<\/em> people out there who don’t think crony capitalism is such a bad thing. (Psst. And it’s not a coincidence that they’re also very rich<\/em> people.)<\/p>\n

Debit:<\/strong><\/span> After all, if you don’t own a sustainable business that earns regular profits, you can still become filthy rich as long as you’re connected to pols in Washington and the state capitals. Just ask Tesla and SpaceX CEO, Elon Musk; nearly half of his estimated $11 billion net worth — yes, that’s billion, with a ‘B’ — is due to government subsidies<\/a> taken from the taxpayers’ pockets. Is this a great country, or what?<\/p>\n

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

As E! Online notes, “Nothing could be further from the reality of the public at large than a star-studded getaway.” Very true … as evidenced by some recent celebrity R&R bills:<\/p>\n

$137,720<\/strong><\/span><\/span> Cost of Brad Pitt and Angelina Jolie’s family trip to Thailand, including $126,000 for one week at the Amanpuri Beach Resort.<\/p>\n

$196,470<\/strong><\/span><\/span> Cost of Jennifer Lopez and Alex Rodriguez’s trip to France, including $185,000 for private jets between Los Angeles, Nice and Paris.<\/p>\n

$230,000<\/strong><\/span><\/span> Cost of Beyonce and Jay Z’s babymoon in Bora Bora.<\/p>\n

$443,000<\/strong><\/span><\/span> Cost of Kim Kardashian and Kanye West’s vacation in the Bahamas, including $176,000 for a house rental on a private island.<\/p>\n

$475,000<\/strong><\/span><\/span> Cost of Julianne Hough and Brooks Laich’s honeymoon in the Seychelles and Kenya, including $21,000 for a one-week safari.<\/p>\n

Source: E! Online<\/a><\/em><\/p>\n

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

[poll id=”176″]<\/p>\n

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

On average, how many times do you withdraw money from an ATM each month?<\/p>\n