{"id":47570,"date":"2018-03-03T04:15:12","date_gmt":"2018-03-03T12:15:12","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=47570"},"modified":"2019-07-23T08:01:39","modified_gmt":"2019-07-23T15:01:39","slug":"black-coffee-3-march-2018","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id47570-black-coffee-3-march-2018.html","title":{"rendered":"Black Coffee: Do Not Pass Go. Do Not Collect $200."},"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

And away we go …<\/p>\n

“Faith is to believe what you do not see; the reward of this faith is to see what you believe.”<\/em><\/p><\/blockquote>\n

— St. Augustine<\/strong><\/p>\n

“The Bank collects all taxes, fines, loans and interest. The Bank never ‘goes broke.’ If the Bank runs out of money, the Banker may issue as much more as may be needed by writing on ordinary paper.”<\/em><\/p><\/blockquote>\n

— from the Rules of Monopoly<\/em> <\/strong><\/p>\n

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

Debit:<\/strong><\/span> The median household income in Palo Alto, California, is $137,043. That’s more than twice as much as the US at large, but it’s still not nearly enough to buy a new house there because median home sale prices hit an all-time high at $2.67 million in 2017. Perhaps that’s why Palo Altans making $349,999 consider themselves ‘lower middle class<\/a>.’ Heh. Cry me a river.<\/p>\n

Debit:<\/strong><\/span> On a related note, ten miles south of Palo Alto is Sunnyvale, where a two bed, two bath, 848 square foot home was recently listed for $1.45 million. It sold in two days<\/a>. For $2 million. That’s $2358 per square foot. By the way, if you think that signals a healthy housing market, I’ve got a 36 square foot backyard shed in Petaluma I’m selling for $999,999. Hey … realtors say it’s never been a better time to buy!<\/p>\n

Debit:<\/strong><\/span> Those outrageous prices might also be why pending US home sales fell 4.7%<\/a> in January — that’s the lowest reading since October 2014, and the biggest monthly decline since 2010. Uh oh. You know what that means: bad news for those house flipper television shows.<\/p>\n

Debit:<\/strong><\/span> Speaking of plunging prices, the Dow ended a 15-month win streak after closing 380 points lower on the last day of February, snapping its longest monthly win streak<\/a> in nearly six decades. Then the Dow kicked off the first two days of March by losing another 420 points<\/a> on Thursday — and 71 more on Friday.<\/p>\n

Credit:<\/strong><\/span> Some analysts are blaming the latest stock market decline on US plans to impose stiff tariffs on steel and aluminum<\/a> which, naturally, drew sharp protests globally. Of course, there’s a difference between free trade and fair trade — and tariffs are a legitimate way to level the playing field. Never mind that the long decline of the US steel industry<\/a> was primarily due to improving technology — not trade.<\/p>\n

Credit:<\/strong><\/span> Meanwhile, Steve Westly, a former board member of the largest US public pension fund, made a stunning admission<\/a> this week when he said, “The pension crisis is inching closer. CalPERS just voted to increase the amount cities pay to the agency. Cities point to possible insolvency if payments keep rising but CalPERS is near insolvency itself. It may be reform or bailout soon.” Yep. And I’m betting on “bailout.”<\/p>\n

Credit:<\/strong><\/span> Too bad CalPERS simply can’t print all the cash it needs like the US does. Unfortunately, America has become so reliant on the printing press that, as David Stockman notes, “Uncle Sam’s scheduled debt<\/a> this week will nearly equal his cumulative borrowing through 1970.” Uh huh. That covers every IOU generated during the nation’s first 188 years and 37 presidents — in the last week.<\/em> Think about that.<\/p>\n

Credit:<\/strong><\/span> Let’s face it; as Tom Lewis points out, “Few of us consider how extrinsic the value of money really is. At one time, our money was backed by the tangible value of gold or other precious metals, legal tender for anything of equal value. That’s not the case any longer. In reality, we are dealing in valueless fiat<\/a> currencies.”<\/p>\n

Debit:<\/strong><\/span> Of course, the US dollar has lost 97% of its value since the establishment of the Federal Reserve in 1913. And the greenback’s stewards decided to pull its gold backing in 1971<\/a>, officially making the “Almighty Dollar” the king of all fiat currencies. Apparently, America’s monetary officials forgot the cardinal rule of reserve currency management:<\/p>\n