{"id":70021,"date":"2021-12-04T02:15:01","date_gmt":"2021-12-04T10:15:01","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=70021"},"modified":"2021-12-07T20:08:21","modified_gmt":"2021-12-08T04:08:21","slug":"black-coffee-4-dec-2021","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id70021-black-coffee-4-dec-2021.html","title":{"rendered":"Black Coffee: An Explosive Situation"},"content":{"rendered":"

\"\"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

I’ve got a busy weekend to attend to, so let’s get right to this week’s commentary …<\/p>\n

The current account deficit is a ticking time bomb. We don’t know when it’s going to explode, but it can’t continue.<\/em><\/p><\/blockquote>\n

— Bernard Baumohl<\/strong><\/p>\n

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

Debit:<\/strong><\/span> Did you see this? Consumer confidence in November fell to its lowest point<\/a> since February while consumers’ future expectations are now hovering at their lowest point since 2016. Imagine that.<\/p>\n

Debit:<\/strong><\/span> By the way, those consumer confidence figures were reflected in key holiday shopping metrics; while Black Friday retail traffic was up 48% over last year, it was still 28% lower<\/a> than the same day in the previous 2019 holiday shopping year. And the numbers were even worse for the day before, where Thanksgiving day visits to brick-and-mortar stores were more than 90% lower than the same day in 2019. On the other hand, looting was up significantly from prior years.<\/p>\n

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

Debit:<\/strong><\/span> Meanwhile, I see that Cyber Monday sales declined for the first time ever<\/a>. Maybe that’s because 63% of consumers say they have experienced a stockout situation so far this holiday shopping season – suggesting that particular gifts they were looking to buy were not in stock due to supply chain woes. Then again, maybe it’s because after they’re done covering their daily living expenses, there’s very little left for anything else.<\/p>\n

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

Debit:<\/strong><\/span> Of course, for those who love spending money they don’t have, there will always be plastic. In fact, credit card debt soared<\/a> by $10 billion last month, pushing total revolving credit outstanding over $1 trillion for the first time since April 2020. That’s not a trivial sum – especially with the average credit card interest rate currently at more than 16%<\/a>.<\/p>\n

Credit:<\/strong><\/span> Needless to say, the indebted American consumer has company. Macroeconomist Alasdair Macleod points out that, with US government debt more than twice as large as private sector GDP, “productive citizens – through taxes and currency debasement – are supporting far larger obligations than they realize, unaware they’re on a treadmill that’s going ever faster.” According to Macleod, “These are the dynamics of national debt traps<\/a> which only need rising interest rates to trigger them.” In other words: it’s a ticking time bomb. Let’s hope somebody out there knows how to defuse it …<\/p>\n