{"id":77796,"date":"2023-03-25T01:15:56","date_gmt":"2023-03-25T08:15:56","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=77796"},"modified":"2023-03-28T09:03:11","modified_gmt":"2023-03-28T16:03:11","slug":"black-coffee-25-mar-2023","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id77796-black-coffee-25-mar-2023.html","title":{"rendered":"Black Coffee: The Waiting Game"},"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 hope everybody had a wonderful week. And with that, let’s get right to this week’s commentary, shall we?<\/p>\n

We can’t change the cards we are dealt. We can only change how we play the game.<\/em><\/p><\/blockquote>\n

– Randy Pausch<\/strong><\/p>\n

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

Debit:<\/strong><\/span> Did you see this? Last week, the London Metal Exchange (LME) discovered in a Rotterdam warehouse bags of stones<\/a> instead of the nickel that was supposed to be underpinning some of its contracts. The revelation delivers yet another blow to dwindling confidence in the embattled metals exchange. That<\/strong><\/em> begs the question: How much of the LME’s supposed physical gold and silver holdings are also illegitimate? (Psst. Here’s a hint: It’s far more than the fraud imposed on nickel.)<\/p>\n

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Debit:<\/strong><\/span> According to Bloomberg<\/em>, the amount of metal in the $1.3 million scam “represents just 0.14% of nickel inventories on the LME, so the immediate impact is limited. But the announcement has much wider implications<\/a>: In an industry riddled with scandals, the LME’s contracts are viewed as unquestionably safe.” Correction: They were<\/strong><\/em> viewed as unquestionably safe. At least by those who prefer to live with their head in the sand.<\/p>\n

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Debit:<\/strong><\/span> Speaking of scams, did you know that banks only have to reveal bond market value losses if they actually have to sell those assets to raise the cash to pay their depositors? It’s true. Accountants are allowed to price their bank’s assets at book value based on the price that was paid to acquire them – without regard for what these investments are worth today. Thankfully, the recent run of bank failures looks like it has finally awakened the public to the fact that the banks’ quarterly assets-and-liabilities reports don’t reflect market reality<\/a>. That’s good, because there’s plenty of evidence to suggest the banking system crisis is far from over. Is Deutsche Bank next?<\/p>\n

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Debit:<\/strong><\/span> Meanwhile, the risk of banking contagion continues as large depositors are moving their cash<\/a> from smaller regional banks to a handful of too-big-to-fail national banks. Unfortunately, there aren’t many good options for those trying to avoid a banking system collapse. Okay \u2026 maybe one. Or not.<\/p>\n