{"id":80541,"date":"2023-10-14T01:15:59","date_gmt":"2023-10-14T08:15:59","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=80541"},"modified":"2023-10-17T10:44:10","modified_gmt":"2023-10-17T17:44:10","slug":"black-coffee-14-oct-2023","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id80541-black-coffee-14-oct-2023.html","title":{"rendered":"Black Coffee: Winners and Losers"},"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 an enjoyable week. Without further ado, let’s get right to this week’s commentary …<\/p>\n

Losing an illusion makes you wiser than finding a truth.<\/em><\/p><\/blockquote>\n

– Ludwig Borne<\/strong><\/p>\n

The key to winning is poise under stress.<\/em><\/p><\/blockquote>\n

– Paul Brown<\/strong><\/p>\n

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

Debit:<\/strong><\/span> Did you see this? Last week, the government boasted that a net 336,000 new jobs were created in September – that was twice<\/strong><\/em> the expected total. Hooray! But once you cut through the propaganda, the reality becomes far more concerning, as 1.127 million new part-time jobs were created – but the number of full-time workers collapsed by 885,000. That was the biggest monthly drop<\/a> in full-time positions since April 2020 when the economy was shut down. At the same time, the total number of part-time workers in the economy is at its highest level since April. Winning! Oh … and speaking of winning:<\/p>\n

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Debit:<\/strong><\/span> Needless to say, with the job situation deteriorating, it shouldn’t be a surprise that delinquencies on auto loans, credit cards, and consumer loans have reached a ten-year high<\/a>. As interest rates rise, experts predict further financial strain for many consumers. Until then, there’s always credit cards; that is, until consumers finally hit their credit limit …<\/p>\n

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Debit:<\/strong><\/span> Meanwhile, the government’s frivolous spending continues. For example, three years after the pandemic kicked off, 60% of federal employee respondents are still working completely remote, and 33% work in a hybrid situation. That means just 7% of federal workers are in the office full-time. Despite this, bureaucrats have spent $3.3 billion on new furnitur<\/a>e since 2020, including $237,960 for solar powered picnic tables, $120,000 for Ethan Allen leather recliners, and $26 million for new conference room furniture, despite most meetings being moved to Zoom. Then again, frivolous spending isn’t just a government problem …<\/p>\n

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Debit:<\/strong><\/span> Of course, wasteful spending has its consequences. In fact, the US GDP to debt ratio is now 118%. While anything over 90% used to be considered a banana republic debt ratio, even the latest Congressional Budget Office (CBO) numbers – which are always ridiculously tempered to minimize concern – projects that figure will climb to 195%<\/a> no later than 2053. Most likely, that really means the debt ratio will cross 200% by the end of this<\/strong><\/em> decade. Er \u2026 assuming the US dollar (USD) doesn’t lose global reserve status beforehand.<\/p>\n

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Debit:<\/strong><\/span> By the way, interest payments are the biggest line item in the US government budget. How big is it? Well … the US Treasury says it shelled out $808 billion in interest<\/a> on its debt securities for the fiscal year that ended last month, while the Department of Defense’s military programs cost $695 billion over the same period. Meh. Thankfully the US will simply issue more bonds to cover the bill. Of course, they’ll also be picking up the tab for any Treasuries that the market refuses to purchase – thereby monetizing the debt. The trouble is, the pool of buyers willing to fund America’s insatiable debt appetite continues to dwindle.<\/p>\n

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(h\/t: @OneClick Crypto)<\/p><\/div>\n

Debit:<\/strong><\/span> Rising interest rates and Treasury bond yields show no signs of slowing down. At the same time, the Federal debt has been doubling roughly every eight years since at lease 2001. If that pace continues – and it almost certainly will – the National Debt<\/a> will cross $40 trillion in 2025 at the very latest – and $45 trillion by 2027. Don’t believe it? Keep in mind that the US added $900 billion<\/strong><\/em> to the National debt in the second quarter of this year alone. Thankfully, you can be sure all of the other expenditures – and your tax dollars – are being spent wisely …<\/p>\n

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Credit:<\/strong><\/span> America’s high debt ratio, fueled by its $33 trillion – and rapidly growing – National Debt is just one reason why billionaire investor Ray Dalio says the nation’s fiscal situation is “risky.” In fact, last week he warned that the toxic cocktail of high debt, rising interest rates and soaring bond yields portends that, “We’re going to have a debt crisis<\/a>. How fast it transpires, is going to be a function of that supply-demand issue, so I’m watching that very closely.” You do that, Ray. Then again, here’s a real-life analogy of what the system is eventually in for …<\/p>\n