{"id":85236,"date":"2024-11-16T01:00:10","date_gmt":"2024-11-16T09:00:10","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=85236"},"modified":"2024-11-19T10:35:02","modified_gmt":"2024-11-19T18:35:02","slug":"black-coffee-16-nov-2024","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id85236-black-coffee-16-nov-2024.html","title":{"rendered":"Black Coffee: Income & Outgo"},"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

Well … another busy week is behind us. So with that in mind, let’s get this party started …<\/p>\n

When your outgo exceeds your income, your upkeep becomes your downfall.<\/em><\/p><\/blockquote>\n

– Anonymous<\/strong><\/p>\n

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

Credit:<\/strong><\/span> Did you see this? After seeing his net worth rise by almost 5% in the past week alone, Elon Musk has increased the gap<\/a> between himself and the world\u2019s second richest man, Oracle founder Larry Ellison, by more than $30 billion; to put that in a better perspective, that\u2019s 30,000 million<\/strong><\/em> dollars. For those not counting at home, Musk is currently worth nearly $318 billion. Needless to say, Musk also increased the wealth gap between himself and me too. Heh. As for the world\u2019s third<\/strong><\/em> richest man, Jeff Bezos\u2019 net worth is currently a “measly” $220 billion.\"\"
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Debit:<\/strong><\/span> Who knows? Maybe Mr. Musk\u2019s recent financial gains are why yet another out-of-touch ivory tower academic<\/a> insisted this week that people are much better off financially than they seem to think.<\/p>\n

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Debit:<\/strong><\/span> Unfortunately, despite government claims to the contrary, core consumer prices in October rose on a month-over-month basis for the 53rd consecutive month<\/a>, with the year-over-year pace re-accelerating to 3.3%. Even more alarming, the three-month annualized core CPI rose in October to 3.6% versus the prior 3.1%. Even so, costs for critical living expenses is up even more. For example, health insurance is up 6.8%, car insurance is up 14%, airfare is up 4.1%, and housing costs are up 5.2%. Now for the punchline: Despite these numbers, Social Security recipients are getting a 2.5% cost of living adjustment in 2025.<\/p>\n

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Credit:<\/strong><\/span> Heck, consumer prices have been so high for so long that even the wealthy<\/strong><\/em> are now feeling the pinch. Luxury brands routinely charge a markup of eight to 12 times on their production cost. For example, a basic cotton T-shirt with a Christian Dior logo will now set you back $1000<\/a>. No; I didn’t leave out a decimal point. That being said, most luxury brands are currently experiencing an average sales decline of 4% year-over-year.<\/p>\n

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Debit:<\/strong><\/span> For those who avoid grossly over-priced crap like designer handbags, jeans, sunglasses, furniture and home goods, you should know that the average luxury product today is 60% more expensive than it was just five years ago. That’s quite an increase on top of an already steep luxury brand mark-up. So it shouldn’t be at least a little surprising that the luxury-product industry is going through one of its rockiest patches in years, led by Gucci, which has seen its sales decline 25%<\/a> over the past 12 months. Cry us a river. That being said, 25% is a painful decline for any<\/strong><\/em> business – regardless of its profit margin.<\/p>\n

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Debit:<\/strong><\/span> In the meantime, all of the fiscal stimulus, super-low interest rates, and massive asset price appreciation has failed to do much for America’s bottom 50% of households. That’s because they’ve watched their share of the nation’s financial wealth fall<\/strong><\/em> from 3% in 2010 to 2.6% while tens of trillions in new wealth were added<\/strong><\/em> to the swollen portfolios<\/a> of the top 10%, much of it via the latest housing market bubble. Too bad that’s not a recipe for a happy and cohesive society. In fact, it’s the complete opposite.<\/p>\n

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Credit:<\/strong><\/span> Of course, we all know that Wall Street has very little in common with Main Street. For proof, look no further than the stock market, which capped its best week of the year<\/a> after the election was decided, driven by optimism that the incoming party\u2019s policies are going to result in better days for the economy. The question is: Will it really?<\/p>\n

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Credit:<\/strong><\/span> The stocks aren\u2019t the only assets whose prices are soaring; bitcoin is too, after touching more than $85,000<\/a>. In other words: Bitcoin continues to reveal its true self by behaving as a highly-speculative asset, rather than the shills’ absurd claim of it being a safe haven similar to – if not better than – physical gold. Now for a reality check: These market bubbles will eventually come with consequences, as the Fed has birthed a moral hazard mania beyond its control in which all risk has vanished. You know … kind of like this:<\/p>\n