{"id":85778,"date":"2025-01-04T01:00:57","date_gmt":"2025-01-04T09:00:57","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=85778"},"modified":"2025-01-09T09:27:55","modified_gmt":"2025-01-09T17:27:55","slug":"black-coffee-4-jan-2025","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id85778-black-coffee-4-jan-2025.html","title":{"rendered":"Black Coffee: Lying Through Their Teeth"},"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 another busy weekend ahead of me, so let’s get right to this week’s commentary …<\/p>\n

The first duty of a man is to think for himself.<\/em><\/p><\/blockquote>\n

— Jose Marti<\/strong><\/p>\n

The last duty of a central banker is to tell the public the truth.<\/em><\/p><\/blockquote>\n

— Alan Blinder, former Vice Chairman of the Fed<\/strong><\/p>\n

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

Debit:<\/strong><\/span> Did you see this? According to a new survey, 36% of American consumers took on holiday debt in 2024. Those who racked up balances this season took on an average of $1181 in debt<\/a>, up from $1028 in 2023. However, that is still down from $1549 in 2022. Less than half (44%) of the people who took on debt expected to acquire those balances. And for those not counting at home, more than one third of Americans racked up over $1000 in credit card debt this holiday season. This is all part of sharply rising US credit card debt, which hit a record $1.3 trillion as of the end of September.<\/p>\n

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h\/t: @kobeissiletter<\/p><\/div>\n

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Debit:<\/strong><\/span> On a related note, the spending boom for the bottom third of US consumers is over, thanks to maxed-out credit cards and depleted personal savings that have pushed credit card loan defaults to their highest level since the Great Financial Crisis in 2008. So, how much has the welching cost credit card companies? Well … they wrote off $46 billion in “seriously delinquent loan<\/a>” balances during just the first nine months of 2024. That\u2019s a 50% increase from the same period last year and the highest level in 14 years. Did you know that prior to 1980 credit card debt was almost an afterthought for most Americans and seen as financial taboo? It was.<\/p>\n

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Debit:<\/strong><\/span> Making matters worse, annual percentage rates (APRs) on credit card debt have hit record highs, compounding the financial misery for cash-strapped Americans. On the bright side, help may be on the way<\/a> (just don\u2019t hold your breath) …<\/p>\n

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h\/t: @The RealKingRosa<\/p><\/div>\n

Debit:<\/strong><\/span> Of course, it’s not just the American consumer who is struggling; retailers are too. In fact, US retail closures have reached the highest level since the pandemic<\/a>. As of early November, retailers had announced 6481 store closures for the year. For comparison, during the 2020 pandemic, closures affected slightly less than 6000 stores. But, yeah \u2026 the economy is doing just fine according to US government bureaucrats. Oh … and speaking of store closures:<\/p>\n

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Meanwhile, the big keep getting bigger. (h\/t: @charliebilello)<\/p><\/div>\n

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Debit:<\/strong><\/span> In other news, a group of banks and business groups are suing the Fed over the annual bank stress tests, saying the current process falls short of its goals<\/a>. Uh huh. We think it\u2019s more likely that they\u2019re getting harder to pass. Then again, we\u2019re not sure what they are worried about when the banks ultimately decide who the winners and losers are when their financial situation is at its most dire. Er … if you know what we mean …<\/p>\n

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h\/t: @LukeGroman<\/p><\/div>\n

Debit:<\/strong><\/span> Speaking of stress tests, perhaps the US Treasury should be subjected to an annual IT security stress test after they reported that Chinese state-sponsored hackers broke into its network this month \u201cin a major incident<\/a>\u201d that resulted in the theft of critical unclassified documents from Treasury Department workstations. Why are we not surprised? On the other hand, Chinese hackers clearly aren’t the biggest threat we face each and every day:<\/p>\n

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Debit:<\/strong><\/span> Meanwhile, Fed chair, Jerome Powell correctly observed that \u201cpeople use bitcoin (BTC) as a speculative asset.\u201d But those words of wisdom were then followed by his absurd assertion that bitcoin \u201cis just like gold<\/a>, only virtual. People aren’t using it as a form of payment or as a store of value. It\u2019s highly volatile. So it\u2019s not a competitor for the US dollar (USD); it\u2019s really a competitor for gold.\u201d Huh? Yes; BTC is “highly volatile” – but gold<\/strong><\/em>? No. For 5000 years commodities and wages priced in gold have remained remarkably stable – which is the very definition of a store of value. As for Mr. Powell, well … he’s just doing what central bankers always do …<\/p>\n