It’s time to sit back, relax and enjoy a little joe …
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.
Well… another busy week is behind us. So with that in mind, let’s get this party started!
Reality is easy. It’s deception that’s the hard work.
– Lauryn Hill
Sometimes the point isn’t to make people believe a lie – it’s to make people fear the liar.
– Anne Applebaum
Credits and Debits
Credit: Did you see this? American drivers are expected to spend the smallest share of their disposable income on gasoline this year than in the past two decades. The EIA projected that less than 2% of people’s personal disposable income will be spent on gasoline in 2025, down from an average 2.4% over the previous decade and the lowest share since 2005, aside from the pandemic year of 2020. Then again, everything is relative, isn’t it?
Debit: Meanwhile, a model used to predict Social Security (SS) cost-of-living adjustments (COLA) is predicting that recipients can expect a 2.7% raise in 2026. Last year, the SS COLA was 2.5%. Regardless, it will be less than the inflation rate calculated by the intentionally understated CPI peddled by the government and then conveniently used by the federal bureaucrats to calculate those annual SS COLAs. Then again, most people know that they should never believe everything our so-called authorities tell us. For example …
Debit: In other news, we see that European grid capacity shortages are still a problem thanks to its over-reliance on intermittent wind and solar energy. As a result, energy prices continue to soar, and power bills have skyrocketed as continent politician sacrifice grid reliability to combat the alleged “climate crisis.” As a result, without more fossil fuel power plants coming on line, the only other alternative is to ramp up the number of nuclear plants. The bad news is that option will take upwards of 15 years to help alleviate current grid vulnerability. Despite these irrefutable facts, others continue demonizing fossil fuels and their producers. Imagine that.
Gary Larson – The Far Side
Credit: With that in mind, Zero Hedge opined this week that, “After this massive (green energy) boondoggle, what are the Europeans left with? Look no further than Spain: a fragile, maxed-out grid that threatens to paralyze the economy as power constraints will stall new factories and data center buildouts. Well done, Brussels – it’s almost as if these so-called ‘green’ policies were never intended to succeed, but rather to neuter the EU.” Well… it certainly seems that way. Those same policies have lead to much higher electricity bills here in the US. But, hey… some people have far bigger problems than this…
Debit: Speaking of bills, the average single-family American homeowner is now paying almost $2370 for property insurance every year – that’s up 70% since the pandemic. In fact, premium increases have far outpaced inflation over the same period; they’re up 4.9% in the first half of this year alone, and more than 11% from a year ago. And you thought high home prices were a problem.
h/t: @BeTheChain
Credit: Meanwhile, on Wall Street, the Dow, S&P 500 and Nasdaq ended the week at all-time highs. For the week, the Dow rose 1%, while the S&P 500 and Nasdaq cinched their third straight weekly gains, adding 1.2% and 2.2%, respectively. Frankly, it seems like nothing can stop any of the major US stock indices at the moment. Anybody care to guess why that is? What’s that? Yes… you in the back there… speak up so everyone else can hear you:
Debit: Of course, since 2008, stock market investors have become accustomed to being saved by the Fed every time an economic crisis threatened to unwind previous market excesses. The resulting moral hazard has trained today’s investors to take increasingly larger risks, because they believe the Fed has their backs. At the same time, the US government is expecting other nations and private investors to continue to cover an absolutely staggering amount of debt. The bad news is the Fed and the US Treasury are running out of suckers. Talk about playing a losing game …
Debit: Indeed, the stock market has been in a constant and almost-unrelenting uptrend since the Fed began backing the market with additional liquidity every time the economy caught a sniffle. As a result, macro analyst Jesse Columbo points out that “the Buffett Indicator stands at a staggering 214, which is 149% above its long-term average of 86, dating back to 1971. This level is even higher than the peak of the late-1990s Dot-com bubble, which ended in a devastating crash.” Yeah… but everybody is telling us that it’s different this time. They better hope so.
h/t: Jesse Columbo via Substack
Debit: Needless to say, minimizing economic slowdowns via the Fed’s printing presses has come at a steep cost. One only has to look at the $37 trillion National Debt to see that. For those not counting at home, a stack of $37 trillion in US dollar (USD) bills would reach the moon ten separate times. Never mind that the National Debt doesn’t include more than $100 trillion in unfunded obligations that the US is also on the hook for in the coming years. In the meantime…
h/t: @duedilgenceguy
Credit: Speaking of the $37-trillion National Debt, Sprott macro analyst Paul Wong warned of the coming impacts from the Fed’s last bullet in the chamber, which it started implementing this week when it cut rates by 25 basis points: “Financial repression and fiscal dominance (has) direct consequences for the USD. Suppressed yields reduce the real return on US assets, weakening the USD’s appeal. Stablecoins backed by T-bills expand the supply of USD-like instruments, diluting their scarcity premium. And with fewer foreign investors anchoring the market, the USD could lose its stabilizing role.” Ya think?
Credit: Clearly, the writing is on the wall for the future purchasing power of the fiat USD. And yet, an unwary general public still isn’t interested based upon the lack of business reported by precious metal coin and bullion retailers. History tells us that the public will eventually wake up to what is happening to the fiat currency they work for daily and use to store their wealth. The only question is: At what price will they finally decide to purchase their wealth insurance? Well… assuming it’s still available.
h/t: GoldSilver.com
By the Numbers
A new study by WalletHub has identified the US states with the healthiest housing markets. Here are the states with the ten lowest mortgage delinquency rates in the nation during the last three months of 2024:
10 South Dakota
9 Indiana
8 Maine
7 Delaware
6 Oklahoma
5 Arizona
4 North Dakota
3 Vermont