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Low Rates Good for Banks, but Pity the Saver [NYT]

Friday, April 16, 2010 - 1:27 PM
This NYT article (via Yahoo) is another good article which shows how the banks are profiting from the record yield curves while responsible savers are left with near zero interest rates. However, the article does offer some hope:
That said, the current spread between Treasury rates does offer encouragement that things will get better for the economy, and for savers. The last two times the spread between the one-year and 10-year Treasuries approached this level were in 1992 and 2003. In each case, that happened as slow recoveries after recessions were finally about to accelerate.
Hat tip to the reader who emailed me the link to this article.
Ken TuminKen Tumin5,442 posts since
Nov 29, 2009
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1. Friday, April 16, 2010 - 6:08 PM
1992 and 2003?  Those two years are the same time as the two wars in Iraq.
AnonymousAnonymous2,281 posts since
May 9, 2010
Rep Points: 3,788
2. Sunday, April 18, 2010 - 3:02 AM
Another article:

This Bailout Is a Bargain? Think Again

By GRETCHEN MORGENSON A major factor missing from Treasury’s math is the vast transfer of wealth to banks from investors resulting from the Fed’s near-zero interest-rate policy.

This number is not easy to calculate, but it is enormous. The Fed’s rock-bottom interest-rate policy bestows huge benefits on banks because it allows them to earn fat profits on the spread between what they pay for their deposits and what they reap on their loans. These margins are especially rich on credit cards, given their current average rate of 14 percent and up.

The losers in this equation are savers and investors, especially people on fixed incomes. “All interest-sensitive investors have been transferring what they should be receiving to Uncle Sam and the banking industry,” Mr. Whalen said. “And you are talking about a lot of money.”
AnonymousAnonymous2,281 posts since
May 9, 2010
Rep Points: 3,788