WaPo Article Sums Up the Plight of the Savers

This article hits the nail on the head. It's not just about savers. It's about morality. Corporate profits (and, by extension, stockholders' profits and executive compensation) and real estate profits (bolstered by moves to prop up home prices) have all come about at the expense of everyone. I see no difference between the previous administration and the current one in this respect. Those whose greed created the recession have received positive reinforcement for their actions. But it's not over yet. Wait until inflation kicks in as a result of the government spending frenzy. We'll look back nostalgically to today's 2% rates once we have 4% rates accompanied by 8% inflation.

I hate being the one to pay for other people's poor financial decisions. Bailouts, bailouts, bailouts. Why should those of us who were prudent with our money pay for those who greatly overextended themselves? And I'm afraid that this is far from over. Going deeper in debt to combat debt is not the answer. Yet, that's what the government seems to think. I hate to see what kind of world my children and grandchildren will inherit!

Nobody stands out for the savers. Obama administration said many times, if you have money in the bank, you are well off or rich and stop complaining. Not with these exact words by implied in many speeches.
We are actually paying and supporting the Government and the banks by not being compensated for our savings.

AARP is in bed with Obama and don't expect anything from them. Our reps in Congress couldn't care less for the savers. So, we are left on our own to straggle to get better savings rates. When inflation kicks in, we will loose most of our savings anyway.
In meantime, FEDs will declare less then half of real inflation and will continue to eat into our savings. Either way, we are on the loosing end of the Government policies and I don't see any improvements in near future.

I agree with the above posts and like to add that the Dollar is being trashed by the Obama administration on purpose to increase an imaginary export.
What we have got to sell that China and the rest of the World do not have?
Nothing, it is a narrow sighted plan that will backfire on all of us.
When the rest of the world dumps the Dollar as inferior currency, all our savings will almost become worthless. It does not matter whether we save more or lose the income from the low interest rates. We all lose as the things stand now.

To poster at 10:28 AM, October 21, 2009.
You are absolutely right. In order to compete with China our labor cost must be 10 time less than it is now if we want to be competitive with the rest of the third world products.
Our export is only high tech and the markets are only vertical and easily saturated. We can never export ourselves of the current recession.
Government current policies are disasters. Can not wait for 2010 election day to come and blow some steam out of myself.

All of this commentary on Obama makes me sick. When are the people going to realize that politicians are mere puppets for those *really* in charge. "...can't wait for 2010 election day"... give me a break.

While people argue politics, you have the big banks, like Goldman Sachs, getting money at virtually zero interest from the Fed and turning around and getting 4.25% yields, on 30-day deposit accounts, in Australian banks. Not only are they getting the interest but also the increase in exchange rates against the falling dollar. The "carry trade" in extreme is the rule of the day and it's going on with abandon. The currency traders at Goldman Sachs are reaping millions in bonuses for these easy deals while savers in this country are hunting for 2% savings accounts with the dollar going into the toilet. This will continue no matter who is in power in Washington, D.C. The U.S. is about to enter a "lost decade" ala the Japanese.

I agree with anonymous @ 11:45.

If it weren't for the quick action of the current administration to undo the damage of the previous one, we'd be a lot worse situation than we are today.

Although I have a chunk of my wealth in savings, not all my eggs are in that one basket and things in general are looking up.

I too can't wait for the 2010 election---to get the rest of the obstructionists the hell out of the way.

And all this, although very true will never change. Doesn't matter which political party wins elections. Wall Street dictates how this country is run.

REVOLUTION anybody?

Of course Home Land Security and all their spying on us citizens would stop it in it's tracks.

re: anonymous @ 11:45

You need to do some research, Einstein. Your ignorance is deafening. You and others like you are the reason we have the fool in office we have today. Get a clue!

To anonymous @ 11:45, are you deaf when Obama said in a speech that he wants the exports to pull us out from a recession and to start the printing presses for the Dollar demise. People like you contributed to electing an incompetent president and reps in Congress that are self centered only and care for none of us.

To 11:45 AM, October 21, 2009, would you please elaborate on your thought and tell us who really is in charge of the US economy and its present policies?
If you can't answer that, we will assume is Obama administration and their puppets.

THE GOVERMENT BY KEEPING RATES LOW IS FORCING INVESTORS BACK INO THE STOCK MARKET EVEN QUALITY BONDS ARE GETTING HARDER TO FIND

I don't think the anonymous at 11:45 AM, October 21, 2009 can answer back, since we all know that this is Obama show and his appointed 31 Czars that are destroying this Country. If you have proof in contrary, please reply, otherwise, refrain from posting nonsense. Yes, me too can't wait for 2010 election day to remove some combatants from their lazy chairs.

This is pure conspiracy against the savers to destroy their savings and make everyone dependent on Government handouts. We may not think like this at this very moment, but when the Dollar collapses you will thing like that to no avail for help from anyone including this administration.

Well, how can we, as savers, make the best of it, regardless of the politics? Other than reward checking accounts and CDs??

To: All
Re: Chill

Folks, calm down. A key to money management for savers is to achieve a real rate of return. With few exceptions, CDs do this handily (as well or better than TIPS or I-Bonds, might I add). Even your puny 2% Ally one year CD beats inflation by at least 200 basis points, more if you believe the BLS. Even in the days of stagflation (late 70s - early 80s), my CDs were besting inflation by 200 points or more (usually more).

Keep your CDs laddered. Works (and has worked for a long time) for me.

Dear whining savers:

You seem to forget that to raise interest rates on deposits, you also have to raise interest rates on loans, like business loans and home mortgages.

Who thinks THAT would help things right now?

BIG PICTURE WHAT IS HAPPENING:

Ben Bernanke and friends are pursuing a deliberate but thinly masked policy to devalue the U.S. Dollar and engineer controlled inflation in order to MONETIZE the huge public debt burden.

The Fed will keep the funds rates low until late 2010/11 keeping savers down in the dumps. Money printing will continue...

When your currency is losing value, stocks and commodities such as gold and other natural resources become hedges against your depreciating $$$.

What does this all means for savers? Your $$$ will be worth less in the coming years as inflation kicks into high gear.

Look back at currency devaluations in Russia, Brazil, and Korea as a case exmaple of what COULD happen in the U.S.: high inflation, high unemployment, and record stock market rallies as hedge against a declining dollar.

Conservative investors should be considering TIPS (Treasury Inflation Protected Securites) to prepare for the eventual storm to come in the coming years.

Regarding Series I Savings Bonds: until about a year ago the Treasury allowed individuals to invest up to $60,000 in I Bonds incrementally each year, making them very attractive to higher net worth savers. Originally, Savings Bond could not be purchased in such large amounts. They were really intended for the small investor. They have traditionally made great gifts to young family members because one could purchase denominations as low as $25.00. Although these bonds could be purchased directly from the Treasury, many banks used to participate in the program even though they earned no commission from selling them, and even though they were in direct competition with their own fixed income products like CDs. Eventually, the banks grew tired of subsidizing the sale of these bonds and lobbied the Treasury to make them less attractive. The Treasury, for its part, needed to encourage redemption of the earlier issues, some of which, until recently, were paying more than 8% annually (including the inflation factor). The recent sharp decline in interest rates and the swing from inflation to deflation has created the ideal situation for both the banks and the Treasury to redirect public savings from the Treasury to the private banking system.

"Dear whining savers:
You seem to forget that to raise interest rates on deposits, you also have to raise interest rates on loans, like business loans and home mortgages.
Who thinks THAT would help things right now?"

FYI - Interest rates on savings have dropped MUCH more than the rates on home mortgages. Most mortgages are still 5%, down maybe 1% from 2-3 years ago. Savings rates are down as much as 4% since 2-3 years ago. Remember the govt has record deficits to finance. If you could set your own rate for money you are borrowing wouldn't you also borrow at 0-0.25%?

I admit I was disappointed when I read Banking Guy's post regarding where the I Bond would be in November. Yet another six months for me which I won't even consider buying them.

As for those of you whining about how this administration is responsible for where we are, you need to go to pbs.org and check out Tuesday night's show regarding how this recession occurred. Believe it or not, it all started when Reagan deregulated the financial institutions. The market was allowed to self-regulate, which lasted for the better and up until the latter part of the 90s. Men like Greenspan, Levitts and Summers, created a huge problem when they didn't heed the warning from the chair of the CFTC, Brooksley Born.

Thirteen banks, along with Long-Term Capital Mgmt, invested in the OTC derivatives market with only $4 billion of capital, to buy $1.25 trillion of insurance policies. This caused an excess leverage that essentially created a mini-2008.

Visit pbs.org and check out Frontline's Tuesday's episode. Lobbyists for the big corporations and Congress are sleeping well together. This will never change, no matter the party.

"Visit pbs.org and check out Frontline's Tuesday's episode."

PBS is one of the biggest liberal rags out there. Consider the source.

To Anonymous at 6:15 AM, October 22, 2009.
You my friend are brainwashed by the left media reporting. PBS is nothing less then Democratic party loud mouth. They always find excuses or defenses for the cause without blaming the Democrats. They protect them with unrelated events or stories, just to take the Democrats of the hook. They will never report anything negative to incriminate the Democratic party, therefore, your posting is self serving and irrelevant, since most of us know that democrats in Congress stopped many legislations to control the derivatives, banks and insurance industries at least 5 times in the past. If you depend on the truth to come out of a public biased station, you are irresponsible citizen and your comment is moot.

"They always find excuses or defenses for the cause without blaming the Democrats." They protect them with unrelated events or stories, just to take the Democrats of the hook."

You obviously didn't watch the Frontline show "The Warning" (can be viewed online). Democrats were not off the hook in this show. In fact the ending leaves you with a sense of helplessness because the Obama Administration has kept Summers and Geithner on his treasury team. No legislation has been passed to regulate Wall Street. The financial lobby is the most powerful lobby in Washington.

It is sound monetary policy to lower interest rates to help facilitate an economic recovery. When the cost of borrowing is low, economic activity is generated by businesses and individuals buying vehicles, equipment, real estate, etc.

During the recession of 3/2001-11/2001, the FOMC lowered the federal funds rate from 5% to 2% to do just that. While one can argue that they kept low rates in place far too long (helping pump up the housing bubble), the resulting low savings rates were accompanied by low auto and home loan rates that stimulated a lot of economic activity.

And as for trying to place blame for low savings rates on the Obama administration, the current recession began in December 2007 and the federal funds rate was lowered to the current 0-0.25% in December 2008, both of which occurred before Obama took office.

To Anonymous, at 8:17 AM, October 22, 2009.
Obama administration kept Summers and Geithner and Ben Bernanke for a reason, TO BE ABLE TO BLAME THE BUSH ADMINISTRATION for his own blunders and incompetency. PBS is left media loud mouth, get real.

To poster at 10:22 AM, October 22, 2009, your logic is faulty.
If interest rates can stimulate economy alone, than we would have not fallen into recession again and again and again, in a clockwork pattern.
What low rates do is mask the real problem underneath the rotten economy. It is a make believe recovery for few years and then back to the old down economy.
Since low rates create false hope of cheap money, actually cost us more on long run. Dollar is trashed, our savings are not worth as much, commodities and energy cost more and so on.
It is obvious that low rates do not bring prosperity and real recovery of the economy.

I agree with the poster at 10:39 AM, October 22, 2009.
If this economy can only function with low interest rates, cheap money, Government handouts and printed money, then we have a real economic problem.
If 2-5% interest rate can break the economy, we live in an unsustainable economic state, that sooner or later will collapse again.

I agree with the 3 posts above mine.
Well said fellows.

If the so called economists new any better then you and I, then they would have fixed the cycle of boom, bust and stagflation and would have not allowed this to repeat more then once in history.
But, since we have narrow minded Government, we think that they know better than we do, unfortunately, we are victims of such arrogance and know it all Congress.
They try to fix it after the fact and the fix is only temporary until the next downturn.
Since they contribute to poison the economy with their stimulus packages and easy money, the next bust and the next chain reaction of downturn will repeat itself in few years again.
Everyone is blaming anyone else but themselves, we seams to have reach the bottom of irresponsibility and accountability and can only be fixed by changing the mentality in Congress in 2010.

Most morons deserve the paltry 0.02% savings rates they get. After all, most morons are all but too eager to give their hard earned money to these banks at 1 - 2%. What a bunch of fools.

If I were the banks, I would not budge even 0.01 percent as long as I have a fool giving me their money at 1 - 2% rates.

Anyone who has given their money to a bank in exchange for 1 - 2% deserves a bleak future.

If everyone would stop doing that, you can almost guarantee that rates would go up overnight.

Stop DEPOSITING YOUR MONEY INTO THESE corrupt institutions.

I was the reader that provided the Washington Post link and also have a hard copy of the article. I am sure that article was bound to rile up a few hairs on one's back and be fuel for diverging opinions on the matter. Notwithstanding the current interest rate environment, I am glad that I don't depend on passive income as my main source for my budget. I feel for those people who are retired and depend on it for a major part of their income. I am thankful that I got a somewhat depending source of income (stable job, yearly raises, and several years before I am eligible to retire) so that I don't worry too much about dropping rates. Glad that my mortgage is paid off too (the real big monkey off my back). The one thing that still gets me annoyed is how a townhouse that cost in the mid-$20,000 about 40 years ago is now selling for nearly a million dollars even with today's drop in housing prices. Exact same house in the same condition. Real estate is nothing but a big Ponzi scheme.

The debate triggered by the article seems to pit leftists versus rightists. I was viewing a PBS program (I know left wing material) that was a retrospective on the Black Tuesday market crash on October 29, 1929 which was 80 years ago. Things were looking so rosy and then all hell broke loose. There was little government intervention those days since people were expected to "fix" any problem on their own without any assistance. Things like Social Security were not ever considered because they were essentially government handouts. Some of those who made the big bubble jumped out of buildings or shot themselves. Maybe those responsible today should do the same?