Thursday, January 14, 2010

NYT Exposes Zimbabwe Ben-Finally

"Millions of Americans are paying a high price for a safe place to put their money: extremely low interest rates on savings accounts and certificates of deposit. The elderly and other on fixed incomes have been especially hard hit. Many have seen returns on savings, CD's and government bonds drop to niggling amounts recently, often costing them money once inflation, fees and taxes are considered. ... Interest on one- and two-year Treasury notes was just 0.40 percent and 0.89 percent as of Monday. ... 'The unemployment situtation and the general downturn in the economy had an impact, but what's going to happen now as CD's mature is that retirees and the elderly are going to take anywhere from a half to three-quarters of a percent cut in their incomes,' said Joe Parks, a retired accountant in Houston on the advisory board of Better Investing, an organization that works to help people become savvier investors. 'It's a real problem.' Experts say risk-adverse investors are effectively financing a second bailout of financial institutions, many of which have also raised fees and interest rates on credit cards. ... 'What the average citizen doesn't explicitly understand is that a significant part of the government's plan to repair the financial system and the economy is to pay savers nothing and allow damaged financial institutions to earn a nice, guaranteed spread,' said William H. Gross , co-chief investment officer of the Pacific Investment Mnagagement Company or Pimco. 'It's capitalism, I guess, but it's not to be applauded'," my emphasis, Stephanie Strom (SS) at the NYT, 26 December 2009, link: http://www.nytimes.com/2009/12/26/your-money/26rates.html.

Yes SS. I've said this for years. What's safe about leaving your money in a bank? Here I go again: "Got gold, get more. Got bonds? Sell immediately". Remember: Interest is what the government promises to pay to to steal your principal. Well Gross, you manage hundreds of billions. Will you close Pimco as a sham and tell your "investors", i.e., fools buy gold? Don't you have enough money Gross? Do you still need to work?

3 comments:

Anonymous said...

You called the coming California muni collapse...

Unfortunately you and the NY Times are calling this one right too...

Geithner said that the TBTF banks would "earn their way out".

They have to "earn" their way out from the pockets of someone...

It's pathetic that President Obama, Chairman Bernanke, Secretary Geithner and all the others feel that "savers" can be sacrificed to keep the banking system intact.

These are corrupt institutions who are much too concentrated. These banks grow as Main Street banks are further weakened.

JPM and other money center banks have attracted all mid market clients and leave the smallest local borrowers to local banks... this is very profitable for the big banks cause their cost of capital is so advantageous.

I heard a small banker say that they have lost many accounts to Ally Bank... GMAC... propped up by the Treasury.

The system is rigged to grow the big banks bigger. This is the road to economic fragility and instability.

edgar said...

hello i.a.,

The banksters run over little old ladies with their mercedes limos. ;)

Anonymous said...

and all the others feel that "savers" can be sacrificed to keep the banking system intact.

Of course the "savers" have to be sacrificed -- they have money...

And the people on SS (they just won't be paid the value promised)...