Thursday, Feb 01, 2007
Personal Savings
YahooFinance: 2006 Personal Savings Fall to 74-Yr. Low
People once again spent everything they made and then some last year, pushing the personal savings rate to the lowest level since the Great Depression more than seven decades ago.
Posted by sgp @ 04:17 PM (167 views) Add Comment
6 Comments
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1. uncle chris said...
This is what has been worrying me for some time now. To me the signs are there that the next crash may be on the scale of the 1920s. The financial markets have been shifting money around like there is no tomorrow, the USA and UK have taken on massive amounts of public and private debt and yet I cannot see where this money has magically appeared from and how it is ever going to be repaid to whoever has been foolish enough to risk it on our 'live for today' society - fellow bloggers aside of course. My concern is that when they sit down to work out where it has all gone, there are going to be some ENRON'esk holes in the accounts, but on a national scale.
2. Orwell said...
Yes Chris I have always wondered what will happen for example if the third world ask for all the money back.
What would you do for work in this situation? I am a lawyer but not a conveyancer thank god - litigation so i suppose I would try to get into insolvency work?
3. Ilejustwait said...
uncle chris
I feel the same, everything is just on paper and thats all it is , but i recon if everyone cashed in there investments either it be bonds, invest shares, insurance pol, property, etc etc, this country would come to a standstill overnight, and this is very worrying, and i think it is a possibility that it can happen, its called not seeing the obvious !!,
4. Orwell said...
That was GK Galbraith said only a few years ago - shame he is no longer with us.
5. dohousescrashinthewoods said...
Agreed, we seem to be having a mass global delusion and it's been growing for years.
Wasn't that the story in the US, where everyone bought stuff on credit and one day someone said "er, hang on.." and it all ended in tears?
Can anyone see a difference with the current situation, perhaps with the exception that this time it is global, not national and is orders of magnitude larger?
According to Wikipedia (Great_Depression_in_the_United_States):
"In the 1920s, in the U.S. the widespread use of the home mortgage and credit purchases of automobiles and furniture boosted spending but created consumer debt. People who were deeply in debt when a price deflation occurred were in serious trouble—even if they kept their jobs—and risked default. They drastically cut current spending to keep up time payments, thus lowering demand for new products. Furthermore the debts grew, because prices and incomes fell 20-50%, but the debts remained at the same dollar amount. With future profits looking poor, capital investment slowed or completely ceased. In the face of bad loans and worsening future prospects, banks became more conservative in lending. They built up their capital reserves, which intensified the deflationary pressures. The vicious cycle developed and the downward spiral accelerated. This kind of self-aggravating process may have turned a 1930 recession into a 1933 depression."
I think that is a close enough match to be concerned - try reading it "..turned a 2008 recession into a 2011 depression."
6. Milly Weeble said...
I'm becoming increasingly worried about my savings (from the sale of my house)...will they be safe?