Tuesday, Feb 24, 2009
Is old money propping up the economy
Telegrath: Savers withdraw record amount from banks
British Bankers' Association says that customers withdrew £2.3bn in January, the biggest drop since records began. Bankers have their own version of where the money is going but I think it's probably being spent before it's worth less or being used to prop up falling incomes.
Posted by enuii @ 06:15 PM (1151 views) Add Comment
12 Comments
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1. 51ck-6-51x said...
*hopes* Maybe this will induce some more competition in the market for savings.
2. mdmick said...
I wonder if it is someone with 52k moving the excess 2k to another bank ; that way, if the 50k bank folds then there is at least a belief that the government will cover the lost 50k (the limit). Net, the banking system has lost no money, in a sense; but maybe these statisticians did not measure that effect.
3. magnifico said...
Yes 51ck I expect it will send the message to the bank that savers are more astute than borrowers and in the long term a safer bet.
4. techieman said...
"sales of corporate bond funds, which are paying yields of 5pc or more are proving popular among investors looking for a lower risk investment that pays an income. Bonds funds accounted for two in every three unit trusts bought in December and they continue to attract the lion's share of investors' money in 2009" - that may very well end in tears!
5. growler said...
alternatively, people are burning through their savings to pay off their debts...
6. Yoss said...
Will be interesting to see the take up on ISA's this year.
7. troy said...
growler, talking of burning, it is cold and quiet around here just now
oops what was that?
8. mdmick said...
Techieman @4 , these bonds are described as lower risk. In a bad scenario, what could happen that would cause tears?
A bank suggested a bonds type of investment to me recently while I try to help a friend with money. And I don't know enough about the subject to state the pros and cons.
9. yoyo1 said...
'investors looking for a lower risk investment'.
Don't like that word 'investment' any more.
10. mark wadsworth said...
This is the sort of blitheringly stupid special pleading that will have The Badger reaching for his (our) chequebook.
Savers withdrew, did they? What did they do with it...
1. Put it in coins and notes under the mattress (hurray, interest free loan to the government, possibly never to be repaid)
2. Use it to pay off mortgage, which might explain why mortgages are being paid off so quickly - it's better to lose 0.05% interest on your savings and save 3% on your mortgage interest.
3. Spent it on wine women and song (or indeed wine, men and song)? Methinks not. And even if they did, the business takes that money, pays it to employees or suppliers, who pay it into the bank etc??
4. Or what, exactly?
To sum up, the headline is B0LL0CK5
11. techieman said...
mdmick - not all "low risk" bonds are.... low risk. There is a reason why corporate bonds are paying higher rates - so its just a remark to be carefull about the possible default risk. A while back you would have said PIBS in B&B was low risk.....
12. 51ck-6-51x said...
An investment grade corporate bond bubble is building up.