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Archive for the tag “financial crisis”

SA savings rate dips below zero

The savings rate has slipped below zero? Why are they surprised?

One thing is certain: a penny saved is a penny lost. If you try to save money, it will dwindle away to nothing.

The Times – SA savings rate dips below zero:

South Africa’s saving rate has dropped from 2.7% in 2001 to a negative rating of -0.5% in the second quarter of this year, the SA Saving Institute said today.

If the SA Savings Institute wan South Africans to save, they must work for the bringing back of the building societies.

Before the building societies went commercial a little over twenty years ago, anybody, but anybody, could open a savings account at a building society with R1.00, and earn interest on it. With R10.00 they could buy indefinite period or fixed period paid up shares, and have the dividends from these paid into their savings account, and accumulate savings, no matter how poor they were. A R1.00 a month subscription share could accumulate over 3 years, and so people could save for a fixed term objective, a holiday, for example, and, of course, in the case of building societies, a home.

But now, since the building societies all turned into commercial banks, anything you put away for a rainy day will be swallowed up in bank charges, and eventually the bank will send you a letter to say that you owe them money.

And it’s interesting to see that a lot of the present financial crisis began with mortgages, and that some of the institutions in most trouble in places like Britain have been building societies that became commercial banks.

The present situation favours only the rich, those who can afford to put away enough money so that the dividends or interest received outwighs the bank charges. But for the poor saving makes no sense — far better to spend it as soon as you get it.

The SA Savings Institute is not just barking up the wrong tree, it’s barking in the wrong forest.

AlterNet: How Wall Street’s Scam Artists Turned Home Mortgages Into Economic WMDs

Those who caused the Wests financial crisis are now amking a fortune in consulting fees explaining how they did it.

AlterNet: How Wall Street’s Scam Artists Turned Home Mortgages Into Economic WMDs:

The alphabet soup of exotic investments that represent the immediate cause of the banking mess is so complex that many of those ‘innovative’ financiers responsible for bringing the global economy to the brink of collapse are now making a fortune in consulting fees explaining just what the hell it is that they created. According to the Financial Times, Robert Reoch, the London banker who may be responsible for creating the first of the now-infamous debt-based securities, is now ‘swamped by investors who want to extricate themselves from derivatives-linked messes, or simply to understand the products that came out of the past few years of intense financial innovation.’ The Washington Post reported that Joe Cassano, the financial products manager ‘whose complex investments led to (AIG’s) near collapse,’ is raking in $1 million per month in consulting fees from the ailing financial giant to help sort out the toxic sludge on (and off) the bank’s books.

Bring back the building societies, I say.

The party’s over for Iceland, the island that tried to buy the world | World news | The Observer

Iceland won the 2007 UN poll as the best country to live in — I hope no one moved there on the strength of that.

The party’s over for Iceland, the island that tried to buy the world | The Observer:

This North Atlantic volcanic island, which is the size of Cuba, with a population of 320,000 – the size of Coventry’s – is an unlikely player on the global financial stage. It is famous for its fish, geysers and for winning the UN’s 2007 ‘best country to live in’ poll. But Iceland built its extraordinary wealth on the crest of the worldwide credit boom and now the crunch is sweeping it away, bankrupting a people for whom the past eight years have been, for most of them and by their own admission, one long party.

The nation’s celebrated rags-to-riches story began in the Nineties when free market reforms, fish quota cash and a stock market based on stable pension funds allowed Icelandic entrepreneurs to go out and sweep up international credit. Britain and Denmark were favourite shopping haunts, and in 2004 alone Icelanders spent �894m on shares in British companies. In just five years, the average Icelandic family saw its wealth increase by 45 per cent.

The party’s over for Iceland, the island that tried to buy the world | World news | The Observer

Iceland won the 2007 UN poll as the best country to live in — I hope no one moved there on the strength of that.

The party’s over for Iceland, the island that tried to buy the world | The Observer:

This North Atlantic volcanic island, which is the size of Cuba, with a population of 320,000 – the size of Coventry’s – is an unlikely player on the global financial stage. It is famous for its fish, geysers and for winning the UN’s 2007 ‘best country to live in’ poll. But Iceland built its extraordinary wealth on the crest of the worldwide credit boom and now the crunch is sweeping it away, bankrupting a people for whom the past eight years have been, for most of them and by their own admission, one long party.

The nation’s celebrated rags-to-riches story began in the Nineties when free market reforms, fish quota cash and a stock market based on stable pension funds allowed Icelandic entrepreneurs to go out and sweep up international credit. Britain and Denmark were favourite shopping haunts, and in 2004 alone Icelanders spent �894m on shares in British companies. In just five years, the average Icelandic family saw its wealth increase by 45 per cent.

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