Posts tagged 'savings'

Greece’s depression is forcing dis-saving on an epic scale

The collapse of the Greek economy is almost without precedent. Real household consumption has dropped by 27 per cent since the peak. During the global financial crisis, this figure “only” fell by 6 per cent before rebounding:

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Hibernating bear sustenance (part two, the UK)

In the latest from Andrew Smithers, our eye was drawn to a line in his gloomy state of the world summary, that the UK economy is driven by an unsustainable fall in household savings.

What it turns out we had not been paying attention to lately is the fact that the UK household saving rate is the worst among the developed economies apart from Japan, where a dip into negative territory has some investors nervously (gleefully?) eyeing the sovereign debt load. Read more

Cash ISA popularity raises fears

Households are putting more money aside in tax-free savings accounts than ever before, despite rising domestic bills and stagnant wage growth. The number of active Individual Savings Accounts (Isas), rose to 15.3m in 2010-11, the highest figure since Isas were first launched in 1999, according to FT analysis of data from HM Revenue & Customs.  Economists said the repercussions for the wider economy could be negative if households were opting to save rather than spend. However, the overall picture on savings is mixed, suggesting it is the relative competitiveness of Isas compared with other forms of saving, which has boosted their take-up.


This year’s oil bill – $2,400bn according to Morgan Stanley

Crude oil doesn’t necessarily spring to mind when one thinks of natural wealth redistributors.

Yet in 2010 the transfer of income from oil-importing countries to oil-exporting countries amounted to some $1,600bn — or 2.6 per cent of the importers’ GDP. With oil prices now hovering around $110 a barrel that redistribution will only increase. The barrel bill, so to speak, is about to get bigger. Read more

US families and attitudes toward financial risk

What impact did the crisis have on the attitudes of American families toward financial risk?

A paper published last week by the Federal Reserve, and cited in a speech by Elizabeth Duke on Thuesday, begins to answer this question by looking at how US households’ wealth, savings and expectations changed between 2007 and 2009. The researchers conducted a follow-up survey in 2009 of families analysed as part of the Survey of Consumer Finances (SCF) in 2007. Nearly 89 per cent of 2007 participants were re-interviewed. Read more

Richard Koo goes unconventional on China

Nomura’s Richard Koo — he of ‘balance sheet recession’ fame — has been inspired.

He’s spent a week with Chi Hung Kwan, of the Nomura Institute of Capital Markets Research and an all-around China expert, and come back with the discovery that the “conventional wisdom on [the] Chinese economy has begun to collapse.” Read more

Japan’s savings rate about to go negative, Goldman says

Japan has just announced that its national savings rate rose to 5 per cent in 2009, from 2.2 per cent in 2008. But already some analysts are predicting a sharp reversal in the trend. Goldman Sachs’ Chiwoong Lee thinks the rate is about to turn negative.

From a Monday note: Read more

Deleveraging and the tax compromise

Given the politics of the moment, the compromise deal on extending the Bush tax cuts was an all-or-nothing proposition. Either Republicans and Democrats would get everything they wanted (of the things that mattered), or everyone would leave empty-handed.

Obviously we ended up with the former. Read more

US and Japanese savings – the quiet reversal

One of the most striking shifts in the deployment of capital on the American and Asian  sides of the Pacific has been occurring quietly and with relatively little comment in the past year – a surge in America’s notoriously low savings rates and a slide in Japan’s traditionally stratospheric savings rates.  As the FT reports on Thursday:

US retail investors flee to savings
US retail investors poured close to $250bn (€184bn) into bank accounts in the first months of this year, sharply accelerating a flight to safety as they continued to flee volatile stock markets. Bank savings deposits rose by $246bn to a record $4,343bn in the nine weeks to March 9, according to data from the Federal Reserve. This is more than the whole of 2008, in which savings deposits rose by $229bn.

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