Savings and Moan

The author points out that the banks are no longer interested in making home equity loans. If so, how is a homeowner able to make improvements on his home? Won't he have to save the money he has earned to pay for those improvements? And if he and everyone else is suddenly saving money, isn't there more readily available funds for lthe banks to make loans? Why the gridlock?

That's cool dutch, hope you like 25% unemployment.

Thanks for mentioning "health issues" peter. Another wonderful characteristic of this third-world country we live in is that your diligently maintained $100,000 savings account evaporates at the first medical emergency.

For those of you who like research go to this government website, Bureau of Economic Analysis, to see the savings rate:

http://www.bea.gov/briefrm/saving.htm

Then go here to this pdf file on the SAME website to see why they say the rate is bogus, see page 13:

http://www.bea.gov/about/pdf/nordhaustestimony24july2002.pdf

tenininchpython, I pay cash for everything never ever had a loan except for a modest sum for my house. I drive used, paid for vehicles, etc. In fact I do not need to explain to you. Why shoot the messenger? Why let the media convince you that majority of Americans are stupid and lazy? The fact is, only about 10% of Americans are in financial trouble and mostly because of job loss and health issues.

The saving rate calcuations are wrong and you have yet to prove anything other than a simple minded and bizarre personal attack.

It's this kind of journalism that is the worst and needs to be addressed.

Yo python, are you saying peterthepumkineater is wrong about the way the savings rate is calculated?

One last comment, the reason Japan's savings rates are so high is because home ownership is simply out of the question. Most Japaneese live in 800 or less square foot apartments with no hope of ever buying a home, so they have no where to put their money except in a savings account. Living in an apartment means no lawn mowers, no roof repairs, no family room additions, it's a completely different economic world and not a fair comparison.

LOL - Mr. peterthepumkineater and joe the moralist, I cheerfully smile at your ignorance. I am certain this article applies strongly to your personal situations... you just can't get yourselves to open your eyes yet and see the reality. Let me guess, you both have houses where you owe more than they are worth. But, I am also willing to bet you have Hummers sitting in your driveways as well.

LOL - Mr. peterthepumkineater and joe the moralist, I cheerfully smile at your ignorance. I am certain this article applies strongly to your personal situations... you just can't get yourselves to open your eyes yet and see the reality. Let me guess, you both have houses where you owe more than they are worth. But, I am also willing to bet you have Hummers sitting in your driveways as well.

If the personal savings rate calculation does not include pensions and investments then it is totally useless as a litmus test of savings. Investments are the only mechanisms I use to actually "save" money, because putting money into a standard bank savings account will earn you an interest rate that is well below the rate of inflation.

Also, socking away more money is a fine habit to get into, but changes (at least on the macro scale) need to be gradual or else we exacerbate the problem. America needs to keep the money moving.

I should elaborate more: Let's say you put 15% of your income into a 401k, and keep $20,000 in a savings account for emergencies. You are not saving any money accourding to the calculations.

Let's say you have $200,000 in a savings account. Your afraid of a bank failure because your only insured to $100k, so you buy $100k in gold. Oops, your savings rate has now dropped %50, because gold is not considered savings.

Let's say you keep $10,000 in a savings account and the rest of your income you deposit in a Money Market Fund at TDAmeritrade. Let's say your money market went from $50,000 to $100,000. Guess what? Your savings rate is still zero.

I am sick and tired of hard working, thrifty Americans getting shafted with bad accounting principles.

The personal savings rate calculation does not include pensions and investments, such as 401k's. Savings is narrowly defined as how much cash you have in a savings account or checking account. The reason savings goes to zero in boom times is that people invest their money. When stocks tank, people put money in safe investments such as the bank. Your arguments are completely wrong.

well, we have Zakaria on one page, and Gamien on another; one says we must save, the other says we must not save- this rag should be titled the Bipolar Times. Where is the editor, in line at the Fed?

The Americans just have to learn the beauty of savings. Over the decades, the Americans are spending way too much than they actually need and lead a way too luxury life for too long. Banks are lending money with way too low restrictions. Financial investment banks are earning way too much bonus. And US Government are paying way too much tax payers' hard working money to save their mess up. This is recession time but it is also a balance adjustment by nature, say by GOD or whoever is out there watching Americans spending way too much for the past. All Americans, including us indificual, banks, lendors, investment banks, car manufacturers, governement, all need to re-exame the way we live, work, think, consume, react and adjust back to a more balanced way.

Well said alpha. And I am so sick of the whining from the media about deflation or people saving their money, as if they had any remaining credibility.

The baby boomers and their surviving parents who have propelled the economy for decades have stopped spending. No one in my family is buying new cars or hourses or taking trips. We are done. The younger generation doesn't have the same earning or spending power because our economny has been weakened by unfair global trade. Good luck, we need it.

The problem will get worse before it gets better. As the economy continues to recess, people who lose their jobs and have no savings will be in a tight spot. The credit card companies know this and are in panic mode - closing accounts, raising interest rates, etc. THey are tying to limit their exposure. Expect the credit bubble to burst sometime soon.