It is a shocker....the US economy as of today's report....slipped by 2.9 percent. The quote attached to it? The largest slip in the economy outside of a recession (Fox New's quote, not mine). For folks with short memory episodes....it was the last two quarter of 2008 and the first quarter of 2009.....when all the bad news came and folks felt pretty negative about the economy. Course, the Bush team fixed up some minor deal and the new Obama administration carried the rest of the "fix" down the line.
What should we take from this episode today? Well....the recession or depression (as the President often talks of).....probably never came to an end. When you look at employment numbers and how they've changed the entire game of counting who is employed and who isn't......it's more than a mere six or seven percent. Forbes magazine in 2013 gave the real rate in the US at around 14.3 percent. The CNBC business news folks put the rate back in December at around 13 percent.
Toss in bank failures (they still occur).....major US companies keeping their profits overseas....small business stagnation across the US.....and the CD rate still stuck at barely one percent, and you've got a depression on your hands.
Why did the President authorize the sales of US-produced oil to business operations outside of the US today? It's been forty years since we halted US-produced oil being sold to other countries. I'm guessing for the past month they knew the economic news was going to be bad, and this was the only positive thing they had left in their bag of tricks.
What's left? Repeat cash-for-clunkers? Toss out seven-hundred-and-eighty billion in stimulus money to build bridges and schools? Slash taxes on the working class? Pump up taxes on the wealthy?
A short history lesson. When Wall Street fell in 1929, and the FED refused to step in to help the banks in their moment of crisis.....Hoover ended up with twenty-odd solutions which simply delayed spiral until the election, and then FDR stepped in with his hundred-odd solutions which kept the depression underway until 7 Dec 1941 (Pearl Harbor Day). As the next month went by and various members of the FDR White House team admitted that it'd take a year or so to gear up industry and even start to marginally get us into the war.....private industry walked in and simply said to put them into the control seats and suspend all of the FDR practices of the past decade.
Roughly a hundred days after 7 December 1941.....the nation was in a building frenzy....violating every past FDR rule set into place. When the war came to an end....the economic experts of the FDR era felt that the government would have to step in and manage the economy once again....otherwise, we would collapse back into a depression again. Well.....that didn't happen. Overmanagement of the economy wasn't allowed. As Eisenhower came in around 1953...the economic management crew were still left sitting and out of the picture.
Since the Nixon era.....there's been various efforts to bring the economic back under a government-managed system. Both Republicans and Democrats have agreed to the measures. We sit here today.....with massive regulation, rules which stagnant growth, and lack of clear future goals because folks think the government will step in to tax them more or set up marginal stumbling blocks.
Stock prices drops? I'd prepare myself for a correction or two in the next week. More speeches by the President? Maybe....but what else can he say? Admit we never emerged from the 2008 depression? It's best to just smile and hope for better days ahead.
Wednesday, 25 June 2014
Tuesday, 24 June 2014
My Stuck Story
This is a true story.
Over the last weekend....some American kid (exchange student, I presume) in Germany....got engaged in a conversation with some German associates near a statue in the local village.
It's best to describe the statue as a resemblance to a woman's certain private area....with an opening. You can sit and imagine at your leisure.
Why a statue of such significance? Well....no one has really said much over that. I'd assume the city council thought they had money to blow on something....some artist suggested this....and a year later, he/she delivers this stone statue depicting....well....a woman's private area. It's a fairly big monument.....maybe six to eight feet tall....and the opening is just big enough for a slim kid to push himself through....well...maybe.
In this episode....the kid took a dare that he could pass from the inside out....got halfway....fell....and got stuck.
His associates tried to yank him.....pull him.....and lift him....but the American kid was stuck completely in the stone cavity.....so to speak.
So, the fire department got called. Normally, to rescue cats out of trees and such....it'd be one truck and four firemen. In this case? Four trucks and around twenty German firemen. They took a while to size up the situation. You see....in Germany....you just don't wander up to a town statue and accidentally destroy it. So they figured out the best method to remove the kid, and the job was done.
I sat and previewed the whole thing. If this was in the US....they'd have to put a fence around the statue because folks would claim it's dangerous for the public to be around it after one person got stuck. Germans don't think that way.....they assume fifty years might pass before another idiot gets stuck.
The kid? Well....he's gotten a nickname from the episode....maybe even five or six nicknames. Later in life....he'll be interviewed for a job with the State Department and bring up the "stuck-in-a-woman's-privates" story. He'll get the job because of the story. In a bar in Guntersville or Aruba.....it's good enough for folks to buy you a drink or two.
As for the town council? They might put up a warning sign, but I kinda doubt it. It'd just draw attention. As for future statues? I'm guessing questions will be raised over the safe factor and how it might be abused.
Yeah, just an odd-ball story from Germany. True though.
Over the last weekend....some American kid (exchange student, I presume) in Germany....got engaged in a conversation with some German associates near a statue in the local village.
It's best to describe the statue as a resemblance to a woman's certain private area....with an opening. You can sit and imagine at your leisure.
Why a statue of such significance? Well....no one has really said much over that. I'd assume the city council thought they had money to blow on something....some artist suggested this....and a year later, he/she delivers this stone statue depicting....well....a woman's private area. It's a fairly big monument.....maybe six to eight feet tall....and the opening is just big enough for a slim kid to push himself through....well...maybe.
In this episode....the kid took a dare that he could pass from the inside out....got halfway....fell....and got stuck.
His associates tried to yank him.....pull him.....and lift him....but the American kid was stuck completely in the stone cavity.....so to speak.
So, the fire department got called. Normally, to rescue cats out of trees and such....it'd be one truck and four firemen. In this case? Four trucks and around twenty German firemen. They took a while to size up the situation. You see....in Germany....you just don't wander up to a town statue and accidentally destroy it. So they figured out the best method to remove the kid, and the job was done.
I sat and previewed the whole thing. If this was in the US....they'd have to put a fence around the statue because folks would claim it's dangerous for the public to be around it after one person got stuck. Germans don't think that way.....they assume fifty years might pass before another idiot gets stuck.
The kid? Well....he's gotten a nickname from the episode....maybe even five or six nicknames. Later in life....he'll be interviewed for a job with the State Department and bring up the "stuck-in-a-woman's-privates" story. He'll get the job because of the story. In a bar in Guntersville or Aruba.....it's good enough for folks to buy you a drink or two.
As for the town council? They might put up a warning sign, but I kinda doubt it. It'd just draw attention. As for future statues? I'm guessing questions will be raised over the safe factor and how it might be abused.
Yeah, just an odd-ball story from Germany. True though.
Sunday, 22 June 2014
The Pope's Lack of Understanding
This past week, the Pope stood up and made a big speech over ethical judgements, investing, and poor judgement in agricultural commodities. Basically, food prices have gone up a notch or two over the past six months, and someone finally noted this to the Pope. He figured that a speech on the topic and Pope-like advice would get to the folks who run the agricultural markets and halt such unethical pricing.
Generally, you go to a priest, bishop or Pope for one general purpose.....a reading on the Bible. Beyond that, there's not much else in terms of advice that you want from them.
They generally don't tune cars, lay bricks, herd cattle, mix drinks, dig septic tanks, paint barns, split posts, feed the hungry, drive eighteen-wheelers, shovel snow, run a pub, mix concrete, plant tomatoes, operate a Dollar General Store, mow grass, weld metal gates, run a patrol through dangerous neighborhoods, rescue cats out of trees, rescue drunks at wild parties, replace windows, or plan a forty-person family reunion.
When the Pope suggests it's intolerable for folks to flex the market and it's by God's wishes to be ethical in handling agricultural pricing.....he might want to stand back and observe that there are at least forty variations on pricing which real life has to contend with. He didn't mention various inspectors that are required by law now. Nor did he mention the effect of weather. Nor did he mention that drought comes and goes in various regions of the world. The oil used for gas and diesel to move products? Well, yeah....that's part of the mess as well. The fact that folks want year-round products now....mean that we import grapes from India (yeah, shocking, isn't it) tomatoes from Egypt, and apples from New Zealand on occasion. That didn't happen fifty years ago, but we started to insist that we had to have watermelons all year round, and that meant ships got involved, along with refrigeration.
Speculation? It's all built into the system because we don't eat local fruits and vegetables anymore. Nor will we eat local pork, chicken, turkey, fish or beef anymore.
I'm not dumping on the Pope.....but to suggest that God's will fits into agriculture, speculation or the pricing of cucumbers....well....it just ain't so. Course, if you got a question on Moses, or why some reason why Luke was a better disciple than the rest of the dozen.....well....it might be worth asking about that.
Generally, you go to a priest, bishop or Pope for one general purpose.....a reading on the Bible. Beyond that, there's not much else in terms of advice that you want from them.
They generally don't tune cars, lay bricks, herd cattle, mix drinks, dig septic tanks, paint barns, split posts, feed the hungry, drive eighteen-wheelers, shovel snow, run a pub, mix concrete, plant tomatoes, operate a Dollar General Store, mow grass, weld metal gates, run a patrol through dangerous neighborhoods, rescue cats out of trees, rescue drunks at wild parties, replace windows, or plan a forty-person family reunion.
When the Pope suggests it's intolerable for folks to flex the market and it's by God's wishes to be ethical in handling agricultural pricing.....he might want to stand back and observe that there are at least forty variations on pricing which real life has to contend with. He didn't mention various inspectors that are required by law now. Nor did he mention the effect of weather. Nor did he mention that drought comes and goes in various regions of the world. The oil used for gas and diesel to move products? Well, yeah....that's part of the mess as well. The fact that folks want year-round products now....mean that we import grapes from India (yeah, shocking, isn't it) tomatoes from Egypt, and apples from New Zealand on occasion. That didn't happen fifty years ago, but we started to insist that we had to have watermelons all year round, and that meant ships got involved, along with refrigeration.
Speculation? It's all built into the system because we don't eat local fruits and vegetables anymore. Nor will we eat local pork, chicken, turkey, fish or beef anymore.
I'm not dumping on the Pope.....but to suggest that God's will fits into agriculture, speculation or the pricing of cucumbers....well....it just ain't so. Course, if you got a question on Moses, or why some reason why Luke was a better disciple than the rest of the dozen.....well....it might be worth asking about that.
Friday, 13 June 2014
Simply Observations
A couple of notes I've come to realize over the past day or two.
Texas Governor Rick Perry has taken this comment "Gay lifestyles can be from your DNA" and thrown it back into pot....saying alcoholism can come from your DNA and you can deny it....starve it off....and avoid it. Journalists are a bit peeved and want to say something harsh about this, but Rick's comment goes hand-in-hand with use of the DNA stance. Opening up the DNA can of worms.....probably didn't help anyone's case in the long run. Stupidity also comes from DNA.....and we don't necessarily brag about that.
High protein diets loaded with meat....good to avoid strokes? Yeah. That's what the smart guys have discovered. Course, they'd rather not rejoice on this. Another group of smart guys says meat can increase the chances of breast cancer.
In Bama.....some young gal (19) had ended up with an aunt. Bad family situation or whatever. But the young gal wasn't having much luck either with the aunt. The aunt ended up going onto Facebook with a fake account as a guy to befriend her niece. What ended up having in a rather odd and quick way....was that the young gal quickly buddied up with the new fake guy, and said she wanted her entire family killed. The aunt then realized she had a nut-job in the house.....called the local Sheriff and the niece is sitting in a local jail. Charges are going to be interesting, and I doubt if the gal spends more than six months in jail.
Finally, this Bergdahl guy. The newest fact on him is that he went to the Coast Guard boot camp originally....spent roughly four weeks there before they kicked him out. They won't give a reason, but it would appear that he had real issues in accepting authority. More and more.....Bergdahl looks like a nut-case who never should have spent a day in uniform, but the Army relaxed its standards enough to let the guy in. Promoting a nut-job to Sergeant? Well....the Army has kinda gone back on that promotion. It might still happen, but it'd likely embarrass the leadership a good bit to admit they promoted some nut. And the $360,000 in back-pay? It'll still happen, I think. If you had to pick some guy who needed to go and spend the rest of his life in a mental institute.....this is the one guy that I'd definitely send.
Texas Governor Rick Perry has taken this comment "Gay lifestyles can be from your DNA" and thrown it back into pot....saying alcoholism can come from your DNA and you can deny it....starve it off....and avoid it. Journalists are a bit peeved and want to say something harsh about this, but Rick's comment goes hand-in-hand with use of the DNA stance. Opening up the DNA can of worms.....probably didn't help anyone's case in the long run. Stupidity also comes from DNA.....and we don't necessarily brag about that.
High protein diets loaded with meat....good to avoid strokes? Yeah. That's what the smart guys have discovered. Course, they'd rather not rejoice on this. Another group of smart guys says meat can increase the chances of breast cancer.
In Bama.....some young gal (19) had ended up with an aunt. Bad family situation or whatever. But the young gal wasn't having much luck either with the aunt. The aunt ended up going onto Facebook with a fake account as a guy to befriend her niece. What ended up having in a rather odd and quick way....was that the young gal quickly buddied up with the new fake guy, and said she wanted her entire family killed. The aunt then realized she had a nut-job in the house.....called the local Sheriff and the niece is sitting in a local jail. Charges are going to be interesting, and I doubt if the gal spends more than six months in jail.
Finally, this Bergdahl guy. The newest fact on him is that he went to the Coast Guard boot camp originally....spent roughly four weeks there before they kicked him out. They won't give a reason, but it would appear that he had real issues in accepting authority. More and more.....Bergdahl looks like a nut-case who never should have spent a day in uniform, but the Army relaxed its standards enough to let the guy in. Promoting a nut-job to Sergeant? Well....the Army has kinda gone back on that promotion. It might still happen, but it'd likely embarrass the leadership a good bit to admit they promoted some nut. And the $360,000 in back-pay? It'll still happen, I think. If you had to pick some guy who needed to go and spend the rest of his life in a mental institute.....this is the one guy that I'd definitely send.
Wednesday, 21 May 2014
Economy and History
I often stress history because it tells a lot of lessons.
When I was a kid....in 1968....a burger at McDonalds cost eighteen cents. The soda at the school break area? It was ten cents.
Seven years later? The same burger would cost you around thirty cents, and the soda would have cost around twenty cents. A substantial rise? Yeah....partly because of the economy, and partly because of the escalation of oil pricing.
I did some research. If you were around in 1970 and desiring college in Utah....you would have paid around $390 for the entire year....for tuition. Books, food and housing would have been the substantial stumbling block for your lifestyle. Today? That year of tuition at the same university in Utah is $7000. The books, food and housing? Probably triple what they were in 1970.
In 1940, you could have bought a simple plain wood house....for around $3,920. Today, in a non-urban area....like Alabama....you'd need to spend around $65,000 to get the same plain house.
In 1970, you could buy gas for around thirty-six cents a gallon. Filling the tank up? It would around five bucks.
For the greater part of the 1970s....economists generally agree that most folks when thrust into unemployment.....were there for fifteen weeks. Today? It's closer to being greater than thirty-seven weeks (more than double). You then consider that there weren't advertised jobs off the internet, highly trained HR squads in companies, or fancied-up resumes in existence. You generally had some typist fix up one generic resume and made a few copies of it. In effect, we have three times the effort, the cost, and the delay built into hiring today.....than in 1970.
Industry jobs? The economists say that we had around eighteen million Americans in 1970's industry. Today? We barely have twelve million occupying jobs in industry. Automation, foreign production, and smarter production values all helped. There's probably one million Vietnamese folks who are today part of the American industrial cycle....supporting the needs of America....while residing in Vietnam. If you had said that in 1970....people would have laughed you out of the room.
Locking things? In 1970....most folks NEVER locked their car-doors, and probably over half of America never locked the door to their house. Today? We not only lock the car-doors, but we invested in car alarms and various devices to defeat the thugs. Our homes? Alarms installed, and we all have guns in various corners to meet the thugs head-on.
Economists will tell you that in 1970....roughly one in fifty Americans were on some type of public assistance (food stamps, welfare, etc). Today? One in six. Who paid for the difference? Well....you the taxpayer. Could we eventually get it down to one in four? Yeah, probably so.
In 1970, I had access to four channels (ABC, NBC, CBS, and the Alabama Public Access channel....the educational channel as we called it). Today? My dad has the satellite TV deal fixed up and could have four-hundred channels flowing into the house. To be honest, once it got up to ten possibilities....that was all we kinda needed. The rest? Just wasted digital space.
You'd think there was some lesson learned out of this history lesson. But no.....there's nothing much we can learn. We are simply walking toward further out and wondering just how big a mess you could fall into.
When I was a kid....in 1968....a burger at McDonalds cost eighteen cents. The soda at the school break area? It was ten cents.
Seven years later? The same burger would cost you around thirty cents, and the soda would have cost around twenty cents. A substantial rise? Yeah....partly because of the economy, and partly because of the escalation of oil pricing.
I did some research. If you were around in 1970 and desiring college in Utah....you would have paid around $390 for the entire year....for tuition. Books, food and housing would have been the substantial stumbling block for your lifestyle. Today? That year of tuition at the same university in Utah is $7000. The books, food and housing? Probably triple what they were in 1970.
In 1940, you could have bought a simple plain wood house....for around $3,920. Today, in a non-urban area....like Alabama....you'd need to spend around $65,000 to get the same plain house.
In 1970, you could buy gas for around thirty-six cents a gallon. Filling the tank up? It would around five bucks.
For the greater part of the 1970s....economists generally agree that most folks when thrust into unemployment.....were there for fifteen weeks. Today? It's closer to being greater than thirty-seven weeks (more than double). You then consider that there weren't advertised jobs off the internet, highly trained HR squads in companies, or fancied-up resumes in existence. You generally had some typist fix up one generic resume and made a few copies of it. In effect, we have three times the effort, the cost, and the delay built into hiring today.....than in 1970.
Industry jobs? The economists say that we had around eighteen million Americans in 1970's industry. Today? We barely have twelve million occupying jobs in industry. Automation, foreign production, and smarter production values all helped. There's probably one million Vietnamese folks who are today part of the American industrial cycle....supporting the needs of America....while residing in Vietnam. If you had said that in 1970....people would have laughed you out of the room.
Locking things? In 1970....most folks NEVER locked their car-doors, and probably over half of America never locked the door to their house. Today? We not only lock the car-doors, but we invested in car alarms and various devices to defeat the thugs. Our homes? Alarms installed, and we all have guns in various corners to meet the thugs head-on.
Economists will tell you that in 1970....roughly one in fifty Americans were on some type of public assistance (food stamps, welfare, etc). Today? One in six. Who paid for the difference? Well....you the taxpayer. Could we eventually get it down to one in four? Yeah, probably so.
In 1970, I had access to four channels (ABC, NBC, CBS, and the Alabama Public Access channel....the educational channel as we called it). Today? My dad has the satellite TV deal fixed up and could have four-hundred channels flowing into the house. To be honest, once it got up to ten possibilities....that was all we kinda needed. The rest? Just wasted digital space.
You'd think there was some lesson learned out of this history lesson. But no.....there's nothing much we can learn. We are simply walking toward further out and wondering just how big a mess you could fall into.
Monday, 12 May 2014
A Story of a Haircut
It's not a story that will get told on CNN or in your local paper. If you browsed around, there might be a dozen newspapers in the entire US that carried the story, and it'd just be forgotten real quick anyway.
So, two guys go for a haircut.
In a normal typical day.....tens of thousands of guys go for a haircut. Most have a preferred barber. They have a routine......stepping in...reading the local news....maybe sipping some coffee. The TV might be on, or the barber might be chatting away on NCAA football, a Baptist revival, or discussing the best way to brew garage-beer.
In this particular case....the barbershop is in Yemen....a far piece from American soil. The two customers? One was a CIA guy and the other a Army special forces Lt Col. It's safe to say....that in Yemen....you do as the locals do, and you carry a gun on you.
For some reason, these two guys were picked from the various folks coming and going at the embassy there in Yemen, and were supposed to be kidnapped.
The kidnapper crew? I'm not sure if they really had much of a plan, or if the head mullah of the local Muslim facility just said a few magic words and figured it'd all be fine.
Well....our two American guys pull their pistols out and kill the two terrorists. Reports won't indicate the shape of the barbershop after the event.....but it's safe to say that there's no more issues ever to arise from these two fine young gentlemen of a Muslim orientation. They've gone to the six-feet under world.
The barber? Well....there's not much said. I'm sure he's a bit shaken. He probably didn't get to finish the haircuts. And there's probably a reputation about his customers now.....they aren't the type to give easily.
This old world is not a peaceful place....or defined as a friendly place. You do stupid stuff....you end up six-feet under. You think about your place in life, and gauge the circumstances of which you'd like to enjoy. If you don't have much to live for.....obviously, you lack something....as these two young gentlemen did.
So, two guys go for a haircut.
In a normal typical day.....tens of thousands of guys go for a haircut. Most have a preferred barber. They have a routine......stepping in...reading the local news....maybe sipping some coffee. The TV might be on, or the barber might be chatting away on NCAA football, a Baptist revival, or discussing the best way to brew garage-beer.
In this particular case....the barbershop is in Yemen....a far piece from American soil. The two customers? One was a CIA guy and the other a Army special forces Lt Col. It's safe to say....that in Yemen....you do as the locals do, and you carry a gun on you.
For some reason, these two guys were picked from the various folks coming and going at the embassy there in Yemen, and were supposed to be kidnapped.
The kidnapper crew? I'm not sure if they really had much of a plan, or if the head mullah of the local Muslim facility just said a few magic words and figured it'd all be fine.
Well....our two American guys pull their pistols out and kill the two terrorists. Reports won't indicate the shape of the barbershop after the event.....but it's safe to say that there's no more issues ever to arise from these two fine young gentlemen of a Muslim orientation. They've gone to the six-feet under world.
The barber? Well....there's not much said. I'm sure he's a bit shaken. He probably didn't get to finish the haircuts. And there's probably a reputation about his customers now.....they aren't the type to give easily.
This old world is not a peaceful place....or defined as a friendly place. You do stupid stuff....you end up six-feet under. You think about your place in life, and gauge the circumstances of which you'd like to enjoy. If you don't have much to live for.....obviously, you lack something....as these two young gentlemen did.
Wednesday, 7 May 2014
A Little History over CD Rates
My brother will harp on this discussion topic a fair amount. CD rates at banks....are lousy.
In 2012, the six-month rate was around .63-percent.
In 2007, the year prior to the fall.....it was around 3.50-percent.
In 2000, before 9-11, it was 6.75-percent.
In 1997, in the midst of the Clinton-era, it was 6.70-percent.
In 1990, we were actually getting 7.50-percent for a six-month CD.
Toward the last six months of 1989, the six-month rate actually floated between 10.40-percent and 10.13 percent.
Toward the middle of the 1980s....the average CD rate for six-months floated around seven and eight percent.
For ALL of 1984.....the CD rate was ten to eleven percent.
In the first four months of 1980....we had this amazing monthly rate that ran: 13.48-Jan, 14.58-Feb, 17.74 for Mar, and 15.80 for Apr. Yeah.....it was an amazing period.
Most of the 1970s...the average CD rate ran around five to six percent a year. For five months in 1974.....we ran ten to twelve percent on the average six-month CD package.
Throughout most of the 1960s? It stood above five percent for every single month, and in a fair number of months....above six percent. Around mid-1969, we briefly tangled with eight percent for a couple of months.
The truth is....if you bring up the topic....most everyone under the age thirty don't remember much about CD rates, and they generally accept a rate of one percent as normal or average. For those over sixty.....they remember the glory days and how eight and nine percent....locked into an account for a year or five years....really mean something.
Why the low rates for such a long time? There's three basic reasons that the experts always bring up.
1. The US is now perceived as the prime place to park money internationally....because we are ultra-safe....compared to various Asian countries, Middle-Eastern areas, and the European Zone. So, the rich arrive...park their money....and there's no need for additional capital in US banks. To be honest.....they are overflowing, with other folks' money.
2. Bank reserves are at a all-time high....something is unique and unusual. Why pay more on CD rates....when you have the money sitting there?
3. The Fed's target for short-term rates is awful low.....which affects the perceived outlook for long-term rates....which is where CD rates would be affected. If the Fed said short-term perceptions were growing better....they'd raise their rates (something they quietly don't feel is good right now). For six years.....their perception on short-term rates has been AWFUL low and you'd have to wonder if there's more to the whole Fed story.
I went looking for rates in the 1930s....and the best I could find was savings rates. The typical savings account ran between .6-percent and 1.0-percent.....for a fair amount of the depression era. Toward 1936, it actually dropped to .1-percent, and for 1938/1939.....it was 0-percent. Yeah....ZERO percent.
The odds of it going back to three to five percent? Most economic experts say it's a cycle, and that it has to retreat back to a norm....sooner or later. Course, they don't want to guess when this cycle will end.
So when Uncle Karl drinks a bit, and reminisces over 1980 and how he got locked into seventeen percent interest for a couple of years with his savings....he's not joking. If he did a five-year CD....he turned better than seventy-percent growth over that period with his money. Today? Five years might get you six-percent growth over the entire period. This is why Uncle Karl drinks so much probably.
In 2012, the six-month rate was around .63-percent.
In 2007, the year prior to the fall.....it was around 3.50-percent.
In 2000, before 9-11, it was 6.75-percent.
In 1997, in the midst of the Clinton-era, it was 6.70-percent.
In 1990, we were actually getting 7.50-percent for a six-month CD.
Toward the last six months of 1989, the six-month rate actually floated between 10.40-percent and 10.13 percent.
Toward the middle of the 1980s....the average CD rate for six-months floated around seven and eight percent.
For ALL of 1984.....the CD rate was ten to eleven percent.
In the first four months of 1980....we had this amazing monthly rate that ran: 13.48-Jan, 14.58-Feb, 17.74 for Mar, and 15.80 for Apr. Yeah.....it was an amazing period.
Most of the 1970s...the average CD rate ran around five to six percent a year. For five months in 1974.....we ran ten to twelve percent on the average six-month CD package.
Throughout most of the 1960s? It stood above five percent for every single month, and in a fair number of months....above six percent. Around mid-1969, we briefly tangled with eight percent for a couple of months.
The truth is....if you bring up the topic....most everyone under the age thirty don't remember much about CD rates, and they generally accept a rate of one percent as normal or average. For those over sixty.....they remember the glory days and how eight and nine percent....locked into an account for a year or five years....really mean something.
Why the low rates for such a long time? There's three basic reasons that the experts always bring up.
1. The US is now perceived as the prime place to park money internationally....because we are ultra-safe....compared to various Asian countries, Middle-Eastern areas, and the European Zone. So, the rich arrive...park their money....and there's no need for additional capital in US banks. To be honest.....they are overflowing, with other folks' money.
2. Bank reserves are at a all-time high....something is unique and unusual. Why pay more on CD rates....when you have the money sitting there?
3. The Fed's target for short-term rates is awful low.....which affects the perceived outlook for long-term rates....which is where CD rates would be affected. If the Fed said short-term perceptions were growing better....they'd raise their rates (something they quietly don't feel is good right now). For six years.....their perception on short-term rates has been AWFUL low and you'd have to wonder if there's more to the whole Fed story.
I went looking for rates in the 1930s....and the best I could find was savings rates. The typical savings account ran between .6-percent and 1.0-percent.....for a fair amount of the depression era. Toward 1936, it actually dropped to .1-percent, and for 1938/1939.....it was 0-percent. Yeah....ZERO percent.
The odds of it going back to three to five percent? Most economic experts say it's a cycle, and that it has to retreat back to a norm....sooner or later. Course, they don't want to guess when this cycle will end.
So when Uncle Karl drinks a bit, and reminisces over 1980 and how he got locked into seventeen percent interest for a couple of years with his savings....he's not joking. If he did a five-year CD....he turned better than seventy-percent growth over that period with his money. Today? Five years might get you six-percent growth over the entire period. This is why Uncle Karl drinks so much probably.
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