Gross: Never have investors reached so high in price for so low a return. Never have investors stooped so low for so much risk.
— PIMCO (@PIMCO) May 14, 2013
“The bottom line is that as a saver, just like you I have no choice, I either take risks in dividend paying stocks and the UK housing market or all of my hard earned wealth will be stolen by the government and the banks. Of course one of the main objectives of ZIRP is to force everyone to spend their savings, then we will all be in the same boat, become reliant on state benefits because the government’s stealth tax – inflation will have eroded the purchasing power of our earnings away.” – Nadeem Walayat (UK)
UK Savings Catastrophe – Best Cash ISA? There Isn’t One! | Market Oracle |
May 14, 2013 – by: Nadeem Walayat (excerpt)
The consequences of Quantum of Quantitative Easing (QQE) is one of systematic theft of wealth from savers / bank depositors by the government and banking sector, unfortunately this trend is intensifying and unlikely to change for at least another year as illustrated by announcements every other month such as the extension of the funding for lending fraud, that looks set to continue to bleed depositors dry in the run up to the May 2015 general election as an desperate, fractious Coalition government will first attempt to bribe the electorate by spending money the country does not have or in the final analysis given a poor standing in the opinion polls decide to follow Labours example of 2009 (Labour Governments Bankrupt Scorched Earth UK Economy for the Conservative Government ) by handing the next Labour-geddon government an even more scorched earth bankrupt economy.
The banking crime syndicate has been busy these past few weeks by just about having pulled virtually any of the deals that would have beaten even the highly suspect official rate of inflation which is jokingly being reported by the ONS as being at 2.8%, when every household knows through experience that it is actually north of 4%!
Cash ISA Interest Rates Crash
The new tax year gave a small window of opportunity to lock in rates that just barely beat inflation after interest rate crash of 2012-2013 as a year earlier, Cash ISA savers could have fixed at as high as 4.5% for 5 years, but as the below table shows of the rates offered by the Halifax that the savings rates have crashed directly in response to the Bank of England’s Funding for Lending Scheme that was announced in July 2012 which sought to provide the Banks with cheap money to entice lending to the general public that originally would total an estimated £80 billion over 18 months which has now been indefinitely extended. The effect of which is that the Banks are able to rely on Bank of England / UK Treasury for funding for loans instead of savings and thus savings interest rates continue to crash.
In my last article on Cash ISA’s at the start of this tax year I warned that savers only had a short window of opportunity to lock in rates before they once more resumed their crash – 06 Apr 2013 - Best Cash ISA Savings Account for New Tax Year 2013-14:
Therefore cash ISA savers have perhaps a 4-6 week window to pickup tax free savings accounts before probability favours the rates being cut once more as occurred during 2012 as the Bank of England and government continue to funnel tax payer cash into what still mostly remain bankrupt banks that await the next domino (Slovenia? Spain? Portugal? Italy? Greece? France?) to tip them over the edge once more.
And right an cue the Banks have followed through by taking a meat clever to savings interest rates by slicing over 25% off the rates available barely a few weeks ago as illustrated by the updated table for the Halifax Cash ISA rates –
So whilst the mainstream press blindly continues to pander to its banking advertisers by promoting ‘Best’ saving accounts, the reality is that there aren’t any best rates out there, and nor have been for many years, in fact the last best rates were way back in October 2008, which at the time I warned to lock into for several years before they disappeared – …
As a reminder, the equity risk premium is “expected future return of stocks minus the risk-free rate over some investment horizon.” It is this record high risk premium that leads the two to agree with Wall Street and to forecast that stocks have nothing but upside for half a decade more. Of course, what they try to not highlight is that the previous near all time high equity risk premium was seen in the days just before the Lehman collapse, when the same poll and the same models, would have predicted smooth sailing for a long, long time, instead of the 60% modest correction that transpired in the coming months, and which would have led to the end of the Western financial model as we know it if not for the same NY Fed injecting a little over $10 trillion into risk on short notice. But don’t worry, there is an economist “explanation” for this particular fly in the ointment: “It is difficult to argue that we’re living in rosy times, but we are surely in better shape now than then.”
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