[lit-ideas] Re: Niall Ferguson on high oil prices
- From: "John McCreery" <john.mccreery@xxxxxxxxx>
- To: lit-ideas@xxxxxxxxxxxxx
- Date: Sun, 30 Apr 2006 10:07:17 +0900
More useful background information, courtesy of bonddad on dailyKos.
====================================================
US Savings Crisis Continues -- and Deepens
by Bonddad, Sat Apr 29, 2006 at 10:04:52 AM EST
Personal saving -- disposable personal income less personal outlays --
was a negative $50.5 billion in the first quarter, compared with a
negative $15.8 billion in the fourth. The personal saving rate --
saving as a percentage of disposable personal income -- decreased from
a negative 0.2 percent in the fourth quarter to a negative 0.5 percent
in the first. Saving from current income may be near zero or negative
when outlays are financed by borrowing (including borrowing financed
through credit cards or home equity loans), by selling investments or
other assets, or by using savings from previous periods.
Savings is vitally important to an economy for two very important
reasons. First, suppose the economy hits an extended slow-patch,
growth decreases, job growth decreases and businesses increase
layoffs. People will have to live off something - usually savings.
When savings is low, people have less of a financial cushion is case
of economic hardship. The more people who have a smaller financial
cushion means a greater possibility of an economic "dip" becoming
something larger.
=====================================================
Ouch!
--
John McCreery
The Word Works, Ltd.
55-13-202 Miyagaya, Nishi-ku
Yokohama 220-0006, JAPAN
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