Tuesday, January 17, 2017

Not Interesting Times

Donna Summer: Works Hard for the Money

In recent years January has become a financially depressing time.  In our home of Switzerland the tax years runs Jan 1st to December 31st.  So banks are obliged to send you Balance statements so that you can fill in your Tax Return.

And with the bank statement comes the Yearly Interest Received Statement.

The Big Picture
For multiple short term expediency and benefits, many governments have made vast sums of money available to Commercial Banks. 

Unfortunately it all started with the US and the UK but now even our home of Switzerland has been flooding the Banks with money.  So awash with cheap almost zero Interest Government financing; Banks don't really need my money and their corresponding lack of Interest paid to me hits hard on those yearly Bank statements.

In Switzerland
For Retail i.e. the likes of me and you, 0.5% Interest is almost only a dream in Switzerland today.

To make you understand how pathetic this is, consider the Chevrolet Corvette C7, with 660 BHP.  Available in Switzerland for about 120,000 CHF

So if I was to deposit this cash in a bank each year the bank would pay me 600 CHF interest!  (About 600 USD or 400 GBP).  Correspondingly retail banks will borrow at less than 0.5% meaning they can finance a top of the line Corvette for under 1K USD per year.

Yep, quite insane

Not Saving
And with this almost zero return on your savings, most people are simply are not bothering.   Not saving in Switzerland, Wider Europe or America.  Period.

Because you know:  The State will take [good] care of you in your Retirement: I'm sure that's what my UK government told me after working and paying taxes for many decades.

Cyndi Lauper: Money Changes