Free Markets, Free People

They told us if we put a Republican in the White House seniors would suffer

Oh.  Wait.

Consider this:

Interest rates on bonds, CDs and money market accounts — staples of the retirement crowd’s portfolio — are at historic lows. (I’m always shocked to see what banks are touting. Really? 0.35% — that is, 35/100 of a percent — on a money market? 0.90% on a CD? Yep.) Stocks are nothing to write home about, still well below their highs of five years ago. As for those real estate investments? Forget about it.

The squeeze is real. Some years ago, when earning say 5% on your money was realistic, a $360,000 portfolio of CDs would produce $18,000 a year in interest — that’s $1500 a month. Couple that with an unexceptionalSocial Security payment of about the same amount, and that’s $36,000 a year, $3,000 a month. Nothing fancy, but enough to get by.

Now change that 5% to 0.9% and you’re earning $3,240 per year, or about $270 a month. Add that to $1,500 a month in Social Security and you’ve got $1,770 a month to live on; just $21,240 a year. That’s a brutal 41% cut in income. And it is why many senior citizens around the country are being forced to draw down savings to make ends meet.

Now, you’re saying, well yeah, got it but is that the President’s fault?  In a political system that considers all things that happen under a president’s watch to be “his”, yes.  If president’s are going to claim responsibility for good occurrences, then they also get the responsibility for the bad things as well.  And if I remember correctly, the current president promised to fix all this stuff.  But, this is reality:

The Federal Reserve’s low interest rates are a boon to overextended banks and to the borrowers who owe them money. (As well as the world’s greatest debtor, the U.S. Treasury). But these benefits come at the expense of savers — both those who hope to see their savings grow enough that they can retire someday, and those who have already retired expecting to live on interest at rates far higher than those that prevail today. The low rates are, basically, a tax on savers for the benefit of borrowers and those who made bad loans.

Couple that with the spendthrift ways of the past few years, with little to show for it, and you sort of have the perfect political storm don’t you.

The point about the seniors is their retirement income has been materially effected.  That’s totally real to them – they live with it daily.  And, frankly, they’re going to blame someone.  4 years ago they probably blamed Bush.  But now, well now they’re going to blame the guy who has had ample time, in their estimation, to do something about this … and hasn’t.

And who is the guy on the hook?  Right or wrong it’s the prez.

As if what is described above isn’t bad enough, there’s more:

For senior citizens, it’s a double squeeze. While incomes for retirees are going down, costs are going up. Gasoline is now roughly double what it was whenPresident Obama took office and, in many places, it’s back up in the neighborhood of $4 a gallon.

According to the Bureau of Labor Statistics, ground beef recently hit a national average of more than $3 a pound, the first time in history it’s reached that level. (When Obama was inaugurated, it was $2.35). Anyone who has spent time in a grocery store knows that this sort of thing is happening on every aisle — coupled with “shrinkage,” as manufacturers reduce the amount of product in a box while keeping the price the same, a way of hiding price increases from (they hope) inattentive consumers. And it’s going to get worse, according to the Department of Agriculture, when this summer’s drought hits food prices in a few months.

Heard anything about all of this?  Yeah, me neither.  Glenn Reynolds hasn’t either and he’s pretty sure he knows why:

In fact, with this double squeeze, we have the makings of a major national crisis. There’s only one thing missing: the kind of news media attention you’d usually get with this many senior citizens suffering in an election year.

I’ve been watching these developments for a while, and by now you’d expect a lot of sad news coverage about old people who diligently saved for retirement being squeezed by high prices and federal policies, being forced to choose between medicine and food or having to let go of pets and move in with children because things have just gotten too expensive, living on cat food and the like. But actually, we’re not hearing much.

And we all know why?  When the 4th Estate becomes a 5th Column, you’re unlikely to hear much about the things that might reflect on their chosen one.

Report it or not, it remains a real problem and those suffering from this turn around are likely to want to point the finger at someone.  And usually that someone is whoever is in charge on election day.

Another “indicator”.


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10 Responses to They told us if we put a Republican in the White House seniors would suffer

  • There is also one more angle to consider.  If interest rates return to a more historical norm of 4%-5% then was does that do to interest payments on the debt?  The zero interest rate policy has to remain while the government is running trillion dollar deficits and since that doesn’t appear to be ending any time soon…
    This is how 100% debt to GDP ratios become a drag on the economy.  The government will have to spend considerable sums just servicing the debt.  5% of $16 trillion is $800 billion.  Four more years of trillion dollar deficits combined with a 5% rate will net you trillion dollar interest payments.
    Now, just for grins, assume some modest inflation results from loose monetary policy and interest rates go to 10%.  For a real horror story, plug in the 20% rates from the stagflation years.  This is one way to go from inflation to hyper-inflation.

    • Yeah, what will happen is that inflation will begin to be felt, and the portion of the budget which goes to debt service will balloon.  It is a very real danger.
      But as for the old people who might be suffering, I have a reserved amount of sympathy since those are the Bozo’s (mostly) who voted continually for lying left wing politicians.

    • For a real horror story, plug in the 20% rates from the stagflation years.  This is one way to go from inflation to hyper-inflation.

      Yes, it becomes a endless loop (assuming people fail to grasp Milton Friedman’s demonstration of the causes of inflation).

  • Oh, NOOooooo, McQ!  Our Presse-dent ASSURES us we are “headed in the right direction”!  I just know he would not lead us astray!
    And those “necessarily skyrocketing” energy prices…!?!?  Why THOSE won’t effect older people AT ALL.  Nor will the brown-outs and black-outs, ’cause older people are immune to extremes in temperatures!

  • Well if those pesky old people die off due to lack of food, shelter, etc…, then Obamacare will not be so expensive after all!

  • But it’s even worse than Bruce has laid it out here.
    When you add in the effects of the shenanigans of the Federal Reserve who has been monetizing most of the current federal deficit, the value of the dollar has also dropped.   You can see folks like Russia’s Putin complain how the US devalues their dollar holdings that the use on the world oil markets, and they can do nothing, except threaten to go to other exchange currencies.

  • BLAME BUSH!!!!!  DON’T VOTE FOR MORE BUSH!   Vote for HOPE AND CHANGE!   The oceans will stop rising, there will be peace in the world, cars will get 60 miles to the gallon, uh, go 60 miles on 1/10 of their total battery capacity!  You won’t have to worry about your rent, or your gas money!  He’ll pay off your school loans!, your Mortgages!  He’ll tax the rich, and help the poor (with his little bow and arrow).
    He will be all things, to all men!   He will unite us!  DON’T VOTE FOR BUSH!  YOU HATE BUSH!  BUSHITLER!   Romney is BUSH!!!!!
    While you’re thinking about it, send $6.00 to re-elect Barack. and he and Michelle willl pay your air fare if you win a trip to dinner with them!   They won’t reimburse the overtime fees for the police or firemen or EMT’s of whatever town is holding the dinner, but they WILL pay your air fare, honest….(besides, that’s waaaaay cheaper dude).
    “Hey Joe, watch me pull a moon pony outta my hat….nuthin up my sleeve……..”

  • Speaking of senior citizens, Clint Eastwood’s speech was hilarious.

  • ” When the 4th Estate becomes a 5th Column”
    Very nice.