Strike Three, You’re Out

Posted: July 16, 2008 at 12:47 pm by Lisa

A Senator has asked Bernanke about the poor savings rate in the US. He asked Bernanke how people were going to pay for their needs, and save money at the same time, if wages didn’t increase. Bernanke’s response went something like this: People need higher paying jobs, which requires more education and they need to be (almost) forced to contribute to 401(k).

Ok. More education? The government has done an outstanding job of lowering the standards in public education for decades. I also know plenty of people with advanced degrees, who are unemployed or under-employed. Strike one.

Contribute to a 401(k). Who gets to manage that money that is contributed? That’s right, the same people who are causing most of the losses right now in the market. Strike two.

Higher paying jobs. Educators should be the highest paid professionals, for starters. Our economy is overwhelmingly a service economy, and you aren’t going to find the "higher paying jobs" in that sector. Strike three.

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6 Responses to “Strike Three, You’re Out”

Dave on July 16th, 2008 1:02 pm

Anyone fading today’s rally?
bsg on July 16th, 2008 1:02 pm

You can add the student loan racket to the point on education. Start young worker tens of thousands in the hole, and you’ll find a generation that simply can’t save.

I’m 31 and I finally paid off my loans a couple of months ago. My loans were based off of college prices from the mid 90’s. The problem is exponentially worse now.
kyrieeleison on July 16th, 2008 1:19 pm

I agree, bsg. I know that the main lender in PA said that it will be cutting some loans by $500 due to the general economic situation. While that might not seem like much, $500 is easily a semester’s worth of books. As access to credit becomes more and more difficult, how much of an option will education be?

Regarding student loan rates, I locked into extremely low rates as I went to college during 9/11 and consolidated immediately after graduating. My wife graduated after I did and the small difference in our rates makes a noticeable difference between our monthly payments. Yet we were both lucky to finish college without amassing that much debt, and are able to put in a little extra each month into our payments. We have some savings but I know that if either of us lost our jobs, we’d have a very difficult time finding comparable ones.

I know people with $40k, $50k, and more of student loan debt by themselves and I can’t imagine the impact that has on their budgeting… it’s no wonder people don’t save!
Lisa on July 16th, 2008 1:41 pm

Great points about the student loan/debt problem.
ecklebob on July 16th, 2008 1:45 pm

Dave, I’m down $. You know I’m going after ‘em. Went in on SPY SEPT $123 PUTS
Dave on July 16th, 2008 2:29 pm

Eckle -

How did I know you would be out there trying to take money from those bulls?
Yeah..rallies like this are scary when you are short, but then again….the trend is in your favor. Hard to imagine this rally has any legs. I am interested in the volume and breadth of today’s move.