Serious Post - Trying to Understand Where My $$ Went

Money makes the world go around, faster and faster all the time. At Planet Money, a multimedia team of reporters tracks down the economists, investors and regular folks who are trying to make sense of the rapidly changing global economy

Like everyone else, we're watching our savings for retirement dwindling *fast*. Yesterday I saw a statistic that said the Dow Jones had dropped some 36% since a year ago. And despite what many economists and financial mavens are saying, this may not be the bottom, and it probably isn't going to get better any time soon. The rest of the world unfortunately seems to have followed the US into the sub-prime lending bog; Iceland is among a group of countries which are essentially bankrupt.

Our bank statement arrived yesterday and I commented to DH that we had an unusually high balance in checking (last month had 3 paychecks in it). My initial instinct was to get it moved to a better investment, but y'know, the bank is a darn good substitute for the mattress right now. Twelve-month US Treasury bills are paying interest of ONE CENT on the dollar to investors (per the chart, yield is $1.01 per $1). T-Bills are supposedly the safest investment anywhere, being based on the credit of the entire US government. But even large corporate and institutional investors are willing to take that rate of return in exchange for what they're seeing as the best no-risk place to park their dollars.

As I posted a little while ago, I recently got an 80GB iPod, and I've discovered podcasts, courtesy of a couple of groups at Ravelry. One that was being highly recommended was NPR's Planet Money. If you know how to access or subscribe to podcasts via iTunes, it's at the top of the most-popular podcast list. Otherwise, it seems that you can read and possibly listen to these discussions at the NPR site, as with this link to one of today's stories.

In the last 2 days I've listened to all of the 'episodes' since 9/28, and I'm very impressed with the way that all of this money-babble is being made clearer. Yesterday while I was on my way to my Friday night knitting group, I heard the host tell the guest "This is a jargon-free zone." And the guest proceeded to explain LIBOR and the Ted spread, why it's bad that banks are not lending to one another, etc. Right now, the fact that banks are not lending to other banks is a very scary thing, since companies won't be able to borrow to meet short-term cash-flow needs, such as our paychecks.

This may be far TMI (too much information), but I hope that these links will help some of you, my friends and readers, to understand just why we're in the financial crisis.