The Free Press, Mankato, MN

State, national news

October 6, 2013

Families hoard cash five years after crisis

NEW YORK — Five years after U.S. investment bank Lehman Brothers collapsed, triggering a global financial crisis and shattering confidence worldwide, families in major countries around the world are still hunkered down, too spooked and distrustful to take chances with their money.

An Associated Press analysis of households in the 10 biggest economies shows that families continue to spend cautiously and have pulled hundreds of billions of dollars out of stocks, cut borrowing for the first time in decades and poured money into savings and bonds that offer puny interest payments, often too low to keep up with inflation.

"It doesn't take very much to destroy confidence, but it takes an awful lot to build it back," says Ian Bright, senior economist at ING, a global bank based in Amsterdam. "The attitude toward risk is permanently reset."

A flight to safety on such a global scale is unprecedented since the end of World War II.

The implications are huge: Shunning debt and spending less can be good for one family's finances. When hundreds of millions do it together, it can starve the global economy.

Weak growth around the world means wages in the United States, which aren't keeping up with inflation, will continue to rise slowly. Record unemployment in parts of Europe, higher than 35 percent among youth in several countries, won't fall quickly. Another wave of Chinese, Brazilians and Indians rising into the middle class, as hundreds of millions did during the boom years last decade, is unlikely.

Some of the retrenchment is not surprising: High unemployment in many countries means fewer people with paychecks to spend. Some people who lost jobs got new ones that pay less or are part time. But even people with good jobs and little fear of losing them remain cautious.

"Lehman changed everything," says Arne Holzhausen, a senior economist at global insurer Allianz, based in Munich. "It's safety, safety, safety."

1
2 3 4 5 6 7 8 9 10 11
Text Only | Photo Reprints
State, national news
  • Injured snowy owl ready to be released ST. PAUL (AP) — A rare snowy owl that gained national attention when it was apparently hit by a bus in the nation's capital is scheduled to be released into the wild after a rehab stint in Minnesota. The Raptor Center at the University of Minnesota

    April 18, 2014

  • Court case to test 'Buy the Farm' law NEW PRAGUE (AP) — A case set for trial next week is expected to test Minnesota's "Buy the Farm" law, which is meant to require utilities building high-voltage power lines to buy out farms in the way if affected landowners demand it. The case pits th

    April 18, 2014

  • Judge strikes down part of state energy law MINNEAPOLIS (AP) — A federal judge ruled Friday that part of a Minnesota law designed to promote the use of renewable energy is unconstitutional because it attempts to control business that takes place outside state borders — and she barred Minnesota

    April 18, 2014

  • White House updating online privacy policy A new Obama administration privacy policy released Friday explains how the government will gather the user data of online visitors to WhiteHouse.gov, mobile apps and social media sites, and it clarifies that online comments, whether tirades or tribut

    April 18, 2014

  • Horse virus cases showing up in Upper Midwest BISMARCK, N.D. (AP) — State officials in the Upper Midwest are cautioning horse owners about a virus that spreads easily among the animals and can lead to breathing problems, abortions and nervous system disorders. Three cases of equine herpesvirus

    April 18, 2014

  • Bear attacks spark debate: Kill them, or leave them alone? ORLANDO, Fla.—Dallas Smith thinks he has the answer to Central Florida’s black-bear threat, and he’s ready to lock and load it. “I think the fear of God needs to be put back into them,” said Smith, 47, who wants state authorities to lift restriction

    April 18, 2014

  • Tourism push plays up 'Only in Minnesota' ST. PAUL — (AP) — Say goodbye to "More to Explore." Minnesota tourism promoters ushered in a new slogan Thursday that focuses on "Only in Minnesota" experiences as part of their largest-ever advertising campaign. The revamped message kicks off a maj

    April 17, 2014

  • mfp ap pipeline photo Minnesota Pipe Line seeks to expand capacity MINNEAPOLIS (AP) — Minnesota Pipe Line Co. announced plans Thursday to nearly double the capacity of a crude oil pipeline that carries oil from Canada and North Dakota to the two refineries in the Twin Cities that produce most of Minnesota's and much

    April 17, 2014 1 Photo

  • Holder asserts his commitment to fighting heroin WASHINGTON — Attorney General Eric H. Holder Jr. has been crusading for more lenient treatment for nonviolent drug offenders, making it a top priority before he is expected to leave office this year. Recently, however, he has been forced to confront

    April 17, 2014

  • Less-schooled whites lose longevity, study finds ATLANTA — Barbara Gentry slowly shifts her heavy frame out of a chair and uses a walker to move the dozen feet to a chair not far from the pool table at the Buford Senior Center. Her hair is white and a cough sometimes interrupts her speech, but she

    April 17, 2014