Yesterday I was looking at my Yahoo Front Page and saw a story about the interest rates in Iceland. Iceland has raised their interest rates to 18%. This made me start thinking about some of the bank problems in this country. The bank that I just moved all of my money from was paying .02% interest on passbook savings and wanted to charge me $5.00 a month if the account was inactive. I moved everything I had in the bank to a credit union bank that pays .055% interest on passbook savings and has no penalties. If my banks paid a fair amount of interest on savings I would have had a bunch of money in the bank rather than risking the money in the stock market and many other folks would have done the same. This way the banks would have lots of money to lend and wouldn't have to worry about using tax payer money to bail themselves out of their financial crisis. With the interest rates the way they are I am further ahead spending my money rather than putting it in the bank because the interest rates they are paying is less than the inflation rate.
I took a paper loss of around 40% on my IRA stock accounts. I am fortunate that I don't have to use this money to live on because if I did the account would be empty in a short time.