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average personal savings rate in the U.S. slipped to 3.9 percent in the first quarter of 2012 -- the lowest level in over four years

With savings account interest rates near zero, people are left with little incentive to save.

With interest rates running well below the rate of inflation, money in a savings account or other deposit vehicle is actually losing purchasing power with each passing day

you have to consider one additional factor: inflation.

Bond yields are not much higher, and stocks haven't been very rewarding so far in the 21st century either

However, getting the most for your money is only one consideration. Having resources to support your retirement is also an important function of saving, and in this respect people with low savings rates are not behaving rationally.

while low interest rates may seem to discourage saving money, they actually make it more imperative.

other important point of this context is that outside of the government, most people no longer have an employer pension plan to fall back on.

shift from defined benefit to defined contribution retirement plans put the responsibility for saving solely on the employees

people seem to have responded to this trend by saving less rather than more

by choosing more immediate consumption over saving for retirement, people are supporting their current lifestyles at the expense of the future.

this is a decision that many will regret once that future arrives

one likely scenario ([1], [2]) involves derivatives constructed from the riskier components of some European corporate bonds.

Whale’s notional exposure in one index was speculated to have been $100 billion

total notional exposure of all of JP Morgan’s trades has been estimated to be $79 trillion.

JP Morgan “was just engaging in financial tricks of little or no social value”.

Is JP Morgan “too big to fail”? I think so

recent paper by Stanford Professor Darrell Duffie highlights an unresolved weakness in the U.S. financial system

Each day something like $100 billion in such short-term lending is intermediated by two clearing banks

Duffie believes the system is inherently unstable, as dealer banks depend crucially on the ability and willingness of the clearing banks to provide short-term financing each new day

Here is Duffie’s recommendation for how to make the tri-party clearing system more stable: Given the systemic importance of tri-party clearing agents, and given their high fixed costs and additional economies of scale, tri-party repo clearing services for U.S. dealers and cash investors should probably operate through a dedicated regulated utility. Although this would likely increase operating costs for market participants, it would enable investment in more advanced clearing technology and financial expertise, allowing greater resilience of the tri-party repo market in the face of financial shocks such as the default of a major dealer. The moral hazard associated with lending of last resort to a dedicated utility is much reduced relative to the case of a financial institution with a wide scope of risk-taking activities.

this week’s news should remind us that more needs to be done to ensure financial stability and that the incentives of private participants align with the public’s best interests

Bankia SA, the country's fourth-largest lender, saw its shares fall as much as 27 percent during trading in Madrid after the El Mundo newspaper reported the bank was hit with more than €1 billion ($1.27 billion) of withdrawals since the government announced the takeover.

Greek president Karolos Papoulias warned party leaders during unsuccessful coalition talks that about €700 million ($898 million) in deposits have flown out of Greek banks since the May 6 elections, according to a report from Greece's central bank governor, George Provopoulos

the interest rate on Spanish 10-year bonds stood at a worryingly high 6.29 percent. It has risen sharply from below 5 percent in March and is edging toward the 7 percent mark that is considered unsustainable in the longer term.