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Remember the startling article, "Cash is No Longer Trash"? Well, it looks like cash is still no longer trash ;-).

Shedding Stock-Market Vertigo (but Still Making Some Money)
New York Times, October 28, 2007


Federal Reserve interest rate cuts — which bail out aggressive borrowers and arguably amount to another bonus day for Wall Street — typically penalize savers. This time, though, more than a month after the Fed’s half-point cut, things have played out a bit differently. With many financial institutions needing to raise capital wherever they can find it, the humble saver and his cash are still in demand....

Many banks are still paying nearly 5 percent, and sometimes more, on C.D.’s. [Go to the Bonds and Fixed Income Board, for constant updates on the best offers. Also, and -- W]

In many cases, lenders have been offering their highest rates on some of the shortest-term C.D.’s, suggesting that banks need deposits now, but expect rates to fall in the future....

The credit crisis has played a part in keeping bank yields high. “It’s still cheaper to pay 5 percent on a C.D. than to go into the capital markets and issue debt with the tightness in the credit markets...”

...even C.D.’s issued by troubled lenders are safe, of course, thanks to broad protection from the federal government. “As long as you are protected by F.D.I.C. insurance, the additional return is pure gravy...”

The Fed is likely to cut rates again in coming months — perhaps as soon as this week — and even if it leaves rates unchanged, money market rates could fall another 10 or 20 basis points, or hundredths of a percentage point...

<Lots of discussion of bonds and bond funds snipped>

[End quote]

Wendy (cross-posted on METAR Board)
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