Sunday, August 28, 2011

Bank of America's latest problem - too much money

Due to all the turmoil in Europe deposits are leaving European banks and finding their way into US banks. However US banks don't want this money, with interest rates at 0 its impossible to find profitable ways to invest it - they may even be losing money on these deposits. Plus no one thinks these deposits are going to stick around for long so banks unwilling to invest them in longer term assets.

All this is making me wonder - are low interest rates the cure or the disease? Maybe they need to start considering alternative investments. Perhaps a Scrooge McDuck themed amusement park?

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