What Can The Government Do For You?

We've come a long way from the idea that the individual seeks to make a contribution to society. Now a lot of people are all about what can the government, what can politicians, do for them.

All these massive bailouts are distorting the marketplace. The government is penalizing the prudent and rewarding those who made stupid decisions. We've gutted moral hazard with these bailouts.

Banks made dumb loans. They're getting bailed out. GM and Chrysler built cars that few people want to buy. They're getting bailed out.

Alan Sloan writes: The government is spending trillions to keep interest rates down to support the economy and prop up housing prices, and those low rates have inflicted collateral damage on savers' incomes. "It's a direct wealth transfer from savers and retirees to overly indebted borrowers," says Greg McBride, senior financial analyst at Bankrate.com.

Since October 2007, when government intervention in the financial system began picking up speed, yields on the ultrasafe one-year and five-year investments that many retirees favor have tanked. Two years ago, the average yield on a five-year federally insured bank CD was 3.9 percent, according to Bankrate.com. Now it's 2.2 percent, a drop of more than 40 percent. Yields on one-year CDs have almost vanished: 0.92 percent, compared with 3.6 percent. On five-year Treasury securities, the yield is down to 2.3 percent from 4.4 percent. On one-year maturities, you get a minuscule 0.3 percent, down from more than 4 percent in 2007.

The rates on AAA-rated one- and five-year tax-exempt bonds, another safe saver haven, are down sharply, too, for bailout-related reasons that we'll get to in a bit. As for money-market mutual funds, fuggeddaboutit — the average is about 0.06 percent (no, that's not a misprint), according to Crane Data, down from 4.6 percent two years ago.