Streams

Economic Wrap-Up

Thursday, September 18, 2008

Joan Goldwasser, senior reporter for Kiplinger's Personal Finance, gives an update on the latest news from Wall Street and its impact on your pocketbook.

Guests:

Joan Goldwasser

Comments [35]

Judy Blitman from nyc

Brian,

Your financial advisor sounded like a therapist. It's nice that she wanted to calm us, but this talk about a 20-30 year horizon for investors was not useful for listeners over 45. Am I correct in thinking that the market was flat for about 15 years--from 1948 to 1962?

"Judy from the West Side"

Sep. 18 2008 11:13 PM
Graham from Paris

CONCLUSION of "ps to Alex."

That's the real and the only sound backing for a currency---wholesome public faith. Everything else is one or another form of make-believe in which supposedly reasonable adults cross their fingers and place their faith in talismans.

When the public's trust is earned and deserved, that's better than gold or silver---which any set of scoundrels can horde and manipulate.

It's easy to state what we need, much harder to restore it once its lost. That, indeed, is why you are so very right to say that things are now seriously in a mess. It's been decades in the making.

Sep. 18 2008 12:51 PM
Graham from Paris


ps to Alex.

A precious metal---gold, silver, what-have-you---would inevitably be a lethal straight-jacket for any modern economy and would also place lesser economies at the mercy of those who are fortunate enough to have or to be able to acquire as much of the precious metal as needed when needed--all in a way that they are not beholden when currencies are not gold/silver backed.

There is really no substitute for a sound _society_, fairly and openly run, one which places the issues of social and economic importance out in the open for free and fair consideration and resolution by equitable and predictable means which, themselves, deservedly enjoy broad public respect.

That can't be conjured up magically. It's an invaluable "public good"---a free and fair society" which holds the public's confidence because the public can see that things are generally done fairly and in open view.

That's the real and the only sound backing for a currency---wholesome public faith. Everything else is one or another form of make-believe in which supposedly reasonable adults cross their fingers and place their faith in talismans.

Sep. 18 2008 12:44 PM
Graham from Paris


Alex,

The real issues aren't whether or not there's to be a central bank, or even necessarily how "independent" that establishment is from the nation's other political institutions. The most serious questions turn around the set of basic guiding assumptions which the central bank's directors use in practice day in and day out.

That is too large a set of issues to be easily resumed in the space available here. So, to be brief, one ought to want a central banlk which is run by people who are

a) humane and socially responsible in their attitudes about what a national ecomony is for and the interests of ordinary people in that economys's _fair_ and predictable operation ---as well as being "economically reasonable and practical" from the professional economists' point of view

b) acquainted by long experience with the real world of business and finance and the way people behave in the real world, not merely in an abstract econometric model.

Saving FannieMae and FreddieMac _had_ to be done for practical real world reasons. Much better would have been to have had the sense to understand that it was silly and huge error to "privatise" such a public-interest entity in the first place.

Sep. 18 2008 12:28 PM
jl from manhattan

More journalists interviewing journalists. I'm going to keep making this comment until you get an expert on the show. Journalists are not experts and their tentative grasp of the entire situation is why the rest of the public doesn't understand what is going on.

There are at least three fine business schools in Manhattan. Can't you find a professor at one of them to coherently and comprehensively explain what is going on?

Sep. 18 2008 11:52 AM
Alex from bk

Graham,
I agree we definitely need a central bank, but what do suggest we do to back our currency? Don't you agree that the fed reserve must be transparent have to answer to the govt instead of working independently from it?

Sep. 18 2008 11:19 AM
Alex from bk

Graham and Joe, thank you for your sanity. We're in serious trouble. It's good that graham mentioned 1930's Germany, because look what happened. Maybe they'll push some monopoly money into the economy too, that might actually be better.

Sep. 18 2008 11:09 AM
Graham from Paris


Joe,

thanks for the compliment, but, I'm sorry to disappoint you elsewhere: really, Ron Paul's economic ideas are not to be believed. In all honesty and with all due respect to you, his claims concerning the gold standard and other aspects of monetary issues are truly fairy-tale stuff.

This, too, is important. You can't simply pretend that a precious metal based currency can work---it failed disastrously in the 1930s which explains why every sane nation dropped it. In addition, the Federal Reserve is essential---if the events of the past week don't make that clear, you have not understood what's been going on.

Sep. 18 2008 11:02 AM
Joe Corrao from Brooklyn

Good job Graham from Paris

Sep. 18 2008 10:54 AM
Richard Mitnick from Highland Park, NJ

On what your guest said about just holding on if one can and waiting for the mess to clear away and things to go back up:

It depends on what companies you have in your account. One needs to buy the right companies in the first place.

The best strategies to follow are:

Peter Lynch- buy what you know. Find companies whose products and services you use, identify those which are good investments, and put your money there (e.g., Newell-Rubbermaid is a great company with great products. We all use them every day. But it is a horrible investment).

Modify the above with

Jack Welch (late of G.E.), try to buy the top one or two companies in their industries.

Also

Morningstar- buy companies with good "moats",that is, companies with little competition where the barriers to entry are high.

Use Valueline to do your research. It is totally independent. This is an expensive service to buy; but it is generally available ina good library.

>>RSM

Sep. 18 2008 10:52 AM
Graham from Paris


You really have nerve to laugh off the possibility of the FDIC going bankrupt. If, for example, the Treasury tries to simply print all the currency required to make good on all deposit account holders' stakes, you'd discover what you should already be aware of :
a 1930s Germany-type situation where baskets full of cash couldn't buy a loaf of bread.

Americans' economic stupidity astounds me.

This isn't a joking matter.

Sep. 18 2008 10:47 AM
Joe Corrao from Brooklyn

Brian you finally talked about printing more money as a problem! wooo hoo finally you touch on a key Ron Paul issue. And for this guest to laff at is terribel...she is clueless...next time get on someone less qualified to advise

Sep. 18 2008 10:39 AM
AWM from UWS

The drop in certain funds may be so precipitous that any future gains may not be large enough make up for the losses. If a fund gives you an annual return of 3 to 5% it is supposed to be steady, it isn’t built to sustain a considerable drop. It will take an unusually large gain (which it is not built for) or considerably more time to recoup losses of 15% or more.

Sep. 18 2008 10:39 AM
Alex from bk

Again and again I'm surprised, or not so surprised about the lack of discussion regarding where the money is coming from for these bail outs (or buy-outs). The fed keeps making this fictional line of credit which has placed our economy is this predicament in the first place, but somehow they come away the saviors for these failed, incompetent, and avaricious institutions. Where is the backing for these loans. And now we have World bank stepping in print more money-- is there not something wrong with the whole picture? Ron Paul was on Fox discussing this fact--the fact that we're living in an unsustainable bubble of credit which is only expanding as our debt grows. Dr. Paul frankly stated that all these funds are derivatives and we must begin living within our means.

Sep. 18 2008 10:39 AM
Linda from NYC

I have annuities at National Integrity Life Insurance Company -they are not FDIC insured but continue to have an A+ rating. Can I trust that rating?

Sep. 18 2008 10:38 AM
Hugh from Crown Heights

Do whatever they need to make sure....

Translation - 1. Raise taxes so that we the people bail out the execs who screwed up.

2. (This is the dirty little possibility) -- Just PRINT MONEY. Print money and lower the value of the debt.

Sep. 18 2008 10:37 AM
Laura from Staten Island

I am in my 30s, so my action has been to increase the amount of money that I am investing in my mutual-fund-based SEP IRA. I figure it will go up eventually, and so now I am getting the investment, "on sale."

Sep. 18 2008 10:36 AM
superadsf

ha ha !

yeh, i have the time to literally watch the market and day trade!

Sep. 18 2008 10:33 AM
Clayton Price from Brooklyn, NY

I'm interested in Joan's comments on what people who are on the cusp of retirement should be doing right now. If someone is
70 years old, and required to start cashing in IRA's and SEP's
at 70 1/2, there's a real dilemma,with their retirement income
at stake.

Thanks,

Clay from Brooklyn

Sep. 18 2008 10:32 AM
jeff from nyc

Leave my $ in for 20 to 30 yrs!!!! Most of us do not have 20 or 30 yrs before retirement.

So now long term is 20 to 30 yrs! It use to be ten yrs!

I'd remind your quest that in 1999 the market was at 11700 TEN YRS AGO!! Now it is heading to 10300 or lower

Sep. 18 2008 10:31 AM
jeff from nyc

Leave my $ in for 20 to 30 yrs!!!! Most of us do not have 20 or 30 yrs before retirement.

So now long term is 20 to 30 yrs! It use to be ten yrs!

I'd remind your quest that in 1999 the market was at 11700 TEN YRS AGO!! Now it heading to 10300 or lower

Sep. 18 2008 10:31 AM
Phoebe

To Jessica, who wants to open a 401k. Go for it! You will be "buying low" right now, and you will (most likely) get a match from your employer. Which is FREE MONEY.

Sep. 18 2008 10:31 AM
Susan Schneider from Chatham NJ

Should i move my son's college fund (starts college in 2 years) from mutual funds to a 529 fund?

Sep. 18 2008 10:29 AM
Lorenzo from NJ/NY

What kind of "long run" are you optimistic people
talking about? Just think how screwed somebody wanting to retire next year might be right now...
.. about putting into question tying a nation's pension funds to the stock market?

Sep. 18 2008 10:29 AM
superadsf

(death of private insurance was one dike that burst -- that of the pretense of capitalism. but so long as there is an appetite for treasuries we don't need to hoard food and water...)

Sep. 18 2008 10:28 AM
Cesar from Upper East Side

Stocks 101 Question: What if I shorted AIG, Lehman, Goldman Sachs, or Morgan Stanley before the huge sell-offf this week? Do those who shorted these stocks see huge profits it nobody is buying?

As for 401(k), I leave it alone and will rebalance at the end of the year. Good idea?

Sep. 18 2008 10:28 AM
Jennifer from New Jersey

I just started my retirement account last year and have approximately 6k in it. The last few months I've seen it dwindle down and I'm concerned that if I just leave it where it is, I won't have anything left. What should I do?

Sep. 18 2008 10:28 AM
Bill from Westchester

I checked my 2 401k's yesterday. Year to date, they are down 18% and 24%.

I'm not changing anything though. I just hope that the money that goes in today that buys more shares now, will pay off in the long term.

I've got about 30 years until retirement...

Sep. 18 2008 10:26 AM
Chris from Manhattan

Joan is saying that in 20 or 30 years things will be great. But what should those of us who are in our early 60s do? We don't have 20 to 30 years.

Sep. 18 2008 10:26 AM
Mitchell Wright from Brooklyn, ny

Everyone is asking if current AIG stockholders should sell or sit tight. What about buying AIG stock at such a cheap price and hoping it pulls through?

Sep. 18 2008 10:25 AM
superadsf

Trading and....EARNING...this is truly a great time to profit off fear.

Sep. 18 2008 10:25 AM
Rich from Staten Island

Why hasn't the FDIC raised the level of insurance for deposits? The level of $100k was set in 1980, especially considering the consolidation of these banks. For retirement accounts that is not a significant amount.

Sep. 18 2008 10:24 AM
john

my IRA is invested with Morgan Stanley - it's not millions of dollars, but it's all that I have - should I be concerned?

Sep. 18 2008 10:24 AM
Hugh from Crown Heights

Somebody is selling hastily. Are we supposedly to believe that all the bigwigs are taking Joan Goldwasser's advice and standing pat?

Sep. 18 2008 10:23 AM
Tony from San Jose, CA

Should I be worried that FDIC itself will go under? They are running out of cash.

(I still haven't moved all my money to euros)

Sep. 18 2008 10:21 AM

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