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Post by rogesgallery on Sept 27, 2008 0:46:55 GMT -5
Oooh Doc! You were actually involved in the fabled Silverado? Your the first I've ever talked to whose fingers were burned in that.
You're probably right that few will remember how this all came about, a generation down the road—unless there are bread lines of course. It will all be blamed on some fictitous institutional anomaly. The actions, whether conscious or out of ignorance, of individuals or groups of individuals will likely be lost in the tumultuous consequences.
Hey on a lighter note: Did you hear that the new CEO (17 days) of Wa. Mu. will leave with a severance package of $20,000,000.00? Lucky guy, eh.
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Post by gailkate on Sept 30, 2008 10:26:48 GMT -5
Yeah, that's a real knee-slapper, roges.
So how many of us are expecting to have to burn the furniture and eat grass?
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Post by joew on Sept 30, 2008 11:05:42 GMT -5
Not me. I expect my government pension to keep coming. That's about 2/3 of my income. The remainder is mostly from a weird annuity which is supposed to start paying in another 18 years but meanwhile allows me to take cash out at a rate of 5% of the original investment every year. (I guess the idea was that the value of the things they invested in would go up at least as fast as the 5% I'm taking out, so there is still plenty to fund the annuity when it kicks in.) Well unless the insurance company goes completely belly up, they ought to be able to keep paying me my money back. If the payouts stop, there is a modest IRA and a little cash on hand; but if 1/3 of my income disappears I'll have to cut out a lot of nonessentials that I enjoy.
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Post by gailkate on Sept 30, 2008 11:21:20 GMT -5
It's good to hear a calming voice. I've listened to so many economists saying we simply don't understand how bad this is that I'm having trouble staying on an even keel. The trouble is that everyone says it'll be fine if you have time. So people in their 30s and 40s shouldn't have to worry about 401Ks or other investment plans. But several have said things that sound like I'll be 75 before our savings catch up to where we were yesterday, let alone where we supposedly were a year or two ago.
A man named Ben Stein, (whose name is familiar but I can't place him), a McCain supporter, said that those retired or planning to have been robbed. He couldn't have been more blunt. So I'm feeling like Bl over in her savings thread - why did we scrimp for so long? Will I ever get to England?
However, the Dow Jones went up a couple of hundred points, so it's still a crapshoot. The gamblers are still playing with Monopoly money and aren't worrying about us little folks.
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Post by rogesgallery on Sept 30, 2008 12:15:23 GMT -5
I'm sure it's not all that bad gail. You did say you and Jerry own your house and it sounds like you are familiar with dirt so window gardens are an option for variety. I do hope you went light on the weed and feed this year.
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Post by liriodendron on Sept 30, 2008 12:47:12 GMT -5
So how many of us are expecting to have to burn the furniture and eat grass? Call me Pollyanna, but I am just not going there. (Of course, my husband would say that I don't have to worry because he does.)
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Post by booklady on Sept 30, 2008 12:58:35 GMT -5
Ben Stein is a kinda guy who used to have a show called "Win Ben Stein's Money." Jimmy Kimball was his sidekick.
I felt that neither of our presidential candidates distinguished themselves by anything resembling vision or leadership yesterday. The person I liked the best turned out to be Barney Frank.
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Post by liriodendron on Sept 30, 2008 13:00:50 GMT -5
I remember Ben Stein from his show on Comedy Central, "Win Ben Stein's Money". According to his bio on his website, he is well educated in both economics and the law, at Columbia and Yale, respectively. And golly, he was also a speechwriter for both Nixon and Ford and played a boring teacher in Ferris Bueller's Day Off.
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Post by liriodendron on Sept 30, 2008 13:02:32 GMT -5
Apparently Bookie and I have the same taste in television shows. Or maybe not. She didn't actually admit to watching it. I did.
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Post by booklady on Sept 30, 2008 13:19:09 GMT -5
I did watch it, lirio!
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Post by doctork on Sept 30, 2008 22:57:27 GMT -5
//Oooh Doc! You were actually involved in the fabled Silverado? Your the first I've ever talked to whose fingers were burned in that.//
I feel like my lost $60,00 went directly into Neil Bush's pocket! He is GWB's younger brother, and believe it or not, he is the black sheep of the family for many reasons, not the least of which was the way he used his last name to spark the last S&L crisis in the late 80's. And as I said, I was just an ordinary homeowner paying the bills on time, but had the misfortune to get critically ill and need to move from self-employment to a job with secure benefits. That's why I feel today's "Wall Street Bailout" is actually a "Main Street Bailout" because it will spread and effect many who are just collateral damage otherwise.
As for the WaMu president who gets a $20 million parachute - I believe he was recruited from elsewhere (ie, no responsibility for the past WaMu mistakes) and gave up a lucrative compensation package at his former job to take this one, in a risky attempt to save the company. Without knowing more details, I'm not sure that his compensation package was unfair, unless you put it in the context that the government should regulate all CEO compensation. Personally I think that is the responsibility of the Board of Directors of each company, and cheated shareholders should be making a bigger stink about it. Maybe more regulation there would be appropriate, to ensure the directors perform their fiduciary responsibility.
As for Ben Stein - I like him, and usually agree with his opinions in his weekly NY Times articles in the Sunday Business section. He is a common sense person, and very knowledgeable in law and economics. Plus, when I have emailed him comments about his columns, he has actually responded!
Disclaimer: Ferris Bueller has always been one of my favorite movies, though Mr. Stein played a fairly small role. I didn't watch the TV show though.
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Post by sailor on Oct 9, 2008 17:12:07 GMT -5
The stock market looks pretty grim. I guess that plan of using Martha Stewart as an example to everyone else didn't pan out.
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Post by joew on Oct 9, 2008 21:28:13 GMT -5
Guess not. There should be some real bargains available pretty soon if not right now. I suppose there might be even better bargains available if you wait a bit longer.
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Post by booklady on Oct 9, 2008 22:42:18 GMT -5
$5 G.E., anyone?? Now, will it bounce back up, or sink into worthlessness?
Did you hear about the Chicago policeman or sheriff or some type of law man who's refusing to serve any more eviction notices?
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Post by Jane on Oct 10, 2008 8:37:50 GMT -5
Good for him!
During the Viet Nam war, a veterinarian in my little home town held out from his taxes the percentage that was going to the war effort and donated it to charity. The IRS seized all of his assets and held an auction to sell them to pay his debts. The people in town went to the auction, bid a dollar or so on everything and no more and gave him back all his stuff. That's the kind of civil disobedience I applaud!
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Post by gailkate on Oct 10, 2008 9:43:05 GMT -5
Great story, Jane. I hope that Chicago sheriff fares as well. He's only drawing the line at renters, though, people who paid their rent and had no idea they could be evicted or even that the owner was in trouble. It's astounding to think that people could come home to find their belongings in the yard. But hey, no problem. With a cell phone you could order pizza, call around for a U-haul and then start checking for cheap motels. I'm feeling as if all the verities I grew up with have proven false. "The Depression was caused by buying on margin and could never happen again," intoned my 6th grade teacher. I have never doubted it. For a little gallows humor on the economy listen to Andrei Codrescu's story on NPR yesterday. www.npr.org/templates/story/story.php?storyId=95567782
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Post by joew on Oct 10, 2008 15:33:20 GMT -5
The question of the day is: If all those stocks are actually worth so little, how come people were paying much more for them a few weeks ago?
And we're talking about a market that is dominated by funds, with managers who supposedly know what these securities are really worth, at the helm, not private individuals who get spooked by a downturn.
One way or another, doesn't it show that investment managers don't know what they are doing?
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Post by doctork on Oct 10, 2008 19:43:06 GMT -5
Fund managers manage for the long term. People selling now are selling in a panic, likely due to an urgent need for cash, even if it means selling at a loss. But there are fewer buyers, so prices drop.
And old fashioned run on the bank, but the stock exchange version. However, if you have money to buy, it's "Stocks on sale!"
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Post by joew on Oct 10, 2008 23:14:57 GMT -5
Well, the thing is, how many of the people would have needed the cash right now if the market had been inching up?
Actually, since I made the earlier post, I think I've realized why the fund managers are selling. Peter Lynch tells the story of the time when he was managing the Fidelity Magellan Fund. There was a sharp decline in the market, and he was going to work the next day thinking of all the bargain stocks he could buy for the fund. But when he got to the office, he found that investors were pulling out, which left him without the cash to buy all those bargains. Instead, he had to sell stocks to get the cash to pay the departing investors.
So it's not the managers' fault, it's the panic-driven public.
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Post by gailkate on Oct 11, 2008 9:22:12 GMT -5
Peter Lynch was a titan, no doubt about it. But I'm not sure we can say "so" as in "thus" as in "it follows as the night the day." This is something of a chicken-egg question. Investors wouldn't pull their money if they weren't seeing its value plunge, so the acumen of managers has to fall into doubt. We are stuck in Magellan because we put our first IRA into it. The fund did do well, grew to so many members that it had to be closed to new members at least for awhile. It's been lackluster for years and is down 35% this year. When a fund loses that much it is because the managers have invested $ in risky enterprises. The problem is when people recognize the risk, and fund managers haven't been particularly canny about that. Magellan is, of course, just the handy example. I'm afraid humans are wired to get excited and follow the herd. "If everyone's cashing in on all this real estate paper, it must be a good bet." Same thing with the dot com bubble. All the major funds bought Cisco and other companies that don't even exist anymore. Cisco survived, never to reach its stratospheric heights again, and millions of people lost millions of dollars. It's gambling, plain and simple.
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Post by joew on Oct 11, 2008 9:43:21 GMT -5
Point taken. The scenario of poor management is another possible one.
But that was not the case when Peter Lynch was managing Magellan; and when an individual fund is poorly managed, I don't think you get massive withdrawals overnight. When investors are spooked by a big drop in the Dow, and they want to take their money out of their fund, regardless of how well it has been managed to that point — with the result that all the funds have to sell to get cash — I don't think we should conclude that they have all been poorly managed. I suppose it's true that something of that same herd mentality exists among fund managers, and that is another part of the problem.
BTW, I'm not sure that you're stuck with Magellan for your IRA. It's been a while since I've worked at the IRS, so I may not have exactly the right jargon term, but as I recall, owners of IRA's are permitted to transfer the assets of the IRA directly from one custodian to another. It has to go straight from one fund to another — you can't have Magellan distribute the money to you and than you take it to another institution, but as long as the money doesn't pass through your hands, I think a transfer is permissible.
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Post by gailkate on Oct 11, 2008 13:55:33 GMT -5
I think you're right, Joe. We've stayed with the "ride it out" principle for too long. I guess the good thing about transferring now is that we wouldn't have to pay any capital gains tax ;D I'm being silly, but there was something about costs for transferring to another group - no penalty if you just switched within the same company. Not only could we roll it into something else at a relatively low price, we can probably take lots of lovely losses. Oh boy! I haven't looked at the numbers closely; given the fall in the dollar, we may come out where we started. I just keep thinking about all that careful saving, money every month into deferred comp, and paying off the mortgage. Why the hell didn't we go to England and Europe and New Zealand? Rio, for goodness sake? We need a new thread -- Things I Should Have Squandered Money On.
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Post by doctork on Oct 11, 2008 20:50:19 GMT -5
Magellan is only one of Fidelity's many funds, right? You should be able to move IRA money between the different funds, all with different investment objectives - some are conservative fixed income funds, some are aggressive growth funds, some specialize in domestic companies, some do international companies.
I have some of my retirement savings in a fund that is "age-appropriate" - that is the fund manager moves the money around according to one's age. More aggressive for the younger savers and more conservative as you get older and closer to retirement. It's a good idea anyway to be diversified, and this particular retirement account is with my current employer, whose choices within the plan are limited.
I don't think the capital gains taxes (or lack thereof) matter when the money is in a retirement account, as long as any gains are reinvested within the IRA account. You only pay taxes when you withdraw the money, and then it would be at whatever rate your income is taxed. But I'm not an accountant - guess you should ask a professional.
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Post by gailkate on Oct 27, 2008 10:09:27 GMT -5
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Post by jspnrvr on Oct 27, 2008 14:02:44 GMT -5
Still here, gail. Of course, 10 or fifteen years ago this commercial wouldn't have been made; there wouldn't have been the universal experience in the target population to make the ad effective. Large bunches of Hispanics standing around hoping for day labor? Sure, everyone has seen that! Let's make a parody using white collar Anglos; Ha, Ha. Going to be interesting to see how this all shakes out; I seem to remember hearing about an ancient Chinese curse, something like "May you live in interesting times!"
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Post by gailkate on Oct 28, 2008 9:24:10 GMT -5
You're right, this isn't ha-ha but a darker kind of humor. At its best humor can make you see from a different perspective, and that's how I saw this. Human beings, desperate for work, made to feel useless and scrambling for any chance to put food on the table.
I don't know what it's like in other states - except in a general way - but job cuts are serious here, in all categories. From roofers to auto workers to senior management, it's truly painful. I knew people who were suddenly jobless after Enron, but that's the only case I can think of where there's been massive white-collar job loss. And all the news stories we've read but not heeded were right - thousands of people are only a few steps from homelessness. Some of the most well-off are overextended and have nothing to fall back on if their job gets cut.
And the extraordinary thing is that this is worldwide - all the markets seem to be bouncing around, businesses going under - where is our FDR?
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Post by doctork on Oct 28, 2008 11:05:18 GMT -5
In Denver in the mid to late 80's there was huge shrinkage in white collar jobs due to the oil industry collapse and the Silverado and other S&Ls banking scandal. It was a major problem for those in the energy business, as many jobs that were preserved involved a transfer to Houston.
I remember delivering a baby and then discharging mom & baby from the Denver hospital on day #3 so they could go to the airport and fly to Houston to rejoin dad and the other kids. Several of my MBA classmates in the 80's were back in school as a result of having lost their jobs, hoping to get new/better jobs once they got the MBA.
Now I see several patients every day who are losing/have lost their insurance because they lost their jobs - some white collar, some pink or blue collar, but mainly just lots of them.
And yes, it's worldwide, but the difference is that in every other industrialized country, the people still have health insurance even if they don't have a job.
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Post by Jane on Oct 28, 2008 19:52:14 GMT -5
Hey, I'm in MICHIGAN! Don't tell me about the bad economy....The car companies are circling the drain, house prices are going down, down, down, jobs are scarce as hen's teeth, and it ain't gettin' any better. (That's how we talk when we're down on our luck and standing in the soup line.....)
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Post by gailkate on Oct 28, 2008 23:33:16 GMT -5
They're still heating soup for you down-and-outers? Hell, we're lucky to get dry bread here. Matter of fact, it's so bad here we're lucky to even see bread through a window. Grandmas tell stories to the little ones about how they used to have bread back in the day.
Nope, not funny at all.
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Post by joew on Oct 29, 2008 19:55:56 GMT -5
For once it's good to be on a fixed income. The clerk at the stationer's was telling me yesterday that sales are down in her store and in the bookstore across the street. The savings bank has laid off employees, and the commercial bank may not be far behind.
Under these circumstances, I'm glad I can continue to spend at my normal rate, and it even feels like an obligation to do so.
But about 1/3 of my income comes from a weird annuity contract which guarantees my the right to withdraw 5% of my original (single) premium every year for 20 years. Right now, after four years, the value of my investment is down about 33% of the original premium, whereas the expectation had been that gains would more than offset withdrawals. I suppose in an even bigger meltdown, they could run out of money to pay me my due. That would be a real problem. But for now, I guess I'm doing my part by being one of those "get and spend" conservatives.
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