Marketplace

And if you threw it all a-way

So much for that big Friday rally, eh? Spent the weekend thinking Things Can Only Get Better? Do you feel scared? I do. But I won’t stop and falter. Whoah whoah whoah… Uh oh.

While Congress and the Treasury duke it out this week over the bailout plan, we’re going to focus on what all this market madness means to your financial planning. Chris tells us all the time that we need to focus on the long-term… that market swings, even like the ones we’ve seen the past couple of weeks, won’t mean much 10-20 years from now. But what if you’re about to or just retired? You thought you had it all worked out, but now the math is no longer going your way.

A couple of years ago Lee Eisenberg wrote a book called “The Number: A Completely Different Way to Think About the Rest of Your Life,” all about figuring out how much money you need to save to retire to the lifestyle you want. It was published two years ago, and we wondered if his advice has changed at all given the current money environment. So we’ll talk to him, as well as to some folks who were planning to retire soon, but are now wondering if they should keep working.

Chris and I are also planning to address a question that’s come up in several of your emails… how on earth did we really get here? How is it possible that sub prime mortgages sent the entire economic system to the brink? AND… was the system truly on the brink? How so? What would the worst-case scenario have been for US, not just the big banks and insurance companies? (Chris and I talked for 40 minutes about this question last week and I still am not sure what financial Armageddon would look like, so we’re figure that out once and for all.)

We’re also going to take a look at the effects of this meltdown/bailout on people who aren’t anywhere near retiring. As part of that coverage we’re profiling a new effort underway by the Treasury Department (in its spare time) to educate 18-24-year-olds about credit and its risks. Maybe if more people understood those risks we wouldn’t be in this situation? We’ll also be hosting another roundtable with the personal finance bloggers we spoke to last month to see what they’re writing about the financial crisis and what kind of advice they have for the rest of us. And Marketplace’s Bob Moon will join us again to wrap up the week.

Hope you can join us this weekend… what else do you want to hear about? Post your suggestions here and we may use them to help shape what we put on the show this week.

UPDATE FRIDAY 9/26

HI everyone — thanks for the great comments. You are far from alone in your disgust over this entire situation. We’ll have much more on all of this over the weekend, including an interview with Marketplace’s Bob Moon about the collapse of Washington Mutual. So much for Wamoolah, eh?

We’ve also ended up using many of your listener comments in the show — tune in early on to hear retirees who are watching their 401k’s turn into 1k’s. Keep those emails and calls coming!

• September 23, 2008
• 10 comments

Spare a dime? Or $900 billion?

$900,000,000,000.

That’s the total — so far — of government bailout money this year. Reuters has the rundown, which includes:

$200b for F. Mac n’ Mae

$85b for AIG

$300b for the FHA to refinance bad mortgages

$116b to JP Morgan for both the Bear Stearns buyout and to help bolster trades after the Lehman bankruptcy

$200b in Fed loans to banks, and oh yeah…

$4b to help cities with blight caused by foreclosed homes

Whoah. I hope you’ve been tuning in to Marketplace and the Morning Report this week for some excellent coverage of how this is all coming down and what it means. Meanwhile for this weekend we’re still planning an in-depth look at how your finances and investments are affected by these moves on Wall Street and in Washington.

In addition to what I noted in my previous post, we’ll be talking about recent developments in money market mutual funds — usually referred to as “as good as cash.” Not so much? One of the biggest funds, Primary Fund, announced this week that it’s “broken the buck,” meaning the value of a share is now less than a dollar. Yes, this is just one fund company. But we’ll ask our New York bureau chief Amy Scott about what that means for your investments.

We’re still getting lots of letters about Lehman, Merrill and AIG, and I’ll reiterate that we’re doing two special segments of Getting Personal where Chris will answer as many of those questions as we can. Keep them coming… and tell us here what else you want to know about this week’s developments. Stay cool… the FDIC will cover your bank deposits, the SIPC will cover your investments, and Uncle Sam is now in charge of your insurance annuities and coverage at AIG. So far, so… ok…

• September 17, 2008
• 4 comments

Going to the mattresses?

Sure seems like that’s the place to park your money these days. Wow — what a weekend. And you felt it, too. We had more than 70 listener emails in our inbox this morning… many, if not most, of them asking about Lehman, WaMu, Merrill, Fannie, Freddie, and AIG. (I didn’t count all the phone calls.) You say you’re very worried about where to put your money. And we’re going to try to help you sort it out on this week’s show.

First and foremost you should know that if you parked your money with Lehman or Merrill, it is safe. At Lehman, your account will likely be transfered to another investment house. In the worst case scenario, the agency that protects investment accounts, the Securities Investor Protection Corporation (SIPC), will move toward a liquidation of Lehman’s assets. And that would mean it could take some time to get your money to you. But since 1970 SIPC has recovered 99 percent of retail account holdings from bankrupt brokerages. So barring anything unforeseen, you will not lose your money. And again, it’s not even likely to get to the point of liquidation. Instead, your investments will be transfered to another management firm.

At Merrill, this is just like any other takeover. It will take time to complete, and until then you won’t notice any difference in your ability to move your money around. Eventually your statements will start coming from Bank of America instead of Merrill Lynch. And that’s about all the change you’ll see.

We’ll be going deeper into these questions and issues on the show — we have Marketplace’s Bob Moon booked to talk us through the latest news from Wall Street as the week goes on. And we’re devoting the entire first segment of Getting Personal to your questions about these developments. We’re also hoping Vanguard founder John Bogle will be able to join us again as he has after previous Wall Street shockers. He’s always a valuable voice of calm and reason in a storm!

It’s not ALL doom and gloom, of course — even after today’s (Monday) 500-point drop on the Dow. Tune in for a nifty tutorial from Marketplace’s Steve Henn on where, exactly, your money goes after it hits campaign coffers. We had planned to air it last week, but had to bump it for the Fannie/Freddie wrapup. And Rachel Dornhelm introduces us to a Silicon Valley entrepreneur who’s designed a DIY ethanol pump. It can be yours for the bargain price of $10,000.00!

Does that sound like a good show? What else do you want explained about this crazy market? What are you thinking about it all? Are you managing to stay calm? Or are you ready to stuff everything under your mattress? Inquiring minds want to know…

• September 15, 2008
• 1 comments

Shakin' your Fannie

So… anything happen over the weekend?

Oh yeah… biggest government bailout EVER.

This morning we spent most of our editorial meeting discussing how to address the Fannie Mae/Freddie Mac takeover. By the time you hear the show, the news will be a week old. But this is right in our “wheelhouse” so we’ll be doin’ some ‘splainin’, even if you’ve heard some of it before. Marketplace reporter Mitchell Hartman will be delving into the homeowner/homebuyer questions of what happens to your mortgage if it’s backed by Fannie or Freddie, and what happens/what changes if you’re looking to get a mortgage.

Then we’ll address the issue of shareholders who look to possibly lose everything if they invested in these companies. Is it just me, or does it feel like there’s just no safe investment anymore, despite what we’re repeatedly told? Auction-rate securities… Fannie Freddie… There’s always risk involved in investing, but who and what are we supposed to believe when we’re told don’t worry, this is a safe one? And Chris has some pretty strong feelings that he’ll share about all the pension funds that may have lost their shirts because they held F/F stock.

What else do you want to know about this news development? Post your thoughts here and help us frame the discussion this weekend. By the way, if you want a good primer on Fannie and Freddie and how they operate(d), check out this interview we did with Susan Wachter back in April. Of course now some of the definitions are outdated because of the takeover… but she does a good job explaining why the two entities exist. And just for the record… nationalization is exactly what Chris (aka Magic 8 Ball) predicted and encouraged in the Straight Story two months ago.

Elsewhere in the show, Marketplace’s Steve Henn is going to do some on-air illustrating for us! He’s going to draw the line between your political donation and where it actually ends up in a campaign’s treasure chest. And we’re celebrating National Coupon Month! Janet Babin takes a look at all those smart people who save serious coin by clipping. And how many of your employers offer a lifelong learning account? What IS a lifelong learning account, you ask? Full answer coming this weekend, but to give you a taste… it’s a personal savings account provided — and matched! — by employers so people can go back to school.

What would you study if you had the money to go back to school? I’d go to Juilliard, become a concert pianist and be invited to play Grieg’s A-minor concerto at the Hollywood Bowl with the LA Phil.

Ok… gotta go practice…

• September 8, 2008
• 1 comments

Readin' (annual reports), writin' (checks) and 'rithmetic (all of the above)

Welcome to a new year of Money school! Anyone who can tell me Chris Farrell’s number one piece of investment advice goes to the head of the class and is exempt from mid-terms. (THURSDAY UPDATE: The answer is: diversify, diversify, diversify!) Oh — and before any of you get too cool for school… I know nobody writes checks anymore. Just thought it would make for a catchy blog headline…

We’ve got a crackerjack show planned for this weekend. First, we’re going to look into insurance issues in the aftermath of Hurricane Gustav. Home insurance is so expensive now along the Gulf Coast that some homeowners (who’ve already paid off the mortgage) are taking the chance to go without. Yikes. We’ve also got an interview with Kathy Kristof — a longtime friend of the program who just last week ended a 19-year career as a personal finance columnist at the Los Angeles Times. She took a buyout this summer… and she talks with us about living her own financial planning advice.

Let’s see what else… we’ve got rideshares… timeshares… how about nannyshares? That’s how some families are handling their needs for part-time nannies — they’re sharing with another family. Bennies included! Alisa Roth has The Nanny Sharing Diaries from Manhattan. Nancy Marshall Genzer in our DC bureau is going out on Thursday to the first-ever AARP job fair for seniors. We’ll hear from some of the attendees and talk to Nancy about how much of this job-searching is out of desire and how much is out of necessity.

And we’ve got YOUR letters this week. As I mentioned last week we got lots of response to our coverage of the 3rd anniversary of Hurricane Katrina, so we’ll air some of that. And a couple of foodie-type pieces got some of you quite worked up… Cash Peters’ story about going veggie, and Sean Cole’s about energy drinks (sluuuurrrrp sluuuurrrrp)… we’ll hear from you on those. And if you haven’t checked out the debate going on online over my interview with Leslie Bennetts, author of “The Feminine Mistake,” click on last week’s show and read through some of the comments.

And then post your own right here! What do you want to hear about this week? Tell me NOW…

• September 2, 2008
• 0 comments

The Fruits of Our Labors

First — thanks for responding to our coverage of the third anniversary of Hurricane Katrina. Your comments reflect enormous compassion and concern. As I mentioned in last week’s post, this is a story that will stay with me for a long, long time. And I do plan to return at least once a year to report on progress… or lack thereof.

There was one critical comment/question that several listeners sent in to Marketplace. Here’s a sampling:

“I was listening to the report on New Orleans and was wondering why the story was about how bad it was that people were not rebuilding. It seems to me that it doesn’t make any sense for people to build in a flood plain. Why allow people to rebuild in a place that has been flooded and will be flooded again. The smart thing to do is to give people money to build somewhere where it makes sense. Not building in New Orleans is a good idea, not a a bad idea.”

“Ms. Vigeland reported with disappointment that neighborhoods in the New Orleans flood plain were not being rebuilt. That people are not rebuilding their homes in an area that is below sea level should be seen as wise and prudent; not disappointing. With a rising ocean, relocating to higher ground is the only responsible action. This story could have been reported as a city moving forward (and upward) with an eye towards the future instead of seeing a failure to recreate a failed experiment.”

These may be valid arguments. But it’s a little late to be making them, isn’t it? This country had a very short — and shallow — post-Katrina conversation about how and whether to rebuild New Orleans. Ultimately the city decided to allow residents to rebuild in the flood zone… and as we mentioned in the show, in an effort to just get the population to return to NOLA, it even allowed residents to go to city hall to reduce their damage assessments so they didn’t have to elevate their homes. So you have to deal with that reality. And I’m not sure the political will exists — at any level — to move people out of the flood zone now that they’ve already returned. Why not make it easier for them to rebuild to a level of safety that experts agree could save thousands of homes, and possibly lives, in the next storm?

Moving on… we’ll be dedicating THIS week’s show to all of our respective labors, and the fruits thereof. We’ve got interviews about how women can become better salary negotiators (‘cause studies show we’re awful at it) and what the mommy track means for women who decide to re-join the workforce later in life. We’ll also take a look at the role of online job networking, where, just like offline, it’s less about what you know than WHO you know. And if you’ve ever wondered what it would be like to run a business with your spouse all day and then go home to… your spouse… we’ve got some couples who’ve done it. Some worked out… some, uh, didn’t.

Meanwhile… I’ll be laboring on Monday — will you?

• August 25, 2008
• 0 comments

Personal finance in New Orleans... three years later

This week we’re doing things a little differently on the show. At the end of the July I paid my first visit, ever, to New Orleans. I was there for almost a week to check up on some of the financial issues residents are still facing on the third anniversary of Hurricane Katrina. What I found — well — it captivated me like no other story I’ve covered recently. I’m still trying to get through conversations about my visit without getting choked up about what I saw and heard. THREE. YEARS. LATER.

It’s stories like these where as a reporter I find it very, very difficult to be evenhanded and objective. I wrote an essay that will end the show… and in an early draft I confessed that I was “angry” about the lack of progress and that I was trying to figure out why I cared so much. A friend and editor who listened to it said, you know, I’ve never heard you admit that kind of strong opinion on air… are you sure you want to do that? So I’ve softened it to “upset.” Of course if you read this you’ll know my true feelings — so is it ok to say on a blog, but not on air? I don’t know. But I’m doing it anyway. It’s just so shocking to go there and realize how many neighborhoods are still empty… maybe one or two families back on the block. No gas stations, grocery stores, fire stations, 7-11’s… some places you wonder if they’ll ever come back.

We have an interview with Tina Marquardt of the Beacon of Hope nonprofit who tells us about her neighborhood and what it’s like trying to repopulate a ghost town. People are finding that in their rebuilding efforts, they often run out of that last little bit of money they need to, say, put in a new sidewalk (because the current one is buckled) or put in landscaping or paint. So there’s this quality of “unfinishedness” to a good swath of New Orleans… even the parts that are starting to renew themselves.

Our major personal finance story is about the question so many homeowners face of whether or not to elevate their homes FAR above flood level. Most are required, if they raze and totally rebuild their homes, to elevate above FEMA-designated flood levels, usually 3-4 feet. But some were granted exceptions by the city early in the process and have rebuilt right on the old foundation… even homes that were a block away from a levee breach. They couldn’t wait around for the government to decide whether and how much money it would provide to help with elevation, which can cost upwards of 80-thousand dollars, depending on the size of the house. And those who have been able to elevate — some to nine feet above flood stage — tell stories of four inches’ worth of paperwork… almost a full-time job.

Each year since Katrina we’ve taken the opportunity of that anniversary to talk about preparing financially for an emergency. Things like where should you have your important papers, how much cash should you have onhand in case ATMs are down, etc. In fact we have a webpage devoted to the issue of emergency preparedness that you should check out if you haven’t done that kind of planning. This year I asked several of the folks I talked to in NOLA how their emergency planning has changed since their Katrina experience. They’ll share their stories. And our Day in the Worklife segment features Ian McNulty, the author of a new book about returning to NOLA after the flood. I found him at Finn McCool’s, the Mid-City neighborhood bar where he wrote the book.

We will, of course, also bring you the Straight Story and Getting Personal. Other non-NOLA stories include a feature about kids going away to “money camp” (hey isn’t that what we do on the show each week?!) and as we approach Labor Day, former Secretary of Labor Robert Reich tells us about his first job.

I do hope you’ll tune in for our NOLA coverage. I’ve been wanting to cover that story for three years, but for various reasons they needed me here in the studios for each of the anniversaries. But I felt a pull to go and see it for myself and this year I did. And I hope you will go and see it for yourselves — and pour your tourist money into the French Quarter and beyond. I met the most wonderful, generous-hearted people who just want their city back. Unless the rest of us pay attention, I fear many of their neighborhoods will not come back.

Any of you been there since Katrina? What did you see? What else is on your mind this week?

• August 18, 2008
• 8 comments

Eating your words... and vegetables

Ok ok so apparently many of you are vegetarians and do NOT — I repeat — do NOT resort to buckwheat loaves as our beloved Cash Peters did. You eat well and manage to enjoy veg’ing out while listening to Marketplace Money. Excellent! Thanks for your comments over the weekend… we’ll be sure to air some of them in our next listener letters segment (which, by the way, comes around every four weeks or so).

So this morning we debated in our weekly editorial meeting about what kind of followup we should do around the dollar gaining strength and oil prices falling. There was some argument in favor of explaining the macroeconomics of what’s going on with the dollar. But I countered that unless and until it gains enough to really make a difference in our lives (i.e. it’s finally time to book the trip to EuroDisney!) that it felt too early to be doing that story. What do you think? Is the dollar’s value top of mind in your personal finances this week? If so, what would you have wanted to hear about it?

It also seems like yes, oil and gas prices are falling, but jeez we’re still at, what, $114/barrel and I paid almost $4.40/gallon over the weekend, so I’m not seeing any real savings yet. Are you?

What we did decide to do is look at two surveys that came out with what seem like dueling takes on the economy. One, published in USA Today, says “fewer economists believe recession likely…” and the other, published in Bloomberg, seems to paint a different picture. How are the rest of us supposed to interpret all that? We’ll talk to two economists about what’s really going on and which survey participants could be eating their words at this time next year.

We’ve got a bunch of Marketplace reporters helping out this week. Bob Moon is going to talk us through the practical effect of all those legal settlements over auction-rate securities that have locked up a lot of money that people thought was safe. How will they get their money, and what happens if all those funds just get yanked out of the market because people don’t trust those securities anymore? Steve Henn will join us for a quick followup to last week’s story about companies that cull prescription drug records and sell them to insurance companies. A listener wrote in and wondered how that’s allowed to happen in light of what are supposed to be pretty rigid medical privacy rules. Good question!

Scott Tong has a fun piece from China looking at the American shopping experience during the Olympics. No more knockoffs for YOU! And while we’re talking about China — anybody worried about all those foreign investment decisions you made way back, oh, a year ago when emerging markets were all the rage? D’oh!

And finally a sneak preview of our extended coverage of the third anniversary of Hurricane Katrina. I went to New Orleans a couple of weeks ago and we’ll be devoting much of the show the weekend of the 22nd to the personal finance and rebuilding troubles that STILL plague residents there. This weekend we have an interview with Allison Plyer of the Greater New Orleans Community Data Cater, who talks about the lack of housing, childcare, public transportation and more that are making it hard for people to justify returning to their city. The only thing they have a surplus of in the Big Easy? Jobs.

Hope it all sounds interesting… what did you want to hear about this week?

• August 11, 2008
• 5 comments

How we're Makin' (Marketplace) Money

Dude… I got a blog!

Welcome to the innaugural post of Makin’ Money… my stab at an online conversation about our show. Basically I’ll be writing about how we choose our stories, some of the sausage-making (depends how much of it you want to hear about), and hopefully hear from you what you’d like more of and less of on our fabulous program.

We have a weekly editorial meeting at 9 AM PT each Monday, so hopefully by the end of the day I’ll be able to give you a sneak-peek at that week’s show and why we’re covering what we’re covering. And through the week I’ll share any great personal finance writing I find out there on the Internets… feel free to do the same. I’m not sure what else might happen here — but please add your three cents or more. (Actually these days I’d rather have your three Euros.)

If you have questions for Chris… go forth and visit “Getting Personal.” And then come back and tell us all your best money stories.

See you on the blog rolls!

• August 8, 2008
• 6 comments