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