Looking at the last few days, it’s been quite a roller coaster ride financially…the stock market crashed, and the banks’ credit supply froze. Financial turmoil swirled around the globe. Masses of people withdrew money from the market–$36 billion more flowed out of mutual funds, compared to the week before, according to Fox Business. Plus, one in five of us stopped contributing to retirement plans.
We worried if our money was safe in banks and investment accounts. Retirement funds, college savings plans, and nest eggs we squirreled away have cracked. Along with money, some are losing jobs and small businesses.
Then the U.S. stock market staged a Monday rally, based on a government plan to guarantee that banks will loan to each other. The Federal Reserve is helping restore confidence in the U.S. money supply. The Federal Deposit Insurance Corp. raised to $250,000 the amount a bank can insure a depositor’s account. U.S. Treasury secretary Paulson is trying to implement a bailout plan. New strategies are being tried, like the U.S. government offering $125 billion to 9 major banks, in exchange for ownership stakes. It’s hoped the banks will lend to individuals and businesses and improve their reserves.
We are living through unprecedented times, something we’ll tell our grandchildren about years from now. As I talk with those who work for the Small Business Administration, at the Federal Reserve, and on Wall Street, plus CPAs, investment brokers, mortgage originators, bankers and credit union folks, I see hints of optimism. All is not lost.
What will happen next? No one knows for sure. We still have an election to take into account plus an anticipated retail holiday season tha’s expected to be lousy. Consumers are worried, and anxious consumers don’t spend money.The market will zigzag and react erractically. The economy has slowed, and might slow more. There are still big credit problems. We just don’t know how severe the recession might be.
Will the bailout really work? We will need to see loosening credit continue—it can start as a drip, turn into a trickle and eventually become a steady flow, but we need to see progress.
What are glimmers of economic brightening? Look for new jobs creation and GDP growth, good retail and auto sales, and improvements in the housing market. It will take time. We are emotionally charged.
What can you and I do personally? More on that later.