How to post to this blog
Marilyn J. Shaw
January 18, 2009 11:28 AM

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Why is the economic glass half-full?
Marilyn J. Shaw
January 18, 2009 12:40 AM

A work colleague last week questioned whether an article about a Fed chief’s speech should retain a reference to a bright spot in the economy. I said sure.

He commented that the difference between our two corners of the newsroom was that somewhere in the middle the glass apparently went from half-empty where he sat to half-full in Business News.

We’ve been covering the bad economic news and dire predictions. What could possibly lead Business journalists to be at all positive?

Simple. Like the circadian rhythms that cue our internal clock on when to sleep, wake and eat, we see the cycles all around us. Cycles inevitably decline—and they inevitably rise. It’s the nature of the financial markets, industries, governments.

Welcome to Darwinism in capitalist society. Are you fit enough to survive?

People who take action to improve their own situation have a better chance of taking advantage of opportunities down the pike. For instance, if you didn’t have three to six months of living expenses socked away in an easily accessible account before the downturn and you start saving now, you will have some cushion should something happen to your earning ability later. That gives you some control over your life in a world that seems to be spinning a little out of control. Plus, compounding of interest rewards your effort to save, although rates now are small. As the economic cycle revolves, eventually interest rates will rise, further increasing your savings, your control, your peace of mind. 

And so it goes.

The economic tide could change within months.

Jeff Lacker, president of the Federal Reserve Bank of Richmond, in a transcript of a speech he gave in Richmond on Friday sees some clearing in the economic skies ahead. He said:

      “It strikes me as reasonable to expect the U.S. economy to regain positive momentum sometime in 2009, for several reasons. First, monetary policy is now quite stimulative and real interest rates are quite low. Second, the energy and commodity price shocks that dampened economic activity earlier this year have subsided already or are in the process of doing so. And third, as I said, the drag from declining residential investment seems likely to diminish significantly in the next year. In fact, I would be surprised if we don’t see a bottom in housing construction sometime in 2009.”

How did you prepare yourself or your business for the decline and how are you altering that plan to enter the up-cycle even stronger? Or, if natural selection appears to be knocking at your door, what approaches are you taking to escape extinction?

Is your glass half-empty or half-full?



One for all and all for financial literacy
Marilyn J. Shaw
January 17, 2009 11:51 PM

“Financial literacy empowerment of the individual is key to our future,” a presidential advisory council member said last week about a report that recommends 15 steps to improve financial literacy not just for students but for all Americans.

“The best response to this crisis is to put in place policies and practices that help to ensure that something like this never happens again,” said John Hope Bryant, vice chairman of the U.S. President’s Advisory Council on Financial Literacy. It plans to work with Congress, the executive branch, the private sector and faith-based and nonprofit organizations this year to implement the recommendations.

Among the suggestions is the creation of a “National Financial Literacy Check-Up,” through which people could assess their financial knowledge, and to provide links to sites where information could help fill in the gaps.

Are you competent that you have the skills to take control of your financial future? Would you take the time to perform a check-up? Would it be worth your time to pursue information to raise your knowledge level?

You could wait to see whether these ideas pan out under the new presidential administration. Or you could get a jump on the competition and determine today to spend some time on http://www.mymoney.gov, the Treasury Department’s Web site to teach Americans financial literacy.
Would you attend financial literacy courses at work if your employer provided them? Another council suggestion is to look into providing tax incentives to encourage businesses to inform workers.

Another proposal would require college students getting federally funded or guaranteed loans to take a more comprehensive course or pass a competency test as a condition of getting those loans. The council report also recommends increasing access to bank accounts for the millions of “unbanked” and underserved Americans.

Other suggestions are to have colleges and universities research the state of financial literacy in America and mandates on teaching the subject in elementary and secondary schools.

The 16-member council, created one year ago by President George W. Bush, has been led by the founder and chairman of stock brokerage Charles Schwab Corp. Charles R. Schwab, according to Fortune magazine, was the nation’s 55th richest man in 2008, with a net worth of $6.2 billion. So it’s fair to say he’s a man with a familiarity with money.
 
“There is no question that the lack of personal financial literacy has been a major contributing factor to the economic and financial crisis in the United States,” Schwab is quoted as saying in the release. “We believe that this report contains recommendations that will help Americans at all stages of life learn the financial basics so that they can manage their own money wisely, save for the future and navigate our complex economy effectively.”
——-
The draft report can be found at http://www.treas.gov/offices/domestic-finance/financial-institution/fin-education/council/7th-meeting-2009/PACFL_Draft-AR-0109.pdf
The recommendations start on page 6.
——-
For more on Schwab’s thoughts on investing and today’s market, see Chuck’s Perspective on the Charles Schwab Web site: https://www.schwab.com/public/schwab/home/welcomep.html



Welcome to the Moneywise blog
Marilyn J. Shaw
January 17, 2009 11:40 PM

As individuals, wringing our hands over the state of the economy isn’t just a waste of time, it can be counterproductive.

Admitting there is a problem is the first step toward conquering it.

America, we have a problem.

Now, you and I need to find those quintessential American bootstraps and begin pulling.

This blog, and the Sunday Richmond Times-Dispatch section by the same name, will provide coping ideas, suggested solutions and tips to get us through the downturn and to exit this recession as stronger residents and business owners.

The hope is that this blog will be a place to share ideas big and small that can embolden individuals to discard destructive habits and embrace new inspirations, a place to talk through possible strategies, a place to support our neighbors and our businesses as we navigate through trying times.
Come join the conversation.


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