That Whooshing Sound is the Sound of the Stock Market Plunging into an Abyss
When Congress passed (and President Bush signed) the $700 billion bailout late last week, they did so promising that soon things would be back on track. In fact, in the run-up to Friday’s signing proponents of the bailout insisted that it was needed in order to prevent a complete Wall Street meltdown. So, how’s that working out so far?
Not well. The market down to below 10,000 and in a complete and utter state of panic, reports Bloomberg:
“It’s a financial panic, total dislocation in the financial industry across the board,” said Ralph Shive, chief investment officer at 1st Source Corp. Investment Advisors in South Bend, Indiana, which manages $3 billion. …
The Federal Reserve doubled its emergency auctions of loans to commercial banks to as much as $900 billion in an effort to unfreeze short-term lending markets. The central bank also will begin paying interest on bank deposits under authority it gained from last week’s financial-rescue legislation.
In fact, far from preventing the crash of epic proportions, the $700 billion bailout has done nothing — except saddle taxpayers with more debt. Indeed, that’s part of the problem. The fact of the matter is that we were sold a “quick fix” (or at least lobbyists bought one from Congress), and when investors realized that the credit markets were still seizing — and would be for weeks or even months — things started getting panicky.
I, however disgusted I am at the sight of my IRA statement, am refusing to panic. Well, sort of. I’m planning on sitting tight, since I have a long way to go until retirement. But I can understand why my parents are freaking out right now. However, now is the time to think about other options that can shore you up until the stock market recovers. Consider some safer cash investments. The return isn’t sexy, but it’s better than nothing and better than completely liquidating the retirement account.
Deep breaths.
Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.
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economy, investments, retirement
