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Tired of the doom & gloom

Tired of the doom & gloom

I don’t know about you, but I’m pretty tired of all the doom and gloom in the headlines. Yes, financials are in trouble. Yes, people got mortgages they shouldn’t have & companies lent money they shouldn’t have. Yes, eggs cost more. Yes, oil is up and that’s bad. No wait, now it’s down and that’s bad. Yes, the sky is falling. Yes, you name it.

But really, is it necessary to pounce on “the next whatever” seconds after one crisis is dealt with? It’s like there’s some master list out there of banks and financial institutions that are in trouble, and a bunch of vultures moving from one to the next before they’re even completely dead. I’m not saying there’s a conspiracy or anything, or that people didn’t get greedy. I’m just saying that I’m sick of it. And that fancy headlines grab readers, and readers grab advertisers, and advertisers pay the bills.

But what it also does is create more panic, worry and fear. I don’t know how many times I saw the questions “is my money safe?” and “should I hold off on doing blah blah blah with the economy like it is?” in various forms yesterday.

First, no money anywhere is completely safe. The world could end today, and you’d be out of luck. Of course you’d probably be past caring at that point. Yes, such and such bank MIGHT be failing. (In fact, because of how banks work, banks are more LIKELY to fail if everyone panics and withdraws their money.) But if your money is in an FDIC insured bank, take a deep breath and read how it works instead of panicking:

According to the FDIC, if you have $100,000 or less per depositor per insured bank, you’re covered. If you have $250,000 or less per depositor in an IRA at an insured bank, you’re covered. For more details, visit the FDIC’s web site.

The bank down the street from me failed a while back, and you know what happened?

They changed the sign to the name of a different bank.

Now, probably there was more going on behind the scenes, but that was the most noticeable change as far as I could tell.

See Also

If your money is in a credit union, chances are your shares are insured by the National Credit Union Administration, which has limits similar to the FDIC. Their web site states that, “Not one penny of insured savings has ever been lost by a member of a federally insured credit union.” and “If a federally insured credit union does fail, however, the NCUSIF will make any necessary payouts to the credit union’s members. These payouts are usually done within 3 days from the time the credit union closes its doors.”

If your money is in a brokerage account, it’s probably protected by the SIPC. According to their mission, “When a brokerage firm is closed due to bankruptcy or other financial difficulties and customer assets are missing, SIPC steps in as quickly as possible and, within certain limits, works to return customers’ cash, stock and other securities.” A news release on the SIPC’s site also states that “In addition to the protections provided by SIPC and the SEC’s net capital rule, the SEC requires registered broker-dealers to place client assets into accounts segregated from the brokers’ own proprietary funds and securities. As a result, clients are protected from the firm’s trading losses.” Check with your brokerage account to see if you are covered.

Finally, don’t base your financial decisions on “what the economy is doing”. Base them on your individual situation and what you can reasonably anticipate for the future. This means that if you have a 20% down payment on a modest house that you can easily afford, a decent job, health insurance, 6 months or more in an emergency fund, and money to spare every month, a reasonable person might conclude that you can probably afford a house – even though “the economy” is freaking out. But if your gut still wrenches at the thought of buying the house, maybe you shouldn’t do it despite the reasonableness. It just depends on your own situation.

View Comments (10)
  • Unfortunately, bad news sells, the more sensational the better. Even more unfortunately, some of the “news” agencies have a vested interest in making things seem worse than they really are, at least until after November.

    cheers,
    Ken

  • Thank you. I’m very sick of it too. But they are always like that. Even in good times it’s all doom and gloom.

  • I’m getting sick of the bad news hype myself – how many times can the sky fall in one week? IF you’re worried about your money be cautious if you’re adventurous then look for a great deal. When the markets are down is when smart people make a killing.

    I’ve started ignoring the general hype about the markets… there’s too much stuff to sift through to get to the truth.

  • Chad – It isn’t getting started its been going for over a year, it is just now starting to hit home more.

    Ken and Ashely – I agree, unfortunately bad news sells. Makes me wonder sometimes. Growing up I can remember hearing good news, nowadays, not so much.

    I am like Matt, I to have started to ignore all the hoop la, the truth is out there we just won’t hear.

    Great post.

  • If you watch news channels for a full day you’d think the sky was caving in HOWEVER – money is an emotive subject and people feel strongly about the cash they’ve worked hard to save up. Now is the time to pay down debt as opposed to save, and anyone who has a pension should think twice before continuing to contribute. Bricks and mortar are the closest thing to a safe bet in the long term.

  • @Bruce
    It is just getting started. We haven’t had any real bad economic news (the majority don’t understand the bad news that has come before this or there wouldn’t have been so many ARMs) since this whole downturn started, other than Bear. We are just startingt to get into the meat of the downturn right now and the understandable bad news is just getting started. Merrill, Lehman, AIG…in a week’s time. Now Morgan Stanley is discussing potential suitors. WaMu is on the edge of a cliff….it’s just getting started.

  • Gosh, Julie from shorebank is plugging her bank everywhere today (not that this comment will be relevant if her comment is deleted)!

    Anyway, I figure if the world comes to an end or whatever then it comes to an end. But on the very good chance that things will pick themselves up, even if it takes a while, I plan to continue to invest sensibly, allocate properly, etc.

    Unfortunately, panic sells. My parents’ investment manager actually plans to meet with them this week, my dad thinks it’s to make sure they’re not panicking. I talked to him about their allocation and I think it’s the best they can do under the circumstances anyway. Little scarier for them, since they’re closer to needing it.

  • I don’t see the “doom and gloom” people talk about in the financial news. I work in finance for a large Wall Street hedge fund. I, and most of my colleagues as well, feel the media is UNDER-REPORTING the actual bad news out there, simply because a lot of it is hard to understand. Unfortunately the attitude that the news is just gloomy and thinking “bad news sells” makes people stick their heads in the sand and not protect themselves. Like tons of people who lost their uninsured money at IndyMac and other banks because they thought the failure hype was overblown – they actually interviewed people who lost their money who said things like “well I was listening to so and so on the radio who said the media is just doom and gloom but in reality the banks are fine blah blah”. Morons.

    I know you wrote this post before the most massive bailout in history was undertook but just to illustrate what happened. The Fed, Treasury, and other top economic and banking officials held a closed door meeting with Congress and from what we know so far they told Congress that the US ECONOMY WAS DAYS AWAY FROM COMPLETELY COLLAPSING. This was not told to the public or to the media, this was a real collapse they expected and that is why the bailout package was instituted so quickly. Now the economy doesn’t just turn overnight. The fact that top officials were so certain we were days away from a complete collapse tells you a lot, it tells you the so-called “doom and gloom” you’re talking about was probably being too optimistic. I can tell you most people I know in my business, where we study these things intimately, have been conservative as hell with our own money because this is the worst anyone has ever seen it. I know guys who have been in the markets for 40 years saying they never saw anything this bad. Just because it hasn’t effected Main Street all that much yet doesn’t mean it won’t, information just moves faster nowadays then credit developments take to get through the economy. Right now taxpayers have just been put on the hook for $1 TRILLION DOLLARS. But of course, stick your head in the sand and just “ignore” it. You remind me of the people who thought their money-market funds were “guaranteed”. Ignorance is bliss, until it costs you.

  • JD, bad news DOES sell, but more importantly it gains eyeballs, which gains advertisers, which is a big part of what the news is about. Which isn’t to say that bad news is made up or anything. But if you have a choice of saying “IndyMac likely to collapse” or “Thousands of bank collapses predicted this year! Can you keep from losing it all?” which headline do you think gets more eyeballs?

    I am worried about a complete collapse of the U.S. economy. Do you have suggestions as to what an individual person can do regarding that though? IS there really anything? And if it does collapse, is it going to matter if I keep investing in various funds or if I sit on a pile of dollars under my mattress? Because wouldn’t the dollar be pretty much worthless if that happens?

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