Facing the Financial Crisis

We said yesterday that "all the bad news is out" about the current financial chaos. It is, but unfortunately, knowing what is causing all the hew and cry and fear doesn't immediately cure all those ills, it just helps us understand what we're up against. How to deal with "what we're up against" is thus a perfectly valid concern.

As we've been following the news since the weekend, we've come to at least one good place where there is some reasonable-sounding concrete advice. It's the Wall Street Journal columnist Brett Arends whom we quoted yesterday. Since 3:30 yesterday when we posted that article, he has posted two more columns. Read them both.

"Ten Ways to Protect Your Finances From the Crisis
As the country's financial system teeters on the brink of disaster, you need a game plan to minimize the damage."

http://online.wsj.com/article/SB122150347951037511.html

and

Is Your AIG Insurance Policy Safe?
If you have a life, home, auto or long-term care insurance policy with AIG, you probably have one question on your mind: will the struggling insurer be able to meet its financial obligations? Here's what you need to know.

http://online.wsj.com/article/SB122159859013744663.html

Regarding this second item about AIG: As you may have read or heard by now, the Federal Reserve this evening has granted a loan to American International Group (AIG) for as much as $85 billion. The Fed has the right, under the Federal Reserve Act, to lend to anyone it wants if it sees a great need -- an "unusual and exigent need", the Act says -- that cannot be handled by other lenders. This action is a comfort to markets, but adds to the confusion over the philosophy being applied here by Fed, Treasury and other officials about the proper role of government. However, AIG's "need" for cash is "exigent"; this characterization is widely accepted. The philosophical discussions will have to wait until later.

Finally, this morning, I asked a stockbroker of my acquaintance what he is telling his clients this week. Rob replied quite directly, using words one doesn't often look for from a stockbroker: "There's probably some more downside. This isn't a time to be a hero."

So you all be careful out there!

If you have some specific questions about all this, please ask them. Let us know what aspects are most important to you. If we don't know much about the answer, we'll look or ask around until we can find something. carol@geraniumfarm.org!