Events are unfolding or unraveling so quickly that even the morning’s newspapers are largely outdated by the time I sit down at my desk. Given that, the period between Election Day, the first Tuesday of November, and January 20th, Inauguration Day, worries me. The typical presidential transition requires eleven weeks. That feels like a lifetime given today’s rapidly changing financial crisis.

President Bush must be concerned as well since last week he signed a new executive order detailing how his administration will handle the up-coming transition. Similar executive orders have been signed by past Lame Duck administrations but normally not until after Election Day. Both candidates’ transition teams are working to get up to speed on everything from absorbing existing policies in dozens of areas, the free-fall in the financial markets and the handling of two very active war zones. (more…)

As the markets close the week with losses that has set all kinds of world records, you have to wonder what’s next. Will the Dow Jones, which notched up its worst percentage and point drop in its 112 year history, have a repeat performance next week? Much will depend on what happens this weekend. (more…)

Sometimes I’m called upon to forecast the future in this business despite the fact that no one really knows how things will turn out. Right now, according to a recent poll on Yahoo, 6 out of 10 Americans believe we are entering a second Great Depression. They point to the present global stock market crash as evidence. After all, they argue, the 1929 stock market crash ushered in almost a decade of decline in the United States.

“Gee,” said one of my smarter clients on hearing that news,” I must have missed the Great Depression of 1988.” (more…)

So the $700 rescue plan finally passed this afternoon. The entire process was a disgrace. While various members of congress extracted over a billion dollars in extra goodies over the last two weeks for their votes, investors lost well over $1 trillion of IRA and other tax-deferred investments as the market plummeted. That was money we planned to retire with and live out our years but instead most of us now face the prospect of working for several more years just to get back to where we were. But it doesn’t stop there. (more…)

Both sides of the Congressional aisle agreed on a frame work for the multi- billion dollar financial markets rescue on Thursday afternoon. There will be further haggling on the details but it looks as if the deal will pass–it better.

That’s not to say I’m happy about it. It ticks me off that we have to pay for the mistakes of a bunch of greedy bankers and brokers but self-preservation dictates that we go along with the plan. As for the add-ons that Congress is proposing, the more the merrier. After all, the plan will be costing each of us over $2,000 so we might as well have some of that money go to bailing out middle-class Americans. (more…)

This week’s turmoil in the world’s stock markets has investors in a panic. On the surface it appears as if we are in the midst of a financial meltdown. In less than a week the financial landscape of America has changed more than it has in years. Pillars of finance like Lehman Brothers, Merrill Lynch, AIG Insurance, and Morgan Stanley have gone bankrupt, been acquired or bailed out and the week is not over. Yet, nothing I’ve seen thus far indicates to me that we are in anything more than the last stages of a global stock market correction. (more…)

Given the market volatility, I wonder if anyone is actively trading the market outside of professional traders and a few desperate hedge funds. All week they tried to stem the rising tide of sentiment which threatens to drive the markets lower. In the end they succeeded but it was a bit like putting lipstick on a bear.

Monday started off with a bang when Fannie Mae and Freddie Mac were essentially nationalized by the Treasury Department with your money. Congratulations on the purchase. I estimate it will cost us $200 billion. The market loved it as well they should since half the nation’s mortgages are held by the mortgage giants. Then came Tuesday and the markets gave it all back when it was discovered that a Korean bank was no longer interested in buying Lehman, our fourth largest broker, which is teetering on the edge of bankruptcy. (more…)

As a result of the turmoil in the banking sector, I have been fielding quite a few questions about the safety of local banks. The answer to the above question is yes; your bank deposits are absolutely safe—as long as the total amount of money in your name is no more than $100,000 per bank deposit. In addition to cash, the Federal Deposit Insurance Corporation (FDIC) covers up to $250,000 in tax-deferred deposits, such as IRAs, pension and profit-sharing plans. Beyond that, many banks take out private insurance to entice deep pocket customers with more than $100,000 to bank at their place. (more…)

The global markets took it on the chin from the beginning of the holiday-shortened week right up until the close Friday. It was the worst week in six years for world markets. The Dow, NASDAQ and S&P 500 were all down more than 2 percent and if you’ve been reading this column you know that there is more downside to come. The question is how much more. (more…)

So, now the economy is the number one issue in the hearts and minds of this country’s voters.

We are a fickle lot. A year ago it was Iraq followed by health care. Energy made the grade a month ago. Who knows what burning issue will take center stage this fall but since this is a financial column let’s stay with the economy. Have you ever wondered how much power the president actually has to change the economy in the short or even medium term? (more…)