Even relative to the market’s dovish expectations, the FOMC came off as worried about the U.S....
Let’s Not Become Our Biggest Fears!
03/09/2009 10:57 am EST
The fear factor is taking over the markets, the economy, and the public psyche. And no matter what programs, speeches, or photo ops the new administration stages, it won’t help restore public confidence.
One of the great motivational books of all time, The Strangest Secret by Earl Nightingale, was written 75 years ago. The “secret” was this: “We become what we think about!”
And all we think about, and talk about, these days is economic failure. The latest headlines about unemployment are just the latest example. Yes, more than 8% of the workforce is unemployed, but that means 90%-plus is still working!
This is not meant to be a paean to Pollyanna. But it is a request that we start putting all this bad news in perspective—especially the media and the Obama administration.
Last week Sheila Bair, who’s done a great job as head of the Federal Deposit Insurance Corp. (FDIC), inadvertently raised the fear level with the announcement that the FDIC fund was running low.
How ridiculous! The FDIC has a direct line of credit from the Treasury for $30 billion. And does anyone think the government won’t extend more help to prevent a run on the banks? Remember, they even started covering money market funds last fall.
Then President Obama bashed the latest revision to the bailout of AIG, despite sending more money and restructuring the original deal. Of course, this failing company could not pay 10% interest on the money they received! And equally of course, despite the idiotic credit default swaps the company wrote, the government won’t let them fail and destroy the retirement funds of America’s teachers, invested in TIAA-CREF annuities (which are AIG products, by the way).
We’re scaring people beyond belief, and it’s taking hold in the country. Here are excerpts from e-mails I received in just the past two days, regarding the safety of money in banks and insurance companies:
“My husband and I are in our seventies. We have our entire retirement fund in bank CDs. Every day we hear more dire reports concerning [our bank]. And now the FDIC is almost bankrupt. We are worried and feel we should take our money out of the bank, but where would we put it? Are there any safe banks?”
And here’s another one:
“I heard a bit about what you said [on radio] about annuities in AIG being safe because it was separate from the corporation. How is it insured and should I move it out of AIG into another company or different product in another company [CD]?” (That’s not exactly as I explained it, but you can see the confusion out there!]
Of course, I told each of them that the federal government is standing behind the bank deposits through the FDIC fund and has demonstrated that—despite the fact there is no federal backing of insurance company products—the government will not let major insurers fail.
But the truth is, there aren’t enough trees on the continent to print all the paper dollars that would be necessary to give every depositor or policyholder the cash if they wanted it! So, we can’t let fear rule.
Despair is pretty typical of bear markets and deep recessions like this one. And when you’re in the middle of it, it’s hard to see what will make things better.
But how about trying the power of positive thinking, for a change? Let’s think about prosperity. Yes, we need sensible tax and spending policies to get us there. But let’s stop looking down, and start thinking UP! Isn’t that “can do” spirit what made America great?
What do you think? How can we start turning our own thinking around? Please have your say and join the conversation!
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