Get Rich Slowly readers have sent me many stories about the ongoing U.S. economic crisis and the debate over a possible bailout. Because I don’t like to talk politics here, and because economics is way outside my area of expertise, I haven’t provided much commentary on this situation.
Besides, sound personal finance skills are the same no matter what the condition of the economy. When times are rough, it’s even more important to focus on the basics: spend less than you earn, do what you can to avoid (or eliminate) debt, protect your job, etc. Also remember that investing is a long-term adventure; the time to make adjustments for low risk tolerance is before the market drops, not after.
Rather than ignore all the stories you folks have submitted, however, I thought I’d link to them all at once with only a minimum of comment.
- First, from last May, here’s my write-up of This American Life’s “The Giant Pool of Money”, which is an anatomy of the subprime mortgage mess. (Also at GRS: Will the subprime crisis turn the suburbs into slums?)
- Second, The Money Meltdown is a new site with a single aim: “pulling together useful, authoritative, and comprehensive information about our current financial crisis in an accessible way.” This is excellent. [via waxy]
- Next, The New York Times has an excellent chronology of recent events: “As Credit Crisis Spiraled, Alarm Led to Action“. [via brip blap]
- Also at The New York Times, Ron Lieber has a great piece called “‘Is My Money Safe?’ and Other Questions to Ask“. This is a fanastic summary of what’s happening and what you should do (or not do) about it.
- Vincent sent me The Subprime Primer, which does a good job of explaining the housing portion of this mess. (But, be warned, contains some foul language.)
- Harvard Business has an interactive history of recessions going back to 1948.
- The New York Times Magazine recently published an article about Nouriel Roubini, an economist who predicted this entire mess.
And, of course, many people are looking for (and offering) solutions. Here are a few:
- At Ask Metafilter, one user wants to know how to invest as if a depression is coming.
- GRS-reader John writes: “I have mixed feelings about Michael Moore. I agree with some of his stuff, but his suggestions for fixing the Wall Street Mess just make my brain hurt.” Like John, it’s difficult for me to take political extremism of any sort seriously. Attempts to blame any one person or group of people for our current crisis are, well, stupid.
- Matt writes: “Have you seen Dave Ramsey’s bailout plan? I like what he has to say normally, but I think his plan is awful.”
- Erica Douglas has some ideas on what you can do to help solve the credit crisis. Her solution? Stop borrowing and start saving.
Finally, though it’s only marginally related, Clusterstock has an August 22nd transcript from what it calls “that awesome Warren Buffett CNBC interview”. It’s full of classic Buffett bites — little nuggets of wisdom about the economy from the world’s richest man. “I don’t try to pick turns [in the market] in any kind of an industry in terms of buying stocks. I just like to buy them when I think they’re cheap relative to their long-term earning power.”
But what does this all mean? Who can tell? Everyone seems to be flailing wildly to blame homeowners, banks, hedge-fund managers, Democrats, Republicans, George W. Bush, Bill Clinton, Ronald Reagan. I don’t think it’s the fault of any one person or group of people. This was systemic. And now the system is correcting itself.
The next few years will likely be painful for everyone, but less so for those who continue to practice basic smart personal finance skills.
GRS is committed to helping our readers save and achieve their financial goals. Savings interest rates may be low, but that is all the more reason to shop for the best rate. Find the highest savings interest rates and CD rates from Synchrony Bank, Ally Bank, GE Capital Bank, and more.