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And now stay tuned for the rest of the story

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By Linda Norman

If you have been reluctant to open your 401-K statements lately you are not alone. Very few have been unscathed by the continued decline in the financial markets this past year. Retirees who are dependent on their security holdings in their IRAs and other brokerage accounts to meet monthly expenses have been particularly hard hit.

Can the news get any worse? Stock prices are at 12-year lows, the GDP growth was negative last quarter, unemployment has climbed north of 8 percent and every day we are bombarded with stories of foreclosures and bank failures.

Overseas, the news is even more dramatic and since we live in a global economy, we, as Americans, are feeling the pain. Even the mighty growth engine of China has slowed significantly. Economies in countries like Greece and Iceland have all but collapsed.

How did we get here and why should taxpayers foot the bill for a problem they didn’t create? There is plenty of blame to go around — politicians, Wall Street, the Federal Reserve, Fannie Mae and Freddie Mac – to name a few. One of the root causes, in my opinion, lies in something called the Community Reinvestment Act (CRA) which was enacted in Jimmy Carter’s administration and expanded in Bill Clinton’s administration. That is not to point the finger at Democrats; Republicans also participated in many of the decisions that brought us to where we are today.

For those who don’t know, the CRA was the legislation that mandated that banks make loans to minorities with the intent to eliminate discrimination on the basis of race or sex. The intent was good. The perversion of the intent — loans to some people who couldn’t pay them back was the eventual outcome.

With all of the bad news that is pumped at us daily by various news media, there is some good news out there after all. As the recently deceased radio icon Paul Harvey was fond of saying, “and now stay tuned for the rest of the story.”

Most homeowners — more than 90 percent — are paying their mortgages. (Source: WSJ) That fact alone makes me wonder why we need some of the recent legislation that has come out of Washington lately but I digress. A positive outcome of lower home prices is that housing is now more affordable for those who couldn’t afford to just a few years ago.

Ninety two percent of American workers are still employed. (source: IBD) While it is true that the American consumer has changed their spending habits — perhaps permanently — it can’t all be blamed on high unemployment. We have enjoyed unprecedented prosperity in the last 25 years in this country, creating a standard of living for this generation that most of our parents and grandparents never enjoyed. Borrowing and spending became a way of life. Now it’s time to rein it in to more sustainable levels.

Lower oil prices and gasoline prices are saving the average American consumer hundreds of dollars annually. Lower oil prices are seen in heating and cooling bills as well as the gas pump and it has brought much needed relief to our pocketbooks. 

There is a vast safety net for those who are unemployed or losing their homes or both. I have heard the “D” (depression) tossed around so casually by our news media and watched as we Americans became increasingly fearful. Even if it were true, which to date does not seem to be the case, there is FDIC insurance for our bank deposits, unemployment insurance when we lose our jobs, help with our mortgages if we find we can’t pay, Social Security income for retirees, Medicare for retirees. Medicaid for the poorest of us who need help with medical expenses. These programs did not exist at the onset of the Great Depression. Social Security was enacted in 1936 as part of the New Deal but that was late in the game.  

Fear has a way of feeding on itself. What is sorely needed in the midst of the non-stop bad news is perspective. I do not know when the stock market will stop declining or how long it will take to recover. I only know that it will recover at some point, and that technical indicators show that the market is vastly over-sold. There is plenty of value out there and I have my buy list ready.

Any opinions expressed are solely my own and not necessarily those of Raymond James Financial Services Inc.

Linda Norman is a Certified Financial Planner™ affiliated with Raymond James Financial Services Inc. member FINRA/SIPC. Formerly located on the 200 corridor in Jasmine Square, her office is now located at: 1900 SE 18th Ave. suite 200 Ocala. She can be contacted at: 629-9138 or e-mailed at:

www.raymondjames.com/practicalplanner.