Bear Market

For years we have been told to "save" and now that we are in a position to use the interest of that savings for retirement, the fed lowers interest rates so low that we get almost no income. Where can we go with our $ and what is the incentive to save?

Sent by Gary Tipps | 2:14 PM ET | 03-17-2008

I was lucky enough to sell my home recently and will have about $300,000 that I need to park until I buy another house. I feel like the safest place to keep that money is in my mattress. Any suggestions? Could this worldwide financial meltdown make it risky to put cash in CDs? Treasury Bills?

Sent by Wendy | 2:16 PM ET | 03-17-2008

I thought these New York investment banks were fans of Ayn Rand and hated "government intervention".

Isn't the taxpayer underwriting this deal?

Sent by Bryan McKown | 2:16 PM ET | 03-17-2008

What is going to the Executives of Bear-Sterns? Are they going to keep their jobs? Are the going to get golden parachutes. It seems they should be fired without compensation for doing a bad job, but that never happens to high ranking executive no matter how badly they do a job, even ones whose decisions are wrecking the economy as a whole.

Sent by David Pope | 2:20 PM ET | 03-17-2008

When does tolerance for risk become tolerance for stupidity?

Sent by Lloyd Arnold | 2:25 PM ET | 03-17-2008

If the other investment banks had to worry about the same issues as BS, then they're not healthy either. How does it help us long term to prop up an industry of unhealthy, poorly run banks?

Sent by Joshua Lerner | 2:26 PM ET | 03-17-2008

The question that I would like to have answered is: "How much did Bear Stearns pay out in bonuses this January/February for 2007 performance?" That money came right out of capital & any funds we, the taxpayers, have to pay will be $1 for $1 funding those bonuses.
I was mystified hearing about Wall Street bonuses this winter - knowing the argument that these had to be paid to retain the "good" employees because you can't penalize the stars for the failures.
What about us, the clean-living?

Sent by Alyssa C Salomon | 2:26 PM ET | 03-17-2008

Many Democrats wish Bill Clinton still occupied the White House. However, before you put him in Mt. Rushmore, you might want to investigate his role in the mortgage foreclosure crisis.

The chief aim of what I have termed the Republican Counterrevolution has always been to roll back the New Deal. Anti-government rhetoric hides this as surely as states' rights hid racist segregation. Of all the New Deal legislation the GOP has sought to overturn, one that has always been at or near the top of the list is the Glass-Steagall Act. Ironically, a Democratic president repealed this for them.

Glass-Steagall

An unreconstructed Southerner from Virginia, Carter Glass shepherded the creation of the Federal Reserve System through Congress, which has caused some to call him the "founding father of the Federal Reserve System." Later Glass would serve as Wilson's Treasury Secretary, recommending aid to Europe after World War I. Just before leaving Treasury to become senator, Glass warned about banks getting involved in stocks.

Sent by mary margaret | 2:31 PM ET | 03-17-2008

The only winners in this debacle is the bankers. They get paid a boatload when times are good. They still get paid when doodoo hits the fan. Government (read: tax payers) get to bail them out and hold the bags. What a deal. Unless we start penalize them with fines or jail time, we will just see this crap again and again.

Sent by Peter K | 2:32 PM ET | 03-17-2008

I find it humorous that today's guest keeps referring to the Federal Reserve Bank as a government institution. The Federal Reserve is a private institution that has ties to the government, but it is not a government institution rather a private business. The Federal Reserve is responsible for the current financial crisis in America, and it should be held responsible.

Sent by Catherine Robertson | 2:33 PM ET | 03-17-2008

What responsibility does the Bush Administration bear for this mess?

Sent by Peter | 2:34 PM ET | 03-17-2008

Every time I hear Republicans talk about privatizing Social Security, I laugh. And today's program (plus the S&L debacle of the 80s, the sub-prime mortgage mess and now the collapse of major investment institutions) explain why: As long as these companies are run by short-sighted, greedy managers who care only about themselves and not their customers, no way should we EVER privatize Social Security!

Sent by Chela Wallace | 2:35 PM ET | 03-17-2008

Where is the accountability for the likes of the Bear-Stearns? Their CEO and corporate officers make millions of dollars in salaries and bonuses each year and when things go wrong due to their own investment recklessness the US taxpayers pay to bail them out? If the average citizen went belly-up they'd be out on the street. Where's the accountability to the investors and taxpayers?

Sent by W. Burns | 2:37 PM ET | 03-17-2008

If we need to establish a market for mortgage securities why not put some of the SS funds to work with the appropriate discounts put in place?

Sent by Peter | 2:37 PM ET | 03-17-2008

Has this situation been precipitated by the deregulation of the banking industry and that the lack of oversight by the taxpayers which might have prevented the situation in the first place?

Sent by Bard Wrisley | 2:38 PM ET | 03-17-2008

I own some shares of Bear Stearn that I could not sell in time on friday. Since they lost almost all their value,
I'm wondering if i should just hold on to it with the hope that i may recoup some value in time.

Sent by jack sullivan | 2:40 PM ET | 03-17-2008

When the economy was strong, these investment bankers pulled down multimillion dollar salaries while the rest of us working professionals (I'm an engineer) felt the squeeze. I understand the need to prop up the economy, but resent having to foot the bill for greed and stupidity. I feel I've been footing the bill all along. Enough is enough.

Sent by Susan | 2:41 PM ET | 03-17-2008

by preventing the donmonio effect to happen are we now not allowing the new( organizations methods and tenchologies) to emmerge fro the old.

Sent by flix Carpenella | 2:56 PM ET | 03-17-2008

It is maddening to hear NPR continue to propagate the myth that the Federal Reserve is an agency of the US government.

The Fed is a private bank and the US government is it's primary borrower. The Congress has a credit card account at the Fed, which it makes minimum payments on by collecting income taxes.

The account is never paid off. It isn't even paid down. Just the minimum payments are made.

These are not "taxpayer dollars" that are being spent by the Fed to save one of its members. This has been the intended function of the Fed since its creation by the original members of the cartel.

It only makes sense that JP Morgan Chase (Morgan and Chase were founding owners of the Fed) would step in to "help the Fed" save a member bank.

Recommended reading: The Creature from Jekyll Island: A Second Look at the Federal Reserve, which is available on Amazon.com.

Sent by Thubten Comerford | 3:05 PM ET | 03-17-2008

I'd like to see the press do a little more research in the financial crisis. Headlines about how housing has dropped in value tend to ignore the fact that values were escalating out of all proportion to historical norms in 2003-2006.
All the stories about people defaulting on their mortgages - or getting into mortgages that they can't afford fail to mention that approxiamtely 35% of all homes are mortgage free and over 95% of all mortgages are performing. (Per a newletter from a realtor).

It seems some investment bankers got really greedy by bundling up subprime mortgages that had unrealistic re-set prices and selling them in the secondary market or into hedge funds. Commercial banks are more regulated than the investment banks altogether. It is unfortunate that we are so interdependent that they can't be left to fail. If I, unlicensed to give investment advice owned Bear Stearns I would definitely hold onto my Bear Stearn stock because it seems that you will end up with some JP Morgan stock - from what I read in the morning newspaper.

Jack Sullivan should consult a licensed investment professional.

Sent by Joyce James | 3:15 PM ET | 03-17-2008

The "Inconvenient Truth" that everyone seems to be dancing around without mentioning is ...

Its not a mortgage crisis, its a WAGE crisis.

Wages have not kept up with REAL inflation (yes, Including energy, health care, housing, college etc. that everyone I know pays and havce gone up while wages are FLAT).

If people had the money, they would be paying their mortgages.

Its that simple, but its also the elephant in the room because when wages of EMPLOYEES called CEOs goes up, it celebrated and not considered inflationary. But when regular employees, the ones who actually DO the work goes up ... oh, heaven forfend, THAT's "inflationary".

But gee, we can't talk about that because ... to point out what so obvious even a Nazi sympathiser like Henry Ford could see it, if the workers don't have the money, they won't buy your products - why that's "Socialism" or whatever.

Its not a mortgage crisis, its a wage crisis. Period.

Sent by Christopher Maxwell | 3:24 PM ET | 03-17-2008

One of your guests made a brief point stating that we need to keep people in their homes and home mortgages value balanced. That point won't be reached until wages and mortgage values come more into line. Obviously the drop in mortgage values has a way to go and so does wall street as they descend into further crises.

Sent by Mike Miles | 3:34 PM ET | 03-17-2008

Do you think the US Govt stepped in to save Bear Stearn to "prevent" further sell-out of the US Financial Giants to Foreign Investors? I heard that UBS Corp sold 1/3 of it's stock to Singapore; Merrill Lynch sold a large portion of it's firm to foreign investors. Foreign investors are buying up "real estate" all over America at bargain basement prices with help from the de-valued US Dollar. what is the "end-result" of sell off of US Assets to foreigners?

Sent by jack hallam | 4:42 PM ET | 03-17-2008

It seems that just last December the major brokerages were issuing bonuses that averaged $600,000.00. In view of the current troubles with Bear Stearns, this seems like mismanagement. If they were in such good shape in December, how could their fortunes turn so fast. If, however, they knew they were in financial difficulty and issued the bonuses anyway, that seems like a fraud perpetrated at the expense of their customers and the taxpayer at large. Something smells fishy to me.

Sent by Barney Rouse | 5:21 PM ET | 03-17-2008

should we be interested in purchasing bear sterns stock today?

Sent by Sheri Yost-Cotterman | 5:39 PM ET | 03-17-2008

We doubt the economy would have fallen to the ground if BS had been allowed to declare bankruptcy. The other posters are quite correct. They caused a lot of these problems with their imprudent practices; they are the ones who should realize a 28 -1 value of debt to equity requires very careful managing and they are the ones who get huge bonuses if they make money but lose nothing if they lose a lot of money. This makes no sense to the average person who knows very well you cant have 28 times more debt to your assets or you will have problems (bankruptcy made harder by Bush) but then this is the new Bush system to allow the rich to get richer while the poor and middle classes continue to struggle.

Sent by jm fay | 6:22 PM ET | 03-17-2008

I'd like someone to tell me just when all of these rate lowing moves are going to be felt by the little guy, the end user, in the mortgage market? We are one of those families caught in the middle of this sub-prime mortgage mess because the housing market is so soft. The Florida home we lived in for 10 years (and have to sell because of employment relocation) has sat on the market for over a year and a half, while we've made double payments... We are waiting to try and refinance , but despite all the hoopla, rates remain the same. What gives? Does anyone notice the forest for the trees?

Sent by Kitty McCoy | 10:11 AM ET | 03-18-2008