- Thanks for the many improvements to Cape Girardeau (04/29/16)
- Charleston, Pinecrest, Lake Woebegone and Lester (04/22/16)
- A kid's lesson on sales taxes is hard to forget (04/15/16)
- I wonder ... about elections and referendums (04/08/16)
- Missy Kitty takes a giant leap into springtime (04/01/16)
- An amazing year for the beauty of Easter (03/25/16)
- You wanted change. You got it. Now live with it. (03/18/16)
The economy hits home
At the regular Rotary lunch last week, the group at the early table -- ready to eat and nearest the door -- was catching up on the latest news and solving the world's problems. One of the club's most stalwart members announced that the recession had hit close to home: Two of his grandchildren, in Baltimore and St. Louis, were losing their jobs due to cutbacks.
It's news like this -- all too familiar to hundreds of thousands of affected families and individuals -- that gives the "economic crisis" or "recession" or "credit meltdown" or whatever you want to call it meaning beyond the newspaper articles and TV reports.
When "the economy" is hurting others, the rest of us sympathize and offer our sure-fire cures. But when "the economy" hits us, we tend to lose our grip and wonder what the future holds.
We're watching "the economy" at our house just like the rest of you. Retirement, medical care, monthly bills, protecting what little we have -- all these concerns we share with millions of others.
At the Sullivan house, we like to think we've considered enough what-ifs and have exercised enough prudence to see us through. The biggest what-if, of course, is the unexpected.
It wasn't all that long ago we would have gladly invested in the likes of General Motors and Citibank and Merrill Lynch. We believed there were certain institutions that would be forever as sound as Mother Church. That, of course, was before Mother Church's coffers were socked by multimillion-dollar settlements of sex scandals.
Just a few short months ago my wife and I were considering an annuity. With the help of our trusted financial adviser, we looked at an AIG annuity. Not only was it the best we could find in the way of future growth and income, it was backed by the largest insurance company in the world. We put a great deal of faith in AIG.
You know what happened. AIG collapsed. General Motors collapsed. Citibank collapsed. Merrill Lynch collapsed. Could this really be happening?
The good news for the Sullivans: We did not purchase the AIG annuity. We are not heavily invested in collapsing corporations. We have seen some of our tax-deferred retirement plans take a hit, but over the long term -- at least 15 years -- we are up overall, not down. Thank goodness we've taken the advice not to panic when short-term losses start looking like doomsday.
Like my Rotary friend, I too am concerned how "the economy" is affecting the ones I love, especially our two sons.
Within the past week, we have received updates from both of them on their financial futures. Our older son's job in Boston is entirely grant-funded. Already grants have been secured for the next couple of year's worth of research, and he is confident more grants will be coming.
Besides, he told us on the phone when he called Wednesday night to see if we were icebound and powerless, he has created enough of a financial cushion to keep him going if the day comes when the grants run out. "If I lose my job tomorrow, I won't starve," he said.
This was good news especially to his mother, who maintains it is her bounden duty to worry about such things. She also worries that our cat, Miss Kitty, won't be warm enough in her sheepskin-and-heating-pad hut in the garage on wintry nights. My wife is a good worrier.
Younger son in Dublin has managed to stay on top of the heap through the wits he inherited mostly from his grandfather. My wife's father was a practical man who had an uncanny ability to figure out the answers to complex projects -- he was a plumber and sheet-metal fabricator -- and issues of national import -- he was a die-hard Republican.
We knew younger son had some of those genes when, as a teenager, he mowed lawns to earn money. He would announce to the customer that his rate was $5 an hour, and the final charge would be prorated down to the minute. And when he turned off the mower, he had already calculated down to the penny how much he was owed.
In Ireland, he has done quite well with his computer-software skills, working both for innovative companies and freelancing. A few weeks ago he went to work for one of the world's computer giants in Dublin. Now that company is laying off. He hopes his skill set is valuable enough to stay on. My wife, as you can imagine, is fretting until we know for sure what happens.
In our conversation with older son, I boldly asserted that I thought the worst was over. While there may be further hits -- higher unemployment being a critical indicator -- I think we've seen how everything and anything can be affected by an economy that has turned into a whirling dervish. But now we know to expect the unexpected. Now we know that being the world's largest insurance company doesn't mean squat to "the economy."
I continue to look for bits of brightness. When we get updates on our investments, I tell my wife to ignore the declining market value of the bonds we've purchased and to focus on the income they are producing and the redemption value they will have when they mature. I am, of course, assuming that these financially solid American corporations are better than AIG.
Much of "the economy" is still good and dependable. I can't say for sure what it will take to stop the spinning of the dervish. All I know is that it always stops. Eventually. I think it will this time too, and it may already be slowing down.