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Here's what I'm doing: Robert Reich

Robert Reich

TEXT OF STORY

Tess Vigeland: We're gonna start things off here with another question, which is "What are you doing?" Yes, you, and lots of other people who are deciding whether to change the way they save and invest.

We'll hear from them throughout this show and other Marketplace programs. To kick it off we turned to a familiar voice who's dealt with budgets big and small.


Robert Reich:I'm Robert Reich, professor of Public Policy at the University of California, Berkeley and this is what I'm doing:

I'm feeling cautiously pessimistic about the economy, I'm worried that there's not sufficient demand out there in terms of purchasing power among the great middle class to keep the economy going.

Although I do have a history of buying high and selling low, I'm just basically keeping my equity shares of stock where it is and any new earning I have -- any new savings, anything I can put away -- I'm putting into money market funds and CDs.

I don't even want to think about what's happened to my finances since last September. I carefully avoid looking at the reports that come in on my 401(k). I just don't want to be aggravated. Hopefully, god willing, there'll be enough years between right now and when I retire that I won't have to be aggravated. I'll just look at it when times get better.

Maybe the only thing that's stayed the same is me. I'm not a big spender. I don't go out to a lot of fancy restaurants or buy big things. There's something in the back of my mind, and I'm sure that I'm not alone, that says if you don't have to spend money, don't spend it.


Vigeland: That was Robert Reich, former U.S. Secretary of Labor.

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What am I doing? paying attention to How buisness has switched goals from trying to be successfull by thier buisness pratices.. Money first? The bottom line:
Look at the Quality of what you are buying how is it constructed, what materials was it made from, Start with shoes Are they Real Leather,with top grain surface or split leather with plastic or Latex fake grain? is it a goodyear welted shoe with real stitching or a molded copy that looks like it but is a 1 piece bottom designed to last 3 to 6 months of constant use? The Price of the Product is up to the market place tradional prices are 3 times cost (product+shipping+ overhead.)
How does this relate?
Simple when their are few if any requriements on quality its buyer beware the CEO is looking for Profit not for quality so they cash in on the company name and sell out the work to subcontractors, the Maker is nolonger the Label owner it just a thing and hes not putting the money into quality materials or workers looking for the lowest way to do Windowdressing work. this is is how its relivent When the only reason for buisness is the Pay check or Profit then the work suffers a quality distruction. Same is true for the world of Finance with the manager only cariong what fee he can extract, not what increse the client should earn. No wonder Confidence in investment has died down the only person you can trust your money with is you and the skill level you have developed in your lifetime if you can earn it and convert it to what you value.

For us the recession hit 3 years ago. Illeagal labor hurt our company where others employ illeagals @ $5.63 hr cash. Our group went from 10 employees to 3. Cash reserves from $600,000.00 to $100,200.00 and shrinking. We will go out of business. Prople can not afford any service business.

I don't consider myself a consumer, I don't find my self worth in buying things, I live within my means and have most of my assets in FDIC insured funds and have over 8 months of income in liquid assets. I have a retirement that will provide me with a lifetime annuity that exceeds my current income. As a result I have not changed my habits or investments. I may have not made as much money as others have but I have never lost a minute of sleep worrying about the stock market. I do not feel it is my obligation to buy things to keep the economy going and quite frankly I think it is sad that, primarily through advertising, people believe their happiness is somehow tied to what they purchase or own. How Sad. Doug

I've always found professor Reich to be insighful and informative but to state that a tenured college professor of his stature has to fret about his or her 401k seems a bit disingenuous.

my husband and I are respectively 81 and 76. Luckily my husband is very conservative and has invested largely in CD's, bonds and TIPS. About 6 % of our networth is in stocks. We live frugally, having sold our house in Connecticut in 2005, and leased a rental apartment in Milwaukee. So we are not likely to be greatly affected by the downturn.

What I am doing in response to the fall in value of stocks is to buy more stocks. I am selling bonds to keep my asset allocation just the same as it was. This satisfies my need to do something, it does not require that I know which direction things will head, and it automatically makes me buy low and sell high. I also am pessimistic in that I expect the markets to stay low for a while, but that doesn't change my plan. Partly because of Vanguard's theme of sailing ships, I picture myself at the tiller of my own small ship in storm, holding on the the course I have set. My asset allocation is that tiller.

Would of liked to listen to video on Credit Default Swaps but sound was so broken for the first couple of minutes, it was not possible. Later in segment, sound cleared, but even after complete loading, first part was garbled too much.

Professor Reich: Over the past four years I have listened to you repeatedly warn us that a day of reconing was comming. As a result, I can't believe that you were quite as unprepared as you suggest. Either way: Thanks for all your good advice and analysis!

I thought Paddy Hirsch did an excellent job describing 'credit debt obligations' and 'credit default swaps'. I've shown my 17, 14, and 13 year old young adults these videos in order to help them understand what is happening in the news. Thank you for posting them on your website. I listen to 'Marketplace' nearly every day. Best Regards

I think most feel as you do. However,if this economy is to start moving only in small steps, someone must spend that dollar bill. But what if we paid cash for the item? What would that do to our economy? Turn it even more wild and crazy or would someone of the "powers to be" think it is a very novel idea? I know not very realistic, but it sure sounds logical. Call on Dave Ramsey to get us out of this debacle! He is the king of no debt.

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