Economists: Don't Panic!
posted 10:30 pm Mon September 29, 2008 - Birmingham, AL reporter: Yenu Wodajo posted by: Yenu Wodajo
The declining economy has many seniors reconsidering retirement as they watch their 401K's plummet.
People are running to the banks and pulling their money out. Economists say that is making things worse.
When people withdraw money in mass from banks, the banks can not give out loans. Without loans, the economy can not recover.
"People that have money in their 401K, people that want to retire soon, they're having a very bad day today," said economist Andreas Rauterkus
"I just wonder what we're going to do now," said Cynthia Robinson.
Robinson shares the concern of a growing number of Central Alabamians wondering what happens next with their money.
"Tightening of the credit," said Rauterkus. "So if I want to get a loan, a mortgage loan, a car loan, it's going to be very difficult even if I have good credit."
Economists say people living month to month on credit cards ought to be extremely careful. You could see your interest rates increase and your credit limits decrease.
"Every time you buy something on a credit card that you don't plan on paying off at the end of the month it's a bad idea," said Rauterkus. "You don't want to live on credit card debt because that's the most expensive kind of debt you can have."
Some believe the market will balance itself out.
"There's a lot of people feeling pain but it's a natural," said Scott Hinkle. "It's something that happens over time. It's been happening since the day this country was founded."
Economist say the key is not to panic. Remember, your money in most banks in FDIC insured up to $100,000.
"It's a circle that can only be broken if people have confidence in the financial system,"Rauterkus said.
"It is tough," said Robinson. "Day to day, hour to hour. It is tough."
"Things could be worse. Things could be better. But it is what it is," Hinkle said.
Congressman Artur Davis voted in favor of the plan and issued the following statement:
"Like all other Americans, I am troubled by the astonishing drop in the stock market in the aftermath of the bill's failure. I fear that the outcome of the vote today was a huge gamble with our economy. We are now reduced to hoping for the best as we navigate these very difficult challenges."
Congressman Robert Aderholt was the one Representative from this area voting against the proposal. He said, "The Administration's request amounts to the largest corporate bailout in American history and it is one that I am not comfortable with supporting. There are no easy answers to the current disarray in our economy but there are alternatives to massive government spending that we should explore."
After the vote, a motion to reconsider was entertained. The House will address this issue again on Thursday.