None are safe.  Today it’s the car company, tomorrow the hospital and very soon the States and Cities will begin to renege on their pension promises.
November 10, 2008
Some G.M. Retirees Are in a Health Care Squeeze

By NICK BUNKLEY
DETROIT — General Motors is living on borrowed time, spending more than $2 billion in cash a month and lobbying for a government bailout to keep it out of bankruptcy.

And for about 100,000 of its white-collar retirees, time is about to run out on G.M.’s gold-plated medical benefits.

To conserve its dwindling cash reserves, G.M. is eliminating lifetime health care coverage for its legions of retirees at the end of this year, leaving people like Ken Hewitt to fend for themselves in deciding how to cover their doctor’s bills and prescription drug costs. (more…)

November 8, 2008
YOUR MONEY - New York Times
Is It Time to Have a Money Talk, Child to Parent?

By RON LIEBER
The federal bailouts of the last few months raise a variety of thorny questions, including who benefits at whose expense. But the question that hits home the hardest is the one that isn’t getting enough discussion around kitchen tables:

Will we have to bail out our own family members?

It’s started coming up in asides I hear from middle-aged friends who are concerned about their parents ending up in the poorhouse. And I see it in e-mail from people in their 60s and 70s, who can’t believe their offspring got mixed up in funny mortgages and wallets full of credit cards.

But often, the grown children don’t know precisely how the devastation in the markets has affected their parents’ portfolio, and the older parents don’t know what their children’s monthly debt payments are.

None of this is fun to think about. And if you dare to open your mouth about it, relatives may take offense. Silence, however, is good for no one. You don’t want to be blindsided months or years from now by a family member in desperate straits, nor do you want to worry yourself sick when there’s no reason to.

So this week, please consider starting an intergenerational conversation about money, perhaps in writing, which might reduce the risk of a knee-jerk response that leads to an argument. I’ve suggested an approach below, for an e-mail message or letter to a parent and a possible reply, though you could easily tweak it if you’re initiating the chat with your child. (more…)

So who can we trust to anticipate the future in the markets? It looks like no one.
The New York Times, October 26, 2008

ECONOMIC VIEW

But Have We Learned Enough?
By N. GREGORY MANKIW
LIKE most economists, those at the International Monetary Fund are lowering
their growth forecasts. The financial turmoil gripping Wall Street will probably
spill over onto every other street in America. Most likely, current job losses are
only the tip of an ugly iceberg.
But when Olivier Blanchard, the I.M.F.’s chief economist, was asked about the
possibility of the world sinking into another Great Depression, he reassuringly
replied that the chance was “nearly nil.” He added, “We’ve learned a few
things in 80 years.”

Yes, we have. But have we learned what caused the Depression of the 1930s?
Most important, have we learned enough to avoid doing the same thing again?
The Depression began, to a large extent, as a garden-variety downturn. The
1920s were a boom decade, and as it came to a close the Federal Reserve tried
to rein in what might have been called the irrational exuberance of the era.
In 1928, the Fed maneuvered to drive up interest rates. So interest-sensitive
sectors like construction slowed.

But things took a bad turn after the crash of October 1929. Lower stock prices
made households poorer and discouraged consumer spending, which then
made up three-quarters of the economy. (Today it’s about two-thirds.)
According to the economic historian Christina D. Romer, a professor at the
University of California, Berkeley, the great volatility of stock prices at the
time also increased consumers’ feelings of uncertainty, inducing them to put
off purchases until the uncertainty was resolved. Spending on consumer
durable goods like autos dropped precipitously in 1930.

Next came a series of bank panics. From 1930 to 1933, more than 9,000 banks
were shuttered, imposing losses on depositors and shareholders of about $2.5
billion. As a share of the economy, that would be the equivalent of $340 billion
today.

The banking panics put downward pressure on economic activity in two ways.
First, they put fear into the hearts of depositors. Many people concluded that
cash in their mattresses was wiser than accounts at local banks.
As they withdrew their funds, the banking system’s normal lending and money
creation went into reverse. The money supply collapsed, resulting in a 24
percent drop in the consumer price index from 1929 to 1933. This deflation
pushed up the real burden of households’ debts.

Second, the disappearance of so many banks made credit hard to come by.
Small businesses often rely on established relationships with local bankers
when they need loans, either to tide them over in tough times or for business
expansion. With so many of those relationships interrupted at the same time,
the economy’s ability to channel financial resources toward their best use was
seriously impaired.

Together, these forces proved cataclysmic. Unemployment, which had been 3
percent in 1929, rose to 25 percent in 1933. Even during the worst recession
since then, in 1982, the United States economy did not experience half that
level of unemployment. (more…)