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Diane Girard, Magical Money Trees: It’s like a religion — you believe in it, or you don’t. I believe that not everyone can become rich. However, some of us may manage to live out our lives without losing all our savings. I plan to be one of those people because I am a wuss. I am content to watch my small jack pine survive the storm

Defining Fear Gauge

From time to time we like to impose definitions on our readership, as you may have noticed.

We ran across the term 'fear gauge' in the Wall Street Journal in reference to trading surrounding General Motors.

The Farlex Free Dictionary defines it as:

VIX -

 

"Economic Snapshot"

The Economic Policy Institute puts out a weekly Economic Snapshot, presenting "charts and short analyses designed to graphically illustrate important economic issues." This snapshot will perhaps help to lessen the handwringing about the falling dollar, that is, unless you're headed abroad!

Moving toward a sustainable dollar by Robert Scott with research assistance by Lauren Marra

The dollar's decline against other currencies is often misunderstood to be a crisis — an understandable mistake, since news reports often describe the result of this process as a "weaker" dollar. In fact, what is happening is a necessary process that restores balance between the dollar's value, which became superheated in recent years, and that of other currencies. This readjustment can carry great benefits for the U.S. economy by helping to reduce unsustainable U.S. trade (i.e., current account) deficits and create a level playing field where US-made goods can better compete for market share at home and abroad.

Read the rest of the snapshot at the EPI site.

The Other Ben Bernanke

Alan Greenspan rarely spoke about his background when delivering his speeches but the chairman, Ben Bernanke, did so in this address in Charlotte, NC:

Charlotte and the Carolinas: Personal Connections
I’d like now to speak a bit about Charlotte and the region from a personal as well as an economic perspective. My family has a long connection with Charlotte. My maternal grandparents, originally immigrants from Eastern Europe, moved here from Connecticut when my mother was a teenager, and she finished high school here. My parents met while attending different campuses of the University of North Carolina--my father at UNC-Chapel Hill, my mother at UNC-Greensboro (then a women’s college). I was raised from early childhood in the small town of Dillon, South Carolina, about two hours from here. My family settled in Dillon because my paternal grandfather bought a drug store there in 1941, and my father and his brother followed in his footsteps as town pharmacists. In Dillon, a town that was always very short of the more regular kind of doctor, my father and uncle were popularly known as Dr. Phil and Dr. Mort, and the prescriptions they dispensed were often accompanied by their free advice on maintaining good health.

I often visited my maternal grandparents’ home on Cumberland Avenue in Charlotte, sometimes with my parents and sometimes on my own, and I have many fond memories of those visits. A short walk from their home was a park where my grandfather often took me to feed the ducks that lived on a lake there. The name of that spot — Freedom Park — was sufficiently like my grandparents’ surname — Friedman —- for me as a small child to conclude that it was actually called Friedman Park. I was suitably impressed by the honor the city authorities had apparently given my grandparents. Grandpa Friedman taught me to play chess when I was five or six; he let me win at first, but after a few years I was no longer a pushover, and the games became very, very serious. Grandma Friedman was a wonderful cook, and if you dig deep enough into the archives of the Charlotte Observer, you will find a large photo of a much younger me under the headline, “Ben Loves Grandma’s Blintzes,” together with her recipe for that dish. Unfortunately, my grandmother died when I was thirteen, and when my grandfather came to live with us in Dillon, the regular trips to Charlotte ended. I am pleased to say, though, that my connection to this city has since been re-established, as my parents have retired to Charlotte, and my brother (a lawyer in town) and his family live here, too. So I still feel like an honorary Charlottean as well as a Carolinian.

The entire speech to the Charlotte Chamber of Commerce, Charlotte, North Carolina is available at the Federal Reserve site.

Climate Change and What Else? Money

Never one to leave money on the table, managers have created a product, one of many to come, based on possible investor interest in Al Gore's crusade: a climate change index.

"The HSBC Global Climate Change Benchmark Index, developed by CIBM's Global Research team, is a global reference index which has been designed to reflect and track the stock market performance of key companies that are best placed to profit from the challenges presented by climate change. The performance of the benchmark has been tracked back to 2004 and has outperformed the MSCI World Index by around 70%."

"In creating these indices, HSBC has responded to changing investor sentiment in global equity markets. The HSBC research team has looked at a wide range of stocks and identified approximately 300 companies that are well positioned to benefit from the challenges of climate change."

The indices are:

• HSBC Climate Change Index

• HSBC Low Carbon Energy Production Index (including: solar, wind, biofuels, geothermal)

• HSBC Energy Efficiency & Energy Management Index (including: Fuel Efficiency Autos, Energy Efficient Solutions, fuelcells)

• HSBC Water, Waste & Pollution Control Index (including: water recycling, waste technologies, environmental pollution control)

While you're deciding on whether to put your investment eggs in this index basket, you might want to look at the Exploratorium's website concerning global climate change.

 

Women Face Challenges in Ensuring Financial Security in Retirement

Highlights of GAO-08-105, a report to Ranking Member, Special Committee on Aging, US Senate

What GAO Found

In general, women have less retirement income than men, largely because of women’s lower labor force attachment and lower earnings, on average. Fewer women than men have income from most major retirement sources, and women have less income from these sources. Women’s median Social Security income is 70 percent of men’s. Also, fewer women than men have pensions. Among the population age 65 and over who continue to work, women earn just over half of what men earn. Women also have somewhat smaller income than men from assets, such as interest and dividends. Accordingly, rates of poverty among those 65 and over are substantially higher for women than for men. Although their participation has increased substantially in the last century, women still spend fewer years in the labor force than men, and they more often work part-time. Also, women tend to earn less than men, despite increases in their wages over time relative to men. Although work patterns are key in earnings differences, in prior work, we found that even after accounting for behavioral differences such as education or labor force participation, women still earn less than men.

Certain life events — including changes in marital status, labor force interruptions, and long-term care needs — can significantly reduce the amount of pension income and Social Security benefits women receive — and leave women with fewer financial resources at retirement than men. Social Security divorced spousal benefits are available only if the marriage lasted at least 10 years. Furthermore, pension benefits are available to a divorced spouse only under certain circumstances. Women’s role as primary family caregiver for children and elderly relatives can reduce their career earnings, on which retirement income is based. Because women tend to live longer than men, widowhood and costly long-term care assistance may further reduce their retirement resources.

GAO’s simulations of some Social Security changes that would compensate for low earnings or time out of the workforce showed that those changes tend to increase benefits for beneficiaries overall, and particularly those in lower income quintiles. Alternatively, changes that focus on shifts in family structure, such as increases in two-earner couples and increased incidence of divorce, tend to increase the benefits of groups targeted by the change, but produce mixed results for others. Some pension changes that have been proposed in the past several years take into account the changing labor force and norms of employer-provided retirement plans; while these changes are gender-neutral, they may provide important new opportunities for women to increase their retirement income. For example, decreased vesting requirements may provide additional pension income to those with intermittent workforce participation who would not qualify for pension
benefits under a longer vesting schedule.

 

Savings Bonds

Convert Your Paper Savings Bonds Using SmartExchange

From the Librarians' Index to the Internet

Overview of a US Treasury program where users can "convert their [paper] Series E, EE and I Bonds to electronic securities." Explains benefits such as redemption at any time without needing to go to a financial institution and viewing of holdings and their current values. Includes a FAQ and a link to instructions for opening the (free) TreasuryDirect account required for this program. From the U.S. Department of the Treasury, Bureau of the Public Debt.
URL: http://www.treasurydirect.gov/indiv/research/indepth/smartexchangeinfo...

The Older Worker

The US Census Bureau has launched a series of reports on older workers that presents a detailed picture for people 55 and older in the work force, beginning with the release of The Geographic Distribution and Characteristics of Older Workers In Iowa: 2004 .

"The retirement of baby boomers will have a huge impact on the work force," said Census Bureau Director Louis Kincannon. "Businesses and planners need a better understanding of labor force trends, the loss of experienced workers and the payout of retirement benefits."

Reports will be issued on a flow basis for the other 30 partner states:

• Second wave: Maine, Vermont, Arkansas, Hawaii and Indiana.

• Third wave: Maryland, New Jersey, Oklahoma, Wisconsin, Colorado, Delaware, Kentucky and South Carolina.

• Fourth wave: Alabama, Idaho, Kansas, Minnesota, Missouri, Montana, Nevada, New Mexico, North Carolina, North Dakota, Oregon, Pennsylvania, Tennessee, Virginia, Washington and West Virginia.

• Fifth wave: California.

The report and additional tables may be found at http://lehd.did.census.gov/led/library/profiles.html. For additional information about the LED partnership, please visit http://lehd.did.census.gov.

On the census page was the paragraph with the teaser, Did You Know: ... that of the industries in New Mexico that employed more than 500 workers 65 years and older in 2002, the highest average monthly earnings were from engineering, accounting and research ($4,157)?

That in turn leads to the Older Worker Profiles Page. This information may be of more interest to employers and planners, but clearly the statistics will influence those who hire the older worker.

 

Article

HTG Investment Advisors: Retirement Planning and Magical Thinking — Without a doubt, there is a “disconnect” between the reality of pre-retirees’ financial situations and their perception of what it takes to retire

Investor Protection Trust

The IPT is a national public education and awareness campaign to help individuals make informed investment decisions. The American Library Association (ALA) and the Investor Protection Trust (IPT) teamed with Kiplinger's Personal Finance magazine to implement investor education in public libraries.

The Investor Protection Trust (IPT) consists of individuals chosen from the ranks of US state securities regulators.

Libraries involved in the Investor Education @ your library® program include: Anchorage (Alaska) Municipal Libraries; Atlanta-Fulton Public Library System; Bowling Green (Ky.) Public Library; DC Public Library; Des Moines (Iowa) Public Library; Detroit Public Library; Fletcher Free Library (Burlington, Vt.); Free Library of Philadelphia; Jacksonville (Fla.) Public Library; Kansas City (Mo.) Public Library; Monroe County Public Library (Bloomington, Ind.); New York Public Library; Norfolk (Va.) Public Library; Onondaga County Public Library (Syracuse, N.Y.); Parmly Billings Public Library (Billings, Mont.); Public Library of Charlotte & Mecklenburg County (N.C.); Sacramento (Calif.) Public Library; SiouxLand Libraries (Sioux Falls, S.D.); Tuscaloosa (Ala.) Public Library; and Wichita (Kan.) Public Library.

If you're not near one of these libraries, read online the seven investor booklets. For a list of events at the above libraries, check the schedule.

Checking on Your Broker
and Switching Firms

There may be a time that you decide to sever a connection with a particular broker and want to employ another firm instead. Several agencies have instructions tailored to this kind of transaction, though you should be prepared to wait at least six to 10 business days before the transfer is completed, if not considerably longer if clarifications are needed.

The National Association of Securities Dealers (NASD) provides a page, Understanding The Brokerage Account Transfer Process, detailing the steps you must take to change brokers. For additional information on securities account transfers and ACATS, investors should contact their securities broker/dealer or visit the US Securities and Exchange Commission (SEC) Web site for "Investor Tips: Transferring Your Brokerage Account." Investors may also contact NASD.

While you're at the NASD site, it's also possible to check the records of your broker and his/her firm. To do that, however, the CRD identifying number is needed. Finding that number was a challenge, even through the online NASD page. So we called the Broker Check Hotline (800) 289-9999 and quickly was informed of his number. I then used a form (first you have to agree to disclaimer terms) to ask for a master file report to be sent to my email address — although you could request the form to to be mailed to a regular postal address. We received our report quickly and our broker (from AG Edwards) whose name we used as a test, as we thought, had no negative reports at all.

The New York Stock Exchange has an article, Moving Financial Assets, that should be helpful. Here's an excerpt from that article:

When a customer chooses to move their account or a portion of their assets from one NYSE member organization to another, the process should be simple and expeditious. NYSE Rule 412 (Customer Account Transfer Contracts) provides established
procedures and time frames that firms must follow. The industry-wide Automated Customer Account Transfer Service (universally known as “ACATS”) provides for prompt and effective electronic transfers between broker-dealers. Familiarity with the transfer procedures should help you to achieve a quick and problem-free transfer.

The firm to which you will be transferring the assets, known as the “receiving firm,”will supply you with a Transfer Initiation Form. This Form sets out instructions and asks you to provide certain information and identify the firm currently holding your assets (the “carrying firm”). You can choose to transfer all or a portion of your holdings, as described in the form. Some firms will use a form requiring your manual signature and may also require a signature guarantee (a stamp confirming your identity that is available at most member organizations and at many banks). However, recent changes in the rules also permit a recognized electronic signature, which could simplify your transfer.

The Transfer Initiation Form, accompanied by a copy of your most recent account statement, should be submitted to the receiving firm. It will help to identify all of the assets to be transferred.

The Form is then transmitted to the carrying firm, which has three business days - as required under NYSE Rule 412 - to either validate the transfer or say why it is unable to transfer the account or the assets. Customers should expect that once the transfer request reaches the carrying firm, the account will be frozen (no new transactions will be accepted) to facilitate the
transfer going forward. If there are time sensitive securities in the account (such as options, warrants or convertible securities), you should review and discuss them ahead of time with your registered representative at the receiving firm.

Once the transfer is validated, all eligible assets (those assets that can be accepted by the new firm) must be transferred within the next three business days. While the Exchange has the authority to exempt certain types of accounts from the above requirements, only the Exchange can do so, not the member organization. Any payments directed to the account after the transfer of assets (such as dividends, interest payments, etc.) are required to be promptly sent to the new account at the receiving broker. If there are any discrepancies relating to positions or money balances, they must be resolved promptly (within five business days) between the carrying and receiving firms. When you receive your first statement from your new broker, it is a good idea to take the time to compare it with your last statement from your old broker to verify that all assets have been correctly transferred.

Insurance Fraud

A new website, InsureUonline.org sponsored by the National Association of Insurance Commissioners (NAIC), provides links to state insurance departments and their complaint databases.

The GAO did a study on unpaid medical claims from 2002 to 2004 and the companies that left claimants uncovered:

Why GAO Did This Study:

"Health insurance premiums have increased at double-digit rates over the past few years. While searching for affordable options, some employers and individuals have purchased coverage from certain entities that are not authorized by state insurance departments to sell this coverage. Such unauthorized entities — also sometimes referred to as bogus entities or scams — may collect premiums and not pay some or
all of the legitimate medical claims filed by policyholders. GAO was asked to identify the number of these entities that operated from 2000 through 2002, the number of employers and policyholders covered, the amount of unpaid claims, and the methods state and federal governments employed to identify such entities and to stop and prevent them from operating.

"GAO analyzed information on these entities obtained from the
Department of Labor (DOL) and from a survey of the 50 states and the District of Columbia. GAO also interviewed officials at DOL headquarters, at three regional offices, and at state insurance departments responsible for investigating these entities in four states — Colorado, Florida, Georgia, and Texas.

What GAO Found:

DOL and the states identified 144 unique entities not authorized to sell health benefits coverage from 2000 through 2002. The number of entities newly identified increased each year, almost doubling from 31 in 2000 to 60 in 2002. Many of these entities targeted employers and policyholders in multiple states, and, of the seven states with 25 or more entities, five were located in the South.

DOL and the states reported that the 144 unique entities

* sold coverage to at least 15,000 employers, including many small employers;
* covered more than 200,000 policyholders; and
* left at least $252 million in unpaid medical claims, only about 21 percent of which had been recovered at the time of GAO’s 2003 survey.

The website complaint database information falls into the following categories:

Complaint Information
There are four reports available housed within CIS related to Closed Consumer Complaints data captured at the NAIC.

Complaint Counts By State
Displays the total number of complaints for the selected company in each state.

Complaint Counts By Code
Displays the total number of complaints by type of coverage, reason the complaint was filed, and disposition of the complaint.

Complaint Ratio Report
Displays the ratio of the company's market share of complaints compared to the company's market share of premiums for a specific policy type.

Complaint Trend Report
Displays total complaint counts by year with the percentage change of counts between years.

Retirement Strategy

The Wall Street Journal's Tom Lauricella delivers a radio report on new perspectives on conventional retirement-strategy wisdom. Go to http://podcast.mktw.net/wsj/audio/20060316/pod-wsjsunday/pod-wsjsunday.mp3 in order to hear the report.

SoundMoney - Affiliated with the NPR program, Marketplace (public radio's daily magazine of business and economics), SoundMoney asserts its purpose thusly: "The new Sound Money will still help you figure out how to pay for your kid's college; explain what the mutual fund scandals mean to you; and help you decide whether to buy or lease a car. But we'll also try to plumb more elusive subjects — the myriad ways money affects us, not just financially but emotionally."

Money Matters is a section that addresses a new issue each week from "negotiating your pay, how to invest in real estate, how to get out of a bad investment or how to shop for a barbeque grille."

The Retiring section handles such questions as advice on rolling over a 401k, investing in gold, setting up a spousal IRA, finding the monetary value of an old stock certificate and answering questions from readers.

 

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