Iraq death toll

Agree to Financial Woes?

By JULIE HIRSCHFELD DAVIS, Associated Press Writers 09/25/08

WASHINGTON - Key Republicans and Democrats reported agreement Thursday on an outline for a historic $700 billion bailout of the financial industry, but there was still resistance from rank-and-file House Republicans despite warnings of an impending panic.

"I now expect we will, indeed, have a plan that can pass the House, pass the Senate, be signed by the president and bring a sense of certainty to this crisis that is sill roiling in the market," Sen. Bob Bennett, R-Utah, said as members of both parties emerged from a two-hour negotiating session.

Negotiators planned to present the outline at a White House meeting later Thursday with President Bush and the rivals to replace him, Republican John McCain and Democrat Barrack Obama.

"We're very confident that we can act expeditiously," said Sen. Chris Dodd, D-Conn., the Banking Committee chairman.

Not everyone in the closed-door talks was as optimistic. Rep. Spencer Bachus of Alabama, the only House Republican in the bargaining meeting, stopped short of saying he agreed with the other lawmakers on an imminent deal.

"There was progress today," said Bachus, the senior Republican on the House Financial Services panel.

Later, he issued a statement saying he was not empowered to strike any deals and there was "no agreement other than to continue discussions."

Both houses' Republican leaders, Rep. John Boehner and Sen. Mitch McConnell, also issued statements saying there was no agreement.

Still, the White House called the announcement "a good sign that progress is being made."

"We'll want to hear from (Treasury) Secretary (Henry) Paulson and take a look at the details. We look forward to a good discussion at the meeting this afternoon," said Tony Fratto, the deputy White House press secretary.

A Treasury spokeswoman said the proposal was being reviewed there.

On Wall Street, stock prices were up late in the trading day, but not by as much as earlier in the day.

The core of the plan proposed by the administration just a few days ago envisions the government buying up sour assets of shaky financial firms in a bid to keep them from going under and to stave off a potentially severe recession.

Obama and McCain called for a bipartisan effort to deal with the crisis, little more than five weeks before national elections in which the economy has emerged as the dominant theme.

McCain on Wednesday asked Obama to agree to delay their first debate, scheduled for Friday, to deal with the meltdown. Obama said the debate should go ahead.

Congressional negotiators said Thursday there were few obstacles to a final agreement, although no details of an accord were immediately available.

"There really isn't much of a deadlock to break," said Rep. Barney Frank, D-Mass, chairman of the House Financial Services Committee.

But there were fresh signs of trouble in the House Republican Caucus. A group of GOP lawmakers circulated an alternative designed to attract private money back into the credit markets with less government intrusion.

Under that proposal, the government would provide insurance to companies that agree to hold frozen assets, rather than purchase them directly as envisioned under the administration's plan. The firms would have to pay insurance premiums to the Treasury Department for the coverage.

"The taxpayers haven't done anything wrong," said Rep Eric Cantor, R-Va., adding that rather than require them to bear the cost of the bailout, the alternative "pretty much puts the burden on Wall Street over time."

Boehner, R-Ohio, the minority leader, was huddling with McCain on the rescue. When asked whether the GOP presidential nominee could corral restive Republicans to support the plan, Boehner said, "Who knows?"

Bush told the nation in a televised address Wednesday night that passage of the package his administration has proposed was urgently needed to calm the markets and restore confidence in the reeling financial system.

House Speaker Nancy Pelosi, D-Calif., said Bush's agreement with Democrats on limiting pay for executives of bailed-out financial institutions and giving taxpayers an equity stake in the companies cleared a significant hurdle.

It was not immediately clear how lawmakers had resolved differences over how to phase in the unprecedented cost — a step demanded by Democrats and some Republicans who want stronger congressional control over the bailout — without spooking markets. The idea of letting the government take an ownership stake in troubled companies as part of the rescue, rather than just buying bad debt, also has been a topic of intense negotiation.

Frank told The Associated Press Thursday both elements would be included in the legislation.

Bush acknowledged Wednesday night that the bailout would be a "tough vote" for lawmakers. But he said failing to approve it would risk dire consequences for the economy and most Americans.

"Our entire economy is in danger," he said.

___

White House: http://www.whitehouse.gov

House Financial Services Committee: http://financialservices.house.gov

700 Billion

Can Americans Stay Happy?

09/24/08

This article was reported by Robert Roy Britt, Jeanna Bryner and Clara Moskowitz.

Given the nation's dismal financial situation this week, not to mention this year, many people are pondering a present and future with less money in the bank. Does that mean that as a nation we'll be less happy?

For a while, perhaps.

But researchers and analysts say finances, as well as moods, will bounce back.

Meanwhile, the experts advise against panicking in these uncertain times. The accounts of the not-so-wealthy are protected by the Federal Deposit Insurance Corporation (FDIC), which guarantees our deposits for up to $100,000 ($200,000 for couples), explains Cristian Pardo an economist at Saint Joseph's University in Philadelphia.

"By definition, that is better than putting the money under the mattress," Pardo said today.

Yeah, yeah, money can't buy happiness, right? Actually, research is conflicting on this point.

Money can buy a measure of happiness, says sociologist Glenn Firebaugh of Pennsylvania State University. But the happiness is derived mostly from comparing our "wealth" to the financial situations of others in our age group, rather than simply adding up the stuff one can buy, Firebaugh and colleagues found in a 2005 study.

So if the national piggy bank goes empty, what will our mood be?

"In the short run, we will be less happy as we lose ground financially, because we will compare our poorer financial situation to what we had before," Firebaugh said today. "But in the long run I don't think we will change all that much — people are resilient."

Already, the nation's anxiety is palpable.

A new survey by the Pew Research Center finds the highest level of citizen interest in reports about the economy in nearly 20 years. Fifty-six percent of Americans in the survey said they followed news about the economy very closely last week, while 49 percent reported specifically following news about the turmoil on Wall Street very closely.

"It definitely affects people's mood and increases anxiety levels, which is not a good thing for a person's happiness," said Aaron Ahuvia, professor of marketing at the University of Michigan-Dearborn.

But everyone is different, and the financial crisis will impact each person a little differently.

"When people who have a higher propensity toward anxiety hear news like this, they tend to respond to [the financial crisis] more strongly," Ahuvia said.

There's also a generational divide.

"People who are senior citizens and perhaps had direct experience with the Great Depression will respond to this much more strongly than people who are younger and grew up in periods of financial stability. Younger people tend to have a mental model where the economy has occasional bumps, but basically things are OK," Ahuvia said.

Jeff Larsen, a psychologist at Texas Tech University, sees the small picture. "What affects our happiness more so than what's going on in the larger world is what's happening to us on a day-to-day basis — Do we enjoy what we do? Do we enjoy who we spend our time with? Do we have meaningful social relationships, people we can count on?"

Larsen added, "If we get such a meltdown that people lose the ability to do the things they enjoy, there is a risk that the nation as a whole will be less happy."

Other research suggests we'll be just fine with less money, however, once we adjust.

The problems with money

A report in the journal Science in 2006 found that while people expect money to provide toys and fun, in fact, the relatively well-off — both men and women — tend to be tense and spend less time relaxing. Of course, everyone has his own definition of well-off. In the case of this study, men who make more than $100,000 a year spend 19.9 percent of their time watching television, socializing or doing other passive leisure activities, while those making less than $20,000 spent more than 34 percent of their time doing this stuff — basically nothing.

Money brings on a host of problems. Baby Boomers, as a broad example, make up one of the most well-off generations in U.S. history. But they are, as a lot, relatively miserable. In a survey earlier this year by the Pew Research Center, Boomers were found to be gloomier about their lives and the prospects for improvement than younger and older generations.

Perhaps nothing defines Boomers more than the treadmill of materialism, our national desire to keep up with the Joneses during several decades of robust economic growth.

"Rather than promoting overall happiness, continued income growth could promote an ongoing consumption race where individuals consume more and more just to maintain a constant level of happiness," Firebaugh hypothesized back in the 2005 study.

An editorial in the British Medical Journal that same year put into perspective the problem with human nature in this regard: "As we realize one set of aspirations, it seems we immediately trade up to a more expensive set, to which we transfer our hopes for happiness."

Assuming you want to hang on to your life savings, however, advice from several experts is similar: Hang in there, and be cautious.

The proposed $5 billion investment into Goldman Sachs by stock market whiz Warren Buffet this week offers some sage advice about market timing. First: Don't try it if you're not Warren Buffet. Second: Don't sell when everyone else is selling.

"Now is not the time to sell off your stocks," said George Morgan, professor of finance at Virginia Tech. "But you should only invest to the extent that you are comfortable with the risk."

Selling now, for those who have these assets, would be trying to time the market, Morgan told LiveScience in an email interview. "This is notoriously hard to do — just look at the huge losses incurred by the investment banks lately, and those are the professionals! In trying to time the market, one is tempted to sell at just the wrong times and buy at just the wrong times."

Anyone interested in the stock market should invest in strong companies and think for the long term, advises Syracuse University Finance Professor Yildiray Yildirim, who suggests waiting a couple of months as stock prices may fall further.

"If they like to invest on real estate, I would suggest they wait until next summer when prices fall even more and buy foreclosures and flip into rentals," Yildirim said.

And in the meantime? Yildirim recommends holding money in money market account, CDs and U.S. Treasuries.

Over time, mutual funds and index funds (not individual stocks) are good picks for most investors under age 50 or so, Pardo said. These funds are riskier than CDs, but over time they tend to return more, so if you don't plan to retire for 25 years, for example, they make sense, he said. "But if you are over 50, then this type of strategy is much riskier."

Craig G. Rennie, an associate professor of finance at the Sam M. Walton College of Business in Arkansas, also advised for the long run. "People should be investing on the basis of a long-term investment policy statement (ideally developed with a professional, licensed, and insured financial advisor)," he said. "When a downturn in the markets does occur, if people do not panic but continue to invest on the basis of their long-term strategic asset allocation strategy, they should do fine."

It might also be prudent to invest some time into looking for silver linings. A spouse, say.

Marriage brings greater wealth, according to 2006 study of 9,000 people reported in the Journal of Sociology. And now is definitely not the time to dump your spouse, if you can hang in there or work it out. Divorce reduces a person's wealth by 77 percent compared to that of a single person, the study found.

Or, if you're feeling magnanimous, there's one surefire way to buy some happiness: Give your money away. A study earlier this year in the journal Science found that income translates into happiness only when it is spent on donations or gifts for others.

In the end, happiness depends significantly on attitude, as well as how the current crisis directly affects an individual.

"If you're someone who loses your job or house as a result of this, then absolutely that will affect you," said Ahuvia, the marketing professor. "For those of us who are just hearing it on the news, I would be very surprised to learn that two weeks from now people's overall sense of happiness was measurably affected by this kind of thing."

Other subtle effects could linger.

"I'm worried about how [the financial crisis] affects people's overall sense of optimism," Ahuvia said. "It's not so much the money, but if people feel that they can't pursue their dreams in this economy that's a problem," he said.

No matter how bad it gets, history offers an upbeat lesson.

"Anecdotal evidence suggests that people certainly suffered during the Great Depression, but they were nonetheless able to enjoy the simple pleasures in life," Firebaugh points out. "When it comes to happiness, money is not as important as, say, good health or good friends or a good marriage."