Archive for September, 2007

Six Fingers of Blame in the Mortgage Mess

Posted on September 30, 2007 by Jason

The New York Times, September 30th, 2007

SOMETHING went badly wrong in the subprime mortgage market. In fact,
several things did. And now quite a few homeowners, investors and
financial institutions are feeling the pain. So far, harried policy
makers have understandably focused on crisis management, on getting out
of this mess. But soon the nation will turn to recrimination — to good
old-fashioned finger-pointing.

Finger-pointing is often decried both as mean-spirited and as a
distraction from the more important task of finding remedies. I beg to
differ. Until we diagnose what went wrong with subprime, we cannot even
begin to devise policy changes that might protect us from a repeat
performance. So here goes. Because so much went wrong, the fingers on
one hand will not be enough.

The first finger points at
households who borrowed recklessly to buy homes, often saddling
themselves with mortgages that were all too likely to default. They
should have known better. But what can we do to guard against it
happening again?

Not much, I’m afraid. Gullible consumers have
been around since Adam consumed that apple. Greater financial literacy
might help, but I’m dubious about our ability to deliver it
effectively. The Federal Reserve is working on clearer mortgage
disclosures to help borrowers understand what they are getting
themselves into. (“Warning! This mortgage can be dangerous to your
family’s financial health.”) While I applaud the effort, I’m skeptical
that it will work. If you have ever closed on a home, you know that the
disclosure forms you receive are copious and dense. Should we add even
more?

Read more of this article.

NewRetirement Retirement Calculator:   Assess your retirement plan with the NewRetirement Retirement Calculator.

A new era for automakers?

Posted on September 27, 2007 by Jason

Philadelphia Inquirer, September 26th, 2007

The contract agreement that ended a 41-hour strike against General
Motors Corp. may transform the competitive landscape of the U.S. auto
industry as it struggles to compete against efficient Japanese rivals.

The company achieved its goal of unloading about $50 billion in
health costs for its 340,000 retirees and their spouses, but the
tentative deal also wrung promises out of GM to keep jobs at its U.S.
plants rather than moving work overseas.

“This begins to solve the significant legacy cost for the domestic
auto producers, which has just put them at such a comparative
disadvantage to the foreign competition,” said David Sowerby, a
portfolio manager at Loomis Sayles & Co. in Bloomfield Hills, Mich.

The agreement was reached about 3 a.m. yesterday, and, an hour
later, the United Auto Workers union officially called off the strike,
which began late Monday morning.

One of the struck plants is in Newport, Del., near Wilmington. Its
1,400 UAW members produce 4,000 Pontiac Solstice, Saturn Sky and Opel
cars a month.

Should the four-year deal be approved by GM workers, Ford Motor Co. and Chrysler L.L.C. would seek similar UAW contracts.

The groundbreaking settlement allows GM to move its unfunded
retiree health-care costs from its own books into an independent trust,
called a Voluntary Employees Beneficiary Association, administered by
the UAW. The company will contribute 70 percent of the money for the
trust fund, or nearly $36 billion. The rest will come from the UAW’s
investment returns on that money.

Read more of this article.

NewRetirement Retirement Calculator:   Assess your retirement plan with the NewRetirement Retirement Calculator.

Health Tip: Spotting a Tremor

Posted on September 27, 2007 by Jason

Health Day News, September 26th, 2007

A tremor is an uncontrolled, involuntary,
rapid movement of a muscle, and can be caused by a medication or certain
conditions such as Parkinson’s disease.

Here are common signs of tremor, courtesy of the U.S. National Library
of Medicine:

  • Frequent, uncontrolled shaking of the hands, eyelids, head, arms or
    muscles.
  • Shaking on one side of the body, or with a different severity on each
    side of the body.
  • Shaking that occurs occasionally, intermittently or temporarily rather
    than constantly.
  • Nodding or quivering of the head.
  • Shaking that stops during sleep.
  • Worsening of shaking symptoms during stress.
  • A shaking or quivering sound to the voice.

NewRetirement Retirement Calculator:   Assess your retirement plan with the NewRetirement Retirement Calculator.

Senate to Hike Health Care Reimbursement

Posted on September 27, 2007 by Jason

Associated Press, September 26th, 2007

The Senate has voted to allow the Pentagon to raise reimbursement
rates for mental health treatment, following reports that soldiers
returning from war have had difficulty getting services because of
reduced payments to therapists.

Tricare, the military health
insurance program, cut its payments to civilian therapists this year
because it ties its rates to Medicare, which had dropped its rates. The
Associated Press reported in June that the lower payments to therapists
were making it harder for veterans to find a therapist who would accept
them as a patient.

Some veterans seek treatment from a civilian
therapist using the insurance because there is a shortage of military
therapists and there are long waits at some military mental health
clinics.

Under an amendment by Sen. Norm Coleman, R-Minn., which
passed the Senate by unanimous consent Tuesday night, the secretary of
defense could change the rates if he determines that access to mental
health services is threatened. The amendment also requires the
secretary to submit a report to Congress on access to mental health
services under Tricare.

Coleman said mental health services have
become increasingly important for returning soldiers as they face
post-traumatic stress disorder and other psychological difficulties.

“The
last thing we should do right now,” he said, “is make it more difficult
for mental-health professionals to provide treatment for these troops
and their families as they deal with the challenges associated with
reintegration.”

About one-third of returning soldiers seek out mental health counseling in their first year home.

A Tricare spokeswoman said she could not comment on pending legislation.

NewRetirement Retirement Calculator:   Assess your retirement plan with the NewRetirement Retirement Calculator.

Mayo Clinic Study Finds Weight Loss Precedes Dementia Diagnosis In Women

Posted on September 26, 2007 by Jason

Science Daily, September 25th, 2007

Mayo Clinic researchers have found that women who develop dementia
experience a decline in weight as many as 10 years prior to the onset
of memory loss, compared to peers who do not develop dementia.

Findings will be presented July 16 at the Alzheimer’s Association
International Conference on Alzheimer’s Disease and Related Disorders
in Madrid, Spain.

“We discovered that the weight of those women
who developed dementia was drifting downward many years before the
onset of symptoms,” says David Knopman, M.D., Mayo Clinic neurologist
and lead study researcher. “This illustrates changes that occur before
the memory loss and mental decline in dementia. We believe that the
brain disease began to interfere somehow with maintenance of body
weight, long before it affected memory and thinking.”

Dr. Knopman
and colleagues conducted this retrospective study, analyzing the
medical records of people seen by a medical provider in Olmsted County,
home of Mayo Clinic, who were diagnosed with the onset of dementia
between 1990 and 1994. They identified 560 patients and, for
comparison, also identified a group of those similar in age and gender
who did not develop dementia. For each patient, weight was identified
for the year of dementia diagnosis and then for the 20 to 30 years
preceding. The weights of those patients who didn’t develop dementia
were tracked over the same period.

“In those women who did not go
on to develop dementia, 30 years before the year of their peers’ onset
of dementia, their average weight was 140 pounds,” says Dr. Knopman.
“At the year of their peers’ dementia onset, they weighed 142 pounds.
The women who later developed dementia started off at the same weight
as those who didn’t develop dementia, but then their weight drifted
downward to 136 pounds 10 years before symptom onset and 128 pounds at
symptom onset.”

Read more of this article.

Pensions Help Smooth Bumpy Credit Market

Posted on September 26, 2007 by Jason

The Wall Street Journal, September 25th, 2007

Pension funds would seem unlikely candidates to have
been the superheroes of the summer’s credit-markets turmoil. But an
exclusive group has been working below the public market’s radar with
investment banks to hedge risk and to provide liquidity support.

The world’s 300 largest pension funds manage more than
$10 trillion, according to investment consultant Watson Wyatt,
exceeding the capital reserves of banks. With such heavyweight backing,
the squeeze in liquidity and a slowdown in securitization have led
several banks to approach European funds for support.

PGGM, the second-largest pension fund in the Netherlands, said this month it had agreed with New York-based Citigroup
Inc. to provide a hedge against a pool of 800 loans extended to
companies in emerging markets worth €2.5 billion ($3.5 billion). The
deal was structured as a collateralized-loan obligation, which in
normal trading conditions might have been sold to hedge funds or other
institutional investors.

For Citigroup, the provision of a hedge against
defaults means the bank can reduce its capital-adequacy requirements.
Meanwhile, PGGM benefits from access to, and earnings from, an asset
class that is difficult to reach.

“Real money investors, such as pension funds, are a
natural savior in markets like today,” said Mascha Canio, head of
infrastructure, private equity and structured credit at PGGM, who
oversees the team that made the Citigroup investment. PGGM drew up a
similar deal with ABN Amro Holding
NV in December, when it provided a hedge against defaults in a €15.5
billion loans portfolio belonging to the Dutch bank. “We are in the
luxury position of having a large sum of assets under management, but
sometimes it’s difficult to take advantage of an opportunity because
the size isn’t there,” Ms. Canio said. PGGM had €85 billion in assets
at the end of June.

Read more of this article

NewRetirement Retirement Calculator:   Assess your retirement plan with the NewRetirement Retirement Calculator.

Retirement savings doomed by high fees

Posted on September 26, 2007 by Jason

CNN Money, September 25th, 2007

Question: I have a company managing my IRA, they charge a
high fee – up to 2.5 percent depending on the account. I see in their
quarterly report that they often don’t beat the Lipper averages for
certain sectors. With such a management fee, should I expect to
consistently beat the averages?

The Mole’s Answer:
Unfortunately, no. With those fees, you are likely to continue to
underperform the Lipper averages. The good news is that I can offer you
an easy solution.

You’d be forgiven for thinking that paying an expert to pick mutual
funds should lead to great results. And that the best managers would
charge the most.

However, in the investing business, you don’t
always get what you pay for. In fact, the more you pay, the worse your
performance is likely to be.

Your fees are “up to 2.5 percent,”
which means you are paying this amount annually for advice. In
addition, it is possible that you are paying hidden fees such as
turnover costs within the mutual funds your expert is selecting for
you. Those fees don’t have to be disclosed.

The Lipper averages
you refer to come from Lipper Analytical Services and reflect the
average level of performance for all mutual funds in a given category.

Sounds
like you have set the bar for your results at average performance, and
then systematically failed to hit the bar because of high management
fees. At least your manager shows you the comparison – many managers
try to bury such disclosures.

Well, if I haven’t totally
depressed you, let me say that you are not alone. Most of my clients
come to me with similar expensive and underperforming portfolios. I
often have to tell them to sell out of the expensive funds, potentially
triggering an unfortunate tax hit.

With you, however, I have some great news.

Read more of this article.

NewRetirement Retirement Calculator:   Assess your retirement plan with the NewRetirement Retirement Calculator.

Flu vaccines may not save elderly lives: experts

Posted on September 25, 2007 by Jason

Reuters, September 24th, 2007

Getting an annual flu vaccine may
not save the lives of seniors, and health officials may want to
look at other ways to protect the elderly, researchers said on
Monday.

No studies have conclusively proven that influenza shots
prevent flu-related deaths in people over the age of 65, and
some of the arguments that have been used to support this idea
are based on faulty data, the researchers argue in the Lancet
medical journal.

“We need to find a way to better estimate what the true
benefits are,” said Dr. Lone Simonsen of George Washington
University.

Simonsen stressed that the elderly should continue to get
flu shots. But she said health officials should also be looking
for other ways to prevent some of the 36,000 deaths that come
each year from flu in the United States alone.

“We can probably do more to protect the seniors,” Simonsen
said in a telephone interview.

Every year, the U.S. Centers for Disease Control and
Prevention launches a new flu vaccination campaign, citing the
research that shows the deaths and the 200,000 hospitalizations
every year from flu-related illness.

Read more of this article.

NewRetirement Retirement Calculator:   Assess your retirement plan with the NewRetirement Retirement Calculator.

Preparing for Your Second Act

Posted on September 20, 2007 by Jason

Yahoo News, September 20th, 2007

F. Scott Fitzgerald
once observed, “There are no second acts in American lives,” but if he
were alive today, he might consider revising the quote. After a
lifetime in politics, Al Gore
won an Academy Award and has refashioned himself into a business and
media mogul, founding an investment firm, an Internet television
concern, and advising or sitting on the boards of companies such as Google (NasdaqGS:GOOG – News) and Apple (NasdaqGS:AAPL – News). Mitt Romney
moved in the opposite direction, leveraging success as leader of
private equity titan Bain Capital and head of the 2002 Winter Olympics
into a successful term as governor of Massachusetts and now a run for
the U.S. Presidency. Even former Federal Reserve Chairman Alan Greenspan is getting into the second-act “act,” recently announcing that he has signed on as an adviser to Deutsche Bank (NYSE:DB – News).

If
you haven’t yet started to think about your own second act, it’s never
too early to start. Peter Drucker predicted the average young American
at the turn of the century could expect to have about six careers in a
lifetime, in part because of the rapid, discontinuous changes reshaping
the workplace. While in many countries people’s job mobility is
severely limited by class, educational background, or other societal
factors, people in the U.S. today still enjoy an unprecedented freedom
to change careers midstream. A friend of mine who was a massage
therapist for more than a decade is today a top computer networking
consultant. Another friend, a top person at Morgan Stanley Private Equity (NYSE:MS – News), is building universities in Asia.

Even my own career is an example of the highly transitory nature of
modern careers: I spent the first decade of my career as a university
administrator, the next as a technology CEO, and I’m now a writer and
consultant. Every new career I have enjoyed has been built on the
experiences of the last and has opened my mind to whole new ways of
thinking (BusinessWeek.com, 5/15/07) and exciting new experiences.

Read more of this article.

Working in Retirement:  Consider the advantages to paid or volunteer work during your retirement at NewRetirement.com

More Americans Urged to Get Flu Shots

Posted on September 20, 2007 by Jason

Health Day News, September 20th, 2007

Too many Americans aren’t
getting vaccinated for the flu, including those most at risk — seniors,
children and health-care workers — U.S. health officials warned
Wednesday.

“Despite the fact that we have influenza vaccine, we are still failing
to protect a large proportion of people,” Dr. Julie L. Gerberding,
director of the U.S. Centers for Disease Control and Prevention, said
during a morning teleconference. “Not just our seniors, but people of
every age. And we are not even protecting our children. With vaccination,
most influenza is preventable.”

In recent years, the supply of vaccine has been spotty. But this year,
the CDC is expecting a record 132 million doses to be available, which is
10 million more doses than last year.

Every year, an estimated 36,000 Americans die from the flu, and more
than 200,000 are hospitalized.

Gerberding stressed that the flu vaccine is safe, and the myth that you
can get the flu from the vaccine is just that — a myth. “It is true that
the vaccine is not perfect. In some years, it is more successful than in
others in protecting people completely,” she said.

It’s particularly important that health-are workers get vaccinated,
Gerberding said, not only so they and their families don’t get sick, but
so they don’t pass the flu on to those they are caring for. “It’s
unconscionable that a health-care worker would not receive this vaccine,”
she said.

Kerry Weems, acting administrator for the U.S. Centers for Medicare and
Medicaid Services, said that for people on Medicare, the flu vaccine is
free with no co-pay and no deductible. “Yet, in any state, 20 percent of
people on Medicare aren’t getting their flu shot,” he said during the
teleconference.

Substantial numbers of children and adults not getting vaccinated,
either, the officials said.

Read more of this article.

NewRetirement Retirement Calculator:   Assess your retirement plan with the NewRetirement Retirement Calculator.

« Older Entries
NewRetirement Blogs Home