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FINANCIAL CRISIS

10 Things That Are Going Right

The markets may be in turmoil. The economic outlook is grim. But not all the news is bad.

October 16, 2008

Never in modern memory have Americans been so gloomy about their future. A record 90% of registered voters say the country is seriously off on the wrong track, according to the most recent ABC News poll. A long economic slump lasting well into 2009 looks likely (see What's Next For the Economy?).

RELATED LINKS
	SLIDE SHOW: 10 Things That Are Going Right
	15 Things to Know About the Panic of 2008
	How to Cope With the Financial Crisis

But take heart. The editors of Kiplinger's Personal Finance and Kiplinger's forecasting came up with ten things going right these days. See if you agree:

1.Oil Loses Its Swagger: With the U.S. and global economy hurting, oil prices have dropped more than 50% in just three months, from $147 a barrel in July to the $65-70 range. Remember $80-$100 fill-ups at the pump? The national average for a gallon of gasoline is below $3.00 again, from $4.11 in March, and should stay below $3.50 through next year. Prices for home heating oil and natural gas are also headed lower this winter than last.

2. A Tipping Point for the Auto Industry: After years of talk and false starts, finally, all the major carmakers are furiously developing hybrid and alternative-fuel vehicles that could lessen our dependence on foreign oil. Meanwhile, desperate dealers are offering unheard-of incentives on new, gas-fired models. For example, Toyota is offering $1,000 cash back and 0% financing on the 2009 Camry, the most popular car in America. Don't drive much? If you've always wanted an SUV or truck, the discounting on some models is extraordinary.

3. Interest Rates Are Low and Headed Lower: The prime rate is at 4.5%, which is driving down interest rates on home-equity lines of credit and some consumer loans. The interest rate on a traditional 30-year fixed-rate mortgage is averaging 6.5%, the highest it's been since the summer of '07, but still not too far from the historic low of 5.8% reached in 2003-05 and 1963-65. And although credit-card companies are cutting personal spending limits, rates are dropping, too. The average rate on credit-card purchases fell to 11.89% in the first week of October, down from 12.13% in September, according to LowCards.com, which tracks 1,260 credit cards.

4. Homes Are More Affordable: Real estate, which was overpriced during the housing bubble, has returned to earth. That's especially good news for first-time home buyers who were priced out of the market. While scare stories persist of credit drying up, the reality is more a return to traditional lending standards that had been thrown overboard-recklessly in many cases-by lenders. That means to qualify you usually need a 20% down payment, sufficient annual income, good credit and a tolerable load of debt.

5. Your Bank Savings Have Never Been Safer: The $700-billion federal rescue plan more than doubles the amount of federal deposit insurance on individual bank accounts, to $250,000 from $100,000. Uncle Sam is also now providing providing unlimited FDIC insurance on non-interest-bearing accounts, covering virtually all of the nation's small businesses. Plus, a new temporary federal insurance program covers the full value if your money-market-fund shares fall below a net asset value of $1.00 (called "breaking the buck"). The program provides coverage for shareholders for the amount they owned on September 19, 2008. See Your Financial Crisis Questions Answered for more.

6. Stocks Are on Sale, and Many Bonds Offer Terrific Yields: The current bear market is approaching the 1973-74 and 2000-2002 downturns, the two worst retreats since World War II. That's the bad news. The good news: Individual blue chips are selling at bargain prices. For example, shares of AT&T (symbol T) sell for about eight times estimated 2009 earnings and yield 6%. Networking giant Cisco Systems (CSCO) sells for only ten times earnings estimates for its July 2009 fiscal year. Johnson & Johnson (JNJ), as steady an Eddie as you'll find, sells for just 13 times '09 forecasts, and Google (GOOG) is going for less than 15 times estimates. Triple-A-rated tax-free bonds, an extraordinarily safe investment, are paying 5%-plus for ten years and 6% for 20. That's more than the Treasury offers for bonds of the same maturity.

7. The Miracle of Technological Innovation Continues: Been to Best Buy, Sam's or Costco lately? For $799, you can now buy a 42-inch, high-definition flat-panel TV that will knock your socks off. Throw in another $200, and you can get a surround-sound system to truly transform your den into a home theater. A top-of-the-line PC with more memory than you'll ever use now costs $1,000; high-end laptops with all the bells and whistles go for $1,200, down from $2,000-$4,000 five years ago. And giant leaps in handheld devices, such as Apple's new iPhone, have revolutionized the way people interact with the world. (Use our PriceGrabber tool to compare prices.)

8. Prosperity Reigns in the Heartland: The fall harvest is shaping up as one of the best ever, despite the destructive weather and floods in the Mississippi River corridor since last spring. Exports of U.S. farm products will increase more than 40% by value this year. And recent years of high profits have allowed farmers to pay down debt so low that it accounts for a measly 9% of their assets -- providing all the credit they'll need for 2009 operations. At home, while food prices jumped sharply earlier this year, the weak economy is now expected to slow further price increases. (Consider Maine Lobster, now selling for only $5.99 a pound).

9. A New Tone and Direction in Washington: Whether it's Barack Obama or John McCain who enters the White House in January, election of a new chief executive should provide at least 100 days of galvanizing certainty for markets, and a new direction and sense of purpose for the country.

10. Shoppers Can Expect Great Gift Buys This Holiday Season: Retailers depend on robust end-of-year sales to turn a profit, but for 2008, the National Federation of Retailers forecasts holiday spending will increase only 2.2% from last year. That won't even beat inflation. It's good news for bargain hunters, though. Both brick-and-mortar and online retailers are gearing up to offer huge discounts to boost sales. For example, Deal News predicts a DUAL Core Intel Laptop will go for as low as $299 on Black Friday, the day after Thanksgiving, and a Canon PowerShot SD1100 (recommended in our Simple Tech picks) will go for a very low $139.

So chin up. We've been through hard times before. To quote Rudyard Kipling, "If you can keep your head when all about you are losing theirs ..."

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POSTED BY: Siddeley (October 17, 2008 09:07 AM)
In response to #10 - 95% of the time I shop online. Last night I found myself at our local mall and was really amazed at the lack of shoppers or even people window shopping or just getting out. Every store I walked into I was practically the only one in there and the sales people seemed to be running up to assist me. I had the man at the hand lotion kiosk ask me five times if I wanted a sample! But the sales were everywhere - I wouldn't say they were better than online sales, but when you are walking through the mall you can see store after store with 50% off sales and "biggest clearance ever" signs. All those sales and no people - I got some great deals but had to wonder if I was throwing caution to the wind by shopping at all for non-essentials.

POSTED BY: Not a millionare yet (October 17, 2008 12:26 PM)
#1 will be taken care of pretty soon. Just yesterday OPEC announced plans to have a summit to discuss cutting back oil production to sustain a "fair" price of $100/gal. So much for the "free" market. But this is just a tip of the iceberg. First the low paying jobs go offshore. Then the manufacturing follows. Then it's the engineering and accounting and R&D and software development and radiology. Nevermind, they said, we don't need to manufacture goods... We'll make money on the Internet (remember the mantra from 1990's ?). When that bubble burst, they said we'd make money pushing money around....the world doesn't want our money anymore. It's not backed up by a real economy, it's not well regulated, and it's not holding its value and its issued by the country that is borrowing like there's no tomorrow and has a very bad public image right now. The dollar was the last good US export and it's been effectively debased...we were all encouraged to heavily invest our hard-earned money into 401k's - with charts showing how everybody will be a millionaire at retirement?...the purchasing power of a million dollars then will be like a $100 today. Or worse. If we want to have a real future we need to rebuild real, goods-producing economy on American soil, bringing real value to the entire country, not inflated stock prices to a few shareholders. I doubt that this is even doable at this point, and it won't be easy at any rate. This market crisis will eventually be over with, but we're in for some very unpleasant future.

POSTED BY: HT (October 17, 2008 04:55 PM)
So prices are going down on SUVs and big-screen TVs, and we can get low-interest home-equity loans to help us buy them...and this is to be taken as a sign that things are still okay, sort of! What a depressing little essay you've written. Maybe we just don't want to learn our lesson. Isn't this attitude of greed, reckless consumption and overspending what got us in this mess in the first place? (Looks down, shakes head sadly.)

POSTED BY: Nomen (October 17, 2008 04:57 PM)
Better take off those rose colored glasses. The real future looks pretty grey and getting darker. I see zero things going right. Our economy started taking a nosedive when gas went from just $2 to $3/gal.last year. Staying at $3-3.50 won't help much nor will deals on gas guzzlers now.So much for points 1.& 2.. My construction friends told me two years ago that the housing bubble had already burst. Even with a lower interest rates, who wants to risk buying a $200,000 house for $150,000 if it might only be worth $100,000 next year. So much for points 3.&4..We have always been insured at the banks for $250,00 or more if we simply didn't have more than $100,000 in each account. Almost every company has trimmed its profit outlook for the foreseeable future so stocks may go up some but may well stagnate again or go lower. So much for points 5.&6.. Almost all of that "Miracle of Technological Innovation" is manufactured overseas so forget point 7.. The farmers had a great year LAST year. But skyrocketing costs of fuel,seed, fertilizer,herbicide, and cash rents will quickly eat up those good yields and higher market prices on this years harvest. Plus I don't know many farmers who paid down their debt and didn't turn around and incur more new debt for new equipment. So much for point 8.. Neither Presidential candidate will have any real power to change anything in Washington. The lobbyists will continue to run the country. Scratch point 9.. Since my health insurance premium just went up 35%, my gas heat 28%, my electricity 50%, groceries 40%, gasoline 50%, property taxes 10% while my income stayed the same, I won't be buying much this holiday season at ANY price. That takes care of point 10.. Rather than Kipling you would do well to read and quote Steinbeck.

POSTED BY: tgrfn (October 17, 2008 05:56 PM)
Yes there is lots of negativity going on in the market but it was just a little uplifting to see a bit of positive with this article.

POSTED BY: GoGlobalWarming (October 17, 2008 06:39 PM)
I have to applaud the positive attitude ringing from this article. With so much gloom and doom in the press these days it is quite refreshing to hear some positive news. Personally, I’m making more money than I ever have (though my inflation adjusted income might not be the highest). I am paying down my debts fairly aggressively and investing the same way in a down market. The market will turn around as it has many times before. The sun will shine again and prosperity will return. I am not so upbeat about our presidential candidates - they need to be more positive as well. We, as a nation, need to pick ourselves up by the “bootstraps”, get back to work and quit complaining. Despite opinions to the contrary we still manufacture goods in America and we are the world leader in services. We are simply more productive than most countries; so producing goods takes fewer people. It is a good time to live in the greatest country on earth!

POSTED BY: Steve (October 17, 2008 08:02 PM)
Don't despair. One very positive result from this financial meltdown of the U.S. economy is people are forced to come back to their senses, especially financial sense from Econ 101 and Finance 101. Hopefully, people are learning not to spend more than they earn; cash and carry really works; what goes up must come down; there's no free lunch; and (if you) gamble you may lose big. Perhaps, this market correction helps our country move forward in a renewed positive direction and determination, away from the decades of decadence and frivolity. A period of renewal, so to speak. Yes, chin up. You, too, will survive and will come out of this with a better perspective and maybe, a better life style. Very best of good luck to us all.

POSTED BY: Cato (October 17, 2008 08:16 PM)
Pessimists will always be with us even when the sun is shining. But I take heart in the fabulous deals in blue chip stocks now selling at penney stock prices. Some of these companies will slog through this downturn and be prospering again in no time. You can bet your boots on that. I once had the chance to buy Chrysler at 2 bucks a share almost 30 years ago...I bought gold instead and watched it languish for decades while Chryler stock shot through the roof. I'm not making that mistake again. Equities will recover as they always have. Remember the old adage: buy LOW and sell HIGH? So take heart. Today's challenges are actually tomorow's opportunities in disguise. The pessimists will miss the coming raging bull simply because they've no faith in America. Pity that.

POSTED BY: obsever (October 17, 2008 08:22 PM)
Like the old tale of the Pied Piper and the King (GB) who not only not pay the piper but gave all the money to the rats! Our children will suffer from the current administration and poor handling. Now about the Emperors new clothes...we now call them derivatives. The forgotten wisdom................

POSTED BY: Marsha (October 18, 2008 12:06 AM)
About Steve's comment posted the 17th, 8:02pm. Too bad our LEADERS don't know bean one about economics and finance. Too bad they are not the ones setting an example for all to follow. Instead, they are spending like there is no tomorrow. I am a banker and I'll bet 60% of the people in Congress do not even know how to balance a checkbook.

POSTED BY: Behaviorist (October 18, 2008 03:22 AM)
While I will agree that things are likely to rebound somewhat at some point, I can't help but be reminded of the dot bomb hysteria - both positive and negative. On what was clearly the crest, there were books and commentators by the hundreds saying that things were rosy as hell - just like they have been up until a month ago. Then, most people panicked and were all doom and gloom. Then they were frantically up again....I think that people like the authors of this article and Warren Buffet genuinely want recovery whether for selfish or altruistic reasons. However, they're like people desperately fanning their hands in the direction of hurricane Katrina to get it to change path. This is another demonstration of the highly faith-based valuation of money and even more esoteric abstractions like stock, short selling and finally the mortgage pools that nobody but an MIT trained securities expert could possibly understand. Until all of those mortgage pools are taken apart into their individual mortgages and the risk vs gain PROPERLY assessed will this all settle down. Unfortunately, the banks owning that paper have good reason to avoid doing that. Nobody wants to discover how many cows they swapped for "magic beans" and actually have to report it in their financial statements...I believe that this is why the $700 billion isn't helping much...The government needs to force the issue through the FDIC and SEC...If this is done along with the government investment, we can straighten the mess out over the next 3-5 years.

POSTED BY: Tom (October 18, 2008 11:40 AM)
And so the beat just goes on, like nothing ever happened except those of you who gamble on the vagaries of a manipulated market hoping to get rich will now know that you're gambling the futures of people who DON'T play that game and that naturally lessens the impact on your own fortunes when the next big bubble bursts. So gamble away brother... I'm not sure I'll have anything left to give to the cause the next time Wall Street needs a raid on the public treasury in order to keep you afloat but that's down the road, eh? Just like the current implosion was "down the road" when y'all bought into the game.

POSTED BY: Sharon (October 18, 2008 12:38 PM)
Thanks for writing that focuses on the positive! I think it is important for the media to provide hope to those who are stuck seeing the glass half full.

POSTED BY: John (October 19, 2008 04:13 AM)
Don't tell the media elites this. You'll depress them!

POSTED BY: Dave the shopper (October 19, 2008 01:40 PM)
I still believe that America is the one place people come to for a future. What do we have? You can have everything in life you want if you will help enough other people get what they want.” is not a statement of greed. It puts the RESPONSIBILITY on people to perform. As Earl Nighingale spelled out in a famous voice recording half a century ago, the basics of success require that an individual be paid for his worth. That voice recording was "THE STRANGEST SECRET". A librarian could, for free, point you to principals of success forgotten on that recording. Some workers do not have but can acquire the incentive to own a house and afford a luxury vehicle. Some employees want to be “safe” and let employers tell them by the pay checks they receive what housing and living conditions they can afford. Unfortunately they then ask the government for “entitlements” they can not afford. TEACHING CHILDREN the principals that there is a price to pay and principals to be learned before politicians scam them with promises of utopia and other rewards without contribution is essential. JFK was on the right track.... What did you do for your country, fellow Americans? America should have less government....Those who can not perform, the young, the sick, the disabled and the older generation who worked and had their retirements stolen by greed should be aided...Idleness is not the tool of the devil, it is the reality that prevents children from succeeding and exposes the children to crime and drugs. Some children break out of that cycle. This is a not handout, it is investment in the future....How many people can be employed to teach the young, fix the highway and other infrastructure and be retrained in other new technologies that are evolving. Wind and nuclear are being used today it is not a hoax or a scam...There is abundant land to farm to make the WORLD less hungry and power bio-fuel projects. So many needs and so many opportunities should create optimism.

POSTED BY: john saver (October 19, 2008 03:48 PM)
...Why are you advocating more spending!! who cares about good deals..we have less money and now were gonna spend it on "cheaper" items? Like low fat -you eat more which is just as bad...

POSTED BY: SuperManLives (October 20, 2008 09:58 AM)
This is good news, the bad news is it took this long and such dire circumstances for everyone to fully comprehend it. Thank the Lord above for the timing of this presidential election! Anyone know the secret of life? It's exactly this, does everyone have their "listening ears" on? It's not always wanting more...it's needing less. ;^) (Think about it).

POSTED BY: Dave K (October 20, 2008 11:56 AM)
I don't understand. Oil Barrel prices come down 50%. Pump prices come down 25-28%. Why don't pump prices come down 40% - 50% range? It seems just because pump prices are coming down, no one is asking why aren't they coming down enough? Getting screwed at $4.11 or getting screwed at $2.99 (not in Chicago, still well over $3.20) is still getting screwed. We need to take off the blinders that prices came down and demand to know why they aren't coming down enough, or at least in proportion to the actual barrel price. Boy, do the oil companies have us fooled. We now accept $3.00 as "good" rather than demand, again, a fair accounting of pricing practices. Gas should be at $2.25 - $2.50, or maybe $1.80 - $2.00, which is where is was the last time barrel prices were at $75. We forget and forgive too easily.

POSTED BY: micah (October 22, 2008 10:35 AM)
I can make your oil and gas price logic work out nicely. In 1998 oil dropped almost down to $11.00 a barrel. I think gas was still $1.00 a gallon. That would put you right where you want to be. Oil is 4 X what it was and Gas is 4 X what it was. Even better because of inflation those dollars are worth less than is 1998 and turning oil into gas is getting more expensive with the old refineries so I'd say at $4.00 a gallon we are ahead.

POSTED BY: jennifer (October 25, 2008 08:55 AM)
its called supply and demand economics ,folks. oil companies set the margin of profit. just because the amount per barrel drops, doesn't mean that the suppliers are willing to drop their profit margins. a certain amount yes, but only so much. and yes it is greed driven, but market based economies always are. so, drive less, shop online, use local markets and learn to make do. i lost my job 3 months ago in this mess, i'm still unemployed and somehow, even though its ugly and stressful, i'm making it on less than 1400.00 a month for two people, one of whom is a 5 year old child. its ugly, but it can be done.

POSTED BY: Ron (October 28, 2008 01:23 PM)
On a percentage basis, crude oil prices rose quite a bit more than gasoline. From 1/1/07, oil prices went up 138%. During the same period, gas went up 76%. They are both almost back down to their original 1/1/07 level.

POSTED BY: Snakelady (November 05, 2008 11:56 PM)
How many Americans are truly strugglig? I realize some are. Many of us,though, have simply gotten used to a very prosperous lifestyle. Thus, we are difficult to please. Spend some months volunteering in a truly poor country, and you just might find it difficult to return to the U.S. with the same expectations. The U.S. has been blessed and protected by God, but any loving parent must discipline a child when he or she becomes self-centered and unthankful. The dear people I met in those 'undeveloped' countries have been the most thankful and giving people I've ever met. Lord help us if we don't learn to be humble, thankful, and to give at least 10% of whatever we earn back to Him. I, too, am a modest-income, single-mom of a now-grown son. We always tithed, given plenty, and lived on a budget. Jennifer is right--use less and drive less. I would add: walk or bicycle more, be thankful, slow down, enjoy the clouds in the sky and your neighbors instead of the television, eat healthy (whole) foods that satisfy with smaller amounts, and enjoy life's many, simple pleasures! THAT is prosperity!

POSTED BY: elizabeth (November 06, 2008 11:56 AM)
you are right, Jennifer, it is supply and demand. I lost my job in May and still havent found anything and we are surving on 800 dollars a month and there are 4 of us two of whom are 6 and 2yo so it is possible things will get better

POSTED BY: jeff (November 06, 2008 02:05 PM)
I see some talk of personal financial responsibility on this board and I like it. The economy has and always will cycle. When our economy is growing again and it will, remember what you have learned here and don't outspend yourselves

POSTED BY: danamisi (November 14, 2008 01:37 PM)
I have been saying essentially the same thing fofr months. It is the truly "spoiled" set that are hurting in these times. My fdamily and I have been living on a low to modest income for years and we manage. My kids don't have 4 wheelers and we drive modest cars, but we are healthy happy and surviving. We too pay tithe and help with charitable foundations. My husband will get on his bicycle and ride to the grocery store before jumping in the car to get a few things.Things have not changed much for our family. It hurts a little on the grocery budget, but we use coupons and shop sales and markdowns. I truly feel like this economy is hurting the "spoiled" as snakelady says. We have never spent a fortune on Christmas so our budget for that has not changed we will spend the same amount as any other year and our kids will not be deprived. And we do not use credit cards because the interest is absolutely ridiculous. We don't have cable or sattelite TV the only reality we need is each other and a good board game. People need to slow down and realize how much we are blessed to live in this country of GREAT WEALTH.

POSTED BY: Optimist (November 22, 2008 04:40 AM)
Always appreciate that you have. Count your blessings. The economy will turn around. We have to get to the bottom before we get back on top. It's a shame that we have to go through rough times to appreciate what we do have.

POSTED BY: MrsN (December 28, 2008 11:59 AM)
I am appalled at the posters who say and or agree with those saying only the spolied are affected by this recession/ poor economy. My husband and I are certainly not spoiled and it's killing us. He has to drive over 100 miles per day to his job which requires a large 4 wheel drive pickup truck. I am disabled and must do physical therapy three times a week and my disabilty requires me to both drive a large SUV and drive 40 miles round trip to the only facility that can do my PT and to the specialist that treats my rare condition. Gas, when at it's highest was $275 a week for him, $125 for me. Also, medical insurance premiums co-pays and especially deductibles have risen despite coverage going down We have had to refi our mortgage which we had down to 10 years by paying extra payments when I was able to work. We have had to go back to a 30 year mortgage, despite our strict spending habits....There's a thing called bad karma. You do not know it all. You do not know each individuals personal circumstances...We were BEYOND financially savvy but life events happen you have no control over, even at a young age like with us.

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