Local experts say crisis ‘not a cause for panic’
9/26/08 | 11 comments

Local experts say crisis ‘not a cause for panic’


By Abigail Curtis

“Economic crisis.”

“$700 billion bailout.”

“Recession.”

The headlines coming from Wall Street and Washington are reliably gloomy these days, but Maine’s economists, bankers and investment advisers say there’s no need for people to panic — or start stuffing their money under their mattresses.

“We’re not going to return to the Great Depression,” said Charles Colgan, a public policy professor at the University of Southern Maine’s Muskie School of Public Service in Portland.

Colgan said that even if a rescue package goes through, as it is expected to this weekend, the local and national economies will get worse before they get better. Mainers will have a harder time getting credit and our unemployment rate — now at 5.5 percent — likely will rise, according to the economist.

“The silver lining, if it exists, is that we go through a really slow and painful period and take the opportunity to get on a more sustainable economic footing,” Colgan said.

Economists are predicting that the national economy will be very weak through 2009 and that Maine’s will not rebound until well after that because of the scheduled closure of the Naval Air Station in Brunswick.

Nevertheless, local experts said that the “unprecedented” events on Wall Street should not have an immediate, dire effect on Maine’s economy. The state was not hugely affected by the mortgage crisis, and “community banks” — as opposed to investment banks such as Lehman Brothers and Merrill Lynch — are in good financial shape.

“The bottom line is, Wall Street is not Main Street,” Yellow Light Breen of Bangor Savings Bank said Thursday. “There will be effects on Maine, but day to day, it’s business as usual. … We are not affected by the national crisis.”

Bankers and investment advisers do caution people to be especially careful with their finances right now as the market rides its financial roller coaster.

“Clients certainly are concerned,” John Dudley of Means Investment Co. said. “We try to provide some perspective so that their decisions are not made out of fear.”

Dudley said that if the wildly fluctuating stock market numbers weren’t linked to some famous names, this might be a “somewhat normal” bear — or declining — market.

However, when household names such as Bear Stearns, Merrill Lynch and Lehman Brothers go out of business, people react more emotionally and want to get out of the market, he said. But this is a perfect time to “stay the course” and remain in the market, according to the investment adviser.

“Assuming you have good-quality stocks, you’re buying quality stocks and bonds essentially on sale,” he said. “If you’re going to put all your money in a mattress, you’d worry about losing purchasing power.”

One banker urged Mainers to be extremely proactive — and prudent — about their pocketbooks.

“Now is the time to plan and get everything in order,” Matt Walsh, president of the University Credit Union, said. “Consumer debt growth is outpacing the increase of wages, year after year after year. You can only do that so long.”

Walsh said that he would stress fiscal conservatism, including:

• Creating and sticking to a budget.

• Putting money in a savings account.

• Keeping a close eye on bank accounts and spending.

“It’s not a cause for panic,” he said. “It all comes back to budgeting.”

He said the credit union has had more people come in lately to talk about their finances than in the past five years combined.

“People are genuinely concerned,” he said.

Ronnie Robertson of Holden is.

“It sucks,” he said succinctly of the economy while standing Thursday outside the Shaw’s Supermarket on Main Street in Bangor. “It’s going to affect everybody, and we’re going to end up paying for it all.”

Libby Hanley of Bangor, another shopper, agreed. She said she was watching the news with her 91-year-old grandmother when they heard about the bailout plan. It all sounded terribly familiar to her grandmother.

“She remembered the Great Depression,” Hanley said.

Not registered? Click here
E-mail this
Print this
Guidelines for posting on bangordailynews.com

Bangordailynews.com is pleased to offer a forum for readers to react to our stories, discuss them and provide additional information. We are reluctant to delete comments, but do reserve that right for those who abuse our forum. For more on using this site, please see our terms of service.

The primary rule here is pretty simple: Treat others with the same respect you'd want for yourself. What does that mean specifically? Here are some guidelines (see more):

Comments
11 comments on this item
On 9/26/08 at 10:40 AM, mariahstorm wrote:         Repeated separate thumbs down will cause comment to be hidden

vote out the encumbents who have done nothing but line their own pockets...Maine is loaded with them...

their backers run the show they don't..... voice your opinion....loud and clear.....NO BAILOUT FOR CROOKS on wallstreet!

or colleges building massive buildings to 'house' the presidents!

Report abuse
On 9/26/08 at 11:37 AM, glenna wrote:         Repeated separate thumbs down will cause comment to be hidden

We certainly should NOT be providing any kind of a bailout that allowed big compensation exit salaries for the top executives for any of the companies/banks that are a part of this mess. If they weren't taking care of the people's business, they were certainly taking care of their own - and that's not Main Street's (our) responsibility to clean up. As for taking over the "bad debt" housing mortgages, some people bought houses they could afford at the time but because of the government allowing corporation's to move a lot of business overseas (where labor is cheap), a lot of Americans have lost their jobs - or people (like a couple I know) have become disabled and can't work and are eligible for SSI (where they could still meet their mortgages. BUT people at Social Security are doing their jobs and just send block and copy denials for the SSI and deny and deny and deny the payments - so these people are facing foreclosure! That's a government caused pending foreclosure. It's just not wise to paint all of these problems with a broad brush and say "Throw the bums out." because not everyone is a bum. On the otherhand, the members of Congress (the House & Senate) and only there because We, the people, elected them - and gave them the authority to DO NOTHING. So, actually - we're to blame as well.

Report abuse
On 9/26/08 at 12:28 PM, raysgurl wrote:         Repeated separate thumbs down will cause comment to be hidden

If our officials think we are not being affected on Main Street, they need to go to Main Street more often. The market has directly impacted the cost of gasoline. For those who have to drive to work, this translates into less money available in the general budget. Not only do we have to pay higher prices to fill our vehicles, but those Iincreased costs for shipping are being passed on to us in terms of higher prices for everything especially groceries and other necessities. Then there is the cost of increased home heating which is not an option in Maine in the winter. WE NEED A BAILOUT package, and we need it now. I agree that generous severance packages, exit packages etc should not be allowed, but these people too have mortgages based on what they have been making, they have families. They can downsize too, but it takes time. I am not going to waste my tears on on the people who have "cooked the books" for years using legal loopholes to boost their positions but their are innocents involved there, honest workers, their familes etc. who will face forclosure on high end homes that are not going to sell easily. Sadly, the efftects of the market are being felt on Wall Stree, Main Street and beyond. If you have investments in the market that are going to be long term investments and they are conserative and stable, then leave them. But if you have more high risk investments, maybe consider changing some of them into conservative and more stable investments to minimize loss for the moment. Most funds allow you to change the percentages of your investments. Even after the Great Depression the market did bounce back. And it has many times since. Right now, with NO confidence in mortgage asset backed securities, government intervention is necessary to keep that aspect of the market from folding altogether. That should help keep other markets a little more stable which will directly impact the cost of oil, a critical matter to every citizen in our nation, not just Maine. Glenna is correct and we need to vote, and vote for change. I am not supporting any candidates; I know how I am going to vote ,but we a government that want to work for those who elect them-"WE THE PEOPLE"

Report abuse
On 9/26/08 at 1:39 PM, ilovebama_37129 wrote:         Repeated separate thumbs down will cause comment to be hidden

Finally, a voice of reason...Americans as well as Mainers should not over react or panic during this times. There is no proof of a severe economic downturn if we fail to bail out wall street. I say to let them sink or swim....No taxpayer money for these bozos....

Report abuse
On 9/26/08 at 1:54 PM, David889327 wrote:         Repeated separate thumbs down will cause comment to be hidden

FYI -

"Friday, Sept. 26, 2008

Maine affected by financial meltdown

Maine bond officials hit a roadblock this week after being told by Wall Street traders they could not float a $50 million transportation bond because there's no market for it, according to the Portland Press Herald.

The board of directors for the Maine Municipal Bond Bank voted Wednesday to wait until the financial crisis stabilized before selling the $50 million TransCap bond, which is meant to pay for 10 highway reconstruction projects, sometime before Nov. 15 at an interest rate no higher than 5.5%, the newspaper reported. Just a week ago, the interest rate for the AA-rated revenue bond would have garnered a roughly 3.8% interest rate.

The stalled bond created no immediate problems for the Department of Transportation, but if the state can't find a buyer for the bond before mid-November, 1,700 road construction jobs could be affected."

source: http://view.exacttarget.com/?j=fe6315747d67037f7614&m=fef217777c6703&ls=fe271777746d017d701777&l=ff2c17797660&s=fe5d12727661047e7c12&ju=fe29157276670d7a771077

Report abuse
On 9/26/08 at 5:22 PM, Louise wrote:         Repeated separate thumbs down will cause comment to be hidden

'LOCAL EXPERTS" Where and who??

Report abuse
On 9/26/08 at 5:26 PM, hossthehermit wrote:         Repeated separate thumbs down will cause comment to be hidden

"Local Experts". How do you get to be one of those ? Bet it pays pretty good, huh? "Don't Panic". Yeah, we're experts, so give us time to weasel a profit out of this mess while the guys that aren't "Local Experts" lose their asses.

Report abuse
On 9/26/08 at 5:34 PM, Louise wrote:         Repeated separate thumbs down will cause comment to be hidden

You know, you can budget until hell freezes over, Maine people have been budgeting most of their lives.All people do not have the money to put into a savings account! Pocketbooks cannot get much more prudent! All this expert advice seems to come from the people that make a damm sight more money then the average Mainer. Live in the real world a while and see if the rules change!

Report abuse
On 9/26/08 at 6:25 PM, Johninphilippines wrote:         Repeated separate thumbs down will cause comment to be hidden

To the insiders, there is no panic because they, the bankers, created the darned problems in the first place! It's easy to palm-off the responssibility, isn't it?

Report abuse
On 9/26/08 at 7:29 PM, abcdefg wrote:         Repeated separate thumbs down will cause comment to be hidden
On 9/26/08 at 7:30 PM, abcdefg wrote:         Repeated separate thumbs down will cause comment to be hidden

http://www.hulu.com/watch/1389/saturday-night-live-dont-buy-stuff

Try this.

Report abuse
You must be logged in to post a comment. click here to log in.

Powered by: Creative Circle Advertising Solutions, Inc.