I looked at my 403(b) balance the other day. I didn't mean to--but I'd received a notice that I had to login to see, and the balance is the first screen after you sign in. Ouch! My balance is $18,000 lower than my total contributions. That's my own contributions, not mine + my employer's contributions, so apparently my entire lifetime retirement benefit from being employed has vanished along with $18,000 of my own hard-earned savings. Thank goodness I don't need to retire in the next few years.
The upside, perhaps, is that I've learned much more about finance than I ever expected to (thank you, PlanetMoney). I have TED spread and VIX indicators on my homepage. I know what a liquidity bank is. I knew enough to be outraged by that Goldman Sachs story in the LA Times. So I am convinced by what GMU economist Russell Roberts has to say:
When no one knows how the rules of the game are going to change — and they seem to change from week to week — who wants to take a risk? Who wants to borrow money? Who wants to invest? Business and consumers are hunkering down, waiting for the storm of change to pass.
The problem isn't liquidity.
It's uncertainty.
This sounds absolutely right. It takes courage just to keep putting money in my 403(b). Forget about making major purchases. Even though I have tenure, my husband doesn't. Even though my university has some reserves, they're still letting instructors go. And even if our jobs remain, who knows what will happen with our extended family? I would feel like such an idiot if we voluntarily took on a major expense right before a calamity.
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