October 20, 2008
By PAMELA YIP / The Dallas Morning News
The recent exchanges I've had with readers have demonstrated how deeply the economic crisis has eaten into their confidence in the traditional pillars of financial security.
Here are some examples:
• "It used to be that anything backed by the U.S. government was safe," said Nadine Chaffin of Cedar Hill, a retired Internal Revenue Service worker.
• Another reader, who expects an income-tax refund, wanted to know whether Uncle Sam would be good for the money. "Should I be concerned about getting this money from the U.S. government in 2009, since they don't have any money?" the reader asked. "Or even worse, if the unthinkable happens and our economy collapses?"
• A caller to the recent financial planning hotline sponsored by The Dallas Morning News and the Financial Planning Association said she didn't believe her bank when representatives said her deposits were safe and insured.
"The fact that you're getting those kinds of questions is discouraging," said Michael Davis, an economics and finance professor at Southern Methodist University. "If you have people who are so shaken that they don't think their Treasury check is going to clear, that's an even more fundamental problem than not knowing what the value of some foreclosed tract in DeSoto is worth."
What's it going to take to restore the trust?
"People need to know that the basic structures of the financial system are still in place and should still work," Mr. Davis said. "The Treasury check is not going to bounce; your insured account at a bank is not going to go away."
When I asked IRS spokesman Clay Sanford about the reader's concern about her tax refund, his response was emphatic:
"We will absolutely pay refunds due taxpayers," he said.
Mr. Davis added another layer of assurance: "The government can print money, so your tax-refund check is not going to bounce."
Read the full story.
# # #