Economy panel weighs lessons in ongoing crises

Tough times have become the norm, panelists said yesterday at a Public Square gathering at the Richmond Times-Dispatch office downtown.

But it's a teachable moment in history, a time to learn lessons so that if history repeats itself, consumers will be better prepared to survive economic storms and learn to save money.

More than 30 people weathered yesterday's rain to attend the "Money Wise in Tough Times" question-and-answer discussion.

"I think what you are seeing is an opportunity for excesses to be washed out of the system," said panelist James Cox, managing partner of Harris Financial Group in Richmond.

Panelist Bruce McClary, media relations coordinator for ClearPoint Financial Solutions, a nonprofit credit-counseling firm, said a lot of people went overboard when times were good. Now they should take the opportunity to save for the future.

Paula Sherman, lending-protection coordinator at Housing Opportunities Made Equal, said a lot of people get in trouble because they spend too much on housing, leaving too little money for other expenses.

All said it was time to start teaching younger generations how to be more fiscally responsible.

McClary said parents need to learn how to manage their money and pass on good spending habits to their children.

Mihir Paithane, a fifth grader, asked how young people can help their families during hardships.

Sherman told him to look for ways to be thrifty around the house and suggested that parents involve their children in planning the household budget.

She and McClary urged consumers to create a budget, know what they are spending and cut back on nonessentials.

"If you're in the hole over your head, stop digging the hole," McClary said. Cox suggested that people save money and invest in the companies that make the products they buy, like or want.

Attorney Mitchell P. Goldstein asked why the government was putting money into the banking system when those dollars could be used to finance research-and-development programs that might lead to innovations to spur the economy.

Cox said the banking system is integral to economic recovery and that efforts now are focused on shoring up financial institutions.

"I don't know how long it will take or what it will require, but we're throwing everything at it that we can."

Cox said that until we address banks' capital problem, including the toxic assets on their books, lending is not going to resume.

He urged consumers not to raid their 401(k) plans. Doing so can result in costly penalties.

He told consumers to increase their contributions to their company's 401(k) plan, whether the company matches the contribution or not. He said shares of good companies are trading at bargain prices.

All three panelists were asked what they saw coming in the next year.

Cox said he expects the stock market to turn around in August or September and when it starts to go up in earnest it will go up fast.

Sherman said she expects foreclosures to continue to mount this year, but the situation should improve by next year.

McClary said credit-card companies will begin to curtail limits and raise interest rates.

The session was the 22nd Public Square hosted by the newspaper. Thomas A. Silvestri, publisher and president of the newspaper, moderated.

Contact Iris Taylor at (804) 649-6349 or .

Staff writers Carol Hazard and Emily C. Dooley contributed to this report.