BERKELEY, Calif. (KCBS) -- Congress is set to examine how the global financial crisis is affecting 401K accounts and pension funds at a hearing Tuesday, amid local pessimism about the short term prospects for a turnaround.
The House Education and Labor Committee led by Rep. George Miller (D-Martinez) was scheduled to convene a hearing at 10 a.m. Tuesday and gloomy testimony seemed likely.
Some of UC Berkeley’s brightest financial minds were anything but optimistic about the short-term future of the economy.
KCBS' Chris Filippi reports
Finance professor Hayne Leland advised against making any drastic changes to 401K plans or other nest eggs. “Rather than plunge into any action that might be ill-advised, you should probably stay put,” he said, noting that like many investors he was now paralyzed by both fear and greed.
Retirement plans may not have seemed terribly urgent to many of the hundred or so students at Monday’s forum at a Haas School of Business. But other parts of the economy will also suffer very immediate effects for some time, said professor Jim Wilcox.
He said the credit crisis will continue to wreak havoc on retail sales, construction, and the job market, thanks to a commercial paper market paralyzed by fear.
“What we're observing is there's this freeze where there's almost no buying and selling of these loans. There's very few new credit extensions going on,” Wilcox said.
He worried that unemployment, sitting at about 4.9 percent last year, could approach seven percent before the economy starts to turn around.
(jro)
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