News Release: Finance and Economics, Law

Sep. 29,  2008

Rough Economy to Stick Around, With or Without Bailout

With the Dow plunging five percent on Monday and anxiety climbing, don't expect the rough economic ride to be over soon – with or without an economic bailout plan, says Emory finance expert Tom Smith.

"We're in for the long haul and unfortunately it looks like the beginning of a recession. It is troubling for the economy but not surprising that so many in Congress were not willing to give Sec. Paulson such a big blank check with little oversight," Smith says of the $700 billion emergency rescue plan voted down by Congress Monday.

"If a plan doesn’t materialize, we will need to come up with some other course of action to increase liquidity in the market," Smith says. "This is really up to the Federal Reserve to cure things like this, to make sure the financial markets are stable, which we're seeing with the infusion of dollars from the Fed into the world economy."

Smith advises consumers "not to freak out," especially those nearing retirement watching the values of their 401k's and other assets decrease. "The truth is, to sell now and pull out will result in big losses.You need to ride it out and let the market correct itself. Unregulated markets, and even regulated markets, will go through periods of turmoil, but in the end, when everything settles, the result will be stronger firms that have weathered the storm."


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