Now that
last year is officially in the history books, we can look ahead to 2008.
As with any new year, there’s uncertainty and anxiety about what the future
holds.
Instead
of wasting valuable space on market predications that may never come true, I’ve
constructed a 2008 wishlist.
Here’s what I’d like to see happen this year:
Regulators de-monopolize the credit rating business
The 2007
subprime mortgage debacle showed just how horribly inadequate the current credit
rating regime is. The top three U.S. rating agencies were scrambling to explain
why they assigned credit worthy status to junk subprime debt. The world still
awaits a believable explanation. Instead of trying to reform a broken system,
regulators should allow new competitors to give Standard & Poor's, Moody's, and
Fitch Ratings a run for their money.
A
Federal Reserve that holds financial institutions accountable for their poor
judgment and lousy financial decisions
Last year
the Fed did a great job of pulling rabbits out of hats. By pumping billions into
the financial system and taking other drastic steps, they did everything in
their power to prevent a financial catastrophe from happening and it worked.
Now, it’s time for the Federal Reserve to stop protecting rogue banks and other
financial misfits that made mistakes by lending to the wrong borrowers or
overleveraged themselves. Quit defending them to the detriment of the masses and
let them pay the consequences for their foolishness.
A
better personal savings rate
According to the U.S. Department of Commerce, the 2007 personal savings rate
increased by a dismal one half percent, which was slightly better than 2006.
Isn't that an embarrassing showing for the wealthiest nation on the planet? The
lack of disciplined savings by the U.S. population hasn't been this bad since
the 1932-33 two year period during the Great Depression. History continues to
prove those who save and invest grow and prosper. Those that don't crash and
burn.
ETF
and index providers focused on product education and support, not just product
development
The
entire exchange-traded fund (ETF) industry has been so busy developing new products, they’ve lost sight
of what investors yearn for: A financial tool that clearly explains what all of
these ETF stock, bond, and commodity indexes are actually doing. It’s become a
confusing mess. What one fund marketer calls a passive index, another is calling
a fundamental or equal weight index. It’s time for ETF companies and index
providers to adopt a uniform system of explaining the indexes behind their
products. They owe it to themselves and to investors.
Index funds become a mandatory investment option in all 401(k), 403(b), and
457 retirement plans
Besides soaking retirement savers with obscene fees, too many retirement plans
have a poor selection of investment choices. George Miller, Chairman of the
House Education and Labor Committee has introduced a proposal to make index
funds a mandatory option in all 401(k) plans. Will it happen? For the financial
well-being of America’s retirement savers, let's hope it succeeds.
