I would also like to suggest that in the future you put out a podcast about personal investment for younger adults, like those just graduated or even still in college. I would just like to hear what the experts suggest a 20-26 year old should do with the money they make right away, and how they can go about doing it.

I wonder, however, why banks and lenders put such faith into a system that won’t share its exact methods of calculating one’s credit score. As a lender, I would want to know more than the inputs—I would want to know how the inputs are manipulated to reach the final number. I think such calculations could be controversial from a borrower’s perspective, especially since they are only estimates, not true predictors. I would be interested on hearing thoughts from both sides on this issue.

First, to Umair: I wonder what will happen when the baby boomers cash in on their 401k’s, however, I don’t believe that they will all take the cash out at once. I also don’t think it would harm the government much considering they do not control their 401k’s. I think that cashing them in would have a significant tax effect for them considering that money comes out as income. With the current tax laws, I think they would be better rolling it over to an IRA slowly, but especially in 2010 and 2011 (if they meet the requirements such as retiring, over age 59 1/2, etc.) when they can convert it to a ROTH without penalty (ROTH IRA money comes out not taxed and in 2010 they can convert money to a ROTH from a traditional without income restrictions). But in reality, I don’t think that the 401k issue would affect the government much, it might even help if the people spend their money on goods and services.

Justin- I don’t think the NBER can tell us we are in a recession because you don’t officially know that you are in a recession until after you have come out of it. Rick speculates that we are because of leading economic signals such as unemployment rates. But many economists do believe that we are in a recession but cannot be sure until after it is done.

Thanks for your comments!

“A liquidity vicious cycle - in which asset prices fall, people sell and therefore prices fall more; a Keynesian vicious cycle - where people’s incomes go down, so they spend less, so other people’s income falls and they spend less; and a credit accelerator, where economic losses cause financial problems that cause more real economy problems.”

Question - Like the Proffesor said, we cannot completely know when we are out of a recession untill it ends, my question is regarding the baby boomer crowd that is retiring, when they retire won’t the mass cash-ins of their 401K further cause the government to sink into greater debt, what will be the possible remedy to this situation?

Topic Suggestion - I would suggest the likelihood of the effects the babyboomers will have on the recession if it continues untill they retire.

Being someone who is completely dependent on financial aid, scholarships, and working during the school year to pay for my schooling, a lot of the content was pretty basic. I’m sure for most individuals this would not be the case. I think that it would be interesting, and I personally would be interested, in listening to some sort of follow up podcast that can elaborate on some of the information presented within the podcast and about financial aid.

I think that its a great idea to provide podcasts on different issues that are relevant to college students and that provide valuable information from people within the field. I look forward to listening to more! Thanks.