As fears of a U.S. economic downturn stir tumult in global finanical markets, two financial experts examine the impact of the market turmoil on the average American consumer and how the week's events may fit into the broader U.S. economic forecast.
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So what does all this volatility mean for everyone who's not a Wall Street trader or analyst?
We turn to two people who've written extensively about personal finance and markets. Jane Bryant Quinn is a best-selling author and columnist for Newsweek and Bloomberg.com. Burton Malkiel is a professor of economics at Princeton University and author of one of the best-known books on finance of the last few decades, "A Random Walk Down Wall Street."
Well, Jane Bryant Quinn, help people understand this in the broad sense first. Is this just what markets do? Or do you see different kinds of risks today for personal investors?
JANE BRYANT QUINN, Newsweek/Bloomberg.com:
In terms of the volatility of it, we've seen this before. I mean, people saw this huge drop in 1987. There was another bad market with the early '90s when the recession came then. There was a bad market in that 2000-2001 recession.
So it's not that people haven't been through this before. We have. It's that every decline is scary in its own individual way.
And what is really scary about this decline is the banking crisis that we've gone through. You just heard about what's happening with the banks and some of the failures in the system. And that is new, and that's unusual.
So when people see something new like that, they say, "Hey, what's going on? Is this worse than it's ever been before?" I'd say, so far, it seems to me like declines we've had before that you shouldn't expect it to be the end of the world.