kiplinger connection
Mortgage Mess • Human Resources • Investing

Mortgage Mess: Feds can’t afford it, and states most affected are stepping in.
Human Resources: New health-care strategies can help even smalls save big.
Investing: Some tips on riding the roller coaster for the long and short term.

Mortgage Mess
As the housing crisis deepens ...
More people are looking to Washington and wondering if a big bailout is in the works.
There’s plenty of cause for concern. Though not all people facing foreclosure will lose their homes, many homeowners will struggle to meet rising house payments.
Politicians are trying to do something.
But aid is coming in small dollops, far short of an all-out financial rescue.
Under pressure from the White House ...
Banks are sure to freeze teaser rates for some subprime borrowers facing big resets. That will help more homeowners hold on longer, but for others it’ll just delay the inevitable. Many subprime borrowers won’t ever qualify for the refinancing deals they need to survive.
More interest rate cuts are likely from the Federal Reserve. That’ll help a bit ... affecting about 25% of adjustable mortgages taken between 2004 and 2006 and facing resets.
And Congress will trim some red tape, passing legislation enabling the Federal Housing Administration to help back up more of the refinancings that homeowners will need.

But a big infusion of government cash is not in the cards.
The situation isn’t bad enough ... at least not yet. Housing starts are down 46% from their peak, compared with a 65% drop in 1991.
Most of the pain is in only eight states. 65% of foreclosures are in Ariz., Calif., Fla., Ga., Mich., Nev., Ohio, and Texas, and most are taking steps on their own to offer help. That reduces the pressure on Congress to step in with a bailout it doesn’t want and can’t afford.
No one knows what a fix should look like or whether it would hurt or help. That’s in part because no one-size plan will fit all. Each case needs to be handled separately, which the government can’t do.
Plus a costly rescue is politically untenable. President Bush and other Republicans oppose it on ideological grounds. Democrats don’t want to help big investors who loaned money irresponsibly. And no lawmaker wants to do anything for speculators left with bad loans.

None of this is to say a big bailout can be totally ruled out.
If things get bad enough, Congress will feel added pressure. Pictures of people being forced out of their homes are powerful in an election year. But the economic effect would have to be much worse than we now expect it to be for lawmakers to push the panic button.

Human Resources
A hot new trend in health care: Clinics within companies. By bringing doctors, nurses, and even pharmacy services in-house, workers can receive fast medical attention without having to leave work to visit far-flung doctors. Such facilities also encourage more employees to participate in company-sponsored health coaching, screenings, and other disease management and prevention programs. In some cases, services are free. When there is a charge, it’s below off-site rates.
Most employers use outside contractors to run the facilities.
Among such clinic operators: Comprehensive Health Services, CHD Meridian, and Whole Health Management. Clinic hours can be tailored to a company’s size and needs. Some big firms have full-time operations. Smaller businesses can simply have a nurse come in two days a week.

Too small for an on-site facility? Retail clinics can help.
They’re spreading rapidly in strip malls and other locations throughout the country. They treat many routine medical conditions on a walk-in basis at fees below what regular doctor’s offices charge.
A heavyweight ... Mayo Clinic ... is jumping in, opening clinics in Minn. and Wis., for starters. Their fees will range from $49 to $59.
Some employers are promoting the use of retail clinics, lowering copayments for employees and their dependents who go to them.

To burnish their family-friendly employment policies ...
More firms are adding infertility treatments to benefit plans. But to cut costs and risks, employers are putting annual or lifetime caps on the treatments, requiring a fertility center to inject a minimum number of eggs to achieve a birth. Companies are also providing more programs for prenatal and well-baby care to women undergoing infertility treatments as well as for other moms to help reduce pregnancy and neonatal bills.

Expect another crackdown on employers that hire illegal workers.
The Bush administration wants new rules in place by March, but business groups think implementing a reliable system will take years. This time, federal regulators promise to consult more with employers before deciding how to make them check Social Security numbers and fire workers whose status isn’t verified. The new approach comes on the heels of a previous effort that was overruled by the courts on grounds that the feds didn’t consider the burden on small companies.

Investing
Fasten your seat belt. Wall Street’s wild ride is far from over. Volatility, as gauged by the degree of day-to-day fluctuations in value of the S&P 500 index, has jumped since summer. The factors fueling the ups and downs ... growth concerns, credit market woes, the housing slump, and high oil prices ... aren't going away soon.
Do we see a grumpy bear market stirring? No, we don’t.
The bull still has legs, though clearly much weaker ones. Barring a full-blown economic crisis emerging from these risk factors, the market is likely to return 5% to 10% over the coming year. Despite the slower U.S. economy, there are still plenty of sectors that remain vibrant enough to propel further market gains. The list includes industries profiting from the low dollar and healthy exports plus companies in energy, raw materials, high tech, and agribusiness.

Still, it is a time for caution. It's best to tread gingerly where there are land mines. Uncertainty isn't the investor's friend.
We like defensive growth stocks as a bulwark in rough times. Consider Procter & Gamble, Coca-Cola, Altria Group, and Eli Lilly.
Investors with short horizons may do best on the sidelines, stashing their cash in less risky assets, such as money market funds.
But there are opportunities for those in for the long haul. In fact, the recent market correction has left prices of many stocks at low valuations by historical norms, creating some bargains.