Coping with a flailing market

Yes. Most banks got infected with these toxic mortgages in some way. When these things were at their peak, the banks doing a lot of them were reporting a lot of earnings. Other banks then started to copy it so they too could make lots of money. It all turned out to be too good to be true. We will work out of it, but it will take time, and it will be painful as we “deleverage” the banking system and the housing market.

PIMCO executives recently forecast about another 18 months before there’s a turnaround. Do you think that’s a fair estimate?

I am not an investment advisor, and the PIMCO people are. But I believe it will be at least 18 months and maybe longer before any normalcy of growth returns to the economy. And then, we may have an inflation problem because of all of the additions to the money supply. But one crisis at a time. We need to restore growth first and worry about other problems later.

What should people do with their money right now? Some say stick with the stock market because you can only win with a long-term strategy. But if you’re nearing retirement and you see your 401(k) fading, is there a safer place to put your money?

As I said before, I am not a financial advisor and am not comfortable giving this sort of investment advice.

What do you think of the financial team President-elect Obama has introduced?

I am generally impressed with the president-elect’s financial team. They are experienced, smart and capable. I don’t agree with them on various policy issues, and those disagreements will become more apparent after this crisis is over.

But solving this crisis now is less about philosophy and more about mechanics, and I think they will be able mechanics.

PAUL ANDERSON is the city editor. He can be reached at (714) 966-4633 or paul.anderson@latimes.com.