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Memo to President Bringdown. Cool it with the "catastrophe" talk, Barack. It's contagious.

The latest example: Analysts are predicting Apple (nasdaq: AAPL - news - people ) will launch a $99 iPhone that will sell like crazy--after a quarter during which iPods sold like crazy--causing one analyst to argue that the Cupertino, Calif.-based company's shares are at risk.

Crazy, right? Apple's shares are up 15% to $97.83 this year, even as the broader stock market has fallen 8%. In January, Apple reported net income for its holiday quarter rose to $1.78 a share, or $1.61 billion, from $1.16 a share, or $1.05 billion, during the year-ago period. That's 39 cents better than the $1.39 per share analysts had expected.

The prospect of a hot new product at a great price would seem to be cause for celebration, then. But not in this economy.

In a note to investors Tuesday, RBC Capital Markets analyst Mike Abramsky became the latest to predict that Apple will launch an entry-level $99 iPhone in June or July. The result: Abramsky is now penciling in sales of between 20 million and 30 million units in fiscal 2010 for the new device. That would boost Apple's share of the global smart phone market to between 14% and 19%, he writes.

The problem: With consumer spending declining to its lowest levels since 2002, a cheap phone could damage Apple's sweet iPhone business. "The economics of an entry-level iPhone appear less attractive when factoring in iPhones/iPod cannibalization," Abramsky wrote. "Apple must sell three $99 iPhones to replace gross profit from one 3G iPhone."

Abramsky figures the new phone can sell for $99, thanks to a $200 carrier subsidy. However, it will come without a high-speed, so-called 3G connection to wireless carriers or GPS. It will also get a "light" data plan that will cost users $15 a month, less than the $30 a month users pay now.
In other words, Abramsky is predicting that the foul economic mood will turn the cheap new phone into a cannibalistic margin killer. "We remain concerned re: elevated risks to valuation from a growth and/or margin 'downshift' for Apple," Abramsky writes, slapping a target price of $70 on Apple's stock.

Even Apple bulls are cautious. "The primary concern with Apple these days is its high average selling prices and whether it can deal with the deteriorating macroeconomic environment," Kaufman Bros. analyst Shaw Wu wrote in a note arguing that Apple' shares still merited a "Buy" rating and a $120 price target.

What that really means, of course, is it's time for President Obama to slap some optimism back into the economy. And if he's not up to that, maybe he should grab his iPod, relax and wait until he's in a better mood.

Treasury won't grant relief for required minimum distribution for this year.

The Treasury has decided against granting any relief to retirees who were hoping to take smaller 2008 distributions from their depleted individual retirement accounts.

Last week, Congress passed a bill suspending--for 2009--rules that force IRA owners over 70 and a half years old, as well as those who have inherited IRAs, to take "required minimum distributions" (RMDs) from these accounts annually. The Treasury Department, meanwhile, had been considering easing the pain for 2008 too.

ormally, the RMD is calculated based on an IRA owner's age (older folks must take out more) and his or her IRA balance on Dec. 31 of the previous year. Outside tax lawyers believed the Treasury had the authority to allow 2008 distributions to be based on some date in late 2008 after the market had tanked. That would have led to smaller required 2008 distributions.

Treasury and the Internal Revenue Service have decided, however, that since Congress has now acted, they will not allow this, according to a letter being sent to several senators and congressmen who had requested help from Treasury.

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Any changes that the Treasury could make administratively for 2008 would be "complicated and confusing for individuals and plan sponsors," the letter states, and the relief would not be available as "uniformly" to taxpayers as the change passed by Congress for 2009. That's because most seniors already have taken their 2008 payouts.

"This will be very upsetting for taxpayers forced to sell in a down market or to take more out of their tax-preferred accounts and transfer them now into taxable accounts," says Clint Stretch, managing principal of tax policy at Deloitte Tax of Treasury’s decision.

So if you were waiting for the Treasury to act (or for an end of the year rally in the market) before withdrawing funds from your IRA, call your broker or fund company now and ask for your 2008 RMD. Or at least find out the last day you can request it.

Vanguard Group gives customers until 4 p.m. on Dec. 31 to call and request their 2008 RMD, but most IRA custodians require more notice. Be careful. If you don't take the money by the end of the year, you could be subject to a 50% penalty on the RMD, in addition to normal taxes.

Insurance agents who steal from clients can go undetected for years.

Kathy D'Alessandro outed her mother's crooked agent.

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Jeanne and Anthony Trotta were in their 80s when they bought $150,000 worth of annuities in 1998 from Michael Minnehan, an insurance agent in their hometown of Milford, Mass. Minnehan told them the annuities would do better than a savings account. They might have, if the money hadn't been stolen.

A few years after the annuities were issued by Jackson National Life, the state Department of Insurance revoked Minnehan's insurance license following fraud allegations. He nonetheless continued to represent himself as an agent, the policies were surrendered and he pocketed a big chunk of the proceeds.

There are several ways for agents to cheat. In some cases they fail to pass along premiums to insurers. In others, they pilfer funds from the cash value of a policy or surrender a policy and keep the proceeds.

"Premium scams are a constant and widespread problem that likely will grow worse in this nightmarish economy," says James Quiggle of the Coalition Against Insurance Fraud. "Most [agents] are honest, but bilking vulnerable clients can mean easy money some just can't pass up."

Who eats the loss? That depends on the agent and the specifics of the crime. If the misbehavior is by a captive agent (one representing only one insurer), the insurer generally has to make victims whole. If it's by an independent agent (one, like the Trottas', selling policies from several insurers), clients can get stuck. A state guarantee fund will protect policyholders (up to certain limits) if their insurer goes under. Victims of fraud are left on the hook unless an insurer chooses to or is legally responsible for compensating them, or if the agent is able to pay restitution.

Six years after the Trottas bought their annuities, Anthony died. Jeanne was told by Minnehan the funds from her husband's annuity would transfer to hers. In 2006 she decided to surrender her annuity and tried to contact Minnehan.

She received a letter signed by his son that said Minnehan was ill with cancer and his affairs on hold. "Please bear with the situation," the letter pleaded. Several apologetic letters followed, along with financial statements from a New Jersey agency to which the Trottas' account supposedly had transferred. The Trottas' daughter, Kathy Jeanne D'Alessandro, reviewed statements her mother had received between 2004 and 2006. She realized they were frauds and Minnehan had never sold or transferred accounts from his agency to the New Jersey firm.

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By Ellen Gibson

Are you better off?" It's a question the candidate of the challenging party asks during each Presidential campaign. The economy, of course, is the No. 1 issue this election, and that question has been raised in cities, suburbs, and small towns across the country. With the recent stock market meltdown and the collateral damage to 401(k) plans, many voters are indeed poorer. But in terms of real wages and the cost of consumer goods, are we truly worse off? For most Americans, the answer is, sadly, yes.

On Jan. 22, 2001, when President George W. Bush took over the White House, the Nasdaq was in the midst of a post-dot-com freefall. Bush had the bad luck of taking office just before the economy went into a recession that March. But after a mini downturn, the American economy experienced a period of recovery and expansion, with the gross domestic product growing at a steady clip and productivity surging 22%. That measure of prosperity, however, hasn't translated into gains for most families.

In 2000 the median U.S. household income was $50,557 (adjusted for inflation), according to the U.S. Census Bureau. Seven years later, the median income fell to $50,233. "That might not sound too bad," says Edward Wolff, professor of economics at New York University, "but normally, median income increases. That's not good news for the middle class." Consider that the median household income would be almost $64,000 had paychecks kept pace with the GDP.

Overblown Claims?

While workers' paychecks have stagnated, corporate profits jumped an average of 10.8% per year, according to data from the Bureau of Economic Analysis. "The fact that middle-income households ended up below where they were in 2000 despite strong productivity growth—that's the heart of the problem," says Jared Bernstein, an economist at the Economic Policy Institute, a liberal think tank. "It's one thing if you're looking at a period like now, when the macroeconomy is dysfunctional, but for most of this decade the economy has been pumping along." However, economists at the conservative American Enterprise Institute counter that claims of income stagnation are overblown, pointing out, for example, that household income data does not take into account total compensation, including companies' burgeoning contributions to employee health insurance.

Even though inflation has not been severe for most of the decade, the cost of living has outpaced wages. The consumer price index has risen by 25% since January 2001, while core inflation jumped 18%. But the core consumer price index can be deceptive because it excludes food and energy. Once, after reporting that core inflation had been relatively tame that quarter, Conference Board economist Ken Goldstein came back to the office to find an irate e-mail: "Hey, dummy, what the hell do you think we spend our money on?" The point was taken: When energy and food skyrocket, families feel it.

And skyrocket they have. In early 2001 you could fill your car with regular gas for $1.47 a gallon. But on Oct. 24, three months after regular unleaded peaked at $4.11 a gallon, the average cost was leveling off around $2.78, according to the AAA online Daily Fuel Gauge Report. Grocery store sticker shock has been almost as acute. Take, for example, the price of a dozen eggs, which has risen 97% since 2001, from a nationwide average of $1.01 to $1.99. "You could look at inflation and think it hasn't been that much of a problem, but in fact, if you look at the components of the middle-income consumption basket—tuition, housing, childcare, gas, food—all of those have been rising a lot more quickly," says Bernstein.

Retirees Are Really Feeling It

There are consumer goods that have come down in price. And some economists don't buy the argument that families are being hit where it hurts most. "People are more attuned to price increases than declines, so their perceptions are biased," says Wolff. He points out that the price of goods such as toys and clothing have remained fairly stable because we have benefited from inexpensive imports. Electronics have come down, too, especially when adjusted for advances in technology. In 2001 the base model of Apple's iBook, with its paltry 500MHz chip and 10GB hard drive, sold for $1,499. Today, the basic white 13-inch MacBook laptop will run you $999 for a 2.1 GHz chip and 120GB drive. That's $500 less for nearly four times the speed and 12 times the storage capacity.

For consumers, there's no argument over the impact of the current economic crisis. They're feeling it, especially retirees. Take Patricia Wehrs, a Washington State resident who retired from her federal government job in 2000. She and her husband were all set for a comfortable, though modest, retirement. Then their retirement fund started losing money every month, while the cost of living crept up. "Our basic bills—electric, telephone, water, and cable—went up, in some cases 90%, over the past two years. I've kept the food bills under control with a budget and a diet," jokes Wehrs. "However, fuel costs have drained any extra money, so no more theater, no dinners out, and smaller gifts to the grandchildren for special occasions."