Does Anyone Want to Buy a Private Pension Plan? Going Once...Mon, 09/15/2008 - 19:51 — dlindorff
That deafening silence you hear coming from the McCain campaign is straight-talkin’ John touting his plan for privatizing Social Security...not.
With Wall Street banks falling like dominoes, a hundred billion dollars vanishing overnight, and the Treasury Department scampering about trying to prop up failing enterprises from Bear Stearns to Fannie Mae, and with domestic and global equity and bond markets swooning, Americans are afraid to open those envelopes that come every quarter telling them the value of their hard-earned 401(k) retirement plans.
No wonder John McCain isn’t touting privatizaton these days.
It’s not just that many of those private 401(k) plans McCain and his ilk so love for the working stiff were invested in the very financial institutions that have seen their share values drop to zero, or in other financial institutions that were themselves heavily invested in the stocks or debt instruments of the growing list of failed institutions. It’s that the tottering US financial edifice is shaking the broader markets, making stocks, bonds, and even giant insurance companies like AIG look like houses of cards, and a poor bet for funding one’s dotage.
Paul Krugman, in today’s New York Times, says that the Federal Reserve Bank and the US Treasury Department, in letting Lehman Bros, the nation’s fourth largest investment bank, go bankrupt, instead of doing yet another government bailout, was a kind of financial Russian roulette. Could Lehman’s collapse lead to a wholesale collapse of Wall Street and the US banking system, ala 1929-31? Krugman says, incredibly, that nobody really knows, including Fed Chairman Ben Bernacke and Treasury Secretary Henry Paulson.
That’s not the kind of thing you want to hear when you’ve managed, over the course of a working life, to save maybe a few hundred grand in a tax-deferred retirement plan that is all invested in stocks and bonds. Nor is it very comforting, if you are one of the millions of Americans who put your money into some kind of insurance annuity, expecting to get a guaranteed stream of income for life, to hear that AIG, the largest insurance company and one of the biggest issuers of such “private pension” programs, is struggling to come up with $40 billion in cash to avoid going belly up itself. ......(more)
The complete piece is at:
http://www.thiscantbehappening.net/?q=node/205
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