I was a little horrified when I read one of
http://robertreich.blogspot.com/2008/09/coming-bailout-of-all-bailouts-bill.html">Robert Reich's proposals. He continues to be someone I turn to for economic sanity. Most of his proposals make a lot of sense to me, but this one blew my mind, "Investors in these institutions lose the value of their equity." Now, maybe I'm misunderstanding what he's saying here -- economics, the stock market, etc are way out of my field of expertise (like many here) and I typically run around looking for explanations of terms, etc. Anyway, the sentiment that I see repeated here a lot focuses on the rich assholes that caused all of this -- fair enough and I agree about them. But stock market loses are soooooo not just about the rich! In one way or another, this is about all of us!!
Number of Americans with retirement funds invested in stocks, mutual funds tied to stocks, bonds, etc:
Despite efforts by financial services firms to better reach and serve Hispanics and African-Americans, only 32% of Hispanics and 54% of African-Americans are invested in an IRA or 401(k) plan, whereas 72% of "general market" consumers are, according to research by Synovate.
Non-qualified plan ownership of stocks of mutual funds was even lower, with only 18% of Hispanics owning these and 33% of African-Americans, versus 60% of the general market.
..........
From the
http://online.wsj.com/article/SB122083623096608799.html?mod=googlenews_wsj">Wall Street Journal:
a) But as companies sought to hold down costs, more and more froze the old-fashioned plan and went solely with a 401(k). "What
didn't anticipate was the erosion of defined-benefit plans," she says. "They never conceived that the 401(k) would be the only retirement plan that companies provided. That's what we economists call 'unintended consequences' of a law."
Almost three out of 10 employers use contribution escalation -- the boosting of the percentage of an employee's pay that is directed into the 401(k) -- in conjunction with automatic enrollment. Many aim to boost contributions over time to 8% to 15% of pay.
b) The percentage of employers who automatically enroll participants has almost doubled since 2005, to 34% -- but given that "most plan sponsors implement automatic enrollment only for new hires, participation increases will occur gradually," Hewitt concludes. On average, 78% of eligible employees participate in their companies' 401(k) plans, up marginally from 2005.
c) An analysis by the firm of target-date funds from a range of mutual-fund companies found that allocations to stocks for employees 10 years from retirement age varied from 40% of a fund's assets to 80%. For employees about to retire, stock allocations ranged from 20% to 65%. The data in the report is based on 22 different fund providers, each having about five to 10 funds.
d) Among investment options, U.S. large-cap stocks are most commonly offered across plans. What category comes next?
A. Target-date funds
B. Intermediate bonds
C. Small stocks
D. International stocks
ANSWER: D. U.S. large-cap stocks are offered in 98% of plans, followed by international stocks, in 97%, Hewitt says. Small-cap stocks, in 89% of plans, and intermediate bonds, in 88%, are third and fourth most common options.
.................
Just http://online.wsj.com/article/SB122178285175454631.html?mod=googlenews_wsj">one person's comments about how she's been hit -- there are thousands of them out there I'm sure: But for many others, the tumultuous events unfolding this past week added to financial strains that have been piling up for more than year. "It starts to make you sick," said 52-year-old Mandisa Lewis, of Maple Heights, Ohio. After losing her job as a secretary, she said she had to tap into her 401(k) account this summer to make house payments. The recent financial news only makes her more anxious: "It gets to where you cry a lot at weird times."
...............
Just a tiny taste of recent pension fund losses -- these retirement fund of teachers and other state employees, not rich Wall St. brokers. All of the pension funds say they're okay and the losses are a tiny fraction of the funds.....now:
1) Vermont. Vt. pension fund lost $6.5 million
Vermont’s pension fund lost about $6.5 million in the plummeting stock values of Lehman Brothers and AIG, the state treasurer said this week. The loss is a small sliver — about 0.2 percent — of the fund’s $3 billion portfolio.........Since December 2005, the state pension fund lost $4.2 million on American International Group Inc. stock and $932,000 on Lehman stock. These are loses that have been “locked-in” because the stocks have been sold at a loss, Vermont state Treasurur Jeb Spaulding said.
2) New Jersey. State Pension Fund Loses 2.9 Percent in Fiscal Year
3) New York N.Y. State Pension Funds Face Lehman Losses; New York's pension funds for state workers and teachers face several hundred million dollars in losses from Lehman Brothers' collapse, and both have a large stake in troubled Merrill Lynch & Co., which agreed to a buyout by Bank of America.
4) Florida. The Florida Retirement Fund lost five (b) billion dollars in value since Friday as US stocks continue to plummet. The state treasury also lost millions in write downs when Lehman Brothers declared bankruptcy. As Whitney Ray tells us, the losses are just a small portion of the state’s 140 (b) billion dollar investment pool.
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