"We are the prey"

[kpete]

Here comes the screw job
by gjohnsit
Sun Jan 10, 2010 at 10:14:31 AM PST

"The 401(k) system has to be fixed, and I don't know anybody who can fix it but the federal government." - John Bogle

"We are the prey"

When the 401(k) system was being reformed in the spring of 2007 the stock market had been on a four year bull market. Stocks were getting very expensive and overpriced. Wall Street insiders, which were holding these stocks needed someone to sell them to before the stock market began declining just six months later.

In this environment, Congress "magically" decided that 401(k) holders needed
to buy more stocks, and Wall Street obliged. The 401(k) holders would have been much better off if they had instead been in money market funds, like they wanted to be, but that's not what the reformers in Congress decided. What happened instead was Wall Street insiders unloaded much of their overpriced stocks on 401(k) sheeple before the market crashed.

Today's market is very different. Interest rates are at historic lows, thus bond prices are at historic highs. The government is flooding the market with record treasury issuance and mortgage-backed security yields are only being kept down by massive intervention by the Federal Reserve. Interest rates have nowhere to go but up, which means that bond prices have nowhere to go but down.

Now Congress wants to reform the 401(k) system again, this time getting people to invest in fixed-income financial products, and Wall Street is sure to oblige again. Even Secretary Iwry's proposal admits that these lifetime income products are "inflexible and expensive" with annuity fees averaging around 6% annually, as opposed to the 3% annual fees from a 401(k).

more:
http://www.dailykos.com/storyonly/2010/1/10/823636/-Here-comes-the-screw-job

[MichiganVote]

1. We are indeed. But which way to turn? And when?

[DJ13]

2. Is it pitchforks and torches time yet?

If not now, before they steal the rest of everyones money, when?

[2 Much Tribulation]

4. +1

[Goldstein1984]

3. Nothing will happen until the sheep grow fangs

and are willing to use them.

And, when that happens, you can expect our government to condemn every tactic they have been encouraging in Tehran.

[laughingliberal]

5. Indeed nt

[me b zola]

6. Some years ago I worked for an agency that provided good bennies

...including a retirement plan (pension). Then they told us that they were switching to a 401 plan, that the pensions could either be cashed out or converted to a 401. I read the literature that discussed high risk, moderate risk, and low risk investments. WTF? I thought, "since when does a retirement plan involve any risk?". I cashed out. I am working class and not a member of the investor class. If I want to gamble my money I'll go to Vegas.

[CrispyQ]

11. "If I want to gamble my money I'll go to Vegas."

And have more fun, too! :toast:

I have a more than a few friends who are stunned at the value of their 401ks.

[Odin2005]

7. The "401K system" is part of the problem.

It was designed as an excuse to destroy pensions and give Wall Street more money to play with.

[ddeclue]

8. Ummm... DUH?

I don't have a 401 (41)K and don't own any stock other than some bank stock that my mom gave me that has lost a huge amount of its value in the last 2 years.

It has seemed obvious to me for years that the stock market:

1) Has two different levels of transparency: One for the in-crowd elites where they get timely useful information and another for the average middle class "investor" who tends to get screwed over.

2) That stock market values were rising dramatically for a long time without any rational explanation - our standard of living hasn't really improved, if anything it has declined, we don't make anything but military weapons any more so it doesn't seem reasonable that company values should be increasing.

3) That derivatives have no meaningful relationship to the making of goods or services and were essentially gambling without really understanding the rules.

4) That commodities were being speculated on (gold and oil in particular) without respect to their actual production or consumption.

5) That real estate property values were being inflated year over year without any rise in actual income by consumers to pay for the higher values.

6) That consumers were being stressed out and forced to borrow just to maintain the standard of living that their parents had 30 years ago.

401K and iRA's are just an excuse to steal your pension which used to be guaranteed - it's just a way to shift that money from the workers to the fat cats.

[Raster]

9. !!!

:kick:

[girl gone mad]

10. The administration is pushing for this change at the worst possible time for the investors.

It would be done solely for the benefit of Wall Street.