Here comes the screw job

It was easy to miss this little tidbit. If Rick Santelli hadn't mentioned it on CNBC I doubt anyone would have caught it. Of course it will be sold as the benevolent government trying to help the poor citizens.

Lawmakers have proposed changes, and the Obama administration will seek ways to promote conversion of 401(k) accounts after their average value fell in the past three years alongside a 46 percent drop in the Standard & Poor’s 500 Index.
The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are leading the effort.

It's just the government trying to help you out, right? They just want to move our money to safer investment vehicles, like Treasuries. Or more likely its the government looking to help themselves out.
If you want a roadmap of how this can turn out, just look to the Southern Hemisphere of 2008.

Here is a warning to us all. The Argentine state is taking control of the country’s privately-managed pension funds in a drastic move to raise cash.
My fear is that governments in the US, Britain, and Europe will display similar reflexes. Indeed, they have already done so. The forced-feeding of banks with fresh capital – whether they want it or not – and the seizure of the Fannie/Freddie mortgage giants before they were in fact in trouble (in order to prevent a Chinese buying strike of US bonds and prevent a spike in US mortgage rates), shows that private property can be co-opted – or eliminated – with little due process if that is required to serve the collective welfare. This is a slippery slope.

I'm going to write more on this later.

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ugh! I don't know what to think here

I look forward to whatever you dig out and write.

Cause firstly 401ks themselves are a true screw job on retirement and the U.S. should return to traditional pensions...

but a bait n switch to finance the increasing sovereign debt...


One piece of the puzzle

I just found this. It's a policy paper that Deputy Assistant Treasury Secretary Mark Iwry wrote while at Brookings Institute. It details exactly what this plan is about.
Unlike the Argentina model it doesn't appear to be an open theft. It's more like a government-sponsored Wall Street theft in which they share in the profits.

BTW, fees on annuities are generally in the 6% range. That's more than twice as high as the typical 401k fees, and three times as high as the administrative fees on SS.


I don't know that much about annuities (although anything with the Hamilton Project in the title makes me suspect).

This also sounded strange, I just scanned it and it was claimed one "hands over all of your savings" exchange for an annuity. Really? No wonder no one buys these things.

Great find, and in addition...

Fantastic catch, midtowng, and in conjuntion to this, I can't help noticing that private equiteer, Peter G. Peterson, recently founded the Fiscal Times, which will probably be pushing Peterson's long term major goal of privatizing Social Security and Medicare.

Peterson, co-founder of the leading private equity firm, the Blackstone Group, also founded the Concord Coalition, the Peterson Institute for International Economics (formerly the Institute for International Economics) and the Peter G. Peterson Foundation, all working towards those same goals.

Not content to plunder and pillage companies both national and international, Peterson seeks to plunder the tax coffers of the American citizenry.

They never quit......

A great column on this subject, by Roger Hickey, can be found at the Talking Points Memo blog site.

Follow the money .....

Momentary tin hat thought here .... but bear with me.

The Government wants you to buy annuities. Annuities buy treasuries.

AIG is the #1 seller of fixed income annuities in the US.

AIG benefits greatly from this idea.
Aig has increased profits.
AIG then pays back the federal government money we gave them.

AIG is happy ... Government has a never ending supply of treasuries and is happy. Taxpayer is on the hook again.


On the perverse side

we could see the % of foreign held versus domestic ownership of debt drop. I'm just saying, because if this works, they will expand upon this. Mark my words, one day you could see Uncle Sam mandating that like Selective Service, you MUST sign up for an annuity the moment you start working in life. Oh yes, the required amounts will be small when you first start your working life, but expect them to index it. If one couldn't cash out with this Uncle Same Annuity (USA?!) Fund, then this would just be another tax.

On AIG, please don't neglect to also mention...

...that their securitized notes they used as repayment will probably end up as valueless, as they are essentially based upon the value of AIG, and, most of all, that AIG is probably now being used as an option scam on the stock market.

A much bigger problem.

First, I don't think this proposal is a sinister way for Federal government to capture and create a new market for its bonds. However, I do think it is a questionable way to pad fees for Wall Street and financial sector by creating these annuities.

The problem the proposal is attempting to address is the one that people are outliving their savings. The much bigger problem is that people are outliving their savings because we didn't save enough in THE FIRST PLACE. That is where our entire retirement system dominated by 401k plans is really screwed up and only benefited Wall Street and the financial sector.

Acccording to the most recent National Retirement Risk Index, 51% of households will not have enough retirement income to maintain their pre-retirement standard of living, even if they work to age 65. This is a huge problem. And this proposal is addressing the wrong problem, IMO.

We need to address the problem of insufficient retirement savings FIRST. - Financial Information for the Rest of Us.

Here comes the screw job: Part II

The Obama Administration is moving forward with this.

The Department of Labor and the Department of the Treasury (the "Agencies") are currently reviewing the rules under the Employee Retirement Income Security Act (ERISA) and the plan qualification rules under the Internal Revenue Code (Code) to determine whether, and, if so, how, the Agencies could or should enhance, by regulation or otherwise, the retirement security of participants in employer-sponsored retirement plans and in individual retirement arrangements (IRAs) by facilitating access to, and use of, lifetime income or other arrangements designed to provide a lifetime stream of income after retirement. The purpose of this request for information is to solicit views, suggestions and comments from plan participants, employers and other plan sponsors, plan service providers, and members of the financial community, as well as the general public, on this important issue.

privatize SS

When I wrote that up, this agenda, during the primaries, a slew of posts and people claimed none of this was true....

here we are.

What I find amazing is who exactly is really running the country? Isn't it astounding to see the exact same "Bush agenda" under a Dem. administration, even taking into account the corpocrats, the DLC, it sure seems someone, somewhere is dictating policy.

Are they out of their friggin' minds, we just showed the S&P has been flat for a decade, so they want to add even more retirement funds, the big paydirt, SS into the gambling pool?