yuck, why pensions are ed

I highly recommend this film we watched the other day, "The Fireman's Ball".

Milos Forman directed it in 1967, and managed to portray the communist party vis a vis the local firemen, and as i've alluded to many times, the aftermath of the fall of capitalism is going to look a lot like communism, as we knew it.

In an interview in the cd, Forman tells what it was like back then, and he said everybody was stealing from one-another all the time...

Just what I've always suspected: in the long run, we're all HOSED.....

7,000 years to double your money is kids play...

We are paying off the National Debt @ a dollar a year, for the next 13 trillion years~

That 82 year old guy from a few days ago getting bumped from 5.9% on his credit card, to money earning just .01%, sadly, these are the kind of diss counts we give our senior citizens now...

Bueno Dias eritos y eritas

Now I need to hire my own private economist like many hire astrologers to forecast my future and tell me where I can earn more than 1 cent on the dollar.

One cent on the dollar would be outstanding. According to the headline, the return is one cent on a hundred dollars. Or... you I need more ?

Cheer up, like CR says, at least it isn't 7000 years.

My version of hell comes gift-wrapped...

YouTube - Christmas Prank On Louie

Bruce...again this returns to the structural problems in finance and banking...in the US and in the world. The playing field was changed so the opposing team always won even when they lost. (structured finance, CDOs, etc.)

Nope couldn't allow people ONE mechanism, not even ONE to keep up. Now I honestly think it will be a large international private pension plan that will blow up and cause a cascading event in fairly short order. Highly invested in those SIVs, REITs, etc rather than given an opportunity to keep up with more traditional and safer investment...those were taken off the table.

We are all just kernels of for

The 'conservative' in policy was really highly liberal...systematically structures and regulations were removed. This is why any philosophy or paradigm taken to its extreme isn't sustainable....we have learned nothing in the last 200 years. Extremism of any kind only produces destruction. This time its 6 billion people and a exceptionally small fraction who are sheltered. This isn't gonna end nice.

I agree 100% with your rant - I have been ranting that myself. How many pensions, insurance companies, annuities, etcetera are now in extreme danger due to the lack of return????
Bernanke and his friends are ?probably? not evil - Just WRONG, WRONG, WRONG!!!! I just find it astounding that they think bailing out idiots (i.e., finance types) who got us into this mess is the solution to our problems. Kinda like we had to destroy saving, hard work, and intelligent investment in order to save it.

:ben in poncho with bandoliers:

Poncho Villian, like this:

http://www.freedomarchives.org/La_Lucha_Continua/images/pancho_villa.jpg

No apologies necessary, my dear. I had to look at it several time for the significance to sink in. It's THAT astounding, imo.

one penny on one hundred dollars? It's not just an insult. It makes a mockery of an insult.

A retired friend has all his funds in dividend stocks, so he is currently earning very little,

He had no retirement plan at work, no 401k. So he saved and put the money in "safe" stocks that paid dividends. So much for that plan.

Juvenal Delinquent wrote:

How do you hide money in a waterbed?

Move the waterbed to the desert

tg wrote:

Move the waterbed to the desert

The beauty of the desert lies in the fact that it somewhere hides a waterbed

"the government’s plan to repair the financial system and the economy is to pay savers nothing"

Yep, it is the pensions and the insurers that are really being punished here. Still Gross, pleading the case for granny, is really talking his book as the buyers of fixed income he cares about are the funds. That being said, he is correct, and it is this same crap that created the housing bubble...funds buying "safe" MBS because treasuries sucked.

However, while Still Gross pleads for a change in rates to bring buyers to his book, this new bubble play by Bernutty and company is out of gas. ERISA and loss smoothing are out of steam, and the funds are now consuming capital to shore up the books. The slosh just might be gone. If BS Bernutty and Timmah! think they can pop the equity bubble to sell treasuries in 2010, they might be disappointed...

Juvenal Delinquent wrote:

So, where does the money go?

The combine

Plantagenet wrote:

Actually, you can hide all of your liquid assets in a waterbed.

LOL good one.

“What the average citizen doesn’t explicitly understand is that a significant part of the government’s plan to repair the financial system and the economy is to pay savers nothing and allow damaged financial institutions to earn a nice, guaranteed spread,” said [Bill Gross of PIMCO] ... Mr. Gross said

Mr. Gross underestimates 'the average citizen'. And the reason why some people aren't buying into the 2% interest rate is it is offered by insolvent or troubled institutions like the 'bank' formerly GMAC and now Ally. It is getting bad enough that I think people are going to look at where their money is rather than the rate. HSBC bailed and there is still chaos in Citi, BoA. I will not put any of my paltry funds in those 'banks' because they are not just banks....

And on that subject...what choices do we have. Zero, Zip and NADA along due the ZIRP. Capital insiders casino markets? I can't afford to lose any of my savings to bad bets unlike our masterful I won't get bailed out.

What happens to the money market when people lose faith eh? Did we already see that in the mutual fund money markets last year when they broke the buck post Lehman's. That credit never thawed, BB doesn't even see it. Idiots.

Like I said, it has to break and break badly enough that structural changes are reconstituted, capital requirements on loans are more strident which in turn will again give banks the incentive to seek capital from savers rather than from a shell-game of derivatives that are smoke and mirrors.

From last night's thread

Credit enema is coming wrote:

Owning several Pawn Shops/ gold exchanges I'm having an issue getting enough cash from the local banks we deal with almost on a daily basis...

Pawn shops are the last line of defense financially, for many overwrought with debt amongst the consumeratti.

They are little financial flywheels that really serves a purpose, and if they have no cash, they are essentially out of business...

My wife remarked just now that maybe we'd better give Bill Gross some investment advice. We're doing better than he is. Somewhat.

sorry, have vertebrae... and cousins don't. Clearly they are separate from the rest of the human race, superior and rewarded by God for their good works. eh? We should honor our benevolent masters for their treatment of the underclasses, us mere mortals. I wonder what sacrifice to them is acceptable now for us mortals to maintain some fresh hay to sleep on? Perhaps I'll donate one of my organs that they will enjoy as a pate?

Say whatever you'd like about Bill Gross, but having built a complete collection of USA stamps is an amazing accomplishment, from a collector standpoint.

In coins, only the Eliasberg collection comes close, in terms of being complete.

Juvenal Delinquent wrote:

Say whatever you'd like about Bill Gross, but having built a complete collection of USA stamps is an amazing accomplishment,

Does that include food stamps? At 0.01 percent return he is going to need them soon.

Bill's upside-down on a number of his investments in philately, inverted being not a bad thing in this case.

Alternative investments like collectibles are really dead,

I keep track of a couple forms of collectibles. Almost year ago I saw the market cracking. I used to put lowball bids in on some items. I quit because I have started winning. Some collectables have dropped more than houses.

bearly wrote:

Every single american is supposed to be a high stakes gambler.

When inflation is higher than wage increases, savings or fixed investment - what is left?
When the gamble they told you was safe, explodes - you loose anyway.

Stocking your pantry is your real savings.

"Some collectables have dropped more than houses."

Don't you collect guitars and such nova? You seeing any good deals there?

I have an old ins policy that was taken out on me as a baby. Strangely, it returns 5% on the money held. I'm trying to figure out if I can add money into it to take it to the maximum because I can't think of anything giving 5% anymore. How pathetic is that?

Of course, it goes without really saying it to visitors on CR's site, but the Japanese government has seen how entrenched a population may become in avoiding risk...and although there may be some sociological differences, and some disparity in the age bands, I suspect underneath the scratched surface, the average Japanese and now, the average American think similar thoughts about investment risk...

No free lunch... if savers don't get screwed, the banks fail... Imagine BFF if the Fed rate was 5%.

the Iranian government [pays] people to give up a kidney, roughly $1,200

Hmmmm.... wonder how much is left after airfare back and forth, hotel, meals. Cab fares; you gotta watch those Iranian cab drivers like a hawk.

Banks are just a place to park money not for profit now days. Retirement for non pension workers is fair game for theft in our governments eyes. How about those F&F bonuses? They worked hard for it and deserve it!

if savers don't get screwed, the banks fail...

Saving? At the current rates, you may as well call it a donation.

so since savings rates are so low, why do people even keep money in banks? what would happen if people just started withdrawing because what's the point?

Ben, tell me whose pension plan will be ok in the next 5 years? Wait...Lord Blankfiend, Angelo Mozilo, congresscritters who can also afford health care to stay in office until they are 98 years old...oh nevermind, they will stimulate the economy.

in the Bahama's.

The Pension Scandals: Six Degrees Of How "Toxic Waste" Lands In Teachers' Retirement Funds | TPMMuckraker 

Clocks are holding value, so far.
We have picked up some great deals on Craig's List, then resold them for a very nice profit.

If (when) wealthcare becomes mandatory, how long will it be before a portion of your paycheck gets attached to your nonredeemable, nontransferable "savings account"?

Deflationary Jane wrote:

because what's the point?

That is why the maximum denomination is $100. It would be very easy to print 10K bills and counterfeiting would not be a problem since most commercial concerns would not take it. You would only exchange it a bank where they have proper controls. As of a couple of years ago they limited Treasury I bonds to a max of 5K per year why? We are being herded through the system. We are owned with the illusion of freedom.

Do payday lenders issue CDs?

With the audience's kind indulgence, I will repost it - yet again
The looting of the savers to support the banks who caused the recession is a conscious strategy, not "bad luck".

Comment by MrM from thread 'Quarterly Housing Starts and New Home Sales'

In the meantime, the Big Boys/Girls (Timmy, Ben and Sheila) don't seem to realize or care that a very large number of folks don't believe any banks are trustable (solvent), and are getting very fed up with 'savings' not earning any interest for their risk/reward.

I will never get tired of re-posting this link. Hear it from The Maestro himself (if in rush, fast forward to the 4th minute)
Video: Alan Greenspan | The Daily Show | Comedy Central

My recollection:
Stewart: So when you lower the interest rate and drive money into stocks, you lower the return people get on their savings. You've made a choice to favor people who invest in the stock market and not those who keep their money in the banks.
Greenspan; Yes, that's the way it comes out, but that's not the way it is.

Jane, SSA did everything but mandate direct deposits into banks some time ago rather than mail checks. A lot of corporations do this with paychecks too. All that digital money, until its not digital anymore.

There was a time when people sought the safety of a bank for their cash, protection against fire, robbers, etc. So now we gotta wonder which way we will go: Zimbabwe, Japan, Argentina or something different?

http://www.youtube.com/watch?v=L57-vQvo34E&feature=related

MrM wrote:

Greenspan; Yes, that's the way it comes out, but that's not the way it is.

WTF does that really mean?

Totally Agree

Sports & celebrity memorabilia is rife with stuff like this, more fakes than you can shake a stick at.

Every collectabile field is rife with fakes. The Chinese make a great fake Gibson guitar now and they will only get better.

I collect documents, especially letters and postcards that were written or used by certain branches of the German political and security forces. Once you get past a certain rank or certain names it gets really tricky. So I just skip them.

josap wrote:

WTF does that really mean?

It means that Greenspan took action to maintain the current credit cycle, not to pay off tihs party or that party, which very few people here seem to understand. Bernanke just plain doesn't have a choice about screwing savers because savers are the problem, not the solution.

But everything in the US is framed in a capitalist context, framed in positive terms for savers so few people understand that System from a holistic standpoint.

Isn't the doom here a bit exaggerated?

OTOH, do you think the largest economy in history could go down without taking the rest of the world with it?

And don't you think everyone in the world knows it?

But even if the whole world went down economically, material and intellectual wealth would remain.

broward wrote:

savers are the problem, not the solution.

I suppose you realize, broward, that you are channeling Keynes
Not that there is anything wrong with that

and our 10 year has gone from 3.2 to 3.8 in less than 30 days....these low rates do serve to unmask the pretenders....whether Japan or Uncle...

Juvenal Delinquent wrote:

more fakes than you can shake a stick at

not unlike a topless Vegas revue

pavel.chichikov wrote:

But even if the whole world went down economically, material and intellectual wealth would remain

the antecedent is rendered moot by what followed

think, dream, imagine

@nova,

"I always thought buying a guitar that was made on an assembly line for 40k plus and then hanging it on a wall was beyond stupid "

ROFL...me too.

What would the value of the wealth be at that point? Would there be enough of a market to set value?

As long as people can communicate with one another there will be a market. As long as there is wealth in one form or another there will be trade.

"Ya', but did you suspect just how big the hose would be? "

It's not the size of the hose, but the diameter of the nozzle that matters.

Off to do some Christmas shopping. Yes Christmas....I'm such a cheap bastard...

Deflationary Jane wrote:

How pathetic is that?

I was gonna say pathetically brilliant-

It could be worse.
They could start charging you interest on your money to keep it safe.

"OTOH, do you think the largest economy in history could go down without taking the rest of the world with it?"

Why it would take down the rest of world? Even Japan's exports WORLDWIDE (not just USA) are only 15 percent of their GDP, relatively less than in UK. Their biggest trading partner is now China but domestic markets are by far the most important for both of them.

Actually Jack, I think some banks do that with fees, they just don't call it interest...

pavel.chichikov wrote:

But even if the whole world went down economically, material and intellectual wealth would remain.

Too bad we've exported so much of our IP-

Jack Staub wrote:

They could start charging you interest on your money to keep it safe.

You're fortunate in not having dropped below minimum balance, where they effectively do charge a fee-

Were back in FULL mode!

Snip:

Think isolation. Think monetization. Think trapped. Think Catch-22, no remotely viable option. Think motive for propaganda. Think end of the road in a gigantic USTreasury bubble, in the process of discredit. Think last resort of monetization, due to the absence of bidders at USTreasury auctions. Think pressure like a vise. The USGovt is in a great big bind and chooses not to discuss it. As European nations ponder the plight of sovereign debt default, the United States compares an order of magnitude worse from deeper insolvency. A default closer to home is considered unthinkable. So was a broad mortgage market breakdown. So was an endless housing decline. So was an insolvent broken banking system. So were consecutive $1 trillion federal deficits.

Zero Corner, Debt Costs & Isolation

pavel.chichikov wrote:

But even if the whole world went down economically, material and intellectual wealth would remain.

Thats a positive way to look at it. However, the human race's history is replete with examples of how that too can be diminished; the Dark Ages is a perfect example. Of the 6 billion people on this planet, how many are educated, well nourished and enabled to make choices freely for their more than their immediate daily needs?

When there is strife, stress and injustices for which there are no recourse in societies; this gives rise to superstitions, gives rise to demoralization of people and vigilante justice which often targets entire groups of people to placate them, give them the idea of superiority over others,...like Nazi Germany in our recent past. It is one of the big risks going forward that I can see. Justification for entitlement over that of others and upon the demoralization of others based on perceptions. One can demonize anything to produce just this result.

People who are hopeless will burn down a house as it gives them the perception of power, that they can burn it down for no other reason than wanting to and do it without consequence.

Your view and my view are different of people perhaps because of different life experiences. We all have that ugly capacity within us, it is a matter of just how much is required that gives rise to that ugliness. If it was on the life of your family would you kill to protect them or feed a starving child? It is degrees of separation and justifications.

Still your point is taken. The good in human nature will eventually rise out of the ugliness once that ugliness has done its worst and has burned itself out again. Just like a forest-fire that is ultimately destructive, or a volcanic eruption; out of the ashes life, creativity renews.

Still your point is taken. The good in human nature will eventually rise out of the ugliness once that ugliness has done its worst and has burned itself out again. Just like a forest-fire that is ultimately destructive, or a volcanic eruption; out of the ashes life, creativity renews.

Going to be a hell of a body count getting there...

,rad pavel,

If we go down everybody goes down, it's a one-size-fails-all system.

And watch technology retreat back into the dark ages~

It's a history lesson in the making, enjoy the ride...

After decades of practicing deliberate failed economic policy glorified by graduates of esteemed academia such as U of C's school of economic, Harvard, Yale, and Princeton (all funded by wealthy families), I conclude that the study of economics is a congame created by conmen to upstream the wealth of the middle and lower classes, future generational wealth, and especially the elderly and children. With a crystal ball, I'd have a better outcome.

Very good summary, thanks!
The characterization of the three groups is very intuitive and very much Minsky-style.

Money is the lubricant, technology's enabler.

Take a look at weaponry in 1938, and then compare it to 1946.

MrM wrote:

Now wait for the shills to start screaming about the sanctity of contracts

Why is it that the Bank of China and Industrial and Commercial Bank of China reneged on derivatives contracts and the world didn't implode? But the citizens of the United States were trussed up like a turkey and feasted upon at the tables of AIG, GS, BofA, Citigroup, and JPMorgan? A sucker is born every minute.

All this talk of concrete bunkers and doomsteads and the Dark Ages is.... overblown eschatology. We are going through an adjustment to our economy that shifts production, income etc around by somewhere in the 5-10% range. For those in the 5-10%, it can be a 100% hit, so of course that leads to a feeling that the end of the US economic world has arrived, but it hasn't.

We will have a country over the next 30 years that imposes higher taxes, maybe higher by an average of 10-15% of income, with much lower real increases in asset prices. Unemployment will go down in the long term, not up. Investment probably won't increase much, but savings will increase a little.

It will look and feel like a cross between the 1970's in the US and the modern era in Europe. And, as long as we stay away from the wide lapels and hair styles of the 1970's, it's not the end of the world.

patientrenter wrote:

overblown eschatology

overblown pre-scatology

Sorry, I disagree...

The world of the 70's was a completely different kettle of fish, with 1/2 the population willfully ensconced behind an economic wall of their own making.

Weakened @ Bernie's?

josap wrote:

rps wrote:
Bank of China and Industrial and Commercial Bank of China reneged on derivatives contracts
I missed that.

Tavakoli again (January of this year):

The Bailout Mess: Attempt to Abandon Mark-to-Market Accounting
This did not get enough press, but in early November, Chinese banks (top tier banks like Bank of China and Industrial and Commercial Bank of China) refused to fork over billions in collateral on dollar/yen FX trades which were out of the money after the yen’s October appreciation. The headlines should have read (but didn’t): “Chinese Banks say: STUFF IT.” The Chinese banks won a game of drag race “chicken” with foreign banks. Most credit support annex agreements would say that closing out these trades would be an event of default, and then the cross default on all the trades would kick in with the same counterparty. But the credit of the Chinese banks was better than many of their counterparties, and they renegotiated contracts with the Chinese banks.

Jack Staub wrote:

On the subject of better returns ...
I hear some guy named Madoff is paying a 15% APR!

The Fed is paying 15% APR today, Jack.

How? It buys $1 trillion in MBS from FNM/FRE. FNM lends to a buyer purchasing a home in Irvine, California, for $800,000. The seller of that home bought it for $275,000 in 1996, putting down $50,000 of their own money. That's $525,000 gain on $50,000, a 20% rate of return. Net out inflation and it's a 15%+ real rate of return, mostly tax-free. The Ponzi scheme continues.

Jack Staub wrote:

They could start charging you interest on your money to keep it safe.

Vanguard does that now on smallish accounts.

patientrenter,
I agree and I'll add, the house in Santa Ana goes into foreclosure and is sold by the court for $300K cash. The buyer flips that in 6 weeks for $400K to a FHA buyer. A $100K gain in six weeks paid for by the taxpayers!

Juvenal Delinquent wrote:

I mentioned it yesterday, but what separates Arrow Trucking from their competitors, anyway?
They all have the same equipment, can carry the same loads, all go the same speed...

Oh, you mean "free market stuff. Well there's your own answer.

LoserBeachBum wrote:

Maybe but countries have collapsed in matter of months, like Germany 1921 or more recently Argentina 2001. Country as big USA could take decades of ever-increasing corruption and outright criminals in the government doing more and more harm before it collapses.
Few predicted the USSR collapse beforehand but it all went down quite quickly. One year and it all changed. In the end it is either too huge military expenses or playing with the monetary base (=printing money) or both.

You would think this longish quote comes from cynical Europeans, not from the father of Reagonomics

Paul Craig Roberts
Americans Are Hell-Bent on Tyranny : Chronicles: A Magazine of American Culture
Our British allies are showing more moral conscience than Americans are able to muster. Former Prime Minister Tony Blair, who provided cover for President Bush’s illegal invasion of Iraq, is being damned for his crimes by United Kingdom officialdom testifying before the Chilcot Inquiry.
The London Times on Dec. 14 summed up the case against Blair in a headline, “Intoxicated by Power, Blair Tricked Us Into War.” Two days later the British First Post declared, “War Crime Case Against Tony Blair Now Rock-solid.” In an unguarded moment, Blair let it slip that he favored a conspiracy for war regardless of the validity of the excuse (weapons of mass destruction) used to justify the invasion.
The movement to bring Blair to trial as a war criminal is gathering steam. Writing in the First Post Neil Clark reported, “There is widespread contempt for a man (Blair) who has made millions (his reward from the Bush regime) while Iraqis die in their hundreds of thousands due to the havoc unleashed by the illegal invasion, and who, with breathtaking arrogance, seems to regard himself as above the rules of international law.” Clark notes that the West’s practice of shipping Serbian and African leaders off to the War Crimes Tribunal, while exempting itself, is wearing thin.
In the U.S., of course, there is no such attempt to hold to account Bush, Dick Cheney, Condi Rice, Rumsfeld, Paul Wolfowitz and the large number of war criminals that comprised the Bush regime. Indeed, Obama, whom Republicans love to hate, has gone out of his way to protect the Bush cohort from being held accountable.
Here in Great Moral America we only hold accountable celebrities and politicians for their sexual indiscretions. Tiger Woods is paying a bigger price for his girlfriends than Bush or Cheney will ever pay for the deaths and ruined lives of millions of people. The consulting company Accenture, which based its marketing program on Tiger Woods, has removed Woods from its website. Gillette announced that the company is dropping Woods from its print and broadcast ads. AT&T says it is re-evaluating the company’s relationship with Woods.
Apparently, Americans regard sexual infidelity as far more serious than invading countries on the basis of false charges and deception, invasions that have caused the deaths and displacement of millions of innocent people. Remember, the House impeached President Clinton not for his war crimes in Serbia, but for lying about his affair with Monica Lewinsky.
Americans are more upset by Tiger Woods’ sexual affairs than they are by the Bush and Obama administrations’ destruction of U.S. civil liberty. Americans don’t seem to mind that “their” government for the last eight years has resorted to the detention practices of 1,000 years ago—simply grab a person and throw him into a dungeon forever without bringing charges and obtaining a conviction.
According to polls, Americans support torture, a violation of both U.S. and international law, and Americans don’t mind that their government violates the Foreign Intelligence Surveillance Act and spies on them without obtaining warrants from a court. Apparently, the brave citizens of the “sole remaining superpower” are so afraid of terrorists that they are content to give up liberty for safety, an impossible feat.
With stunning insouciance, Americans have given up the rule of law that protected their liberty. The silence of law schools and bar associations indicates that the age of liberty has passed. In short, the American people support tyranny. And that’s where they are headed.

Sports & celebrity memorabilia is rife with stuff like this, more fakes than you can shake a stick at.

Not mine -- it came with a signed "Certificate of Authenticity"!

(Come to think of it, perhaps I needed a document to prove that the Certificate of Authenticity is authentic? They offered that for an extra $10...)

rps wrote:

Round 'em up and send them on a one-way cruise to the Bermuda triangle

An eye for an eye only ends up making the whole world blind.
Mohandas Gandhi

Freddie Mac economist: 6% Mortgage rates by end of 2010

kicker wrote:

The Fed didn't cut rates so much as follow them down.

I disagree. For perfectly safe investments, like Treasuries, the rate would be near-zero. But if we didn't have the govt backstops behind virtually every other investment, then the folks behind them would have to pay real interest to compensate for the risk.

What really happened is that the price of risk shot up (overshooting on it's way back from being ridiculously low), and the natural reaction would have been a huge widening of risk spreads, with truly low-risk investments returning next to nothing, and high-risk investments having to promise high returns to compensate for the risk. Given that we are sitting on top of a truly massive, and still mostly not unwound, asset price Ponzi scheme, risks are still very high. The govt balked at the consequences of all that recognition of risk and an unwinding of the Ponzi scheme. It would have meant further large falls in asset prices for risky investments, and the people holding them didn't want that, so they decided to backstop most of the US asset markets (for homes and stocks etc.).

With that govt backstop for almost all (risky) assets, all interest rates converge again, and are indeed low because we still have a global excess of savings over the need for good investments. So we spend the money, pretending it's an investment. How many trillions from Chinese savings can we 'invest' in granite kitchen countertops, or mediocre $500-1000 per sq ft house prices? How are those granite countertops or overpriced NY lofts ever going to produce millions in real goods and services to pay back the debts? They aren't, of course.