Nothing is permanent in this wicked world except banks getting whatever they want, whenever they want, regardless of the risk to their own customers. Two major provisions in the US budget bill spell doom for US savers and retirees
o you remember where you were six years ago? Probably not. It was a long, long time ago. December 2008 is not one of those dates that gets burned on your brain, like the moon landing, or D-Day, or the end of Seinfeld.
But I remember where I was. I was at my post as the host of a personal finance show on national radio, and I was taking calls from people all over the country who were a) furious that their tax dollars were siphoned off to pay for a massive bank bailout that crashed the world economy, and b) outraged that the stock market was responding by wiping out their already-meager retirement and college education savings funds.
In December 2008, the number of jobs shrank by 533,000, the worst monthly loss in more than 30 years. Construction permits fell by more than 12% as people stopped buying houses. And retailers got a giant lump of coal from consumers, who decided that buying a bunch of worthless junk to put under a tree was probably not the best idea when their bank accounts – not the mention the country’s – were circling the drain.
“This shall not stand!” we cried, then. “We can never allow our own savings to be put at risk like this!”
And yet. Here we are again.
Congress has passed, and President Obama has said he would sign, a budget bill that allows banks to use your savings when they make giant financial bets called derivatives. Again.
And because those savings are insured by the federal government, you, the taxpayer, would be on the hook if those bets go south. Again.
This isn’t arcane financial stuff we can ignore. These are the exact financial mechanisms that led to the global crisis just six (short!) years ago. The Dodd-Frank reform law that was passed in the wake of that crisis forbade this from ever happening.
Charlie Chaplin said that nothing is permanent in this wicked world, not even our troubles. I’d add that nothing is permanent in this wicked world except banks getting whatever they want, whenever they want, regardless of the risk to their own customers. Regardless of the risk to the rest of us.
In addition to all that, this so-called compromise also contains a provision that would wreak havoc on the pensions of more than 10 million American workers, who likely have no idea this is coming.
Pension plans were promises to employees that they could count on a certain income in retirement. Unlike the 401k that most of us are familiar with, where we have to rely on our own savings and our own strategies for investing that money, pensions were a guaranteed payout.
That’s why pensions don’t really exist anymore: because they’re expensive, and if a company doesn’t plan correctly, it’s easy to run out of money. The Pension Benefit Guarantee Corporation, or PBGC, has to take over the plans from employers who go bankrupt or bust or simply can’t make the payments.
That has happened over and over again, and workers with those pensions have found their benefits cut in half or even more.
Now there’s a real pension crisis. The PBGC itself is now in something of a hole, and warned recently that it doesn’t have the reserves to pay even the reduced amount of the income that was promised to millions of workers.
And a proposal in this same budget bill would allow some pension plans to cut current benefits to employees who are retired – if those plans can show that they’ll otherwise run out of money in the next 10-20 years. The proposal applies to multi-employer pension plans, which cover a diverse cross-section of blue-collar workers such as truck drivers and people in construction.
This isn’t supposed to be legal.
From their beginnings, if you were already retired, your benefits were supposed to be untouchable.
Change the payout on workers who are still working, sure (because it’s OK to break promises and alter people’s lives as long as you give a few years’ notice), but don’t touch the folks who’ve already started the golden years.
But now, they’re fair game, too.
Supporters say this is simply part of the necessary give-and-take of the political process. Nonsense. They can make other choices that don’t subject Americans to financial ruin.
As someone who spent six years taking calls on-air from people who will never fully recover from the devastating losses they experienced during and after the 2008 crisis, and from pensioners who watched their benefits get cut and wondered how all the financial planning they did around that number they were promised was somehow rendered useless, I wish I could go back in a time machine and warn everyone that George Santayana was right: those who do not remember the past are doomed to repeat it, or worse, allow it to be repeated by others.
People in the personal finance field love to talk about how if we could just get more Americans to save, if we could just get more Americans to learn the basics of the stock market, if we could just convince Americans to forego that latte at Starbucks, if we could just put Americans on a budget, then things would be OK.
But how is any of that supposed to work when banks can use people’s savings to play the roulette wheel that is the stock market – and then when they lose, they just order another cup of coffee and use the federal budget to make sure that the losses fall not on them but on the people who just tried to save a little money in the first place?
This one is only on workers if they say nothing and fail to educate themselves on what is being plundered from their futures. The powers that be are counting on you not to pay attention, or to feel so impotent that you just give up and say “Well, really, what can I do?”
How about instead of calling a personal finance show, you call your senator or representative and tell them your story, and ask them how they would solve your financial predicament? They should hear your stories. When I heard them, I got angry, I felt for you and I tried to help.
Maybe if you tell those stories, someone else will listen, and try to help. Or at least try not to make things worse.
Replies
I agree, and last year, I cashed in my 401k and reinvested it in other way to insure they did not get one dime. They will, watch for it........................... take every penny from you in a money grab if they can. We are in a big mess, and they are desperate to do whatever they must to keep things afloat. Protect what you can.................. which means........... you may want it in YOUR hands not theirs.
Love & Light
SG
James
I have always been an optimistic person hoping that truth and the good always wins in the end and this is what I have heard my whole life but it is not true. Somebody put it in front of my face so many times it pacified me into thinking it was really true. It is not true and it has nothing to do with God or any other beliefs. In 1871 we lost the constitution and we thought we still had rights HA HA you idiots this year you get to wake up if you even do. The whole world is being depopulated by a gang of psychopaths and hopefully there is a way out. The Rand corporation is writing most of the channeled messages to keep the ones that are awake in a state of awe. Most everything you hear is a distraction for something far worse than you can imagine. HAARP is creating the climate change and only carbon taxes will save the planet, ha ha. This has been the year of exposure but no one goes to jail. The economic status of the world is crumbling right in front of our faces and we hope for a reset. Congress is now making things worse and don't expect them to help one thing get better. Do we even understand what is going on, not likely are we even close. We are not even given the 400 cures that have proven to cure cancer. When they flip the switch that creates zombies out of all of us will we be able to fight back not likely and they have the bullets to make sure of it. I write this with a great sense of hope but little hope of survival. Can we live through the poisons of chemtrails, the FDA, nuclear radiation, mind control you need to get serious and arm yourself to the UN agenda 21 and arms control on the 24th of December. I am not from this planet and do not agree with anything that is going on and also apologize for my opinion of what is going on here for those to weak to realize what has happened and still is on going. In closing I have to say that I welcome Niburu to destroy all the evil and reset this once beautiful planet and start all over again. I have much more to say but the world is too wimpy to hear it.
I've seen this coming for some time now, Byron. Obama's "bail in" is about to commence...... ready or not. I just got my notification from S S of my 1.7% INCREASE in the cost of living. WHOOPIE! Seeing as how the REAL CPI is somewhere between 15 and 20%, the net result is the -O- man is only stealing 18 or 19% of my SS income, while all the "bureaucrats" and czars, have enjoyed large salaries, CPI raises and bonuses, with paid holidays and vacations, whether deserved or not! Mostly NOT. I think I'm starting to develop a very very fatalistic attitude regarding these parasites, czars, and most anyone in a position of authority any more. God help anyone with any real money deposited in a bank C D or 401K Plan. I guess pension plans are next on the dictator's hit list.....