Save your breath, Obama fans, this one will change your mind

Wall Street wants a cut of Atlantic City’s market

If it weren’t enough that we bailed out the finance industry, gave them billions of dollars, took their toxic assets off their hands, compensated them for their bad bets and ignored every other blessed thing in the country while the bankers plaintively whined, “But what about *me*!?”, the bankers new plan for the elderly and retired people is really the worst.

According to the NYTimes (and they are no Romney fans, let us note), the Obama administration is fully behind the finance industry’s plan to market securities to the elderly and retired people.  You know, those people in your family who watch Fox News, buy gold coins from Glenn Beck and stock in Israeli oil companies?  Just think about it, some massive pension funds gave money to Goldman-Sachs for hinky securities, the brokers called them “muppets” and got away with it, and Goldman got a slap on the wrist when the pension fund lost a ton of money.  Now, multiply that stupidity across a whole nation of elderly former supermarket cashiers and bus drivers with little nest eggs that they are setting aside for themselves and their children’s inheritance.

And the Obama administration is giving this scheme its blessing:

Bipartisan majorities in Congress and President Obama are to thank for this development. Bowing to the financial industry, they joined forces last April to pass a law that requires the Securities and Exchange Commission to lift the ban on mass advertising of private offerings.

The S.E.C., for its part, made matters worse this week when it proposed a rule to implement the law that utterly fails to address the fact that ending the ban will make everyday investors more vulnerable to fraud. While the commission has no choice but to lift the ban, it does have leeway to write the rules to decrease the threat to investors. It has not used that flexibility.

For instance, while the new law allows for mass advertising of private offerings, it also says the buyers of such securities must be “accredited investors,” generally defined as those with at least $1 million in net worth (not counting a home) or at least $200,000 of yearly income. The law also says that private stock issuers must take “reasonable steps” to verify that investors qualify as “accredited.” But the S.E.C. did not impose or even suggest verification procedures to ensure that investors meet the criteria.

Now, if this were a rule that allowed average people access to valuable IPOs, that would be one thing.  I’ve always thought it was unfair that only certain already rich people had access to inside information that would allow them a head of the line pass to make a killing.  But that’s not what we’ve got here.  What we’ve got is a way for the finance industry to sink their teeth into our future inheritances while potentially leaving our elderly parents destitute.  Someday down the road, we’re going to hear some young, hotshot, banker asshole in a bar say something about how it’s not his responsibility to save stupid people from themselves.  He’s in it for himself and he didn’t do anything illegal.  He’s just smarter than the suckers who bought what he was selling.

So, there you go. Obama, instead of leveling the playing field and making sure that all investors get stellar service from accountable brokers, is doing exactly the opposite, as if investing in the market was just what everyone wanted to do with their retirement savings.

I don’t like the way this is sounding.  Why would any senior citizen with a comfortable living from pensions and social security need to risk any of their money on the market?

Unless some of that comfortable living shrinks up and dies away and they need to find some way to replace it?  Doesn’t this sound like the brute force way to privatize Social Security?  Make your Social Security payment so tiny that you are forced to risk money on  the stock market?  Like involuntarily forcing you into 401Ks with risky mutual funds just when you should be sticking it all in a boring, plodding annuity?

It sounds like a finance industry wet dream, like introducing the gambling addicts to a whole new casino.  Instead of rehabbing them, Obama will be enabling them further.  The bankers will not be curbed in the least, nor will they be held accountable when millions of people lose everything they own to them.  I can almost picture them in a room with Obama, talking about “what everyone already knows.  Social Security is dead. We have to force the public to face up to it and give them an alternate way to make money.”  The sociopaths in the bespoke suits and manicured hands look at the president in what passes for what they call sincerity.  They nod gravely at one another.  Well, what can they do?  The world is changing.  Ohhh, so THAT’S the Change!™ Obama was always talking about.

You know how I know that this is the kind of conversation they’re having?  It’s because this is the same schtick I and my colleagues heard from our 401K managers in a seminar on all the fantastic new products they were rolling out to us a few years ago. “Social Security is going to be a thing of the past.  Where else are you going to go?”  They *almost* made it sound like they were doing us a favor since there wouldn’t be any social security anymore.  And then I thought, how do they know that?  Who told them?  Is that part of the plan??  Deliberately remove this leg of the retirement stool and force us all into risky mutual funds?

So all you Democratic loyalists who are screaming about how the Republicans are the worst people on earth and how you can’t trust them and OMG, if you don’t vote for Obama, we are all well and truly *f^&$ed*!, you can save your breath.  He has betrayed you.  You’re just sticking your fingers in your ears singing “la-la-la, I can’t hear you”.  He will never be YOUR president because you ask nothing of him.  And once he has you in his win column, he will ignore you and move on to the tougher nuts, the religious and the libertarians.  He is exactly the same kind of president to the liberal Democrat that Romney will be to the liberal Democrat.

Democratic loyalists need to ask themselves what they are going to get out of this and they should pay attention to who the Obama administration is courting.  You will only get what you want from the party if you deny them  what they want.  Otherwise, why buy the cow when you can get the milk for free?  The scare tactics don’t work on me because I’m not a fricking pushover.

Stop acting like stupid mooning girls with a crush on a player.

The Democrats in Exile theme song:

Tuesday: Reality Check

So, does anyone believe that the red beanie boys lost their case against no-cost contraceptives in the health insurance plan because Barack Obama has a deep commitment to women’s reproductive freedom or equality?

Or does he have a problem with women and he needs to throw them *just* enough of a bone to win their votes but not enough to piss off the religious too much?

It’s the latter.

While the percentage of Democrats who describe themselves as liberal has also increased since 2000, rising ten points, the Democratic Party remains much more ideologically diverse than the G.O.P. Roughly forty per cent of Democrats call themselves “liberal,” forty per cent call themselves “moderate,” and twenty per cent call themselves “conservative.”

“Such numbers explain why liberals seem destined to perpetual disappointment in Democratic presidents, who cannot lean too far left without alienating the party’s moderate-to-conservative majority,” Will Marshall of the Progressive Policy Institute argues in a recent report.

So, if moderates are still crucial to Obama’s election, what do they look like? Over at Third Way, Michelle Diggles and Lanae Erickson take a deep dive into the data to show that the real swing vote for Obama is a group they call Obama Independents—voters who “liked and voted for [Obama] just 3 years ago… were the most ideologically moderate segment of the electorate,” and “are true swing voters, with one-quarter voting Republican in 2010 and one-quarter voting for President Bush in 2004.” This group, which we are likely to hear a lot about in the coming months, is disproportionately young, female, and secular, and it was hit hard by the recession. One quarter of its members are non-white.

If Obama goes, so does the free Lo-Ovral.

This is the problem with politicians who do not have a coherent worldview, and Obama never has had one.  He has not made any effort to craft policy that will advance women’s equality in the workplace or the doctor’s office.  It’s not one of his goals.  Failure to plan on your part does not constitute an emergency on his.  The problem with Democrats is not that their factions are all over the place.  The problem is that they try to cater to these factions without providing a coherent vision for the future.  There is nothing that sticks Democrats together under one united idea of how the country and world should work.  So, Obama careens from one interest group to another trying to thread the needle between pissing off the religious nutcases, who do have a particular worldview, whether we like it or not, and the rest of us.  Plan B is a contraceptive too far.  Women should get a majority vote from their family and pastors before an abortion.  But contraceptives are probably ok, according to the data mining algorithm.

He’s done the same on the banker/financial sector fiasco.  Instead of developing policy and solutions based on an understanding of what is wrong with the economy and having a vision of how it should work, he has taken an ad hoc approach and tries to cut deals with each player individually.  That is more of the Teddy Roosevelt model but it leaves us open to more misbehavior by the banks because there still aren’t any rules to keep them from gambling our money away and then expecting the government to bail them out.  He should have started with the premise that it is wrong to compensate gamblers for their losses and then figure out how to prevent that from happening again.

Well, you know the rest.  Obama is pandering here to his swing voters, who happen to be moderate, secular women of childbearing age, in order to get votes.  He’s going to save them a bunch of money between now and November.  But that won’t get them better jobs or jobs at all.  It won’t prevent Walmart from subtle sexism that prevents women from getting ahead.  It won’t make measurements of workplace parameters to prevent “he said/she said” accusations about discrimination that no one will take seriously.  He’s not interested in equality.  He’s interested in getting re-elected.

No, Obama’s decision to cover contraceptives is a one time only deal.  There’s no systemic change to the culture.  He is not an agent of change.  He is an agent of Obama and women are the worse for it.

And now for something radical and extreme: Get rid of the 401K

Last weekend, I got polled.  Er, by Harris, the polling company.  I’ve been getting a lot of that lately.  Maybe being a middle class suburbanite independent Democrat-in-exile in NJ means I have finally arrived but it’s unlikely I fit their notions of the typical polling subject.  Well, not after this poll anyway.

The first question was about my attitudes towards the military.  Would I suggest the military to a young person?  As it happens, I’m a military brat, my family has a long tradition of joining up and I have current family members who are career military.  So, while a military career is not for everyone and it’s certainly more dangerous than it was 10 years ago, I wouldn’t rule it out for someone who doesn’t know what they want to do as a career.

That first answer seemed to have put me, a lifelong liberal, on the Tea Party branch of the decision tree.  Many of the other questions after that point were kind of insulting to the intelligence.  For instance, is someone arrested for a crime entitled to speak to an attorney?  Jeez, all those years of Dragnet should have sunk in by now.  Of course they are.  What about if the crime is serious or particularly heinous?  Um, yeah, that’s when you are most in need of one to defend you.  What about if it’s a TERRORIST???  Do they get to speak to an attorney on the government’s dime if they are accused of TERRORISM?  Well, Timothy McVeigh went through the process, was represented, had a fair trial and got what was coming to him.  I think the system can work.  Let’s not start making exceptions for alleged terrorists.

Anyway, that wasn’t the section that tripped my trigger.  No, the one that got to me was about 401Ks.  I don’t know what our brilliant braintrusts in the Democratic party are up to but if they are the ones who are suggesting that it would be a nifty keen idea to expand the 401K system, we might as well all just get used to an America whose salad days are over.  The poll question was something like, “Would you approve or disapprove of expanding the 401k system to workers whose employers would not be required to make a matching contribution?”

That’s a weird question for so many reasons.  The first one is, if you allow *some* employers to opt out of making contributions, wouldn’t you just give the rest of them justification for also opting out?  And what about the Enron-esque employers who match with stock?  But I digress.  Because the real employment trend is to make everyone contractors, freeing the corporation from actually employing and being responsible for the lives of the people who work for them.  So, maybe that’s where this question is coming from.  Say you are now a contractor, forced to go through some rent collecting middle man who acts as an intermediary between the corporate entity and your paycheck.  Now YOU are responsible for your retirement accounts, not the corporate entity.  So, does the old corporation have to match your 401k contributions?  Something to think about as the traditional bonds between employer and employee are redefined.

But that’s not why the 401K needs to go.  Now, I am not a financial wizard.  Far from it.  If you want that kind of expertise, check out Dakinikat’s posts, or Baseline Scenario or Naked Capitalism.  No, I am just Jane Bagodonuts from the burbs.  Nevertheless, blogging allows me to expound on any subject I like or don’t like.  And I have particular dislike for my 401k, may it grow and prosper.  Here are my reasons from a liberal perspective:

1.) It’s a Ponzi scheme.  Yep.  Unlike Social Security, which we are all required to participate in and which has actuarial expertise built into it and is a fall back retirement insurance policy, the 401k is for suckers.  It relies on lots of people dumping their investment dollars into pumping up the price of stocks.  When the baby boom generation starts to retire in earnest, it’s going to want to cash in, leaving us with funds with diminishing value.  UNLESS we get some other poor schmos who don’t have employer contributions to send their money to our 401Ks in return.

2.) Wall Street thinks the money in your 401K is there for them to use as gambling chips in some global game of roulette.   We saw this happen in 2008 when the subprime mortgage market collapsed but it’s not limited to the bond market.  Oh, sure, the stock market is more highly regulated but when the bottom fell out of the mezzanine subprime tranche CDO’s it took everything else with it.  Besides, who has time to monitor their 401K’s at every minute of the day?  Most of us follow the Ron Popeill method of financial investment: set it and forget it. Turning a bunch of naive amateurs into financial planners of their old age lifestyles has turned into a windfall for the predators on Wall Street.  What we don’t know can hurt us and we don’t know what they’re up to.

3.) Wall Street and the financial sector in general is like the Wild West right now.  Until there is more oversight and regulation, you just can’t trust them.  The constant infusion of cash to these testosterone poisoned, self centered, highly overrated gamblers who manage our money only encourages more risk taking and future financial collapses.

4.) 401Ks lead to employees betting against themselves.  The shareholder is the emperor.  The money we put into these funds increase when employers see staff as unattractive drags on the bottom line.  I’ve always preferred the word Personnel to Human Resources because it acknowledges that there are persons actually doing the work and that we are not just variable costs to be minimized for the benefit of the bonus class.  Nevertheless, when corporations cut staff, the stock goes up and everyone starts dreaming of their new retirement condo in Mexico.  That is, iff they have the privilege of actually retiring.

5.) 401ks lead to less innovation.  Well, if you have to cut staff to assuage the quarterly panic attacks of the shareholders, you don’t have people innovating for you.  It’s true.  People who no longer work for you are not required to do your thinking for you.  The people who are left are too busy preparing for their own “displacement” to do any real work.

6.) 401ks invite the bonus class to invest in emerging markets, not the American market.  They’re always chasing profits.  For themselves.  For you?  Ehhhhh, not so much.  Shareholders, that is the BIG shareholders, not you and me, have to be satisfied so the money must go somewhere.  Why not India?  Oh, sure, it means that the capital will be invested in a place that means more Americans will lose their jobs and potential American entrepreneurs will go begging for startup money. But that’s the nature of capitalism.  Suck it up.

5.) In order to get a break on taxes, which in my case are pretty ugly, you can’t take the money out until you retire.  You can borrow from your 401K but then, you have to make sure you stay employed so you can pay yourself back.  It’s not very liquid and most of us can’t afford to fund multiple retirement/savings/college funds.  In emergencies, it’s useless.

Now, I am glad that I have a 401K, for the short term forseeable future, and that my employer is rather generous in funding it.  But it’s all on paper as far as I’m concerned.  By the time I am ready to retire, it might be worthless.  Getting rid of them wouldn’t exclude investing in the stock market.  It would just not institutionalize it and make it an all-but-mandatory retirement strategy.  Maybe the financial sector would be a little bit more attentive to our needs if they didn’t have a steady stream of easy money flowing into their gargantuan gullets.  Maybe customer service would improve.  There might be incentives offered to attract your business.  Maybe the risky gambling addiction behavior would cease.

I dunno.  I can only speculate with my money averse mind. But the more I hear about the financial meltdown, the more I keep coming back to the 401K “instrument” as the root of all evil.

Get

Rid

Of

It

Friday: “I’m shocked that there’s gambling going on in here”

Obama is asking his Wall Street buddies to ease up on the bonuses this year.  It’s unseeemly.  By the way, what is it with the pictures of Obama and his administration that annoys me so much?  Is it that he’s always surrounded by men?  There is a significant concentration of testosterone in the White House that may be reaching toxic levels.  Remember how Bill Clinton promised an administration that looked like America- and then delivered on that promise?  Ahh, those were the days.  But I digress.

So, in the picture, he’s sitting with his legs spread like he’s practicing for some cheerleader split, junk dangling over the edge of the chair.  I’m sorry but he just looks stupid.  And Joe Biden is on his left, Tim Geithner on his left.  Tim Geithner, you may recall is the guy who has a problem with Sheila Bair, the head of the FDIC, preseumably because Bair has ideas in her pretty little head.  You know, ideas like getting investor who own tranches to be realistic about their returns and putting a HOLC like entity together to get homeowners to pay their mortgages?  Silly stuff like that.  Geithner probably thinks, “I’m sure glad you could never be my wife” whenever Bair opens her mouth.

These braintrusts think it is “shameful” that Wall Street bankers rewarded themselves using our money.  But they are wagging their fingers:

Should Mr. Obama have to go to Congress to seek more money for the bailout fund to avert the failure of more banks, he would most likely encounter opposition within both parties and demands for tighter restrictions on pay for executives of institutions that receive government assistance.

Mr. Geithner has already signaled a willingness to impose stricter compensation limits as part of a revamped approach to dealing with the banking crisis, but with his strong words on Thursday, Mr. Obama seemed intent on reassuring Congress and the public that he would step up the pressure on bankers before granting them additional assistance.

Well, that’s telling them. They will get a sternly worded letter saying, “Don’t do it again or Congress will have to regulate you.”  I’ll bet that put the fear of Gawd into them.  The bankers are going to have to court some more Blue Dog Democrats to make sure that doesn’t happen.

Change!™  Ain’t it grand?