Thread: Hold onto your wallet

[quote]Obama Begins His Assault on Your Life Savings
Wednesday, February 24, 2010
By Terence P. Jeffrey
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The welfare state and your life savings are two cars heading down a one-lane road in opposite directions. One must yield, or there will be a crash.

For Americans who believe in the old-fashioned virtues of hard work, self reliance and respect for private property, the solution is obvious. The welfare state must yield.

For politicians who believe in the welfare state and redistributing wealth, the solution is equally obvious. Your savings must yield.

Barack Obama is of the latter group. In the new health care proposal he outlined this week, he suggested a series of unprecedented tax increases that would extend the greedy hands of government into the life savings of hard-working Americans.

These new taxes would essentially construct a new fiscal pipeline capable of carrying money out of the savings of private citizens and dumping it into government coffers specifically for subsidizing Medicare under the new health care system Obama envisions. The White House summary of Obama’s proposal presents this would-be pipeline as a facilitator of economic justice.

“Under current law, workers who earn a salary pay a flat tax of 1.45 percent of their wages to support the Medicare Hospital Insurance (HI) trust fund, but those who have substantial unearned income do not, raising issues of fairness,â€

More on the subject....

Why the Government Wants to Hijack Your 401(k)
Personal_Finance / Pensions & Retirement Jan 27, 2010 - 05:39 AM

By: Money_Morning

Personal_Finance

Best Financial Markets Analysis ArticleKeith Fitz-Gerald writes: It's bad enough that we've been forced to bail out Wall Street. But now the Obama administration is hatching plans to raid our retirement savings, too.

To say that I'm "outraged" doesn't come close to describing the emotions I experience every time I think about the government's latest hare-brained scheme.

According to widespread media reports, both the U.S. Treasury Department and the Department of Labor plan are planning to stage a public-comment period before implementing regulations that would require U.S. savers to invest portions of their 401(k) savings plans and Individual Retirement Accounts (IRAs) into annuities or other "steady" payment streams backed by U.S. government bonds.

Folks, there's only one reason these agencies would do such a thing - the nation's creditors think that U.S. government bonds are a bad bet and don't want to buy them anymore. So like a grifter who's down to his last dollar, the administration is hoping to get its hands on our hard-earned savings before the American people realize they've had the wool pulled over their eyes ... once again.

It's easy to understand why.

Facing a $14 trillion fiscal hangover, the Treasury can no longer count countries such as Japan and China to be dependable buyers of U.S. government debt. Not only have those nations dramatically reduced their purchasing of U.S. bonds, most of our largest creditors are now actively diversifying their reserves away from greenback-based investments in favor of other reliable stores of value - like oil, gold and other commodities.

This growing reluctance couldn't come at a worse time. Just yesterday (Tuesday), in fact, the Congressional Budget Office estimated that the U.S. budget deficit would hit $1.35 trillion this year. And that's not the only shortfall the Treasury has to address. The U.S. Federal Reserve is supposed to stop buying Treasury bonds for its asset portfolio, a program the central bank put in place last year.

The upshot: The Obama administration has to find other ways sell government debt - without raising interest rates, a move that would almost certainly jeopardize the country's super-weak economic recovery.

Facing an uphill battle and increasingly skeptical buyers, the government is changing tactics and targeting the biggest pile of money available as a means of dealing with its fiscal follies - the $3.6 trillion sitting in U.S. retirement plans, including 401(k) plans.

The way I see it, the Obama administration can see the financial train wreck that's going to occur. So it's rushing to crack open the safe that holds our retirement money before anyone realizes that they've been robbed.

And if this plan becomes reality, that's just what it will be - robbery. American retail investors didn't sign up for the financial-crisis roller-coaster ride we've been on since 2008. We didn't approve the nation's five-fold increase in lending capacity. And we certainly didn't volunteer to help pay down a national debt that's doubled.

Few people realize that the federal government spent an estimated $17,000 to $25,000 per U.S. household in 2009 (the final figures haven't been calculated, yet). But that's no surprise: "We the people" didn't approve it.

At a point where it's spending money like a drunken sailor, Washington seems more interested in appropriating and redistributing our retirement savings than it is in fixing a system that's badly broken. If you add in all the stimulus spending that the taxpayers must now repay, the average government-agency-spending tab has zoomed more than 50% in the last couple of years. That's right - 50%.

So it's only logical that the administration would go after our 401(k) and IRA savings plans.

Disgusting, but logical.

Here's how the argument is likely to be framed.

The system we presently have in place is what's commonly called a "defined contribution plan." Under such a plan, the benefits we enjoy during retirement aren't determined in advance. Instead, those benefits are determined by how much money we contribute while working, and by the performance of the investments that we choose. The 401(k) is almost exclusively a defined contribution plan.

Years ago, Americans depended more upon "defined benefit plans" that promised a steady stream of income at a future date - with the actual amounts determined by our years of service or our earnings history. Old-fashioned company pension plans and even U.S. Social Security are examples of defined benefit plans.

By laying claim to our retirement assets in exchange for 30-year Treasury bonds, annuities or other payout streams, the government will try to persuade us that we're not capable of managing our own money, that the stock market is too risky a place for most Americans, and that we need Big Brother to hold our hands and protect our futures.

What we need, the administration is going to tell us, is a defined benefit plan.

So expect a big snow job. But here's the problem.

Defined benefit plans are great only as long as they are well funded. Unfortunately, most aren't.

In fact, according to various studies, pension funds could already be underfunded by as much as $5.3 trillion. Add that to the $14 trillion we've already got on the table and we're talking a staggering $19.3 trillion - and that's with no escalators, no cost-of-living adjustments and no interest-rate increases. And that's assuming we don't need another round of stimulus.

Here's what the government isn't going to tell you. When pension funds transition from defined contribution plans to defined benefit plans, the only backing they have is the underlying assets themselves and the company or entity that's responsible for the plans - which in this case would be the U.S. government.

If the prospects of your entire future being placed in the hands of the federal government doesn't scare the daylights out of you after all we've experienced so far, I suspect that nothing will.

Our elected leaders, appointed government guardians, and Wall Street have together demonstrated a total inability to manage what they already control. There's no reason on the planet why they should be allowed to get their hands on our hard-won savings. All that will do is punish the thrifty, disciplined and far-sighted investor, while rewarding - or at the very least protecting - the inept politicians and career bureaucrats who allowed this crisis to occur in the first place.

By backing their plan with 30-year Treasuries, government backers of this plan are betting that you and I won't notice that the trouble with annuities and long bonds is that they tend to get annihilated by inflation. That's why even the most jaded professionals will tell you that investing in such instruments right now when interest rates are being artificially held down near 0.00% is bad juju: Interest rates have only one direction to travel - up, which tends to crush bond prices.

Right now, Americans are apparently smarter than the administration believes. In fact, a survey by the Investment Company Institute found that more than 70% of all households disagreed with the idea of requiring a retiree to buy an annuity with a portion of their assets. And it didn't matter whether the annuity was offered by an insurance company or by the government.

Let's hope that the full-court press that the administration is getting ready to deploy doesn't snow American investors. If the government succeeds, we'll look back and see that they pulled a pretty slick trick to get our support.

Unfortunately, it won't be the last trick they play with our retirement money. That last trick will come after they have control of our savings - when they make our retirements disappear.

Source: http://moneymorning.com/2010/01/27/retirement-plans/

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If this happens I think a lot more Americans will be flying planes and crashing cars into IRS buildings.

Gerald Celente is warning about tax revolts and food riots here if they don't get it together and back off the people.

Well, all I can say is I know we will never earn enough to have them do this to us, but, it is not right and has to be stopped.

I am getting so worn out from all this. I swear, the only time I get a good nite's sleep anymore is when congress gets a snow day or on vacation.

I am really, really weary of all the bad news. There is just no escape from it. You can turn off the tv or computer but it still keeps coming at us like a giant, unstoppable freight train. I wish I could fall asleep for about 5 years.

We will all be able to sleep better when we get a grip on the whole situation. People are just recently over the last year waking up in more and more numbers. They are catching on, but it is a lot to digest. I attend a Christianity and the Constitution class on Saturdays, and the folks are really trying, so I at encourage them, and when I can I also bring the issue of the invasion with open borders and the detriments it has meant to many Americans, myself included. They at first listen in diebelief, until I quantify it my official documents for closing the business being due to unfair competition and an uncaring duplicitous government. When they see that, they spend the next 5 minutes picking their jaws up off the floor.

It has all become somewhat overwhelming.

I have to admit, SicNTiredInSoCal, that last night my youngest one (12 year old girl) was sitting and watching the sitcom "Full House" which our oldest (now 27) used to watch in grade school/junior high. Then Star Tek (Next Generation) came on, and this used to be on when we sat down for dinner when the younger two were little, and I started to feel really down, doing the "things were better then" in my mind.

I wondered if things really were better then or was it just that we were all pretty still innocent to the massive corruption that has been going on and exploding for decades? Or has it really just been in the last ten years?

Still, I have to pull out the VHS videos, plug them into the VCR and watch episodes of "Little House on the Prairie" once in a while, or "Anne of Green Gables/of Avonlea" videos and just tune the nastiness of the world out for a while, wishing life was like that once again. Even my 16 year old and 12 year old will sit and say "why can't it be like that again?". You know things are bad when kids are even reminiscing for the "good old days".

Originally Posted by AmericanElizabeth

It has all become somewhat overwhelming.

I have to admit, SicNTiredInSoCal, that last night my youngest one (12 year old girl) was sitting and watching the sitcom "Full House" which our oldest (now 27) used to watch in grade school/junior high. Then Star Tek (Next Generation) came on, and this used to be on when we sat down for dinner when the younger two were little, and I started to feel really down, doing the "things were better then" in my mind.

I wondered if things really were better then or was it just that we were all pretty still innocent to the massive corruption that has been going on and exploding for decades? Or has it really just been in the last ten years?

Still, I have to pull out the VHS videos, plug them into the VCR and watch episodes of "Little House on the Prairie" once in a while, or "Anne of Green Gables/of Avonlea" videos and just tune the nastiness of the world out for a while, wishing life was like that once again. Even my 16 year old and 12 year old will sit and say "why can't it be like that again?". You know things are bad when kids are even reminiscing for the "good old days".

LOL! You sound like me. I watch Little House with my kids sometimes. I also watch Andy Griffith and I Love Lucy once in a while too. I have songs from the 70's on my iPod just to try and escape once in a while and think about "how it used to be". Another show that really takes me back is watching Twighlight Zone. All those shows were made before I was born, but my mom introduced them to me when I was twelve and I made them part of my childhood too. Even hearing speeches by Reagan comforts me. I'm also guilty of subscribing to magazines with titles like "Good Old Days", "Looking Back" and "Reminisce".

.....and then, I snap back to the reality that none of us can escape and try, day by day, to stay happy....and sane.....and unafraid.

I wondered if things really were better then or was it just that we were all pretty still innocent to the massive corruption that has been going on and exploding for decades? Or has it really just been in the last ten years?

Yes, I have to agree with you on this one. At the same time, I think that we tend to "idealize" most memories from our past. Sometimes the memory of an actual event is better than the event itself was.

That being said, I would NEVER have imagined 10 short years ago in 2000, that we'd even have to be thinking about issues such as what we have on our plate now. It started for me with 9-11 and in my opinion, our quality of life seemed like it really went downhill fast after that. Bush greased the skids for Obama. I think we will really see a BIG denegration with him in office. God help us.....

Not sure about you, but I was born in 67. By the time I was a kid, it was the early seventies, and I grew up last of six in a small town near Mount Hood (Oregon). Then it WAS a small town, and the woods still were only blocks outside of the main drag in town.

My two older, closest in age, brothers and I (me about 6, they 9 and 10 respectively) could walk from our place on the outskirts of town, to the local store, buy a little candy, sit on a bench, goof around, go home, and always be ok. This was summer, and both parents worked full-time, our mom in town.

Everyone looked out for all the kids in town, a lot of older women neighbors in that equation, and we had three older siblings.

Sometimes we would go hang around the mill on the other end of town, and kick around the sawdust to see how many carpentar ants we could stir up, just being told once by the mill boss to steer clear of the equipment, and sometimes my brothers would go home with bad cuts to "build" stuff with.

To be honest, this is not glamorizing it, it was really better then. I do miss the innocence and simplicity of that time.

I feel awful, my own kids have never been able to have that.