Monday, May 17, 2010

The 401k Takeover Lawmaking Proceeds

I have written about this a before, here and need to talk about it some more.

The point in my prior article is that "what can't go on won't go on" and "things that have to happen will happen".  Nothing has changed.  We still need to sell absurd amounts of bonds and can't go on the way we are.  Our customers are less interested in our bonds.  Although almost never reported on in the US, China's Shanghai stock market is in deep correction, almost a bubble burst.  Higher interest rates might get bond buyers back, but will be a death blow to our economy.  The alternative to monetizing our debt is to selling them to someone, but whom?  Enter the 401k. 


Shanghai composite index.  Technical analysis by http://www.stocktiming.com/index.htm

The latest information is that the rule-making process is proceeding normally.  Reports on the total amount of money in 401k accounts vary, but it's in the vicinity of 5 trillion dollars.  My bet is that is an absolutely irresistible pile of money to the current administration.  In this article, one of my first, I wrote:
The stock market crash of ’08, with the concomitant collapse of many 401k plans, has given the .gov an excuse. There is talk of nationalizing our 401k plans – in not so few words – so that we can replace those “risky” plans with a gubmint guaranteed (but teeny tiny) yield. See, for example, this piece on Market Ticker There's a good reason to think this is coming; our unsustainable debt has to be financed by selling bonds. Now that the sales of bonds are failing internationally, the .gov can sell them by forcing them into our 401k accounts!

I am not emptying my 401k .... yet.  I am watching the process as best as I can. 

You should, too. 

3 comments:

Bob said...

All the government really wants to do is protect us from the evil capitalists in this world that want to take our money. (Yes, I typed that without puking on the keyboard!)

I read somewhere that the Clinton Administration was exploring a way to tap (read TAX) 401K and other retirement savings plans. The Obama Administration is looking at the same thing, but with a different spin. They are trying to sell us on a "Steady income stream," such as an annuity. You can bet the US Imperial Government will want to be the annuity holder too.

Link - http://www.businessweek.com/investor/content/jan2010/pi2010018_130737.htm

This is serious business folks. Like Graybeard says, watch this closely!

Alvie D. Zane said...

Amen, Graybeard. The 401K/IRA stash is the last great wad of real cash out there. And they're already eyeballing it.

Why privatize Social Security when you could federalize all 401k/IRAs?

TheGraybeard said...

Alvie - that's a great way to put it!.

"Why privatize Social Security when you could federalize all 401k/IRAs?"

Could be the next Quote of The Day.


-Graybeard