priorities to restore US economy

NO...NO MORE "BAILOUTS".

How much can the taxpayers absorb?

Stock-market woes highlight risk U.S. families now face - Individuals bear more risk
By Tony Pugh | McClatchy Newspapers
9/18/08

WASHINGTON " As millions of people watched their 401(k) retirement plans rise and fall this week along with the stock markets, their fears reflect a sweeping revolution in how Americans save for retirement.

Whether it's disappearing work-based health care, the move from traditional pensions to 401(k)s, the push to privatize Social Security or just making it harder to file for personal bankruptcy, these and other social supports and safety nets that were designed to make Americans more secure have been watered down, abandoned or altered so that individuals bear a greater share of the risk and cost.

"What's happening on Wall Street occurs alongside a very substantial slow-moving crisis for American families," said Jacob Hacker, a political science professor at the University of California at Berkeley. "More and more financial responsibility and risk have moved from the broad shoulders of government and corporations onto the backs of America workers and their families."

Hacker said this week's stock-market roller coaster offers several important lessons about the consequences of this trend, which he chronicled in his 2006 book, "The Great Risk Shift."

When 401(k)s replaced defined-benefit pension plans as workers' primary retirement savings vehicle, employers were ecstatic because the plans were cheaper to fund and administer than traditional pension plans are.

All but gone are the days when employers and trustees made investment decisions and assumed all the risks for pension plans that pay workers a set amount each month for the rest of their lives.

With 401(k)s, those payments are neither guaranteed nor assured, and investment responsibilities now lie with individual workers, many of whom know little or nothing about investing.

"That gets people in trouble because they don't really understand a single stock is riskier than an index fund or that holding stocks in the company you work for is more risky than an index fund," said Alicia Munnell, the director of the Center for Retirement Research at Boston College.

Participant inertia is another problem. A 2005 study of more than 1 million 401(k) plan participants found that 80 percent made no trades and only 10 percent made only one trade in a two-year period.

These factors, the decline in home values and the current stock market losses help explain why more than half of working households probably won't be able to maintain their current standard of living in retirement, Munnell said.

And for older workers who want to retire now while unemployment is high and jobs are scarce, the recent market losses will cause many to remain in their jobs until they can recoup their losses.

"This will just make the recession worse because it will force people to stay in the labor market and cling to their jobs. The 401(k) has destabilized the economy because of these perverse employment effects," said Teresa Guilarducci, director of the Schwartz Center for Economic Policy Analysis at the New School for Social Research in New York.

Not everyone agrees, however. Daniel Mitchell, a senior fellow at the Cato Institute, a libertarian think tank, doesn't pine for the old pension plans. He said they were riskier than individual accounts because companies often underfunded them and sometimes went bankrupt, which sent aggrieved pension holders to the Pension Benefit Guaranty Corp. to seek reimbursement.

At least with 401(k)s and IRAs, individuals can control their money, Mitchell said.

"You might not make the wisest investment or your fund adviser might not make the wisest investment, but at least you're in a comfortable position knowing the whole thing won't go belly up," Mitchell said.

Mitchell's sentiment is the same one that helped foster the "personal responsibility" and "ownership society" movements, both of which, Hacker said, helped lay the groundwork for putting more financial responsibility, and risk, on individuals.

"I do not want my retirement savings relying on the integrity of the political class. I'd rather have it in the financial markets," Mitchell said, adding that the "political class" is the "politicians and bureaucrats who have tremendous power over me if I'm in a shaky pension plan."

That wasn't always the prevailing philosophy, Hacker said. The Great Depression and World War II created a massive push for government involvement in the well being of citizens. But the political upheaval of the 1960s and the economic malaise of the 1970s gave way to Ronald Reagan, who preached that government wasn't the solution to our problems, but was the problem.

However, with the economy facing its greatest challenge since the Great Depression, the business community and individuals clamoring for universal health care, the national sentiment may be more receptive to the old social compact in which government takes a larger role in providing for the well being of its citizens.

"This current financial crisis has really drawn into sharp focus the idea of risk," Hacker said. "Now that we're thinking about risk, I think it really calls on us to think beyond the current crisis and to the broader challenges we face as a society."

MORE FROM MCCLATCHY

Poll: Americans are more skeptical about financial crisis, government's action
http://www.mcclatchydc.com/economics/story/52751.html

AIG bailout question: Why banks but not me?
http://www.mcclatchydc.com/economics/story/52678.html
McClatchy Newspapers 2008

Woiyo9 wrote: "NO...NO MORE "BAILOUTS. How much can the taxpayers absorb?"

Just the response I expected from a "I've got mine, the hell with you" type of looking out for myself conservative libertarian.

BBB

BBB, You are correct; we have needed public works projects in our country to maintain and restore our roads, schools, bridges, and communication systems to remain competitive in the world marketplace. Rather, Bush has spent our treasure on wars in Iraq and Afghanistan while our infrastructure has deteriorated to untenable conditions; bridges falling, roads under maintained, our schools falling apart, and the air control system out of date.

Our government has now chosen to bail out the rich who the conservatives tell us should keep what they have earned while the bail out helps them with "their" investments more than the middle class or the poor. Their rhetoric has always been it's wrong to transfer wealth from the rich to the poor, but it's okay to use taxpayer monies to help the rich with their investments while ignoring the suffering of the middle class and poor.

Our government is broken; humpty dumpty.

If you want to know who and why the US economy has failed, you must read Thomas Frank's "The Wrecking Crew - How Conservatives Rules." Frank also wrote "What's the Matter with Kansas?"

If you wonder why I insist that Ronald Reagan is the second worst president in US history, read this book.

If you want to know who the Republican plotters were and are, read this book. Ronald Reagan, Grover Norquist, Tom DeLay, Jack Abramoff, Newt Gingrich, George W. Bush, Dick Cheney, Donald Rumsfeld, the Grace Commission, and the whole troupe of activists, lobbyists, and corporations who got their start back in the Reagan years with their goal of corporations taking over the government.

John McCain was part of this group and remains so today. He's doing his best to lie about his history but he can't hide it for long. There is too much documented evidence to expose his lies. I hope the Media will finally show the integrity to expose all of the plotters.

Bill Clinton didn't fight the plotters hard enough despite Republican control of the Congress. He should have gone public and expose what they were doing instead of trying to work with them. The Republicans impeached him as a diversion to prevent him from taking them on and impeding their intentions.

BBB

What do you find funny about what those people did to destroy the US economy?

BBB

Woiyo finds it funny, because he thinks this economic mess created by Bush won't affect him, his family, and his friends.

There's no cure for stupid.

Yea, Bush did it!!!

Sigh.

Woiyo, he's the captain of the f*cking ship. He's responsible when things go wrong. That's what 'the buck stops here' means.

Back when things were going better, Conservatives were falling all over themselves to trumpet his 'good economy.' Now, his legacy is shattered beyond any hope of repair, because the Fiscal Conservatives now hate him as much as everyone else in America, for jacking a trillion dollars from the public to fix the banking problems that his crew allowed to happen.

Cycloptichorn

Yeah, I know, blame it on Clinton - even though he left the white house with a surplus.

woiyo wrote :



imo taxpayers are a lot more "resilient" than you think .
if taxpayers are "resilient" enough to pay for the disaster in iraq , why shouldn't they be able to pay a little extra for the bailouts (notice the plural) - at least that money might benefit the american nation as a whole .
perhaps woiyo would prefer the pension funds to go down the tube - because i don't think you can de-couple the big pension funds from the rest of the financial markets .

just as an example : germany was down and out in the spring of 1945 . three really hard years followed (food was scarce , money was worthless , the infrastucture destroyed) . spring of 1948 the "currency reform" took place .
essentially all savings accounts , insurance contracts ... were declared null and void - so the ordinary people had to start from ZERO .
within a few years germany had risen to the top oof the european nations , and germany is certainly doing quite well these days .

imo all this "doom and gloom" talk is unproductive ; instead countries that run into major problems need to concentrate on the future : where do we go from here , what's a good way of getting out of the quagmire .
to keep looking back at "the good old days" won't help an individual nor a country out of a problem situation .
one needs to look at the future . sure , one needs to look back at mistakes made in the past and try to avoid making the same mistaes again . but becoming pre-occupied with the past and bemoaning it won't solve today's problems - time does not stand still for anyone or any nation .
hbg

hbg, The taxpayers/consumers "were" resilient once upon a time, but no longer. Consumers have lost their well of money because a) their debt is more than they earn, b) their assets have shrunk to new lows, and c) most are having difficulty paying for shelter, food, and fuel.

Retail sales have been shrinking for the past year, and we're going to see this holiday season as abysmal which is one of the best measure of how our economy is surviving or dieing.

The housing debacle will not disappear any time soon, because the government saved the banks and money institutions, but not the consumers who needs the most assistance.

We're going to continue to see more bankruptcies, foreclosures, job losses, and increased costs in food and fuel.

It's gonna become a nightmare for many families.

LIAR!!!!

Please tell me where I lied?

woyio (shouting) :

why is woyio shouting at himself ?
next thing we know , he'll be kicking himself - let's all have a little understanding for poor , misunderstood woyio - he's trying to share his pain - please give him a chance .
wishing speedy recovery !
hbg

"Eight years ago, our future was at risk," Clinton said Wednesday morning. "Economic growth was low, unemployment was high, interest rates were high, the federal debt had quadrupled in the previous 12 years. When Vice President Gore and I took office, the budget deficit was $290 billion, and it was projected this year the budget deficit would be $455 billion."
Clinton
President Clinton announces that the federal budget surplus for fiscal year 2000 is the largest in U.S. history

Instead, the president explained, the $5.7 trillion national debt has been reduced by $360 billion in the last three years -- $223 billion this year alone.

Clinton reduced the national debt with a series of annual surpluses.

You comment inferred he left the Nation with a surplus, which is false.

Dont you feel somewhat stupid now?

>priorities to restore US economy

Simple: Outlaw and ban the demoKKKrat party. The economy will be as healthy as it's ever been in a year and a half.