Gyroscopic Investing

This article summarizes what seem to be ominous positioning to push nationalization of retirement accounts by the Obama regime.

http://www.wnd.com/2012/11/now-obama-wants-your-401k/

This does not seem to be of immediate importance.

Additionally, Jim Sinclair has advised to pull funds from these accounts, or at minimum to stop adding new funds.

One argument against the implementation is that Wall Street has so much to lose. Has anyone changed anything in light of this possibility?

As someone who works in this field professionally and sits in on almost daily meetings about what's happening in Congress with ALL retirement plan related legislation and proposals and also participates in frequent meetings regarding what the IRS and DOL are doing on the regulatory side with respect to retirement plan issues, please ignore all of this stuff about nationalizing retirement accounts.

It's complete nonsense.

MT...thanks for you input.

When you say its all nonsense, are you saying:

-There are no interests who would push this?
-It cannot be achieved either thru legislation, regulation, or executive order?
-It would level the financial markets so Obama wouldn't attempt it? (assuming Obama is a rational and benevolent player)

Please, when you have time, share a little more of your inside view beyond a fiat judgement.

murphy_p_t wrote: MT...thanks for you input.

When you say its all nonsense, are you saying:

-There are no interests who would push this?

None that I can see.  Members of Congress would get more hostile mail than you can imagine over something like this.  No one in Congress would support it.

-It cannot be achieved either thru legislation, regulation, or executive order?

It could be achieved through legislation (though that's a nonstarter for the reasons I outline above).  I don't see how it could be achieved through executive order, and what would the purpose of such an executive order be?  Why engage in such a silly exercise when there are other ways of raising revenue?  Such a step would piss off everybody.  Why would a politician do something that benefits no one?  There is no special interest that would benefit from retirement account confiscation.

-It would level the financial markets so Obama wouldn't attempt it? (assuming Obama is a rational and benevolent player)

That's one of the MANY reasons not to do it. 

I do not recall Obama ever saying a word about retirement plan confiscation.  This narrative has been around for several years and there has never been any basis for it. 

The ONLY proposal that has EVER been put forward was by some mid-level bureaucrats in the Department of Labor, and the proposal was to provide an OPTIONAL Treasury-backed annuity for 401(k) investors who wanted to take a lump sum and turn it into a guaranteed stream of payments similar to Social Security.  This proposal was made as part of a study group and was immediately pounced on by the life insurance companies who didn't want to lose any of their annuity business, and would have never been heard from again if it weren't for the Jim Sinclairs of the world picking up on it and spinning it into "the government wants to confiscate your 401(k) accounts!!!".

In the retirement plan community the confiscation issue isn't even discussed because it is so absurd.

Please, when you have time, share a little more of your inside view beyond a fiat judgement.

It's basically an urban legend that gadflies like Jim Sinclair use to scare people when he doesn't have anything else to write about.

Wall Street has huge political clout and influence.  Does anyone really think that Wall Street couldn't get something like this defeated if anyone were to ever seriously propose it?

MediumTex wrote:

murphy_p_t wrote: MT...thanks for you input.

When you say its all nonsense, are you saying:

-There are no interests who would push this?

None that I can see.  Members of Congress would get more hostile mail than you can imagine over something like this.  No one in Congress would support it.

What is your interpretation of the action/agitation by SEIU in setting up RetirementUSA?

http://www.retirement-usa.org/our-principles

I ask because you statement seems to imply that SEIU & their politicians do not covet the 401k & IRA accounts of those who built up those savings. I have a hard time believing that these same politicians aren't eying these accounts. In the similar manner which the salaried Delphi employees were hurt while the union employees were saved.

"While salaried and managerial employees of Delphi, a major parts supplier to General Motors, lost part of their pensions, unionized employees did not. The unions got a pension rescue -- which is what Turner, like other critics, meant by "political favoritism and backroom deals.""
from http://www.politifact.com/ohio/statemen ... and-backr/

TennPaGa wrote: It is just a website, for goodness sakes.  Anyone can set one up to broadcast (pretty much) anything.

You mean like this?
http://chronnerbrothers.com/

melveyr wrote:

TennPaGa wrote: It is just a website, for goodness sakes.  Anyone can set one up to broadcast (pretty much) anything.

You mean like this?
http://chronnerbrothers.com/

hilarious!

TennPaGa wrote:

murphy_p_t wrote: What is your interpretation of the action/agitation by SEIU in setting up RetirementUSA?

http://www.retirement-usa.org/our-principles

I'm not MT, and he would say this more artfully, but...

It is just a website, for goodness sakes.  Anyone can set one up to broadcast (pretty much) anything.

I think having the AFL-CIO on your steering committee & getting congressional hearings puts you slightly ahead of a kid sitting in his mom's basement playing around w/ html code.

murphy_p_t wrote:

MediumTex wrote:

murphy_p_t wrote: MT...thanks for you input.

When you say its all nonsense, are you saying:

-There are no interests who would push this?

None that I can see.  Members of Congress would get more hostile mail than you can imagine over something like this.  No one in Congress would support it.

What is your interpretation of the action/agitation by SEIU in setting up RetirementUSA?

http://www.retirement-usa.org/our-principles

It's just another interest group pushing an agenda.  In Washington there are groups like this on every floor of every building.

I ask because you statement seems to imply that SEIU & their politicians do not covet the 401k & IRA accounts of those who built up those savings. I have a hard time believing that these same politicians aren't eying these accounts. In the similar manner which the salaried Delphi employees were hurt while the union employees were saved.

Politicians can always be depended upon to look out for their own interests.  I do not see how retirement account confiscation is in the best interest of any politician (much less a majority in both houses of Congress).

"While salaried and managerial employees of Delphi, a major parts supplier to General Motors, lost part of their pensions, unionized employees did not. The unions got a pension rescue -- which is what Turner, like other critics, meant by "political favoritism and backroom deals.""
from http://www.politifact.com/ohio/statemen ... and-backr/

That is one anecdote.  It has nothing to do with the larger picture of government confiscation of retirement accounts.

murphy_p_t wrote:

TennPaGa wrote:

murphy_p_t wrote: What is your interpretation of the action/agitation by SEIU in setting up RetirementUSA?

http://www.retirement-usa.org/our-principles

I'm not MT, and he would say this more artfully, but...

It is just a website, for goodness sakes.  Anyone can set one up to broadcast (pretty much) anything.

I think having the AFL-CIO on your steering committee & getting congressional hearings puts you slightly ahead of a kid sitting in his mom's basement playing around w/ html code.

Not by much.

The bottom line on this thing is that there is no widespread support for it.  It's DOA.  Everyone in Washington knows this.  The ONLY people following this story are the wing nuts and goldbugs because it provides such a juicy storyline to validate fears that some people are already feeling.

I honestly believe that there are politicians that would get behind retirement account confiscation/nationalization, just not enough to be meaningful.  If she thought the votes were there, I could see Pelosi going for this.  However, even if the dems wanted to do this they couldn't get it passed without a super-majority in Congress.  Obama has shown no fear of skirting or ignoring established law, but this isn't executive order material.  At least, not yet.

RuralEngineer wrote: I honestly believe that there are politicians that would get behind retirement account confiscation/nationalization, just not enough to be meaningful.  If she thought the votes were there, I could see Pelosi going for this.  However, even if the dems wanted to do this they couldn't get it passed without a super-majority in Congress.  Obama has shown no fear of skirting or ignoring established law, but this isn't executive order material.  At least, not yet.

Remember, though, such an action would hit rich people the hardest, and those are the people who support political campaigns.

MediumTex wrote: Remember, though, such an action would hit rich people the hardest, and those are the people who support political campaigns.

I would hope we could all agree that political contribution is no longer the sole domain of the uber rich.  Obama has shown himself to be very good at soliciting smaller donations from huge numbers of people.  The people who have been shown to drastically under-contribute to their retirements are also the most numerous.

MediumTex wrote:

RuralEngineer wrote: I honestly believe that there are politicians that would get behind retirement account confiscation/nationalization, just not enough to be meaningful.  If she thought the votes were there, I could see Pelosi going for this.  However, even if the dems wanted to do this they couldn't get it passed without a super-majority in Congress.  Obama has shown no fear of skirting or ignoring established law, but this isn't executive order material.  At least, not yet.

Remember, though, such an action would hit rich people the hardest, and those are the people who support political campaigns.

In my mind, The "rich", who are demagogued by Obama & Co  ...usually refers to upper middle class and lower-upper class...people who have retirement account. The truely rick, Buffet's, Gates, Soros'...aren't thinking about their 401k...and yet they can have huge influence on the political process. In my mind, these autocrats have accumulated enough wealth where their public agendas are more about keeping others from attaining true financial independence. One example is Buffet pushing to raise taxes.

Retirement account confiscation is DOA.

If there was a chance in hell of this going anywhere people in the industry would be talking about nothing else.  The reality is that this topic is treated as a joke any time it comes up.

Believe what you want to, but that's my perspective based on living my entire professional career inside this industry and listening to every hint of any kind of change that could affect my clients.

The way I see it, there would have to be a paradigm shift in the American electorate before retirement accounts would be nationalized.

Hitler, for example, originally came to power by being legitimately elected.  Once in power, however, he used the "desperate measures for desperate times" argument to change the rules of the game.

Could a paradigm shift like this happen in the United States?  Perhaps, but it's up to the American people to decide our collective fate. 

“Well, Doctor, what have we got—a Republic or a Monarchy?”?
“A Republic, if you can keep it.”?
http://www.bartleby.com/73/1593.html

LifestyleFreedom wrote: The way I see it, there would have to be a paradigm shift in the American electorate before retirement accounts would be nationalized.

Just to be clear, though, such a shift has NOT occurred and no retirement plan confiscation bill is being considered by Congress and no one in the Executive branch is proposing the retirement plan accounts be confiscated. 

The ONLY proposal that has ever been made came from mid-level bureaucrats at the Department of Labor who were working in a "study group" and they suggested the idea of an OPTIONAL provision in retirement plans that would allow participants to essentially purchase an annuity from the federal government if they wanted to.

Just like movie blurbs that go like:

"This film … was the most … amazingly … stupendous achievement. The director really did a … wonderful … job. …a masterpiece!"

TennPaGa wrote:

MediumTex wrote: The ONLY proposal that has ever been made came from mid-level bureaucrats at the Department of Labor who were working in a "study group" and they suggested the idea of an OPTIONAL provision in retirement plans that would allow participants to essentially purchase an annuity from the federal government if they wanted to.

HAH!  YOU ADMITTED IT!

Just chased out my 401k to buy gold coins and store them in Honduras.

MediumTex wrote: The ONLY proposal that has ever been made came from mid-level bureaucrats at the Department of Labor who were working in a "study group" and they suggested the idea of an OPTIONAL provision in retirement plans that would allow participants to essentially purchase an annuity from the federal government if they wanted to.

In the American political system, those kinds of statements are known as trial balloons.  A lower-echelon bureaucrat leaks a story to the press.  If the idea doesn't go anywhere, it dies quietly on the vine.  But if the idea takes off and becomes popular, the President (or Governor or Mayor) takes the credit for it.

LifestyleFreedom wrote:

MediumTex wrote: The ONLY proposal that has ever been made came from mid-level bureaucrats at the Department of Labor who were working in a "study group" and they suggested the idea of an OPTIONAL provision in retirement plans that would allow participants to essentially purchase an annuity from the federal government if they wanted to.

In the American political system, those kinds of statements are known as trial balloons.  A lower-echelon bureaucrat leaks a story to the press.  If the idea doesn't go anywhere, it dies quietly on the vine.  But if the idea takes off and becomes popular, the President (or Governor or Mayor) takes the credit for it.

If that is the case I would say that this one will die on the vine.

Everyone hates it.  No one supports it outside of a few wonks who have been pushing for such OPTIONAL provisions in retirement plans for years.

What's funny to me is that at any given time there are dozens of these sorts of wonky proposals floating around and none of them ever go anywhere, but for whatever reason with this particular one certain alarmists have picked up on it and spun it into "retirement plan confiscation."

Ironically, if 401(k) plans DID offer an optional Treasury backed annuity option it would actually be a very good option for many 401(k) participants who have no idea how to make a lump sum last for more than a few years.  By offering a Treasury-backed annuity you would get a much better value than the insurance companies offer because the insurance company annuity products are usually loaded with fees, and the annuitant still has counterparty risk.

My favorite story about using Treasury bonds for retirement is from Groucho Marx.

Supposedly Groucho Marx toured the New York Stock Exchange many years ago, and a stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"

Members of Congress, the presidents, the supremes and their families have retirement accounts (401k, 403B, IRAs, SEPs, SIMPLES, even Keoghs).  Somehow I dont see them proposing or signing off on something like this that would destroy their own wealth and interfere with their ability to pass those assets on to their heirs and beneficiaries.

smurff wrote: Members of Congress, the presidents, the supremes and their families have retirement accounts (401k, 403B, IRAs, SEPs, SIMPLES, even Keoghs).  Somehow I dont see them proposing or signing off on something like this that would destroy their own wealth and interfere with their ability to pass those assets on to their heirs and beneficiaries.

Who would be hurt by retirement account confiscation?

1. Older people who tend to have larger accounts and who tend to vote in greater numbers.

2. The Wall Street firms that depend on retirement plans for the demand for the shares they feed into the market and for the liquidity they need to make markets.

3. The big insurance companies that provide annuities to retirement plans.

4. The mutual fund companies and retirement plan service providers.

5. The big banks that provide trust services to retirement plans.

6. Employers who have a lot of their employees' income tied up in retirement plan accounts.

***

Who would be helped by retirement account confiscation?

I can't think of anyone really. 

What does that say about the probability of it occurring?

MediumTex wrote:
Who would be helped by retirement account confiscation?

Rather, the people who *think* they'll be helped.

The same people who want to raise taxes in a recession and think more government is always the solution.

Nevertheless...I recognize the logic you present.