Aug 17 2011

Retirement? What’s that?

Category: Uncategorizedharmonicminer @ 8:38 am

Do you have a 401K?  I do.  I’ve been paying into it for more than 30 years.  And right now, it’s worth just a bit more than it was 13 years ago, despite constant contributions.  It should have at least doubled in that time.  But there have been four major stock market crash and burns in that time.  The thing is this:  no one (or almost no one) was predicting the first three before they happened.  The dot com bubble, the 9/11 attacks, the real estate mortgage bubble, all had a tiny number of prescient predictors, but it wasn’t obvious that it was going to happen when it happened, and it wasn’t obvious how huge it would be WHEN it happened.  My employer provides access only to one of those restrictive 401Ks where I can’t buy gold, can’t buy inflation-proof financial vehicles, and it boils down to either risking your money in stocks and bonds, or watching it shrink as money market interest doesn’t keep up with inflation.  That’s the nature of the TIAA-CREF agreement with my employer.

But this last crash and burn was totally avoidable, and nearly everyone saw it coming.  All the US government had to do (all OBAMA had to do, really) was to show seriousness about cutting spending, about getting out of the way of a business and employment recovery, about stopping the roadblocks to a recovering economy.  It did none of these.

Talk of “income gaps between rich and poor” and “we need to tax the rich more” and so on has been a non-effective smokescreen for the simple fact that Obama’s policies have seriously harmed the US economy.  You can’t spend money you don’t have.  If you tax people who produce, they’ll produce less, and hire fewer people to do it.  If you make enough rules that people find annoying, they’ll play the game less.  A LOT less.  You can’t get rich by borrowing money year after year because you spend more than your income.  These are simple, common sense understandings that can be explained to a 10 year old.

These simple principles have eluded the elites, the geniuses, the intelligentsia, and they have surely eluded Obama and the business-as-usual Democrats.

I am ticked off. Royally.  I have worked hard my whole life.  I thought several years ago that I would be able to retire in 7-8 years from now (really 5-6), and if the Barney Franks of the world hadn’t insisted on government guarantees for mortgages that shouldn’t have been offered, to people who couldn’t and wouldn’t pay them, my house would be worth a lot more than it is today.  If the fools (I use the term advisedly, and accurately) in Washington who fought for the right to spend other people’s money on everything under the sun, and to stick our children with the bill, had instead stopped using the power of the government credit card and printing press to buy votes and influence, and if they had cut spending, there is a very good chance that the markets would have seen that seriousness about the debt and the deficit, and given Washington a chance to make its newly sober policies work.

As it is, those who could took what profit they could, and got out of Dodge.  For those of us in “managed” and restricted 401Ks with few options, the message seems to be “tough luck.”  If you want to “avoid risk” then you can just lose money more slowly to inflation by parking it in low interest accounts.  Of course, the people who are making these decisions to spend our children’s money are all in “defined benefit” government plans, that are not affected by the overall economy or the stock market.  Work so many years, get so much retirement, simple as that, if you’re a government drone.  And if you’re a congress critter, you get just about the cushiest retirement deal (even for minimum years in congress) you can imagine.

At this point, my health is OK, and I hope to be able to work another 15-16 years….  about the time I think it will take for me to be able to “retire.”

In the meantime, I hope, for my children’s and grand-children’s sake, that American voters come to their senses.  Soon.  If that doesn’t happen, I have the feeling that what’s happening in Britain right now in the way of riots and looting is just an apéritif for the main course of chaos to follow in the USA.