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View Diary: David Stockman: “get out of the markets and hide out in cash” Corruption Of Capitalism (122 comments)

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  •  Many, if not most of us who are invested (9+ / 0-)

    In the stock market are invested through our 401k's, or pension fund.  We simply have no option to get out, even though we see the bubble growing and watch with dread, daily expecting the bubble to burst, once again taking our retirements, jobs and homes with it.  We have no option to get out because the rules of the 401k don't allow for it, without a massive early withdrawal penalty.

    •  Ya think that's a bug? (7+ / 0-)

      Or is it a deliberate feature of the system designed to separate us rubes from our cash and allow the bankers to gamble with our money, and lose it, at almost zero risk to themselves?

      Years ago, it used to be that you put your money in a bank where it was guaranteed unless the bank failed completely, and FDIC was supposed to fix that risk. You were paid a percentage on your money, guaranteed. Remember all the stories from the fifties that talk about the miracle of "compound interest?" Put a penny in the bank and come back in a hundred years and you're a millionaire! Not anymore. These days, if you leave any money in a bank more than a few years without touching it, they first cut off your interest payments, then they confiscate the money as an abandoned account. Often without even contacting you.

      But even the idea of a guaranteed return is a memory. The idea used to be that we were loaning our money to the bank to invest. We got our guaranteed return, our "compound interest," as our part of the deal. The bank got to keep whatever it could earn over and above that guaranteed return. But now, NOW YOU are a "risk taker" (doesn't that make you feel all manly and cool?) and your money is gambled with to see if they can make a profit on it. There is no longer any guarantee over a mere pittance of perhaps 1/2 a percentage point on "savings." Everything else is perpetually "at risk" at all times. They still only give you a few percentage points of the earnings no matter how much they make on it, but the return is in no way guaranteed.The result is that we mere mortal are making no more profit on our money than we did in the 50's, and often much less,, but every time the bankers fail at their jobs WE are the ones who pay the price. It's only ever OUR money at risk, never theirs. Their profits are still guaranteed. If not in the market, then by the taxpayers.

    •  You can move the money (7+ / 0-)

      out of stocks and invest in safer investments (money market funds for example). Most 401Ks have conservative investment options that will avoid losing money when the stock market drops again.

      “We are not a nation that says ‘don’t ask, don’t tell.’ We are a nation that says ‘out of many, we are one.’” -Barack Obama

      by skohayes on Mon Apr 01, 2013 at 04:03:48 AM PDT

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      •  That would be an interesting (5+ / 0-)

        ... "Move Your Money" campaign.  I'm not in finance, so I have no idea what the impact of huge numbers of workers moving their 401K money out of stocks entirely and into money market funds would be.  

        Personally, I think the worst thing about the 401K scam is that it puts workers in the position of rooting against their own interests.  Workers are now "shareholders", so (for their own security) they must support policies that favor Wall Street rather than workers.  It's a terrible system.  Would massive numbers of workers pulling their money out of stocks have an impact on policy?  I don't know.  I'd be curious to find out.

        "You must be the change you wish to see in the world." -Gandhi

        by Triscula on Mon Apr 01, 2013 at 05:17:43 AM PDT

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    •  I dunno. (4+ / 0-)
      Recommended by:
      gzodik, corvo, sweeper, Odysseus

      We're always hair-on-fire advised NEVER to tap retirement funds early because of "massive" penalties. I think it's BS--10% penalty is not massive. A lot of "personal finance" advice comes from the financial industry and is mostly targeted at keeping that industry healthy, imho.

      There are moments when the body is as numinous as words, days that are the good flesh continuing. -- Robert Hass

      by srkp23 on Mon Apr 01, 2013 at 06:17:16 AM PDT

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      •  Oh, and we're rarely told about 72 (t) (1+ / 0-)
        Recommended by:

        exception, whereby, with certain other conditions, you can tap your retirement funds via substantially equal periodic payments and avoid the 10% early distribution penalty altogether.

        There are moments when the body is as numinous as words, days that are the good flesh continuing. -- Robert Hass

        by srkp23 on Mon Apr 01, 2013 at 06:39:56 AM PDT

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      •  When I left my previous job (1+ / 0-)
        Recommended by:

        I cashed out on my retirement account, taking the penalty, and paid off my student loan.  I then promptly replenished my new accounts with the extra money from the new job.

        Sometimes cashing in is actually the right and profitable thing to do -- but there's quite a bit of calculation involved.

        Dogs from the street can have all the desirable qualities that one could want from pet dogs. Most adopted stray dogs are usually humble and exceptionally faithful to their owners as if they are grateful for this kindness. -- H.M. Bhumibol Adulyadej

        by corvo on Mon Apr 01, 2013 at 07:00:20 AM PDT

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      •  You pay the taxes AND the 10% (4+ / 0-)
        Recommended by:
        srkp23, corvo, ChemBob, semiot

        penalty, which puts it at about 40% of the total that goes to Uncle Sam, plus whatever fees the company charges.  

        Those fees had to be structured that way to make people leave it there, otherwise it would be a "savings account" and the reason for it's being - destruction of the need for Social Security so IT could be privatized - would never pan out and no one would buy into the concept.

        Since the crash in 2008, it is crystal clear that those schemes really arent' panning out for the vast numbers of Americans.  That people continue to use them is just astonishing to me.

        David Koch is Longshanks, and Occupy is the real Braveheart.

        by PsychoSavannah on Mon Apr 01, 2013 at 07:24:48 AM PDT

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        •  Of course you pay taxes--that's expected (1+ / 0-)
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          I'm just pointing out that the 10% fee is not a massive penalty. Esp if you're using to pay off debt, or fund a dream.

          I think they're good vehicles only if you get an employer match---that's free money, and in my case, covers the 10% penalty.

          There are moments when the body is as numinous as words, days that are the good flesh continuing. -- Robert Hass

          by srkp23 on Mon Apr 01, 2013 at 08:16:30 AM PDT

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