I was scanning the news today when I came across an article that caused me to say, "Damn! I'm going to be right again."
WASHINGTON -- Debt ceiling negotiators think they've hit on a solution to address the debt ceiling impasse and the public's unwillingness to let go of benefits such as Medicare and Social Security that have been earned over a lifetime of work: Create a new Congress...I will let others address the Constitutionality of this new legislative body, and instead focus on a target of the budget cutting - retirement savings.
Legislation approved by the Super Congress -- which some on Capitol Hill are calling the "super committee" -- would then be fast-tracked through both chambers, where it couldn't be amended by simple, regular lawmakers, who'd have the ability only to cast an up or down vote. With the weight of both leaderships behind it, a product originated by the Super Congress would have a strong chance of moving through the little Congress and quickly becoming law. A Super Congress would be less accountable than the system that exists today, and would find it easier to strip the public of popular benefits. Negotiators are currently considering cutting the mortgage deduction and tax credits for retirement savings, for instance, extremely popular policies that would be difficult to slice up using the traditional legislative process.
I'm a certified "Doom-and-Gloomer". I won't deny it. Many of my posts focus on negative things that I want to see changed. For this and other reasons, many of my predictions have been ignored and dismissed
For instance, three years ago I started ranting against the 401k system. I said that the numbers didn't add up, and that all the profits were being siphoned off by Wall Street. Two years ago I said this:
Unless the federal government simply defaults on its Social Security and Medicare promises then taxes will have to be raised dramatically. You can bet the trillions of pre-tax money sloshing around in 401(k)s and traditional IRA's will be at the top of the hit list.The reason I said this is because of cold, hard math. Today, this was in the news:
[The tax reform proposal] would reduce but not eliminate tax breaks on mortgage interest, higher-cost health plans, charitable deductions, retirement savings like individual retirement accounts and tax-free savings accounts known as 401(k)s, and tax credits for families with children.Don't kid yourself. This is merely the start. Governments have a history of ignoring past promises and changing the rules when crunch time hits. Even the Democrats have been looking at removing the tax break promises for 401k's and IRA's for two years now.
My predictions of a government 401k cash-grab were mostly dismissed at the time. I wonder how long people will refuse to believe it?
Cassandra was cursed by the gods with the ability to see the future, but have no one believe her.
I do not claim that ability. I only claim the ability to do math. When a trend can't continue, it doesn't.
18 months ago I said that Greece would eventually default and have to leave the Euro-zone, and that this would spread to other peripheral nations. As we stare at the second round of bailouts, with no long-term solution at hand, it appears more likely than ever before.
The market rally that followed last week's Greek bailout could be short-lived, say financial analysts.It didn't take a genius to see this one coming. Just someone who can do math. It is strange and disturbing that many of the largest investment firms in the world have been taken by surprise by this development.
They claim the package proposed by eurozone finance ministers fails to tackle the underlying problems and sets a dangerous precedent in permitting a country to default.
When you think outside of the box, people tend to dismiss you as a crank. For example, I recommended buying gold in late 2005, when gold was at $500 an ounce. The response was less than enthusiastic.
17 months ago, with gold at $1,100 an ounce, I tried to burst the popular opinion that gold was in a bubble.
Today gold is at $1,600 an ounce and finally hitting the mania levels..in Asia.
"Record high prices won't scare away investors," said Shi Heqing, an analyst at Antaike, a state-backed metals consultancy based in Beijing.Until the debt situation in America and Europe plays out the price of gold isn't going to drop, but most American investors are still thinking in terms of the 1990's - buying houses and putting money into their 401k. Even Wall Street is bringing back the oldies.
"Investors are likely to chase the rally and continue to buy gold because paper money feels increasingly worthless and they are worried about inflation."
I'm afraid to say that I think most of the American public will continue to invest by the rules of the last trend until the housing market finally washes out, their 401k withdrawals lose their tax break status, and the gold bull market is ready to peak. It is safer to lose money with everyone else than to think for yourself and go against the herd.