OT- What part did 401Ks have in the downfall of the economy?

[rangerider7]

I had a conversation with a friend of mine that has his degree in finance. I stated that when companies started having 401Ks available for their employee's retirement was the start of this economy problem. I will not go into my reasons because I want to hear what y'all think.

[Modoc ED]

Sorry. I don't agree. When many companies started offering 401Ks they abandoned their full funded retirement programs for NEW hires and offered matching funds at certain dollar amounts for them. It's been a lot of years since the 401K programs were brought in and it is not common anymore to find a company that offers full funded retirement programs. The "Big 3" auto makers still have full funded retirement programs for the union employees and those programs are killing them.

The 401K programs have in my mind provided a much needed relief to many companies that would otherwise have gone under under the burden of fully funded retirement programs.

It's a lot more complicated than what I've posted. Just my .02¢ on a small part of 401Ks.

EDIT: I gotta say that a degree in finance does not make a financial expert. Just look at how many econimists are in conflict now-a-days.

[Tycer]

Might have been a small component, but I think this all began long before the 80's. The federal reserve bank, moving away from the gold standard, the community reinvestment act, and then later, upping the community reinvestment act to a trillion dollars in '93, the repeal of the Glass-Steagal Act in '99, Fanny/Freddy all played a much larger part. Granted, taking future pension spending away from corporations and the large investments forced into the market by the 401ks helped drive the market early on, but it would have been driven anyway by the demographics of the baby boomers' normal overconsumption in their late 40s to early 50s.

[PaperPatch]

Short answer...none.

The questions you SHOULD be asking are:

What part does the Federal Reserve have in the downfall of our economy?

Who are the faces of the Federal Reserve, and to what nation is their allegiance??

How does the Federal Reserve profit???

Why did the Federal Reserve choose to remove the U.S.A. from the gold standard????

[Jayhawker]

The 401k's didn't have anything to do directly with this mess as I see it. They did provide the impetus for the stock market to grow significantly over the past 25 years. Without them, I don't think the stock market would have reached 7000, much less the 11000 it was at before the crash.

[tman]

the 401 k scam was the biggest redistribution of wealth scheme yet. corporations stopped offering their employess tradiontional pension funds, thereby increasing their bottom line. corporations, then inflated their net worth, along with the banks. they cashed out before the scheme was uncovered. joe average lost 60 percent of his retirement fund. the previous administration greased the slides by deregulated the banking system. legalized stealing, but the guilty call it class envy.

[Sixgun]

I have a Teamsters pension coming plus a 401K from the company I have worked for for 36 years. The Teamsters are thieves and the company's stock is hovering around .77 a share. I do not believe any of it will be there when I retire in 7 years.

Bottom line is that the Teamsters and all corporations are nothing but a bunch of rotten liars and are only interested in their own wealth and the wealth of their investors. The old days when companies cared for their employees are done.

401K plans are a scam and were invented to maximize the wealth of the corporations because the money people knew this BS was coming all along and they wanted to grab all they could.

Screw the rotten corporations and I hope the country falls flat on it's face like it did in the thirties. Then maybe the people/Liberals will wake up and stop handing out everyones money to the parasites of society because there will not be any to hand out. My family will survive because we know how.

I have my personal money invested in Mr. Colt and Mr. Winchester. Even in the 1930's, quality guns held their value. There's always people around with money who invest in quality tangible items.

My, that sounds like a real disgruntled Teamster/factory worker, don't it? -------------------------------Sixgun

[Old Savage]

The Clinton group with Frank Raines pushed getting loans for people who couldn't pay them off. This pushed housing prices up and people refinanced on the increased equity and spent the money in many ways. The stock market was fueled. Raines went to Fannie Mae and became the first black Fortune 500 CEO. He is the one who did away with the down payment requirement and instituted the no documentation of income. This was likely designed to fail. Dodd and Frank protected Freddie Fannie from oversight. Then the house of cards came tumbling down as planned. The bankers got billions to repay them. And the multi trillion outlays are going in directions that never would have been tolerated otherwise without the hyped crisis and govt. got a huge increase in funding. 108% plus increase in agency fundings. With more to come - partially I suspect as cover for other things to be done to change the face of the US, like this internal security force (gestapo).

Here an upscale development gave a $350,000 loan to a guy who had never made more than $ 9.00/hr. based on the fact that he had $50,000 in the bank from the sale of another house.

Plus the dems took over the congress with their taxing anti business pro social policies. Look at the stock market while the Republicans had both houses regardless of president.

[rangerider7]

Unless I completely fell asleep in history class. A major cause of the great depression was low income people gambling on the stock-market. Maybe that's too much of a simplification, but I know it has some merit.

[tman]

I BLAME CLINTON AND THE DEMOCRATS, I BLAME BUSH AND THE CONSERVATIVES, FDR TURNED THIS COUNTRY SOCIALIST. LINCOLN DESTROYED THE CONSTITIOUN BY DECLARING WAR ON THE SOUTHERN STATES. REGAN DESTROYED THE MIDDLE CLASS. CLINTON HAD SEX IN THE OVAL OFFICE. AMERICA IS ATTACK ON 9-11 BY SAUDI'S AND WE INVADE IRAUQ. 80 YEAR OLD GRANDMOTHERS ARE FRISKED AT AIRPORTS. BORDER PATROL AGENTS ARE JAILED FOR ARRESTING ILLEGAL DRUG CARTELL MEMBERS. SHERRIFFS OF BORDER STATES ARE HARRASED BY THE FEDERAL GOVERNMENT FOR ARRESTING AND DEPORTING ILLEGAL ALIENS. AM I THE ONLY ONE WHO SEES THAT BOTH PARTIES ARE DIVIDING US AND PLAYING US FOR FOOLS. THEY STEAL OUR MONEY, OUR FREEDOM, OUR CHILDRENS FUTURE, WHILE WE PLAY THE BLAME THE PARTY GAME

[rhead]

A lot of people who typically would not be invested directly were personally because the 401 ks provided the vehicle. They had no direct cause for the market fall. The housing bubble was the baby of Fannie mae and freddie mac, startede by carter, should have been stopprd by regan and bush but wasn't, greatly expanded by clinton into forcing the banks to make bad loans, bush the younger tried to reign it in but was balked in comittie by barny frank and co. Probably should have used an executive order.
The revesionist history classes are better slept through. Lower income people investing in the market is one of the best ways to quit being low income.

[Old Savage]

Carter also cut the reserve requirement in half.

[AJMD429]

Two things happened around the same time, with similar effects... "Pensions" and "Health Benefits" - I think the origin was the government debacle of "wage-price freeze" to "control an unstable economy" (sound familiar...?). Both allowed corporations (ironically the 'big business' the Liberal claim to hate - publically traded corporations, and insurance companies, in this case) to get in on the concept of "witholding". That is, taking money from someone's employer, in leiu of pay. The employer gets a bit of savings, by purchasing inferior insurance products at a wholesale discount, or paying the employee less today and handing the rest over to the government. The insurers were allowed to have a 'captive audience' of purchasers, who were largely unaware of the price of their product, since the employer 'paid' (with their potential wages) up to 90% of the cost. The publically traded companies got investors trying to shield their money from present taxes, and keep it in some form (vs. a buried Mason jar) that would keep up with the inflation caused by government printing more money.

The employee had no choice initially, because wages were 'frozen' by the government, so these 'benefits' packages became the norm. How ironic that the Socialist/Liberal crowd who claim to hate big business (but love the biggest monopoloy of all - the government!) were using public policy to force nearly everyone to purchase unwanted and poor quality products from insurers, and invest in large corporations instead of local small businesses or an ordinary savings account.

My own 401k was deemed "off limits" to me during a year where I went 9 months without a paycheck, and desired to lessen the risk of losing my home, by paying off my mortgage with my 401k. There was enough, even after the 'penalty' - but the 'rules' said my situation was not 'dire' enough (that subjectivity really honked me off, as I saw friends who had two or three months off work transitioning between jobs, while collecting unemployment, cash in THEIR 401k's ), and I will not ever put money in a 401k again for that reason. Had I been allowed to do that, I'd have been now debt-free, albeit without 'retirement' (which I don't plan to do anyway), vs. now I'm still in debt, and essentially don't have any 'retirement' anyway, due to the financial crash...

The FAIR TAX would eliminate ALL of these problems,
ALL of the nitpicking 'accounting' for 'business expenses' and wages and what you spend where, and ALL that.

I do not think that ANY solution except the Fair Tax will resolve our financial mess.

[Modoc ED]

EDIT: Deleted. Belay my last!! Had a major brain fanny burp.

[DBW]

As a simple minded guy I view the entire "benefits" concept offered by employers as odd. Pay me a wage to compensate for my time. No pension, no health care, just give me the money to save as I see fit without government involvement. All these plans and schemes are the result of a central government stepping outside of their authority as enumerated by the Constitution.

Yeah, that's oversimplified... but I'm simple.

[Old Savage]

The underlying or not cause was a falsely created "bubble of wealth" that had to crash. They are doing the same thing again to buy political favor. If you believe this a good idea send me your credit card and I will "stimulate'' the economy when I am done with that one we can go for round two.

[rangerider7]

If the lowest income people are investing in stock, who's left to buy it. Just a thought.

[AJMD429]

As a simple minded guy I view the entire "benefits" concept offered by employers as odd. Pay me a wage to compensate for my time. No pension, no health care, just give me the money to save as I see fit without government involvement. All these plans and schemes are the result of a central government stepping outside of their authority as enumerated by the Constitution.

Yeah, that's oversimplified... but I'm simple.

Sometimes 'simple' is good. It is clean, straightforward, understandable, and consistent.

The 'authorities' want to make everything 'complex' (even if it isn't) and use their smoke and mirrors to hide twisted and distorted agendas. THAT is evil!

[Bogie35]

I BLAME CLINTON AND THE DEMOCRATS, I BLAME BUSH AND THE CONSERVATIVES, FDR TURNED THIS COUNTRY SOCIALIST. LINCOLN DESTROYED THE CONSTITIOUN BY DECLARING WAR ON THE SOUTHERN STATES. REGAN DESTROYED THE MIDDLE CLASS. CLINTON HAD SEX IN THE OVAL OFFICE. AMERICA IS ATTACK ON 9-11 BY SAUDI'S AND WE INVADE IRAUQ. 80 YEAR OLD GRANDMOTHERS ARE FRISKED AT AIRPORTS. BORDER PATROL AGENTS ARE JAILED FOR ARRESTING ILLEGAL DRUG CARTELL MEMBERS. SHERRIFFS OF BORDER STATES ARE HARRASED BY THE FEDERAL GOVERNMENT FOR ARRESTING AND DEPORTING ILLEGAL ALIENS. AM I THE ONLY ONE WHO SEES THAT BOTH PARTIES ARE DIVIDING US AND PLAYING US FOR FOOLS. THEY STEAL OUR MONEY, OUR FREEDOM, OUR CHILDRENS FUTURE, WHILE WE PLAY THE BLAME THE PARTY GAME

+1

bogie

[Rusty]

I'm not sure what the cause is but I know by checking my account, in the last two years I've lost 41.7% of my initial investment. My company matches up to $1100 that I put in every year. I'm thinking of drawing it out just to stop the bleeding but Then there will be a penalty.

IIRC from economics class the stock market is based on what is referred to as"the bigger fool theory" which should tell us something.

[Bogie35]

The FAIR TAX would eliminate ALL of these problems,
ALL of the nitpicking 'accounting' for 'business expenses' and wages and what you spend where, and ALL that.

I do not think that ANY solution except the Fair Tax will resolve our financial mess.

There is no "one" answer to the mess our country is in right now, but The Fair Tax is definitely a necessary part of the equation.
The main problem is our Codependent Enabling government. It runs to the rescue of people who aren't willing to help themselves, sometimes even forcing them to take the help. From this comes the sense of "entitlement" that so many "Americans" have acquired. It's not just certain individuals. That sense of entitlement is present in the individuals of the lower economic class, the middle class, the wealthy, the large banks and corporations, and even the government itself. It's everywhere! Nobody is allowed to fail anymore. The idea that everybody wins all the time is the lie that is killing our society.

bogie

[savagefan]

There is no way the country can allow the brightest, most experienced, networked, oh I could go on generation to retire and frugally leak their money back into the economy. Those that make the rules had to give us the "Boney five" to keep the Ponzi going. Madoff was a Leach but the whole goverment Ponzi we all wanted is the biggest boot to the nutz, and everyone voted liberal.