Entries Tagged 'Government' ↓

Trying to keep up with corporate malfeasance, the SEC (Securities and Exchange Commission) is running around suing bankers and brokers like a homeowner during a typhoon putting out pails underneath a leaky roof. But the scandal at Goldman Sachs this week is one that the SEC itself created. Continue reading →

This week there are a number of stories that relate to recent posts on Brucenomics.

Corporate taxes

My latest post Corporate Taxes: No More Simplistic Solutions!” talked about President Obama’s proposal to raise the tax on dividends. My opinion is that raising the tax on capital gains make more sense. This week a special feature article in the Financial Times, “Tax treatment of private equity: Questions over a quirk” delves into the issue of taxes paid, or rather not paid, by hedge fund managers. Continue reading →

The pain in the pension

Pension plans have been hit hard by the current crisis. The stock market is in a volatile up and down race to nowhere; commercial real estate is still in trouble, and there’s a huge crisis in Europe.

Not only that! World War II baby boomers are now retiring. People are living longer. And the Bush administration was quite successful in helping businesses switch from providing their employees with defined benefit plans (i.e, pensions) to defined contribution plans (i.e., 401Ks, 403Bs etc.).

Unfortunately, defined contribution plans haven’t worked out so well. AARPs newsletter is full of articles about older people unable to retire because they have not made enough money in their 401Ks to do so. Many seniors previously had to take money out of their 401(b)s because of an emergency or illness. And many simply lost money trying to learn how to invest, a skill most Americans aren’t taught in our public schools.

Private pension funds are managed by experts in investing and actuarial statistics. 401(k)s, on the other hand offer products created by investment companies and insurance companies to lure people who know nothing about investing into turning over their money to these companies, companies which define workers’ contributions but not what benefits, if any, those employees will ever receive for their contributions.

In “Insurance Company 401k Mutual Funds; The Poor Man’s Derivatives” I wrote about a major insurance company’s defined contribution plan that my employer at the time the offered years ago. The products offered had the same name as real mutual funds, but when I inquired about why I wasn’t earning the same amount that those mutual funds were paying, I was told the truth. My insurance company’s mutual funds in my 403(b) were “knock-offs”.  The company person claimed they did not take out fees. Clearly their imitation mutual funds simply weren’t as good as the actual products sold on stock exchanges!

Where’s a government when you need it?

Given the problems of so many seniors, the defects of 401(k) plans, and the current intention in Washington to make cuts to Social Security, wouldn’t you think our national government would be concerned about maintaining private pension plans?

Well, apparently not! Continue reading →