My husband, a partner and I own an investment management firm. We deal with a lot of outside financial advisors (fee-based, not commission-based) who call in daily to just talk about the situation with their clients. They want to do the best thing for them, they want to help them understand that we have been in situations in the country like this before and it is cyclical, they don't want them to panic and pull their money out at a loss and stuff it in their mattresses. But, without fail, we all agree that the media and the GOP are creating an inordinate amount of panic based on false info and preying on people's fears and this is causing people to do things that are quite honestly very detrimental to themselves. All based on this fear.
My MIL called last night. She is a retired teacher/widow and every year volunteers with AARP to help people do their taxes. A woman in a wheel chair met with her yesterday and was complaining about the country going to pot, Obama being a communist, how she pulled all her money out of the market and stuck it in a bank, etc. etc. All she wanted to know from my MIL was how much she was getting back from her taxes this year.
My MIL looked over her paperwork for a long time and told her she had bad news - she owed a lot of money to the government. The woman was stunned as my MIL explained that what the woman had done was pull all her assets out of a number of IRA accounts - and all that money was being taxed as full, early distributions. The woman had NOT rolled it over to an IRA at her bank, just into her savings acc't. My MIL asked if the woman's financial advisor had told her about this before she did it. The woman said that 'they were all crooks' and she demanded the money be taken out.
This is the kind of thing that results from all these lies, misinformation, fear-mongering, and dirty politics. Innocent people are being hurt. And it's a crime, really. It's a concerted effort to bring down a President, another party, and the entire nation of citizens that are all affected by the economy. Rush isn't kidding about 'blowing up the world'. His and other GOP leaders who have assaulted our airwaves with the help of all media with this treasonous nonsense are going to be held accountable someday. And I hope it's not too late when they are.
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Comments: 76
I must say, it reminds me of a bully toddler, pushing other kids around at playtime, when I see these people.
Good article!
i'm with you paul. i don't either. i'm afraid that by the time i'm ready to retire, i won't be able to for lack of anything that's saved.
i'm laughing w/you. i'm 33 and i don't see myself makin' it till then. i'll prob. be working till i'm 90. i have so many family members still working and well over the age of 60.
GET OUT! No WAY would the GOP use fear as a tool. And false info too? Oh! Oh MY! (try to picture me looking up with my forearm across my forehead, ok? It helps.) I simply cannot believe it ! ! ! What a shocker!
"His and other GOP leaders who have assaulted our airwaves..."
We need that Fairness doctrine back in place...equal time. They HATE that thought...balancing lies with truth. So do I. They should pull the lies.
A retired school teacher seems like a person that should have known better.
Regards,
Doyle I <~~~~~
(Who doesn't even look at his 401k)
I agree that the republican party and some of the talking heads are not helping the situation. I think their audience is shrinking to the core that cannot be persuaded to anything else no matter the fact presented. They are becoming irrelevant.
Its unfortunate really, because I think the country benefits from a health two party system.
A note to Paul: even if never retire, why would you not save in a tax sheltered account?
Its kind of a no brainer to put money into a roth IRA if you are eligible.
Do you like the choices available in the 401K? If you do, and you are allowed to stay in it, I would stay.
If you are not happy with the available choices, you can roll it over to an IRA of your choice.
On the other hand, if you think that’s bad you should see some of the crap people have been deliberately been throwing on seniors. Everything from telling them to heavily invest in real estate to get a guaranteed income through rentals to dumping an insurance policy that they didn’t have to pay for to purchase a policy (in their company) they had to pay for. There are too many con artists out there as it is, conning yourself that you know what you are going is your own fault.
The proposals to renegotiate the mortgages that are in trouble is a good start. I am one who questions the news of some of these paper instruments that are leveraged and bought on margin. That's not a financial advisors fault. It's the fault of those who authorized and managed beyond the means of their company.
Vicky ? Snow Sucks! ? D., Mar 6, 2009, 10:46am EST "
Vicky - Roth IRA's are like regular IRA's, except 1) there is an income limit - one for a single person, one for combined married people; and 2) there are different tax deduction parameters. Google it and you'll see the differences.
My MIL is the retired school teacher. The woman whose taxes she was helping with is the one that pulled all her money out of her IRA's. My MIL would not have made that mistake.
Pat - one can only hope. Your comments are very good and I agree - a healthy multi-party system is the best in a democracy. We need balance - people working together in a respective, productive way to reach consensus. I think that is what Obama is most hoping for.
When someone leaves a company, usually the best thing to do with their 401k assets with that company is to roll them over into an IRA. People don't realize that if they do not, they get taxed on the 401k money double in retirement.
I agree with you up to a point. BUT, and this is a big but, we can not all be specialists in every area. If I am watching & reading the 'news' and a certain drug is being pushed, and I go to my doctor and insist on getting that drug, I'm sure you would agree that it is the doctor's position, based on his training and experience and knowledge, to tell me that that drug is not good for me. That is why there are specialists, and people we rely to give us good advice. Not everyone is capable of handling everything in their life without the advice and counsel of knowledgable people. And the people who are there to give us that advice have a duty to give us good advice. In our industry, we have the fiduciary duty of providing the best financial advice and also taking responsibility for the outcome.
Part of the problem, and what got us here in the first place, was the public's willingness to not hold people in positions of responsibility, doling out financial advice, accountable for their own advice. That whole excuse that you can't regulate stupidity is stupid in and of itself. Of course you can regulate how people do business - and protect the customer who is relying on the advice of the 'expert' that they put their faith in. My firm takes their fiduciary responsibility seriously and live up to our accountability. As any professional should. Let's stop blaming the consumer for everything, shall we? Let's hold the professional accountable.
Dan - the problem is that these risky mortgages are going to be almost impossible to renegotiate.
IF, as in the past, these were bad mortgages simply between a bank and an individual, and the individual defaulted on the mortgage, the bank would do an assessment of the home, look at the value of the original mortgage and then work out either a new mortgage with terms they could both live with, or take over the property.
The problem with these risky mortgages if that:
1) A new scheme was developed over the past few years where the original lender sells the mortgage to a buyer, thereby freeing himself from risk;
2) the buyer (usually a big bank like Bear Stearns or Merrill) takes bunches of these mortgages and slices and dices them into investment instruments, then sells them all over the world. Then they get further traded.
3) there is almost no way of even id'ing the original mortgage to even start to consider it's value and potential rewrite.
Why do people think that this economic crises is GLOBAL in nature? If it was simply a stupid buyer and a stupid lender, this thing would be a piece of cake and be isolated to those two parties. That's why I get pissed when people start going after the borrowers - again, it was the lender who set the terms (ridiculous terms because they knew they could turn around and sell the risk at a profit), it was the large bankers who packaged these risky mortgages, chopped them up and sold them at huge profits, and it was a global market for them.
GOP - stop telling lies about who exactly is to blame for this mess. It's the bankers - pure and simple.
Yes, Richard. Unfortunate. But, absolutely predictable to anyone who understands the least little bit of human nature. And the GOP is doing this on purpose, or else they are the biggest bunch of clueless morons going.
Bob Cronley, Mar 6, 2009, 1:08pm EST
Exactly, Bob. It's another ploy - toddlers use it all the time. Mommy loves you better! He got a bigger piece of cake than I did! And the parent usually gives in, although a good parent would not.
Just stopped by to let you know that this post has been featured at "Barack Obama's Presidential Appointments, Bills and Policies."
http://obamasupporters.gather.com/
Keep up the great work.
Your friend.
Lloyd
John - I hear you. It's easy to feel that way on a certain level. BUT, the problem is that the market reacts when a number of people do this kind of thing and it reacts badly. When there is a lot of selling going on, the prices tend to bottom out at undervalued prices. Of course, someone's always on the buying end of the deal. So, there are people out there getting fantastic 'fear deals' right now. And just who do you think those people are? The ones rich enough to not be affected by this. And that's a total shame.
I knew I should have read the whole thing! :o)
Yeah, it feels good at a gut level...but it also feels like this type of a person is the product of a vast scheme to make and keep people uneducated and to have them continually support the people that keep them down...something of a victim herself. At some point, it becomes something akin to making fun of the handicapped...because they hurt you first.
Carla - the problem is that people do not view things in perspective, with any kind of logic. If we have a 6% unemployment rate, that means that 94% of our nation is employed or willingly unemployed/retired. I know it sucks for those who have lost their jobs, but that is why they pay into unemployment insurance to tie them over until they can get another job.
The DOW hit its lowest mark since 1997. 1997. Not the Depression. We have been through these bubble bursts in the recent past - when manufacturing had already floundered in the country. We have the opportunity to create new jobs, build new industries, develop new technology. That is what we should be focussing on. The GOP has their heads up their collective asses, trying to squelch any of this development simply because where's taking a different direction than the last 8 years.
I agree, Doyle. I may not agree with this woman's political opinions, or her ideology as a whole, but what she does in her daily life affects us all. We have so lost sight of the fact that it's okay to have opinions, but still keep some basic moral compass heading, some common spirit of cooperation and consensus. The people I really would like to have screwed are the people who are giving every ounce of their effort working against that model.
Until the" librul" media stops letting them lie with no consequencea the average moron will buy their stories and invariably be harmed by them.
The sad part is this citizen will continue to vote against her own best interests as so many still do.
Don - It is sad, but you're absolutely correct. For some reason, this party has been able to redefine & twist terms into the exact opposite meaning. Welfare is bad - except when it's for their corporate buddies; taxes are bad - except for the middle and lower classes to take care of; entitlements are bad - except when they help those who donate to the GOP, like the war profiteers, big agri-business, big oil, etc. I simply do not understand how regular people who are getting screwed can keep standing up for these criminals and their policies. Are they too stupid or blind to realize that nothing has 'trickled down' to them but grief the past 8 years? That, no matter how they rant about unions, their paychecks keep going down in relation to their buying power and that corporations keep cutting jobs and increasing worktime and work load on them to increase their own profits?
I remember a phrase someone on Gather used which I thought was totally descriptive. He called it:
"Shitting in one's own living room."
Great point, Jim. The scam artists always come crawling out from under their rocks during these times. Look at all the money that was stolen after Katrina, donated by people of good faith and wanting to help others. It truly is despicable. I am always asking my parents about these types of things - telemarketers, offer letters in the mail. They are now at the point where they show us everything before they do anything. We do need to help protect those who are the targets of these crimes.
http://www.youtube.com/watch?v=4RfyvP634iU
Ew is what I say when I watch Fox "news"
I wish I could run a band along the bottom of Fox news, disclaiming the lies they tell. I guess there isn't a law stating that news programs have to report the truth, is there? It's way too much like 1984 and Brave New World for me now.
I'll be one of the robots. . .
I'll be one of the robots. . .
Pat (mired in the midwest) D., Mar 6, 2009, 2:51pm EST"
One of my all-time, most favorite shows, EVER, Pat! I don't think I could ever be as funny as the Tom Serveux and Crow, but along those lines.
thanks for this very informative article. I listen to Susie Orman and she's pretty right on in my opinion - It amazes me how many folks do not know the value of a dollar. Salud
Along comes Obama, making a monumental effort to haul us, kicking and screaming, back to a more pragmatic foundation. And the ideologues think he's going to destroy the world. I can see why they might think that. His policies and his entire manner of governance are a rejection of the supremacy of ideology. He takes the position that the things we must do and must not do should be based on lessons already learned, handed down over centuries and eons of human experience. Beyond that foundation of time-tested rights and wrongs, the rest is just details. And the details should be handled with an eye toward whatever works best, not whatever creates the least discomfort for our more ideologically-driven brethren.
Incidentally, the firm which manages my 'retirement' account just put in place a sweeping lockdown of funds. In effect, we can do everything we used to be able to do with our money, except withdraw it before retirement. I don't blame them. It seems like a good preemptive measure against the very real potential for a fear-driven run on the 'bank'.
Jane - you have described a perfect scenario of bad capitalism, where the people who plunder and manipulate get rich at the expense of the poor and middle-class, then blame them when everything goes south, as it will in any highly manipulated, artificially inflated system. They benefit when the market is grossly inflated, then when people pay for the inflation caused by the burst bubble, it is yet their fault again, and their responsibility to pay it off.
I was talking with a neighbor today whose son-in-law was involved in London with the selling of these high-risk mortgage derivatives over the past decade. The man has made millions and millions. He now owns a villa near St. Tropez in the south of France. The neighbor is a very sweet older woman from Britain and we love her dearly, but found it hard not to gag while she was 'lamenting' about how her SIL's income has diminished since this recession has hit. These are the people who have preyed in many ways on the regular folks, and although might not be making the billions they were before, are still not losing everything they gained over those years. His wife is still taking the kids on a cruise to Bora Bora soon. Ack..it's enough to make you puke, isn't it?
This is class warfare, but not the way the GOP would have you believe. It is not the rich that have been slaughtered. It's the blue and whitecollar, middle class worker who has had their 401k savings demolished, their pension funds raided, their savings in jeopardy, all because the rich wanted to get even richer...obscenely rich. That's the warfare...the rich against the poor and middle-class.
Poliwonk - please back up these sweeping statements with facts. I want to know exactly how Obama has undermined teh Constitution. EXACTLY.
These are the kind of statements that I am referencing in my article. This baseless, nonsensical PARTISAN crap that has driven many to take their money out of the market, out of perfectly solid, good companies, and locked in devastating losses. Just to make the GOP feel better about losing Washington. That is truly criminal.
Thank you for your wise words, TH. I hate this ideology that has infested our society. It seems to be driving everything. You can hardly make a public statement now where people don't label it right or left, liberal or conservative. It's like you have to fit into some pre-determined box. I don't agree with everything liberal - I don't agree with everything conservative. There is no room for grey anymore - Obama is looking at solutions with a wide lens, realizing that not everything fits one size, not everything goes right or left. It's like he's talking into a vacuum, losing the ideologues on both ends of the spectrum. When are they going to realize that we ARE in a serious situation that calls for a wide spectrum of solutions. And I thought that is what the stimulus plan represented - tax cuts and entitlements for business along with solutions to tide people through the bad times (what the GOP loves to call communism) and investments for the future.
WHAT is wrong with a combination of solutions? When did we become the type of society that could only think of one answer to any problem? When did we actually stop thinking?
Thanks, Sarah. Great comment. You know, the first thing they teach you in any life saving class or medic class is 'DON'T PANIC, REMAIN CALM'. Since when did the opposite become the norm in any situation? The easiest way to manipulate people is to make them fearful, to decrease their logical reasoning. That's what happened after 9/11. And that is what the GOP leaders and conservative talking heads are doing now to try to undermine what Obama and the Congress are trying to do to get us out of this mess.
I agree with you about parents trying to make up the difference in their adult children's lives, today. My uncle went through the depression. Recently, I asked him how the family made it. He said that they ate plenty of oatmeal and meat once a week if they were lucky. Then, he pointed out that now that he's older and trying to stay healthy, he's eating plenty of oatmeal and having many meatless meals. I just wonder if those of us who have lived well over the years may have missed some very important lessons about life.
I'm scared ... I admit it. But I've asked people who should know (economists at Carnegie Mellon University) about my investments and retirement, and they all say "stay". So I stay put and cringe and squint my eyes and try not to look at the bottom line too closely. I also pray a lot.
I pray most of all that Obama's vision will work and that people with short-sighted goals don't somehow derail the recovery we need. If things don't get better, there WILL be an uprising of the poor, and that would be a Very Bad Thing. The ranks of the poor are growing every day, and at some point there will be a flashover of anger.
I find it hard to understand how we can have so much information and intelligence at the same time that we have so much blind, unquestioning obedience. I know people who spout the party line whether it makes sense or not. "Obama is going to ...." and insert some dread thing here.
I'm not all that well-versed in politics, so I have trouble knowing what to say (I wonder if anything would help). I just want my retirement to come back. I want my inheritance to regenerate. I want to be able to be happy when I'm old, and not be eating cat food and cutting my pills in half to make them last longer.
Obviously, the country wanted change, or Obama would not have won. Where are all those people now? Why are they silent while the media spout all this trash?
Good questions, Barb. Excellent questions. Why aren't people giving this man a chance? Nobody can tell what the future will hold, but is it so terrible to believe that fixing our roads, bridges and dams will be a good thing and will put people to work? That fixing our schools will be a good thing and will help to create future leaders and educated workers? That fixing our health care system will save us money in the long run by making sure everyone has access to preventative care, not just emergency care?
I am no more well-versed than you in politics, but I think that we need to call people on lies and fear and ignorance when we see it. All of us.
The repubs don't care about people , the country or the earth.. all they care about is their money and power... and way too many people in this country care way too much about their money and that is how we got in this fix.. repubs cater to greed and resentments in people to gain their power while helping themselves and their friends steal everything they can.
I think both parties have their share of greed, Dexter, but you are right...the GOP has turned it into an art form and a device of manipulation.
I never invested in IRA's or 401K's either. I'm of the opinon that it's my money and I do not wish to be charged a fee if I want to withdraw any of it. I guess some people have no self control and need something to deter them for spending needlessly. I'm okay. The crash missed me and that's a good thing, but so many people are having to cash their IRA's because the savings is gone and the job hasn't magically appeared. Feeding the family always comes before anything else.
i did once in 401k's but i withdrew it all and got charged a huge fee. i'm with you there lee.