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More of Less from Obama

Politics / US Politics Sep 09, 2009 - 07:26 AM GMT

By: Mike_Stathis


Best Financial Markets Analysis ArticleIn tradition with the previous empty bag delivered by President Bush, President Obama has continued to offer Americans more of less when it comes to ways to ensure a viable retirement. In reality, Obama's announced changes do nothing more than ensure Washington gets financing for its reckless spending habits, while lining the pockets of the largely useless mutual fund industry.  

You might recall that President Bush increased the limits for retirement savings plans after the dotcom collapse vaporized the retirement accounts of many Americans. 

You might also recall that virtually none of the thousands of criminals went to prison for this scam. Meanwhile, trillions of dollars changed hands - from everyday investors into the hands of these now tremendously wealthy criminals.

Bush positioned these increased limits as some kind of "favor" to workers, while failing to state the obvious - it represented a clear increase in each employee's burden of retirement from employers.  As pension plans continue to suffer, the shift to 401(k) plans is mounting even faster.  I discussed this issue at length in America's Financial Apocalypse (chapter 9). 

So now President Obama is stepping in to provide an easier route for workers to invest in U.S. government savings bonds, as if Americans are in any position to assume that type of credit risk. 

But this is not all.  Obama also plans to allow "departing workers" to divert cash from unused paid vacation days into their retirement plans.  Wow.  Thank you Mr. President; for nothing. 

The fact is that workers already have this option (up to a certain limit). 

Furthermore, it is safe to assume that most "departing workings" aren't exactly in the position to shift unpaid vacation days into their retirement accounts because they aren't likely to depart by choice.  Most will be departing due to lay-offs. 

But this is not the end from the "Agent of Change." President Obama also plans to make enrollment into employer-sponsored retirement plans automatic.  This is something the mutual fund industry has lobbied for many years, as it means billions in additional annual fees.,0,3323337.story

President Obama, if you really want to help Americans save for retirement you can start by making some real change:

1) Restructure free trade policies to strengthen employment opportunities in the U.S. as you promised prior to winning the election.
The median U.S. worker has not had an increase in wages (adjusted for inflation) since 1999. Of course they haven't been saving for retirement. They simply aren't making any money.  Meanwhile, costs for education, energy, healthcare and food have soared since that time - items that eat away at the disposable income of median workers.

Moreover, why would any sane individual want to toss their hard-earned money into a stock market-based retirement account after witnessing the devastating losses due to the market scandals over the past decade. 

2) Provide more investment options and make them easier to implement, such as the inclusion of Certificates of Deposit into 401(k)-type accounts (so workers can take advantage of the double-digit interest rates that you have ensured in the coming years).

3) Provide retirement savings options that get rid of the middleman (i.e. mutual funds) so workers can keep more of what they save and earn with their investments. 

It is a known fact that 401(k)s have lower performance and higher fees than pension plans because 401(k) plans are retail retirement savings plans, while pensions are not (as detailed in chapter 9 of AFA). 

President Obama, if in fact you want to encourage more American workers to save for their retirement, you need to level the free trade playing field so that there are fewer incentives to send jobs overseas. This is the best thing you can do to ensure Americans have more money to save for retirement.  It is also the best thing you can do to restore what was once a great and economically prosperous nation.

Finally, you need to send these banking executives directly to jail for the massive fraud they created.  This would send a clear message to these criminals and their colleagues that they will pay dearly if they defraud investors.  This is the single-biggest thing that can be done to restore public confidence in the stock market.  Without that, I must insist all non-professional investors stay out of the stock market FOREVER, if at all possible. 

The media's use of Bernie Madoff as a distraction and scapegoat for something he had nothing to do with is a complete farce. The fact that Americans have not protested this unintelligent tactic demonstrates just how ignorant and brainwashed they have become. They have allowed their minds to be seized by the media, while sucking in the media hack’s back and forth political blame game. 


By Mike Stathis

Copyright © 2009. All Rights Reserved. Mike Stathis.

Mike Stathis is the Managing Principal of Apex Venture Advisors , a business and investment intelligence firm serving the needs of venture firms, corporations and hedge funds on a variety of projects. Mike's work in the private markets includes valuation analysis, deal structuring, and business strategy. In the public markets he has assisted hedge funds with investment strategy, valuation analysis, market forecasting, risk management, and distressed securities analysis. Prior to Apex Advisors, Mike worked at UBS and Bear Stearns, focusing on asset management and merchant banking.

The accuracy of his predictions and insights detailed in the 2006 release of America's Financial Apocalypse and Cashing in on the Real Estate Bubble have positioned him as one of America's most insightful and creative financial minds. These books serve as proof that he remains well ahead of the curve, as he continues to position his clients with a unique competitive advantage. His first book, The Startup Company Bible for Entrepreneurs has become required reading for high-tech entrepreneurs, and is used in several business schools as a required text for completion of the MBA program.

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Books Published
"America's Financial Apocalypse" (Condensed Version)

"Cashing in on the Real Estate Bubble"

"The Startup Company Bible for Entrepreneurs"

Disclaimer: All investment commentaries and recommendations herein have been presented for educational purposes, are generic and not meant to serve as individual investment advice, and should not be taken as such. Readers should consult their registered financial representative to determine the suitability of all investment strategies discussed. Without a consideration of each investor's financial profile. The investment strategies herein do not apply to 401(k), IRA or any other tax-deferred retirement accounts due to the limitations of these investment vehicles.

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