Open thread July 10, 2012 Dan Crawford | July 10, 2012 6:10 pm Tags: open thread Comments (5) | Digg Facebook Twitter |
Some answers to questions asked by an independent investigator from Oyster consulting answered by George Hartzman on his Wells Fargo Whistleblower filing
i suppose you all know that florida is one of the six states that has announced they’ll opt out of the medicaid expansion…but maybe you dont know that florida has been covering up the worst tuberculosis outbreak in the United States in twenty years – 99 cases, 13 deaths…the CDC warned them about it, but health officials made a conscious decision not to not tell the public because they believed contagious diseases only affected their underclass…
MORE CHICAGO LOCAL COLOR:
The 90 cents a mile on the Chicago taxi meter in 1981– when I began to drive a cab here (now retired) — would now make two dollars and twenty-eight cents a mile if the mileage rate had kept pace with inflation — according the federal bureau of labor standards online inflation calculator (which uses the most commonly accepted inflation measure: CPI-U).
Since 1981 average income in the US has grown at least 50% — as new technologies and better management techniques came into play.
I heard about the every Monday morning strike recently and I was told by the people I was with that the drivers claimed only $5/hr wages. I told them of my generation’s experience: “Only one 30 cent increase in the meter between 1981 and 1997; at which midpoint the city started putting on 40% more cabs while adding trains to both airports, unlimited livery licenses and free trolleys between all the hot spots downtown.” $5/hr is what an Evanston Norshore driver recently told me he was earning. Easy to believe.
What’s all this about owning a piece of America? Or, a bill of goods by any other name would still not be too sweet.
Here’s grist for the mill of “owning a piece of America.” I’ve never been a big fan of the 401K approach to retirement. An IRA invested in mutual finds seemed no different. However, I being the cynic that I am was concerned that I was being too critically suspicious of the good intentions of our elected representatives and the investment and finance industries of our great country. Besides, I had little choice of what to do if I wanted my wife and I to have something more than Social Security benefits to fall back on. True enough I could have skipped the “tax advantaged” character of the 401k/IRA saving for retirement approach. I could have paid up front taxes on my “saved” earnings and invested in Who Knows What, Inc. A couple of coops or condos in Manhattan would have done the trick, but…….
So I socked it away and even felt perturbed when I got back 401k money because I was earning too much relative to other employees in the company I’d been working for. Little did I know that that returned 401k money would be the only money that would be safe from the vagaries of the stock market. Now I took what I thought to be the more conservative approach and spread the funds over about a half dozen mutuals of the dozen or so that the plan had available for us lucky employees to invest in. Nothing out of the ordinary, they included the big mutual investment funds that we all know and would recognize the names of. And over the past twenty years I contributed about $200,000 into those accounts. Now here’s the rub. Including all the ups and downs of the market place I was able to transfer out without any additional negative consequence the balance of about $179,500. So the market over the last twenty years has earned those funds nothing. That is nothing beyond what ever fund management fees may have been earned by the stewards of those fund companies. In a nut shell I saw the total capital shrink by about $20,500 over a twenty year span. Not too bad I figure if I view it as a change rate of only 0.1025. Unfortunately the change is in the wrong direction.
To be continued.
Continued from above.
I guess I should see the half full glass in this scenario. I still have most of my principal savings. It’s the return that leaves much to be desired. It’s hard to know what I paid to the administrator of the plan and the fund managers for assisting me in losing ground. That information is almost as unavailable as is any research findings regarding 401(k)/IRA performance in general. What with so many Americans investing their retirement in the strength and growth of the American economy one would expect that there would be reams of easily available data elucidating the question. Not so!! I spent about an hour goggling the concept, 40k/IRA performance. Little on the mark though there were tons of references to how one can get the best out of such retirement schemes. All provided by the many who are actively employed by the investment community. So I can’t even determine whether my experience is unique.
I suspect that this issue is one that is ripe for exploration by qualified members of the economics community. Some 50 million workers are putting their retirement plans in the hands of the 401(k) management industry, a mini industry within the general investment management community. Interestingly that is down from the 60 million participants that prior to the 2008 financial debacle which decimated so many accounts. The representative who had assisted me in the personal analysis of my own account noted, “Oh you know the market hasn’t helped fund performance.” It occurred to me, what else is there that has any effect on 401(k)/IRA performance. As my son pointed out to me while discussing my concerns about retirement account performance, “Research suggests that it is only the last five years of an account’s over all performance that can be detrimental.” He means that if it is some earlier point in an account’s duration there is time to “bounce back” from the abyss of deflating values. And what if the market tanks very eight years or so?
So Dan while that is a personal tale of woe I suspect that there are others whose retirement planning has been buffeted (if only mine had been Buffeted) by the vagaries of the equities market. Or the still borne results of the bond markets. It’s interesting to note, as a correlated aside) that the public sector employees have not suffered the same losses. Their primary retirement accounts, even when partially self funded, are defined benefit plans. That could be the basis of so much animosity being shown that class of workers. They didn’t have the same opportunity to own a piece of corporate America, and their not suffering for it while so many other American workers are beginning to recognize that they may have been sold a bill of goods.