Sucking Our Nation Dry

(10 am. – promoted by ek hornbeck)

No, this is not an essay on some X-rated movie.  It is about how the government and Wall Street have continually conspired to take and use any new money it can get its hands on, which, now means YOUR money.

The latest new “idea” floated by FDIC Chairwoman Sheila Bair is to have state pension funds buyout failed banks.

Now, I am not totally ignorant about economics, nor, am I a studied professor on the subject.  However, I’m not sure who could glean any meaningful information out of the following:

In a speech to the National Association for Business Economics Washington Policy Conference, FDIC Chairwoman Sheila Bair outlined what she called “a pre-funded resolution mechanism,” but did not specify what exactly that is. She instead said it would be “similar to the FDIC’s receivership authority for failed banks,” exposing only shareholders to risk, as opposed to the bank bailouts that saw billions of taxpayer dollars funneled into a near-crippled financial system.

“Shareholders and creditors would bear the losses, not the public,” she explained. “But, the process would be orderly and help prevent a catastrophic collapse of other firms.”

Go ahead, do your head shake to clear the cobwebs, and let’s talk about the latest plan for the government to get their hands on YOUR money.

Before we talk about the pension funds, however, we must look at the ways that the government and Wall Street have already taken YOUR money.

Social Security

We continually hear about how, without reform, social security will become insolvent.  The reason that our government wants to “reform” social security is because they have looted so much money from it, using it as a slush fund, that there is no way that the government can repay it back.  Thus, the system needs to be “reformed” so that the problem simply goes away.

In a little-known book, “The Looting of Social Security: How the Government Is Draining America’s Retirement Account,” Allen Smith, who has a P.h.D. in economics, details how the Bush administration looted social security in his eight years in office.  But, it wasn’t only George W. Bush, it started with Ronald Reagan.

From The Boston Globe

If you … have the stomach for a truly demoralizing read — you may wish to take up ”The Looting of Social Security: How the Government Is Draining America’s Retirement Account,” by Allen W. Smith (Carroll & Graf, paperback, $14 ).  With dismal clarity, Smith lays out the step-by-step history of how a national pension plan was transformed into an outright shakedown of working people, a maneuver that began during Ronald Reagan’s administration. Bill Clinton aggravated the situation by making no distinction between general revenue and Social Security in crowing about budget surpluses — which, in turn, culminated in the grand largess of George W. Bush in handing out whacking great tax cuts to the rich.

It is an unfortunate fact that the social security fund is basically broke since it is running on IOU’s.  As Bush said:

“Our system is called pay as you go.  You pay into the system through your payroll taxes and the government spends it.  It spends the money on current retirees and with the money left over, it funds other programs.  And all that’s left behind is file cabinets full of IOUs.”

THAT is the reason that Bush wanted to privatize social security; all those IOU’s are suddenly gone and a NEW system instituted.

Retirement pensions became IRA’s

Many people have IRA’s.  Many people saw their IRA’s take a huge hit when Wall Street almost crashed.  That is because the money you have in an IRA is money that is traded on the stock market.  In addition, no matter when you take out the money, it is treated as taxable income.

Companies finally realized that it came out of their profit margin, and,  Wall Street wanted a new way to their hands on more money.  The “win-win” scenario?  To stop giving retirement pensions and, instead, force people to set up accounts that they put their money into that Wall Street could then use on the stock market.

The stock market, however, has three “lanes”; the slow lane, the fast lane, and the ultra-fast lane.  

The ultra-fast lane is used by those who run the industry, and, they never lose money.  The fast lane is used by those “preferred members,” and, they rarely lose money.  Everyone else, to include these IRA’s accounts, use the slow lane, meaning that when the market takes a loss, it is the people in the slow lane who take the biggest hit.

To put it more bluntly, it is our money that is lost first so that others can keep their profits.

How to get more money?

I posed this very thesis before, that our government and Wall Street will continually want more money, that companies will continually want higher profits, and, as wages stagnate and decline, there are fewer and fewer ways for that to happen.  The government has already stolen the funds from social security and Wall Street already has all the money they are likely to get from IRA’s.

We’ve already seen that banks hold no accountability for their failures and debts.  In fact, we just saw this, and the ramifications of it, in action; in Iceland.  When an Icelandic bank went bankrupt, the British and Dutch governments are demanding reimbursement for debts incurred by the failed bank.  The Icelandic government is now trying to push that debt, incurred by a bank, onto each individual person because the debt is so large even the Icelandic government can’t afford it.  Our government could afford it, on our taxpayer money, by simply increasing the national debt by a few trillion dollars.

The idea today is “reforming” health care, but, as Dennis Kucinich has said, all the bill does is make all American’s buy health insurance by federal mandate promising that this will keep rates low.  What promise has our government ever kept?

When you look at what Sheila Bair said, it is now evident where they are looking to find that new money; state pension funds.

Here is what she said, see if you can follow this thinking…

A state’s pension fund is used to bolster failing banks, and, if the bank fails, only the shareholders and creditors will take the loss.  

But, if a state’s pension fund is used, that means that each person who has money in the fund is now considered a shareholder.  Thus, they lose their money they had IN that pension fund.

Doesn’t that sound like another “win-win” scenario?  The FDIC uses the money that average people contribute to a state pension fund and are looking to fund their retirement to cover banks, and, if the bank fails, it is the people that lose, not the banks, not the government.

Unless someone knows something I don’t, that is exactly what I am reading.  Sheila Bair is simply floating a new way for the government to get their hands legally on more of our money.

They’ve drained our social security.  They drain our IRA’s to bolster losses in the stock market.  Now, they want to drain state pension funds.

That pretty much sucks any safety net for the average person dry.