Thursday, May 29, 2014

Building the Nest Egg for Golden Years...Not So Much


Do you remember the drill of all those TV financial gurus in the Nineties? I liken to those graphics of a hammer pounding on the brain in old Excedrin or the appropriately named "Advil" commercials.

First, "You are never too young to begin to save for your retirement." Trust me, is what they meant while on their quest for their first million by selling advice how to get rich.

Alright already, point taken. We employees discussed the options available defined-benefit payout, a deferred compensation plan "457" followed by numerous others including planet "401-K" designed by K-Pax. 

Second, when they told you to save as much as possible...for YOUR retirement even though you had a mortgage, car payment, kids to put through school...forget them and "Pay Yourself First! Of course we did not fully understand this concept until Bain Capital unabashedly demonstrated years later.

 Third, we had no idea of the catastrophe and loss of life with 9-Eleven! In twenty-four hours stocks and mutual funds held by we young retirement savers took a nosedive, crashed into the Indian Ocean and the evidence against the institutions who escaped big losses now rested in a place never to be found. 

Fourth, what did the financial "gurus and pundits" hammer home that horrible Tuesday night to all of us?  "Small investors should not panic and sell. Hold on to your stocks and mutual funds."

Even the President told us to "stay the course...this is what terrorists a patriot."
While the big institutions, hedge funds and banks hurdled that call to arms so to Ca$h-out first. 

(TRUTH: On the evening of 911 every flight in America by executive order of Dick Cheney from an unknown location grounded every flight. However, Saudis and members of the Bin-Laden family boarded planes back to the Middle East. RUMOR: How many "extra bags" of cash did they store aboard, and did they pay the higher fee?

Many of we small investors did figure out some these boondoggles, shenanigans enacted by Foreign and Wall Street carpetbaggers. What could we do? Why it is "Do more with less" and "America will fight back."  

However, there is more to come. In the late nineties "inflated real estate prices and sub-par mortgages" greedily staked a claim. One with little risk for the bankers. In the years following, unethical and illegal new protocols of over-inflating housing markets became a mantra. "Everyone else is doing it," became the reply of even the bankers with high accreditation. Wall $treet initiated their own gold rush, taking no hostages in a "personal and obscene profit" scheme rather than the standards in place for protection. 

Millions of those same "small investors" (holding dear to retirement savings) were hoodwinked by Ferrari drivers parking in garages in the Hamptons. The typical borrower was sold on the Adjustable Rate mortgage that one day they could meet. The mortgage bankers, institutions who "bundled junk" and sold it as merely "high risk" investments. These crimes they had to have known. Bankers and the King's horsemen knew Humpty Dumpty would take a terrible fall. Oh, and that Old Lady would find herself living in a shoe with so much debt she knew not what to do. 

This was not sound economics guided with prudence, but a movie notion that "Greed is Good!" Isn't that right Mr. Gecco? 

(To be continued)