401K plans and IRAs eyed to alleviate fiscal cliff

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401K plans and IRAs eyed to alleviate fiscal cliff

Postby AR » Mon Dec 03, 2012 2:23 am

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Postby slucero » Mon Dec 03, 2012 2:56 am

I remember this... I think I even commented on this in this thread 2 years ago..

Quoted from here: http://www.zerohedge.com/news/governmen ... ied-sequel
Two years ago, in January 2010, Zero Hedge wrote "This Is The Government: Your Legal Right To Redeem Your Money Market Account Has Been Denied" which became one of our most read stories of the year. The reason? Perhaps something to do with an implicit attempt at capital controls by the government on one of the primary forms of cash aggregation available: $2.7 trillion in US money market funds. The proximal catalyst back then were new proposed regulations seeking to pull one of these three core pillars (these being no volatility, instantaneous liquidity, and redeemability) from the foundation of the entire money market industry, by changing the primary assumptions of the key Money Market Rule 2a-7.

A key proposal would give money market fund managers the option to "suspend redemptions to allow for the orderly liquidation of fund assets."



What this basically means is if you wanted to withdraw a portion, or all of your retirement moneys... you could be denied the right to do so.



The government has to find a way of paying down the debt that maintains some semblance integrity for the USD. simply printing more dollars and diluting the debt won't work because it would destroy the value of the dollar, and offend the existing creditors.

So they have to find a "source" of liquidity that also has implied integrity. That's retirement wealth.

The government knows that no one would agree to any percentage of their retirement monies being automatically converted to US Treasuries without their consent... as that is the whole point of a self directed retirement account. But the government has to figure out another way of getting their hands on the last remaining pool of real liquidity there is. The only thing they can offer in return is UST's, essentially worthless I.O.U's, offering a return that doesn't even equal the rate of inflation are all the government has left.

The likely path will be eventually giving the people the option to "opt out" of some of their retirement going directly into US Treasuries, along with a huge, patriotic campaign to swindle, er convince folks that your retirement is safe in UST's.

:roll:

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Postby Memorex » Mon Dec 03, 2012 3:22 am

Half tongue-in-cheek, but what Fiscal Cliff? All we are doing is resetting the tax rates to pre-cut levels and accepting the hugely increased spending that is clearly desired by the majority of Americans. So what's the big deal? How can going back to something that once was be a cliff? So a few people have less money. I'll pay higher taxes and my family will have less of what I work hard for. So what. At least that money will go somewhere efficiently, right? And look, if raising 80 to 105 billion dollars is the solution to all our problems, then cool. That's pretty easy. I hope that when all these tax rates expire we go back to the good old days. And Medicare and Social Security will hold hands and rejoice. Sweet!

Yes. I know. Just sayin'...
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Postby Ehwmatt » Mon Dec 03, 2012 4:46 am

Why not? There's a concentrated attack on those who save responsibly, and it already reflects in "little" things that people don't realize, such as the way ObamaCare caps health FSA contributions at $2,500 a year now. I've also heard rumblings that many want to abolish Roth IRAs altogether (my preferred savings vehicle--I always max my Roth out before giving a dime to my 401k or my individual brokerage accounts).

The theme is clear: forget about saving responsibly (i.e., tax-free) for those medical costs incurred above and beyond what your insurer reimburses, or even for those little things you and your family need (including things as simple as eye drops and contact solution). At that cap, the two of us are barely able to buy decent glasses and contacts between the two of us, let alone the accessories. Forget the rest of our medical needs.

And god only knows the impact of that little cap on families with medical needs/costs far more serious/expensive than ours (e.g., having a disabled kid).

At bottom, responsibility is being disincetivized in the most perverse way I can imagine.
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Postby Memorex » Mon Dec 03, 2012 5:33 am

Ehwmatt wrote:Why not? There's a concentrated attack on those who save responsibly, and it already reflects in "little" things that people don't realize, such as the way ObamaCare caps health FSA contributions at $2,500 a year now. I've also heard rumblings that many want to abolish Roth IRAs altogether (my preferred savings vehicle--I always max my Roth out before giving a dime to my 401k or my individual brokerage accounts).

The theme is clear: forget about saving responsibly (i.e., tax-free) for those medical costs incurred above and beyond what your insurer reimburses, or even for those little things you and your family need (including things as simple as eye drops and contact solution). At that cap, the two of us are barely able to buy decent glasses and contacts between the two of us, let alone the accessories. Forget the rest of our medical needs.

And god only knows the impact of that little cap on families with medical needs/costs far more serious/expensive than ours (e.g., having a disabled kid).

At bottom, responsibility is being disincetivized in the most perverse way I can imagine.


I use up to full $5k FSA by March or so and the $5k Dependent Care by June. I have 6 kids and now my two nieces that I care for and $2500 doesn't do crap for me. Plus of course my premiums went up. :)
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Postby Monker » Mon Dec 03, 2012 2:40 pm

Fact Finder wrote:http://www.americanthinker.com/2009/11/clowardpiven_government.html


Geez, this is an article writtein 3yrs ago, talking about things from 4yrs ago.

No need for a 'fiscal cliff', you guys have found a cliff yourself and followed each other over it like a bunch of lemmings.

None of this is going to happen...it's just fear tactics from the sore losers.
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Postby slucero » Mon Dec 03, 2012 3:00 pm

yup.. the fiscal cliff isn't real.. neither is the 1.6 Trillion proposed increase int he federal budget... oh wait.. there is no budget.. one hasn't been passed since April of 2009. But technically it was just an “omnibus spending bill,” I guess that's what this will be too..


... it's just political theater from happy Democrat winners... :roll:

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Postby Boomchild » Mon Dec 03, 2012 3:45 pm

All we need to do is think "YES WE CAN". It will help you sleep better. Why not let the Federal Government take over the funds in your 401K. They have done a terrific job with Social Security and have shown great fiscal responsibility in operating our government. Who better to manage your retirement savings. Trust them, the money will be there when you need it. 8)
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Postby The Sushi Hunter » Tue Dec 04, 2012 2:36 am

I can't wait to see how the pro sports players handle the new taxes, not to mention all of the movie stars, singers, rappers, and entertainers in general. Sure there is probably very few that don't make 250,000 per year but I'm sure that's far and few in between.
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Postby The Sushi Hunter » Tue Dec 04, 2012 7:27 am

It shall bring a whole new level of tax evasion to the plate. I bet we start seeing four year contracts that include taxes to be paid and not by the players. This will be across the board as well, including record contracts, acting contracts, etc. IRS is going to be getting busy I predict.
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Postby Monker » Tue Dec 04, 2012 10:29 am

slucero wrote:yup.. the fiscal cliff isn't real.. neither is the 1.6 Trillion proposed increase int he federal budget... oh wait.. there is no budget.. one hasn't been passed since April of 2009. But technically it was just an “omnibus spending bill,” I guess that's what this will be too..


... it's just political theater from happy Democrat winners... :roll:


I'm not arguing that...

I am saying propaganda artists posting articles from three years ago as if they were written today are just frustrated because they lost the argument.

The budgets have been stalled because Republicans have REFUSED to compromise and raise taxes on the wealthy. That has changed...some are now willing to do that. Compromise is giving a little to get a little. You are going to see a compromise budget bill and the 'fiscal cliff' isn't going to happen. And, if it DOES happen, the Republicans are to blame for not compromising and averting the cliff. It's a no win situation for them.

The hard right fiscal conservatives "read my lips, no new taxes" lost that battle when the lost the Presidency

And, no I don't think any significant amount change to 401k's is going to happen. It's just scare tactics directed at the middle income people to rally them against Obama.
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Postby Monker » Tue Dec 04, 2012 10:33 am

The Sushi Hunter wrote:It shall bring a whole new level of tax evasion to the plate. I bet we start seeing four year contracts that include taxes to be paid and not by the players. This will be across the board as well, including record contracts, acting contracts, etc. IRS is going to be getting busy I predict.


And, Chicken Little will get a free helmet so he can survive the sky falling down on him.

You guys are hillarious.

You know, Jesse Ventura may want to do a story about you guys. If he can do one about Lizard Men world leader, he can definitely deal with your conspiracy theories. Just crazy.
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Postby Boomchild » Tue Dec 04, 2012 12:38 pm

Monker wrote: If he can do one about Lizard Men world leader, he can definitely deal with your conspiracy theories. Just crazy.


Actually, it wasn't Jesse that was all that interested in the alien lizard men. It was his son and Oliver Stone's kid that pushed him to look into it for the show. Jesse was very skeptical through the whole investigation and in the end his stated that he felt it was bullshit. He does believe in some crazy theories though.
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Postby slucero » Tue Dec 04, 2012 12:48 pm

Monker wrote:
slucero wrote:yup.. the fiscal cliff isn't real.. neither is the 1.6 Trillion proposed increase int he federal budget... oh wait.. there is no budget.. one hasn't been passed since April of 2009. But technically it was just an “omnibus spending bill,” I guess that's what this will be too..


... it's just political theater from happy Democrat winners... :roll:


I'm not arguing that...

I am saying propaganda artists posting articles from three years ago as if they were written today are just frustrated because they lost the argument.

The budgets have been stalled because Republicans have REFUSED to compromise and raise taxes on the wealthy. That has changed...some are now willing to do that. Compromise is giving a little to get a little. You are going to see a compromise budget bill and the 'fiscal cliff' isn't going to happen. And, if it DOES happen, the Republicans are to blame for not compromising and averting the cliff. It's a no win situation for them.

The hard right fiscal conservatives "read my lips, no new taxes" lost that battle when the lost the Presidency

And, no I don't think any significant amount change to 401k's is going to happen. It's just scare tactics directed at the middle income people to rally them against Obama.






those propagandists would be the Securities & Exchange Commission and the Federal Reserve...


http://www.sec.gov/rules/proposed/2009/ic-28807fr.pdf

2nd page; summary

SUMMARY: The Securities and Exchange Commission (‘‘Commission’’ or ‘‘SEC’’) is proposing amendments to certain rules that govern money market funds under the Investment Company Act. The amendments would: Tighten the risk-limiting conditions of rule 2a–7 by, among other things, requiring funds to maintain a portion of their portfolios in instruments that can be readily converted to cash, reducing the weighted average maturity of portfolio
holdings, and limiting funds to investing in the highest quality portfolio securities; require money market funds to report their portfolio holdings monthly to the Commission; and permit a money market fund that has ‘‘broken the buck’’ (i.e., re-priced its securities below $1.00 per share) to suspend redemptions to allow for the orderly liquidation of fund assets.


http://www.newyorkfed.org/research/staf ... /sr564.pdf

Abstract (2nd page)
This paper introduces a proposal for money market fund (MMF) reform that could mitigate systemic risks arising from these funds by protecting shareholders, such as retail investors, who do not redeem quickly from distressed funds. Our proposal would require that a small fraction of each MMF investor’s recent balances, called the “minimum balance at risk” (MBR), be demarcated to absorb losses if the fund is liquidated. Most regular transactions in the fund would be unaffected, but redemptions of the MBR would be delayed for thirty days. A key feature of the proposal is that large redemptions would subordinate a portion of an investor’s MBR, creating a disincentive to redeemif the fund is likely to have losses. In normal times, when the risk of MMF losses is remote, subordination would have little effect on incentives. We use empirical evidence, including new data on MMF losses from the U.S. Treasury and the Securities and Exchange Commission, to calibrate an MBR rule that would reduce the vulnerability of
MMFs to runs and protect investors who do not redeem quickly in crises.



PAGE 2
This paper proposes another approach to mitigating the vulnerability of MMFs to runs by introducing a “minimum balance at risk” (MBR) that could provide a disincentive to run from a troubled money fund. The MBR would be a small fraction (for example, 5 percent) of each shareholder’s recent balances that could be redeemed only with a delay. The delay would ensure that redeeming investors remain partially invested in the fund long enough (we suggest 30 days) to share in any imminent portfolio losses or costs of their redemptions. However, as long as an investor’s balance exceeds her MBR, the rule would have no effect on her transactions, and no portion of any redemption would be delayed if her remaining shares exceed her minimum balance.

The motivation for an MBR is to diminish the benefits of redeeming MMF shares quickly when a fund is in trouble and to reduce the potential costs that others’ redemptions impose on non?redeeming shareholders. Thus, the MBR would be an effective deterrent to runs because, in the event that an MMF breaks the buck (and only in such an event), the MBR would ensure a fairer allocation of losses among investors.


Importantly, an MBR rule also could be structured to create a disincentive for shareholders to redeem shares in a troubled MMF, and we show that such a disincentive is necessary for an MBR rule to be effective in slowing or stopping runs. In particular, we suggest a rule that would subordinate a portion of a redeeming shareholders’ MBR, so that the redeemer’s MBR absorbs losses before those of non?redeemers. Because the risk of losses in an MMF is usually remote, such a mechanism would have very little impact on redemption incentives in normal circumstances. However, if losses became more likely, the expected cost of redemptions would increase. Investors would still have the option to redeem, but they would face a choice between redeeming to preserve liquidity and staying in the fund to protect principal. Creating a disincentive for redemptions when a fund is under strain is critical in protecting MMFs from runs, since shareholders otherwise face powerful incentives to redeem in order to simultaneously preserve liquidity and avoid losses.



(I'm quoting this from an article)
Basically, according to the Fed, the minimum balance would make the financial system more fair, reduce systemic risk and protect smaller investors who can be left with losses if larger investors in their fund withdraw cash first. The proposal would require a "small fraction" of each fund investor's recent balances to be segregated into a sinking fund to absorb losses if the fund is liquidated. Subsequently redemptions of these minimum balances at risk would be delayed for 30 days, "creating a disincentive to redeem if the fund is likely to have losses." In other words: socialized losses. Where have we seen this before?

But the real definition of what the Fed is suggesting is: capital controls. Once this proposal is implemented, the Fed, or some other regulator, will effectively have full control over how much money market cash is withdrawable from the system at any given moment. At $2.7 trillion in total, one can see why the Fed is suddenly concerned about this critical liquidity and capital buffer.

What is surprising is that this proposal is reincarnated now. The question becomes: why now? What does the Fed know about market liquidity conditions that it does not want to share, and more importantly, is the Fed seeing a rapid deterioration in liquidity conditions in the future, that may and/or will prompt retail investors to pull their money in another Lehman-like bank run repeat?



The talk is just that "talk"... there will never be another budget passed, by either party, because to do so would only further illuminate just how rapidly insolvency is accelerating.

This isn't about the budget or the fiscal cliff... its about liquidity, more precisely "good" liquidity vs. "bad (printed out of thin air) liquidity". The "bad liquidity" is rapidly losing favor in the capital markets, best exemplified by the failure of TARP, 3 rounds of QE, etc, to revive the economy, because their real purpose was to "net out" the losses incurred by banks, but the cost was the integrity of liquidity. And this is the result, an ever-increasing scramble by the institutions of the Federal government that (mis)manage economic policy to shore up capital market confidence regarding the soundness of liquidity.

There isn't any conspiracy here... anyone who takes the time to look beyond the political rhetoric in D.C. and media clowns on TV understands this and see's it for what it is.

The beginning of capital controls.
Last edited by slucero on Wed Dec 05, 2012 1:38 am, edited 1 time in total.

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Postby artist4perry » Tue Dec 04, 2012 10:09 pm

OVER THE CLIFF By Hugo First :wink: :lol: :lol: :lol:
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Postby Monker » Wed Dec 05, 2012 9:00 am

Oh, please. These are Money Market funds - not 401k. And, these rules seem designed to help the common traders during a situation like the housing crisis where funds crashed. Finally, if you think suspending trading on accounts that have crashed to the point of no recovery doesn't ALREADY happen, you are wrong. I specifically know of some funds that changed their rules during the housing crash to put trades in a quieue and only allowed a certain number of trades per day - to artificially keep the fund alive for months rather then instantly going insolvent. Again, that was YEARS ago during the housing crash.

So, your are smoking something funky to equate the below to government taking over your 401k - not going to happen. That's crazy talk.

slucero wrote:
Monker wrote:
slucero wrote:yup.. the fiscal cliff isn't real.. neither is the 1.6 Trillion proposed increase int he federal budget... oh wait.. there is no budget.. one hasn't been passed since April of 2009. But technically it was just an “omnibus spending bill,” I guess that's what this will be too..


... it's just political theater from happy Democrat winners... :roll:


I'm not arguing that...

I am saying propaganda artists posting articles from three years ago as if they were written today are just frustrated because they lost the argument.

The budgets have been stalled because Republicans have REFUSED to compromise and raise taxes on the wealthy. That has changed...some are now willing to do that. Compromise is giving a little to get a little. You are going to see a compromise budget bill and the 'fiscal cliff' isn't going to happen. And, if it DOES happen, the Republicans are to blame for not compromising and averting the cliff. It's a no win situation for them.

The hard right fiscal conservatives "read my lips, no new taxes" lost that battle when the lost the Presidency

And, no I don't think any significant amount change to 401k's is going to happen. It's just scare tactics directed at the middle income people to rally them against Obama.






those propagandists would be the Securities & Exchange Commission and the Federal Reserve...


http://www.sec.gov/rules/proposed/2009/ic-28807fr.pdf

2nd page; summary

SUMMARY: The Securities and Exchange Commission (‘‘Commission’’ or ‘‘SEC’’) is proposing amendments to certain rules that govern money market funds under the Investment Company Act. The amendments would: Tighten the risk-limiting conditions of rule 2a–7 by, among other things, requiring funds to maintain a portion of their portfolios in instruments that can be readily converted to cash, reducing the weighted average maturity of portfolio
holdings, and limiting funds to investing in the highest quality portfolio securities; require money market funds to report their portfolio holdings monthly to the Commission; and permit a money market fund that has ‘‘broken the buck’’ (i.e., re-priced its securities below $1.00 per share) to suspend redemptions to allow for the orderly liquidation of fund assets.


http://www.newyorkfed.org/research/staf ... /sr564.pdf

Abstract (2nd page)
This paper introduces a proposal for money market fund (MMF) reform that could mitigate systemic risks arising from these funds by protecting shareholders, such as retail investors, who do not redeem quickly from distressed funds. Our proposal would require that a small fraction of each MMF investor’s recent balances, called the “minimum balance at risk” (MBR), be demarcated to absorb losses if the fund is liquidated. Most regular transactions in the fund would be unaffected, but redemptions of the MBR would be delayed for thirty days. A key feature of the proposal is that large redemptions would subordinate a portion of an investor’s MBR, creating a disincentive to redeemif the fund is likely to have losses. In normal times, when the risk of MMF losses is remote, subordination would have little effect on incentives. We use empirical evidence, including new data on MMF losses from the U.S. Treasury and the Securities and Exchange Commission, to calibrate an MBR rule that would reduce the vulnerability of
MMFs to runs and protect investors who do not redeem quickly in crises.



PAGE 2
This paper proposes another approach to mitigating the vulnerability of MMFs to runs by introducing a “minimum balance at risk” (MBR) that could provide a disincentive to run from a troubled money fund. The MBR would be a small fraction (for example, 5 percent) of each shareholder’s recent balances that could be redeemed only with a delay. The delay would ensure that redeeming investors remain partially invested in the fund long enough (we suggest 30 days) to share in any imminent portfolio losses or costs of their redemptions. However, as long as an investor’s balance exceeds her MBR, the rule would have no effect on her transactions, and no portion of any redemption would be delayed if her remaining shares exceed her minimum balance.

The motivation for an MBR is to diminish the benefits of redeeming MMF shares quickly when a fund is in trouble and to reduce the potential costs that others’ redemptions impose on non?redeeming shareholders. Thus, the MBR would be an effective deterrent to runs because, in the event that an MMF breaks the buck (and only in such an event), the MBR would ensure a fairer allocation of losses among investors.


Importantly, an MBR rule also could be structured to create a disincentive for shareholders to redeem shares in a troubled MMF, and we show that such a disincentive is necessary for an MBR rule to be effective in slowing or stopping runs. In particular, we suggest a rule that would subordinate a portion of a redeeming shareholders’ MBR, so that the redeemer’s MBR absorbs losses before those of non?redeemers. Because the risk of losses in an MMF is usually remote, such a mechanism would have very little impact on redemption incentives in normal circumstances. However, if losses became more likely, the expected cost of redemptions would increase. Investors would still have the option to redeem, but they would face a choice between redeeming to preserve liquidity and staying in the fund to protect principal. Creating a disincentive for redemptions when a fund is under strain is critical in protecting MMFs from runs, since shareholders otherwise face powerful incentives to redeem in order to simultaneously preserve liquidity and avoid losses.



(I'm quoting this from an article)
Basically, according to the Fed, the minimum balance would make the financial system more fair, reduce systemic risk and protect smaller investors who can be left with losses if larger investors in their fund withdraw cash first. The proposal would require a "small fraction" of each fund investor's recent balances to be segregated into a sinking fund to absorb losses if the fund is liquidated. Subsequently redemptions of these minimum balances at risk would be delayed for 30 days, "creating a disincentive to redeem if the fund is likely to have losses." In other words: socialized losses. Where have we seen this before?

But the real definition of what the Fed is suggesting is: capital controls. Once this proposal is implemented, the Fed, or some other regulator, will effectively have full control over how much money market cash is withdrawable from the system at any given moment. At $2.7 trillion in total, one can see why the Fed is suddenly concerned about this critical liquidity and capital buffer.

What is surprising is that this proposal is reincarnated now. The question becomes: why now? What does the Fed know about market liquidity conditions that it does not want to share, and more importantly, is the Fed seeing a rapid deterioration in liquidity conditions in the future, that may and/or will prompt retail investors to pull their money in another Lehman-like bank run repeat?



The talk is just that "talk"... there will never be another budget passed, by either party, because to do so would only further illuminate just how rapidly insolvency is accelerating.

This isn't about the budget or the fiscal cliff... its about liquidity, more precisely "good" liquidity vs. "bad (printed out of thin air) liquidity". The "bad liquidity" is rapidly losing favor in the capital markets, best exemplified by the failure of TARP, 3 rounds of QE, etc, to revive the economy, because their real purpose was to "net out" the losses incurred by banks, but the cost was the integrity of liquidity. And this is the result, an ever-increasing scramble by the institutions of the Federal government that (mis)manage economic policy to shore up capital market confidence regarding the soundness of liquidity.

There isn't any conspiracy here... anyone who takes the time to look beyond the political rhetoric in D.C. and media clowns on TV understands this and see's it for what it is.

The beginning of capital controls.
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Postby slucero » Wed Dec 05, 2012 10:18 am

Monker wrote:Oh, please. These are Money Market funds - not 401k. And, these rules seem designed to help the common traders during a situation like the housing crisis where funds crashed. Finally, if you think suspending trading on accounts that have crashed to the point of no recovery doesn't ALREADY happen, you are wrong. I specifically know of some funds that changed their rules during the housing crash to put trades in a quieue and only allowed a certain number of trades per day - to artificially keep the fund alive for months rather then instantly going insolvent. Again, that was YEARS ago during the housing crash.

So, your are smoking something funky to equate the below to government taking over your 401k - not going to happen. That's crazy talk.


MMA's are merely an easy, 401(k)-eligible option to not invest in equity or bonds, but in "paper" which is cash in all but name (maybe not so much after the proposed Rule change passes). This rule is not designed to "help traders", its premise is to stop runs on MMA's, and as a result investors will no longer have access to money that historically has been sacrosanct and reachable and disposable on a moment's notice.

Lehman got itself in trouble by over levering itself, with its own money... and when it's customers decided to liquidate their accounts, and get their money back... it made Lehman an enormous credit risk, and rightfully so... and they lost all ability to raise capital to offset their corporate side losses... so they failed. Lehmans risk was not their customers risk to bear, nor should their customers principle be held hostage due to Lehmans malfeasance.

The market functions best when there is clear difference between risk/reward... it's simple economics... With this rule in place investment institutions will be able to use customer segregated principle as a hidden "hedge", which will change their creditworthiness at the expense of their customers... and the pricing mechanism will be further distorted as a result. This will turn MMA's into giant hedging accounts, and ultimately destroy the integrity of MMA's in the long run.


Crazy talk, LMAO... I'm not the one saying it.. the SEC and the Fed are by their actions.... so they're the one's smoking something funny.

Insanity: doing the same thing over and over again and expecting different results.


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Postby Monker » Wed Dec 05, 2012 10:29 am

slucero wrote:
Monker wrote:Oh, please. These are Money Market funds - not 401k. And, these rules seem designed to help the common traders during a situation like the housing crisis where funds crashed. Finally, if you think suspending trading on accounts that have crashed to the point of no recovery doesn't ALREADY happen, you are wrong. I specifically know of some funds that changed their rules during the housing crash to put trades in a quieue and only allowed a certain number of trades per day - to artificially keep the fund alive for months rather then instantly going insolvent. Again, that was YEARS ago during the housing crash.

So, your are smoking something funky to equate the below to government taking over your 401k - not going to happen. That's crazy talk.


MMA's are merely an easy, 401(k)-eligible option to not invest in equity or bonds, but in "paper" which is cash in all but name (maybe not so much after the proposed Rule change passes). This rule is not designed to "help traders", its premise is to stop runs on MMA's, and as a result investors will no longer have access to money that historically has been sacrosanct and reachable and disposable on a moment's notice.

Lehman got itself in trouble by over levering itself, with its own money... and when it's customers decided to liquidate their accounts, and get their money back... it made Lehman an enormous credit risk, and rightfully so... and they lost all ability to raise capital to offset their corporate side losses... so they failed. Lehmans risk was not their customers risk to bear, nor should their customers principle be held hostage due to Lehmans malfeasance.

The market functions best when there is clear difference between risk/reward... it's simple economics... With this rule in place investment institutions will be able to use customer segregated principle as a hidden "hedge", which will change their creditworthiness at the expense of their customers... and the pricing mechanism will be further distorted as a result. This will turn MMA's into giant hedging accounts, and ultimately destroy the integrity of MMA's in the long run.


Crazy talk, LMAO... I'm not the one saying it.. the SEC and the Fed are by their actions.... so they're the one's smoking something funny.


You didn't read what I said.

This type of stuff already happens. You are just ignorant to that fact.

Like I said, government taking over your 401k is crazy talk. It just isn't going to happen. There is a HUGE difference between that and what you are posting about.
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Postby slucero » Wed Dec 05, 2012 12:54 pm

Monker wrote:
slucero wrote:
Monker wrote:Oh, please. These are Money Market funds - not 401k. And, these rules seem designed to help the common traders during a situation like the housing crisis where funds crashed. Finally, if you think suspending trading on accounts that have crashed to the point of no recovery doesn't ALREADY happen, you are wrong. I specifically know of some funds that changed their rules during the housing crash to put trades in a quieue and only allowed a certain number of trades per day - to artificially keep the fund alive for months rather then instantly going insolvent. Again, that was YEARS ago during the housing crash.

So, your are smoking something funky to equate the below to government taking over your 401k - not going to happen. That's crazy talk.


MMA's are merely an easy, 401(k)-eligible option to not invest in equity or bonds, but in "paper" which is cash in all but name (maybe not so much after the proposed Rule change passes). This rule is not designed to "help traders", its premise is to stop runs on MMA's, and as a result investors will no longer have access to money that historically has been sacrosanct and reachable and disposable on a moment's notice.

Lehman got itself in trouble by over levering itself, with its own money... and when it's customers decided to liquidate their accounts, and get their money back... it made Lehman an enormous credit risk, and rightfully so... and they lost all ability to raise capital to offset their corporate side losses... so they failed. Lehmans risk was not their customers risk to bear, nor should their customers principle be held hostage due to Lehmans malfeasance.

The market functions best when there is clear difference between risk/reward... it's simple economics... With this rule in place investment institutions will be able to use customer segregated principle as a hidden "hedge", which will change their creditworthiness at the expense of their customers... and the pricing mechanism will be further distorted as a result. This will turn MMA's into giant hedging accounts, and ultimately destroy the integrity of MMA's in the long run.


Crazy talk, LMAO... I'm not the one saying it.. the SEC and the Fed are by their actions.... so they're the one's smoking something funny.


You didn't read what I said.

This type of stuff already happens. You are just ignorant to that fact.

Like I said, government taking over your 401k is crazy talk. It just isn't going to happen. There is a HUGE difference between that and what you are posting about.



And you also didn't read what I posted. I never said the government was gonna take over 401k's.... I said, quote:

The likely path will be eventually giving the people the option to "opt out" of some of their retirement going directly into US Treasuries, along with a huge, patriotic campaign to swindle, er convince folks that your retirement is safe in UST's.



So - 1st you say I'm smoking something funky... I ignore the personal attack.. and respond to the topic.
Then above you call me ignorant... Do you want to discuss the topic or call each other names?

I have no problem calling you a "head in the sand asshole" if you prefer... but I'd rather be a bit more civil.

Your call.

Insanity: doing the same thing over and over again and expecting different results.


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Postby Monker » Thu Dec 06, 2012 10:18 am

slucero wrote:
Monker wrote:
slucero wrote:
Monker wrote:Oh, please. These are Money Market funds - not 401k. And, these rules seem designed to help the common traders during a situation like the housing crisis where funds crashed. Finally, if you think suspending trading on accounts that have crashed to the point of no recovery doesn't ALREADY happen, you are wrong. I specifically know of some funds that changed their rules during the housing crash to put trades in a quieue and only allowed a certain number of trades per day - to artificially keep the fund alive for months rather then instantly going insolvent. Again, that was YEARS ago during the housing crash.

So, your are smoking something funky to equate the below to government taking over your 401k - not going to happen. That's crazy talk.


MMA's are merely an easy, 401(k)-eligible option to not invest in equity or bonds, but in "paper" which is cash in all but name (maybe not so much after the proposed Rule change passes). This rule is not designed to "help traders", its premise is to stop runs on MMA's, and as a result investors will no longer have access to money that historically has been sacrosanct and reachable and disposable on a moment's notice.

Lehman got itself in trouble by over levering itself, with its own money... and when it's customers decided to liquidate their accounts, and get their money back... it made Lehman an enormous credit risk, and rightfully so... and they lost all ability to raise capital to offset their corporate side losses... so they failed. Lehmans risk was not their customers risk to bear, nor should their customers principle be held hostage due to Lehmans malfeasance.

The market functions best when there is clear difference between risk/reward... it's simple economics... With this rule in place investment institutions will be able to use customer segregated principle as a hidden "hedge", which will change their creditworthiness at the expense of their customers... and the pricing mechanism will be further distorted as a result. This will turn MMA's into giant hedging accounts, and ultimately destroy the integrity of MMA's in the long run.


Crazy talk, LMAO... I'm not the one saying it.. the SEC and the Fed are by their actions.... so they're the one's smoking something funny.


You didn't read what I said.

This type of stuff already happens. You are just ignorant to that fact.

Like I said, government taking over your 401k is crazy talk. It just isn't going to happen. There is a HUGE difference between that and what you are posting about.



And you also didn't read what I posted. I never said the government was gonna take over 401k's.... I said, quote:

The likely path will be eventually giving the people the option to "opt out" of some of their retirement going directly into US Treasuries, along with a huge, patriotic campaign to swindle, er convince folks that your retirement is safe in UST's.



So - 1st you say I'm smoking something funky... I ignore the personal attack.. and respond to the topic.
Then above you call me ignorant... Do you want to discuss the topic or call each other names?

I have no problem calling you a "head in the sand asshole" if you prefer... but I'd rather be a bit more civil.

Your call.


The original article posted at the top of the forum said this :

The plans may be slated for dramatic changes ranging from limiting deductions, to retroactive taxation and to possibly include a nationalization scheme by imposing government mandated plans on employers with savings allocated exclusively to Treasury bonds.


The second part of that statement is essentially the government taking over your 401k. I said what you quoted from the SEC does not equate to that...and you are smoking something funky if you believe it does.

Yes, you are ignorant to the FACT that similar things to what you quoted from the SEC is already happening. That is not a 'personal attack', it's just the truth. It's not like I'm calling you an idiot or something.

I'll say it again, this is just Republicans and conservatives trying to scare people into believing their 401k is about to be run over by the government. It's simply not happening.
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Postby slucero » Thu Dec 06, 2012 11:17 am

Monker wrote:
slucero wrote:
Monker wrote:
slucero wrote:
Monker wrote:Oh, please. These are Money Market funds - not 401k. And, these rules seem designed to help the common traders during a situation like the housing crisis where funds crashed. Finally, if you think suspending trading on accounts that have crashed to the point of no recovery doesn't ALREADY happen, you are wrong. I specifically know of some funds that changed their rules during the housing crash to put trades in a quieue and only allowed a certain number of trades per day - to artificially keep the fund alive for months rather then instantly going insolvent. Again, that was YEARS ago during the housing crash.

So, your are smoking something funky to equate the below to government taking over your 401k - not going to happen. That's crazy talk.


MMA's are merely an easy, 401(k)-eligible option to not invest in equity or bonds, but in "paper" which is cash in all but name (maybe not so much after the proposed Rule change passes). This rule is not designed to "help traders", its premise is to stop runs on MMA's, and as a result investors will no longer have access to money that historically has been sacrosanct and reachable and disposable on a moment's notice.

Lehman got itself in trouble by over levering itself, with its own money... and when it's customers decided to liquidate their accounts, and get their money back... it made Lehman an enormous credit risk, and rightfully so... and they lost all ability to raise capital to offset their corporate side losses... so they failed. Lehmans risk was not their customers risk to bear, nor should their customers principle be held hostage due to Lehmans malfeasance.

The market functions best when there is clear difference between risk/reward... it's simple economics... With this rule in place investment institutions will be able to use customer segregated principle as a hidden "hedge", which will change their creditworthiness at the expense of their customers... and the pricing mechanism will be further distorted as a result. This will turn MMA's into giant hedging accounts, and ultimately destroy the integrity of MMA's in the long run.


Crazy talk, LMAO... I'm not the one saying it.. the SEC and the Fed are by their actions.... so they're the one's smoking something funny.


You didn't read what I said.

This type of stuff already happens. You are just ignorant to that fact.

Like I said, government taking over your 401k is crazy talk. It just isn't going to happen. There is a HUGE difference between that and what you are posting about.



And you also didn't read what I posted. I never said the government was gonna take over 401k's.... I said, quote:

The likely path will be eventually giving the people the option to "opt out" of some of their retirement going directly into US Treasuries, along with a huge, patriotic campaign to swindle, er convince folks that your retirement is safe in UST's.



So - 1st you say I'm smoking something funky... I ignore the personal attack.. and respond to the topic.
Then above you call me ignorant... Do you want to discuss the topic or call each other names?

I have no problem calling you a "head in the sand asshole" if you prefer... but I'd rather be a bit more civil.

Your call.


The original article posted at the top of the forum said this :

The plans may be slated for dramatic changes ranging from limiting deductions, to retroactive taxation and to possibly include a nationalization scheme by imposing government mandated plans on employers with savings allocated exclusively to Treasury bonds.


The second part of that statement is essentially the government taking over your 401k. I said what you quoted from the SEC does not equate to that...and you are smoking something funky if you believe it does.

Yes, you are ignorant to the FACT that similar things to what you quoted from the SEC is already happening. That is not a 'personal attack', it's just the truth. It's not like I'm calling you an idiot or something.

I'll say it again, this is just Republicans and conservatives trying to scare people into believing their 401k is about to be run over by the government. It's simply not happening.



Monker.. I never said it "wasn't" happening already.. did I? I would like to see you post some actual "fact" to support what you are stating is actually factual. So please do so, otherwise it's just your opinion... which you are entitled to, but not fact.

And what I quoted from the SEC only equates to changing the MMA paradigm in a way that is less favorable, and potentially restrictive to the investor. That you do not see that is your opinion, which you are also entitled to.


Or you could simply ignore this.. and stick your head back in the sand..

Insanity: doing the same thing over and over again and expecting different results.


~Albert Einstein
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Postby Rick » Thu Dec 06, 2012 11:40 am

I'm just a dumbass, southern union guy, but over the last few years, I have begin to think "they", whoever "they" may be, would come after people's 401k's. There is no way these rich motherfuckers would let the average "Joe" have any kind of money. They will, and mark my words, find a way to take my, yours and everyone elses savings.
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Postby verslibre » Thu Dec 06, 2012 7:00 pm

http://news.yahoo.com/fiscal-cliff-mean-132544973--politics.html

What Will the Fiscal Cliff Mean for Me?

The fiscal cliff isn’t just about taxes. But for the average American, higher taxes will be the most salient impact if Congress allows spending cuts and tax increases to kick in with the new year. Economic analysts anticipate that the economy will take a hit if the country goes over the fiscal cliff, which could mean shaky financial markets and another recession. That’s a shift that will affect everyone.

How much of a tax hike an individual will see will depend on marital status, number of dependent children, number of deductions typically claimed, and the taxpayer's mix of wage and investment income. With that caveat, here’s a primer on what’s beyond the cliff and what it could mean for certain groups.

What’s in the cliff?

There are three basic components of the fiscal cliff: expiring Bush-era tax cuts, expiring Obama-era tax cuts, and spending cuts to some federal programs.

The expiration of the Bush-era tax changes would mean higher income taxes, reduced tax benefits for families with children, increased marriage penalties, a higher estate tax, and higher taxes on some investment income. The most pressing Obama-era tax hike would be the expiration of the payroll-tax cut. The payroll-tax cut was always meant to be temporary, but a return to higher Social Security payments would mean less money in everyone’s paychecks.

Other Obama-era tax cuts included in the stimulus package are also expiring, including tax credits for families with children and a credit to help students pay for college. Higher earners would see an additional bump in their income and capital-gains taxes next year because of new taxes included in the 2010 health care. And then there’s the alternative minimum tax, a cumbersome income tax that has to be periodically adjusted to track inflation. If Congress doesn’t do so this year, it could hit individuals making as little as $33,750, raising taxes on millions of Americans.

Spending cuts are the final component. Certain domestic federal programs—but not Medicare or Medicaid—would see reduced funding as a result of spending cuts known as "sequestration." Funding for unemployment insurance is scheduled to drop, as are Medicare payments to doctors.

That’s really complicated. How would it affect people like me?

Ms. Banker. Ms. Banker lands squarely in the top 1 percent of earners: She makes $1,000,000 per year. Earners in Banker’s tax bracket are looking at a federal tax increase of around $120,000, on average, if the U.S. goes over the fiscal cliff, according to the Tax Policy Center. Banker is thinking of selling off some of her long-term investments now, in order to avoid seeing them taxed at a higher rate.

Mr. Oncologist. With an annual income of $350,000, Mr. Oncologist makes enough to support his wife and send his kids to private school. Earners in Oncologist’s bracket are looking at an average tax increase of about $14,000, according to the Tax Policy Center. Many of Oncologist’s patients are Medicare recipients, so he’s worried about the so-called "Doc Fix", the cut in payments to Medicare doctors that will go into effect next year if Congress doesn’t act. Oncologist is also unhappy about a cut to federal medical research and development spending under sequestration.

Mr. Teacher. Mr. Teacher has an income of $65,000 per year, a mortgaged home and two young children. Earners in his tax bracket should see a tax increase of about $3,500 if the fiscal cliff isn’t averted, the Tax Policy Center says. Like Oncologist, Teacher is distressed that child tax credits are going to become less generous. Teacher is also worried about how sequestration will effect education funding in his school district. He doesn’t teach in a poor area that receives a lot of federal funding, but there are kids with special needs in his classes. Teacher knows that funding that pays for aides who help those kids would be cut under sequestration.

Mr. Millennial. Mr. Millennial just graduated from college and is making $30,000 a year at an entry-level job. He and folks like him could see their tax burden rise by around $1,200 this year, according to the Tax Policy Center — a jolt that Millennial, already stressed about his student-loan payments, is unprepared for. Millennial is also wondering if sequestration will make it harder for him to afford graduate school. While Pell Grants are exempt from automatic spending cuts, other federal programs that help students pay for college—like federal work-study programs—are not.

Ms. Grandma. Ms. Grandma’s nursing-home bills have already burned through her savings, making her now reliant on both Medicare and Medicaid funding for her care. Grandma doesn’t draw a paycheck, her income is very low, and she has few investments, so the fiscal cliff isn’t going to have a big impact on her personal finances. Grandma’s actually more worried about a deal that would avert the cliff, because that could mean cuts to the entitlement programs she depends on.

You. The Tax Policy Center has a handy calculator* that allows you to figure out what the fiscal cliff could mean for your family situation and mix of assets—or just to play around with various scenarios.

*http://calculator.taxpolicycenter.org/
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Postby The Sushi Hunter » Fri Dec 07, 2012 2:29 am

It's not all that far fetched to figure that the US Government will tap into your 401K. It's not that hard to do. Simply all the government has to do is change up the rules for when you deposit into your 401K and change up the rates that your taxed when taking money out. They could even change the rules so your taxed on the interest even when you don't make a withdrawal. Possible that they can also add an additional tax fee to be incurred when making an early withdrawal. Look at the US now. Stranger things have happened, it's not that far fetched to figure that the US Government will get more of your 401K one way or the other.
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Postby Boomchild » Fri Dec 07, 2012 2:46 pm

The Sushi Hunter wrote:It's not all that far fetched to figure that the US Government will tap into your 401K. It's not that hard to do. Simply all the government has to do is change up the rules for when you deposit into your 401K and change up the rates that your taxed when taking money out. They could even change the rules so your taxed on the interest even when you don't make a withdrawal. Possible that they can also add an additional tax fee to be incurred when making an early withdrawal. Look at the US now. Stranger things have happened, it's not that far fetched to figure that the US Government will get more of your 401K one way or the other.


I agree. Our government is broke and can only function buy borrowing more money from China and others. Rising taxes won't fix it all. This of course raises the debt and requires the debt limit to be adjusted higher. It appears by Obama's recent comments that he is thinking about raising the debt limit AGAIN. So much so that he has hinted that he wants Congress to put this in the hands of his administration alone without needing Congress to debate and approve it. It's easier for the government to take over citizens retirement accounts and convert them into a government run plan\program then to keep borrowing money from other countries to stay afloat. They can just stuff the accounts with a bunch of government IOUs just like they have done with social security.
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