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Old March 2nd, 2009 #421
Mike in Denver
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Quote:
Originally Posted by notmenomore View Post
I wonder what will happen to all those college kids that got their MBA's and then went out peddling 401ks for TRoweprice and Putnam and so forth?

Remember all those "projections" that always showed an average 8% annual return over the life of the account?

Hell, I used to get after them in the good times, wanting to know when they could EVER show an average account that had managed an 8% return. They would just say, "well, it's pretty much a standard model that we use for comparison."

Sure it was, and as any pawnshop operator could tell you: an 8% return doubles the money every nine (9) years. Makes for pretty graphs and pie-charts.

I imagine those kidz would get run right on off the property if they showed up at my plant today - trying to peddle nonexistent 8% returns to industrial wage earners who've seen their balances cut by 50% - 65% over the last 18 months. How many more years will it take now just to get back to breakeven at your nonexistent hypothetical 8% return, Mr. TRowe?

I sure hope MacDonalds has some burgers for these chumps to flip...
I remember hearing the spiel of these 401K managers the last twenty years that I worked. They would pull every trick to get employees to pile money into the 401Ks. The one lie I remember hearing, probably a dozen time is "The DOW has increased an average of 12% a year since....". The truth is, if you had bought equities off the DOW at the beginning of 1929, and if you were so supernaturally lucky that the companies did not go under, you would have broken even in 1954. This doesn't show easily on charts because most long DJIA charts are shown on a logarithmic scale that makes the line look like it is growing throughout the time shown. Change the chart to Linear and you get the accurate picture.

In short, every 401K plan manager I ever met was an idiot and a con-artist.

Mike

Fortunately for me, I sold all my stock, and closed all my 401Ks almost to the day I turned 59 1/2 and didn't have to pay a penalty. I had no income that year so my tax burden was not too severe.
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Old March 2nd, 2009 #422
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Quote:
In short, every 401K plan manager I ever met was an idiot and a con-artist.
They pulled the same shit where I work, but they used a hot chick in a mini skirt and six inch heels. It worked for most of those guys.

I contributed up until two years ago (roughly). I took silver buying from a partial thing to a regular thing to replace what I stopped putting in.

This week, I just cleaned out almost the last of the 401K to use for buying a house we are closing on at the end of the month. I would call it money better spent than leaving it in the 401K. BTW, I had my stuff in government stuff at the end and it still didn't stop though it did slow down the loss.
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Old March 2nd, 2009 #423
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Originally Posted by General_Lee View Post
Below 7000. Amazing! There should have been some significan support at 7000. Next stop, 6500. I wonder if it will find any psychological support there?
Doubtful, Strazzullo says 5,000.

Quote:
NEW YORK (AP) -- Investors' despair about financial companies and the recession has brought the Dow Jones industrial average to another unwanted milestone: its first drop below 7,000 in more than 11 years.

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The market's slide Monday, which took the Dow down 300 points, was nowhere near the largest it has seen since last fall, but the tumble below 7,000 was nonetheless painful. The credit crisis and recession have slashed more than half the average's value since it hit a record high over 14,000 in October 2007. And now many investors fear the market could take a long time to regain the lost 7,000.

"As bad as things are, they can still get worse, and get a lot worse," said Bill Strazzullo, chief market strategist for Bell Curve Trading. Strazzullo said he believes there's a significant chance the S&P 500 and the Dow will fall back to their 1995 levels of 500 and 5,000, respectively.

The "game-changer," he said, will be the housing market and whether it can stabilize.

A recovery will also require signs of health among financial companies, but so far in 2009, it is clear that banks and insurance companies' losses are multiplying despite hundreds of billions of dollars in government help. The market fell Monday after insurer American International Group Inc. posted a staggering $61.7 billion in quarterly losses and as the government agreed to inject more money into the company. AIG will get another $30 billion in loans, on top of the $150 billion the government has already invested.

http://biz.yahoo.com/ap/090302/wall_street.html
 
Old March 2nd, 2009 #424
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Default AIG: We're Insolvent Without ZOG Help.

Doesn't that mean they are done anyway?

Quote:
SAN FRANCISCO (MarketWatch) -- American International Group estimated Monday that another downgrade by ratings agencies would trigger $8 billion in collateral and termination payments to counterparties and warned that without extra funding from the government or other sources it could become insolvent.
A one-notch downgrade to Baa1 by Moody's Investors Service and BBB+ by Standard & Poor's would allow AIG's trading partners in derivatives and other markets to demand the extra payments, the insurer explained in a regulatory filing with the Securities and Exchange Commission. A two-notch downgrade to Baa2 by Moody's and BBB by S&P would force AIG to come up with another $2 billion in collateral and termination payments, the company added.
AIG bucks broader market and sector weakness, with shares jumping more than 15% on news the troubled insurer is getting another $30 billion in government aid, as Greg Morcroft reports.
"If AIG is unable to secure sufficient additional funding through the Fed Facility or otherwise, AIG could become insolvent," the insurer said in its filing.
The U.S. government changed its bailout of AIG for a third time Monday, increasing its commitment of taxpayer money and other support for the insurer by $30 billion to roughly $163 billion. See full story.
The government is going to such great lengths to save AIG because the company is still comprehensively intertwined with the rest of the financial system. The insurer's portfolio of derivative contracts known as credit default swaps was still notionally worth $302.2 billion at the end of 2008, despite government-supported efforts to aggressively unwind it during the fourth quarter.
CDS's are derivatives that pay out in the event of default. If AIG fails to repay what it owes on these contracts, or can't meet demands for more collateral, the financial institutions that purchased the protection could suffer huge losses. That, in turn, could make them default on similar promises they made to other counterparties, triggering a meltdown of the financial system.
The government has lent almost $50 billion to AIG, mainly to make sure the insurer's derivatives unit, AIG Financial Products, has enough money to meet collateral demands on the CDS contracts it wrote.
"This flow of funds through AIG to other financial institutions is a good indication of how intertwined we are with the global capital markets, and how government actions that have been thought of as strictly assistance to AIG have benefited the entire financial sector," Edward Liddy, chief executive of the insurer, said during a conference call with analysts Monday.
After the latest reorganization, AIG said it would still be able to borrow at least $25 billion from the Federal Reserve Bank of New York.
However, the insurer and its subsidiaries have $21.6 billion in cash requirements for 2009, according to CreditSights, an independent fixed-income research firm.
AIG affiliates have $14 billion of commercial paper outstanding as part of the Federal Reserve's Commercial Paper Funding Facility, or CPFF, which buys this type of short-term debt from companies that are struggling to refinance.
This commercial paper must be rated at least F1 by a major rating agency before the Fed buys it. [F1?!-dtz]
If AIG's affiliates -- AIG Funding, Curzon Funding and Nightingale Finance -- are downgraded by leading rating agencies, they wouldn't qualify for the CPFF and would probably have "significant difficulty" securing other sources of liquidity, the insurer warned in its regulatory filing.
Indeed, ILFC, AIG's big aircraft-leasing business, lost access to the CPFF after S&P downgraded its short-term debt rating in January, the insurer noted.
http://www.marketwatch.com/news/story/AI....
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Old March 2nd, 2009 #425
Mike in Denver
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The first time I could put money into a 401K plan was about 1984 (I'm guessing a little here). They were great back then. Any employee could pile 15% of his pretax income into the 401K plan, and most companies would match or nearly match the amount. You mostly got to manage the fund yourself.

Here is the best part: If you wanted to withdraw money form your 401K, at any age, for any reason, you could do so without penalty. (There may have been some restrictions, but I can't remember any).

No, here is the even better part: You paid tax on the withdrawal as 10 year forward income averaging. This would mean say on a $100,000 dollar withdrawal you would pay 10x the tax on $10,000, as if there were no other income. It would probably be zero or close to zero.

Very quickly, they changed these rules, first making it almost impossible to put anything like 15% in. Then they screwed the tax rules. Then they added penalties. Later it was made more difficult to self manage the 401K plan and most companies hired fund managers.. Maybe all companies hired fund managers.

The biggest scam I encountered was forcing (or using forceful persuasion) to make employees put the 401K money in the stock of the company they worked for.

Mike
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Old March 2nd, 2009 #426
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Mike, our 401K is extremely strict. You can take money out to buy your principal residence, stave off foreclosure/eviction, pay medical bills and that is it. I had to come up with paperwork from the loan officer and the real estate agent, proving I was buying a house. I also get a tax bill for the withdrawl. I think the 401K co. sends a 1099 form at tax time.





Tickerguy doing online radio show (denninger):
http://www.blogtalkradio.com/MarketT...cker-BlogRadio

Talking about CDS and other things, AIG.
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Old March 2nd, 2009 #427
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Default 401K scamskis

Quote:
They pulled the same shit where I work, but they used a hot chick in a mini skirt and six inch heels. It worked for most of those guys.
Those were the MBAs I was talking about! A hottie, she was.

A 1099? Doesn't every outfit under the sun have to rat you out with a 1099? I get a whole pile of them every year. I remember there was talk once about requiring all businesses to send in 1099s on every account they issued any checks for other than payroll (covered, natch, by the W2). If they paid Billy Bob $100 for pushing snow off the sidewalk, then a 1099 would issue.

Quote:
The biggest scam I encountered was forcing (or using forceful persuasion) to make employees put the 401K money in the stock of the company they worked for.
I think they finally put a ceiling on that one. 10%, I think it is. I got burned on co stock early on and got the hell out.
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Old March 2nd, 2009 #428
Mike in Denver
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The New Zealand and Australian markets are open now and they are tanking faster than last night.

Beer now.

Mike
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Old March 2nd, 2009 #429
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Originally Posted by Mike in Denver View Post
The New Zealand and Australian markets are open now and they are tanking faster than last night.

Beer now.

Mike
LOL, thanks for the info. Think I will eat some supper and have a cigar.

Right now, Charles Gibson (wife likes to watch the snooze) is playing up AIG....
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Old March 2nd, 2009 #430
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Today's markets are not for the faint of heart. A real rollercoaster ride.

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Old March 2nd, 2009 #431
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Default AIG: quarterly report vs stock price

In almost every report today the numbers are different. Like trying to hold on to a greased pig, itz.

But one thing seems to hold true: regardless of the article or the viewpoint, the per share loss and the stock price are never even included together in the same article, much less juxtaposed. So notmenomore will do the legwork! Here 'tis:

AIG common stock traded today UP at $0.48/share. Thatz down from $51.47 on February 26, 2008. Sorry about that 'n' all, stockholders.

AIG's reported fourth quarter loss today amounted to $22.95/share.

So the "business" lost in one quarter almost fifty (50) times more than it's worth.

Now the reporters all tell us that the hundreds and hundreds of billions of MacBucks have purchased for the gubmint preferred shares of AIG. But wait: it was the Federal Reserve Bank that got the shares, not the gubmint. Can you say "privately owned bank?"

So don't forget this one, folks: lost $22.95/share but only worth $0.48/share.

This thing isn't a zombie (which has corporeal substance); itz a wraith - an indestructible ghost from some bad dream come true.

These losses (and the many more being hidden and swept under the carpet) seem to represent an almost textbook example of the disaster that can occur when selling an uncovered short:

In most investments the greatest possible risk is the loss of the entire amount invested, but in an uncovered short there is literally no limit on the possible amount of the loss. It is theoretically possible for a mere $1,000 invested in an uncovered short position to result in a loss of millions and more.

It appears more and more true that, as the various CDO's putrify and rot, the CDS's that purport to "cover" the risks associated with the CDO's are acting more and more like runaway uncovered shorts.

Almost like doubling the money on the squares of a chessboard, itz. There just isn't enough anywhere to cover the tab.
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Old March 2nd, 2009 #432
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Thanks for laying that out there, notmenomore.

Now, for pensions:

Pension bombs going off
By: Paul Merrion
March 02, 2009

Exploding pension fund shortfalls are blowing billion-dollar holes in the balance sheets of some of the Chicago area's biggest companies, forcing them to make huge contributions to retirement plans at a time when cash flow and credit are already under stress.

Boeing Co.'s shareholder equity is now $1.2 billion in the hole thanks to an $8.4-billion gap between its pension assets and the projected cost of its obligations for 2008. At the end of 2007, Boeing had a $4.7-billion pension surplus. If its investments don't turn around, the Chicago-based aerospace giant will have to quadruple annual contributions to its plan to about $2 billion by 2011.

Stock market losses also pounded pension funds at Abbott Laboratories Inc., Caterpillar Inc. and Exelon Corp., with others sure to emerge as companies file their annual financial reports with the Securities and Exchange Commission in coming weeks.

The pension gaps underscore a growing conundrum. Unfunded pension liabilities have to be subtracted from shareholder equity, weakening balance sheets at a time when it's already tough to borrow money. Barring a reprieve from Congress, companies may be forced to make more layoffs or curb capital investments to divert cash to shore up pensions....

The Chicago companies are symptomatic of nationwide woes. Last year, the 100 largest corporate pension funds in the U.S. saw their net assets decline by 21%, while liabilities increased 1.2%. Applying those averages to any of the region's top funds puts almost all of them into the red by at least $1 billion....
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Old March 2nd, 2009 #433
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..and what timing -just when the first batch of "baby-boomers" is now reaching retirement age. Here is your reward, boomers, for being good sheeple and playing by the ( zog's ) rules.
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Old March 2nd, 2009 #434
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Thumbs up Dow below 7,000

Blue-chip measure drops to levels not seen since 1997 as AIG reports biggest quarterly loss in corporate history, government revamps rescue.

By Alexandra Twin, CNNMoney.com senior writer
Last Updated: March 2, 2009: 5:51 PM ET

NEW YORK (CNNMoney.com) -- Stocks tumbled Monday, with the Dow and S&P 500 falling to 12-year lows after insurance company American International Group's huge quarterly loss added to worries about the financial sector and the economy.

The Dow Jones industrial average (INDU) lost almost 300 points, or 4.2% to end at 6763.29, its lowest point since April 25, 1997.

The S&P 500 (SPX) index lost 34 points, or 4.7%, ending at 700.82, its lowest close since Oct. 28, 1996.

The Nasdaq composite (COMP) lost 55 points, or 4% to end at 1322.85. The tech-fueled Nasdaq has held up better than the other major averages this year and remains above its close of 1316.12 from Nov. 20, 2008.

The stock losses Monday were in response to AIG, but also a continuation of the worries about the financial sector and the economy, said Bill Stone, chief investment strategist at PNC Financial Services.

"There are reverberations from AIG and also the continued uncertainty around the financial sector as a whole, which is the chorus that never ends," he said.

"That's paired with the second chorus that never ends - the weakness of the global economy," he said. "It's reflected in the weakness in the industrial, material and energy stocks today."

Investors also remain wary about the various government initiatives to try to stem the recession, announced over the last few weeks, said Mark Travis, president and CEO at Intrepid Capital Funds. They include the newest bank bailout plan, the $787 billion economic stimulus plan and the $75 billion mortgage modification plan.

"The administration is hemming and hawing and still not being clear about exactly what they are going to do and how it's going to work," he said.

Travis said that some of the policies are "well meaning but aren't going to provide the elixir that they hope."

With all the uncertainty, investors are on a "capital strike."

Tuesday brings an economic report on the housing industry and a number of Congressional hearings. February sales from the nation's automakers are also due throughout the session.

The National Association of Realtors releases its pending home sales index for January in the morning. The index is expected to have fallen 3% after rising 6.3% in the previous month.

Federal Reserve Chairman Ben Bernanke is due to testify before the Senate Budget Committee on economic and budget challenges, starting at 10 a.m. ET.

Also at 10:00 a.m., Peter Orszag, director of the White House Office of Management and Budget, testifies before the House Budget Committee about the fiscal 2010 budget.

http://money.cnn.com/2009/03/02/mark...york/index.htm
 
Old March 2nd, 2009 #435
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Thumbs up Itz here!

Now that we may be in a depression, perhaps it's time to point the finger at precisely who got us here?

The D-word: Will recession become something worse?
Quote:
WASHINGTON -- A Depression doesn't have to be Great _ bread lines, rampant unemployment, a wipeout in the stock market. The economy can sink into a milder depression, the kind spelled with a lowercase "d."

And it may be happening now.

The trouble is, unlike recessions, which are easy to define, there are no firm rules for what makes a depression. Everyone at least seems to agree there hasn't been one since the epic hardship of the 1930s.

But with each new hard-times headline, most recently an alarming economic contraction of 6.2 percent in the fourth quarter, it seems more likely that the next depression is on its way.

"We're probably in a depression now. But it's not going to be acknowledged until years go by. Because you have to see it behind you," said Peter Morici, a business professor at the University of Maryland.

No one disputes that the current economic downturn qualifies as a recession. Recessions have two handy definitions, both in effect now _ two straight quarters of economic contraction, or when the National Bureau of Economic Research makes the call.

Declaring a depression is much trickier.

By one definition, it's a downturn of three years or more with a 10 percent drop in economic output and unemployment above 10 percent. The current downturn doesn't qualify yet: 15 months old and 7.6 percent unemployment. But both unemployment and the 6.2 percent contraction for late last year could easily worsen.

Another definition says a depression is a sustained recession during which the populace has to dispose of tangible assets to pay for everyday living. For some families, that's happening now.

Morici says a depression is a recession that "does not self-correct" because of fundamental structural problems in the economy, such as broken banks or a huge trade deficit.
[...]

http://www.washingtonpost.com/wp-dyn...030201547.html
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Old March 2nd, 2009 #436
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Interesting read on the markets today, what the next six weeks brings and Japan's TOPIX.
http://johngaltfla.com/blog2/2009/03...-our-lifetime/
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Old March 2nd, 2009 #437
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I think it's reached the point where nothing can be done. It's going to get worse.

Can we request this thread be stickied?
 
Old March 2nd, 2009 #438
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The Dow is tanking in historically catatrophic terms and Todd Schnitt, an obnoxious talk show host for Tampa Bay's leading AM radio station, could only talk about those two hapless nigger football players who got lost in a storm out on the Gulf of Mexico. He said he was tired of talking about the economy.

Every major city has a jew on the top of the AM dial and I'm sure they're all down-playing the Wall Street blood bath.

I fully realize that pessimistic talk can stoke a herd mentality and start a stampede, making worse an already bad situation, however should the media talking heads be concerned with propping-up an artificial financial bubble or should they be imparting information to the public for prudent actions that they might take in order to preserve their money? As Whites, the answer is obvious to us.

Todd Schnitt always starts frothing at the mouth, ranting and denying like a maniac whenever a caller to his show implies that he's a jew.......By purposely ignoring this most dire financial crisis Schnitt boldly proclaims to the world that he's a faithful member of the hook-nosed filth tribe.

.
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Old March 2nd, 2009 #439
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Quote:
Originally Posted by Zenos View Post
I think it's reached the point where nothing can be done. It's going to get worse.

Can we request this thread be stickied?
I think it should be stickied. I usually have to look through my subscriptions to post on it. It would serve well, I think, for the smug liberals to see it since they have some sort of obsession with branding us as toothless inbreds (the only form of racism they condone).
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Old March 2nd, 2009 #440
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By Anousha Sakoui

Published: March 2 2009 18:56 | Last updated: March 2 2009 18:56

Credit markets weakened on Monday, as the cost of protecting against corporate debt defaults rose to levels not seen since mid-December.

The deterioration in sentiment came after news of an unexpected cash call from HSBC, additional government financial support for AIG, and more negative macroeconomic data.

“The ‘green shoots’ in credit unfortunately seem to have been killed off by an early spring blizzard,” said Matt King, global head of credit products strategy at Citigroup.

The European Markit iTraxx Crossover index of 50 mostly junk rated borrowers’ credit default swaps – an indicator of market sentiment towards corporate credit – was quoted as high as 1115 basis points, up 35bp on the day.

This means it costs €1.115m ($1.4m) to protect €10m of bonds against default over five years.

The main Europe index of investment grade borrowers’ CDS – often used as an indicator of sentiment towards financials – was quoted at 189.2bp versus a closing level Friday of 180.36bp, a jump equivalent to €9,000 to protect €10m of bonds against default over five years.

US credit derivatives markets were also much weaker.

The cash bond market has absorbed record high volumes of bond issuance this year, which has been positive news for companies as bank lending has fallen. However, the new bonds, which initially performed well, have since fallen in price, implying a rising cost for borrowers that want to sell bonds in the near future.

A survey by Citigroup has increased analyst concerns because it shows euro credit investors are holding record long credit positions relative to their benchmarks, at levels not seen since November 2003. “The worsening macro picture, the sell-off in equities, and above all the fact that investors have got themselves long in spite of record inflows all seem likely to put pressure on spreads,” said Mr King.
http://www.ft.com/cms/s/0/ca63c9bc-0...077b07658.html
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