More Wall St. Regulation Not The Answer

Posted on March 11, 2010


It seems that the President of Greece is requesting that the U.S. Govt. enact legislation to rein in the speculators on Wall Street.  His country has been living over their heads and has gotten themselves bogged down in debt. Now however, the chickens are coming home to roost and Athens wants to pass the blame for this to Wall Street speculators with their credit default swaps, hedge funds and other exotic and difficult to understand financial instruments.  Every liberal in the good old U.S.A. is singing the same song”. If only we had greater regulation of the financial markets our economy wouldn’t have collapsed and our 401k’s would still be solvent”.  In the case of Sovereign Debt, these claims may be true, but when a govt. continually engages in reckless spending, promising benefits and goodies that require huge deficits to pay for, it’s rather disingenuous to blame speculators for the inevitable result.  In the case of  U. S. Citizens and their 401k’s  we have a different problem.  People of  medium or modest means should never have been invested in instruments as risky and volatile as stocks anyway.   The stock market is for the big guys who can afford to take the risk.  It seems that this was common knowledge until about the time that Congress gave Corporate America the gift of the 401k.  This gift allowed the employers to dump their defined benefit pension plans and put the cost and risk of playing the retirement planning game on the backs of their employees. This gimmick saved the employers billions.  The next gimmick was to convince all the little guys with 401k’s that the place to invest all that money was in stocks and that the stock market was safe and well-regulated.  The govt. was all to willing to accede to this myth of small investor safety. They even floated the notion of putting part of everyone’s  Social Security in the stock market.  This was supposed to help solve the problem of Social Security solvency for future generations.  I think we can see how that would have worked out.  The truth is that stocks and financial speculation has always been risky business.  Most regulation concerning financial trading is eye wash and not very diligently enforced. Even when it is the sharks that swim in these waters find new and exotic ways to game the system. This is not the place for the average American to have their life savings. The sad part is that our govt. knows this , but went along with Corporate America’s game and fed into the Wall Street safety lie.  If the Federal Govt. really wants to protect the average American’s 401k and future retirement well-being they should tell the truth about Wall Street. Come right out and say that this is a rigged game and average Americans are at great risk . This is an enterprise for the wealthy who can afford to gamble and lose large sums.  For Average Americans we are going to advise you to put your money in something that doesn’t offer large potential gains but, will be steady, growing and guaranteed.  They should then put out an instrument called “Retirement Bonds”.  These bonds would be inflation indexed and pay out at the same rate of interest as Series I Savings Bonds. They would also be bought at face value and with a promise that if they are held for a certain number of years, the accrued interest would be tax-free.  This would be a way that the Federal Govt. could guarantee and protect the Average American’s retirement future and it would also be a way for the govt. to finance some of our federal deficit without continually putting us into greater debt bondage to the Chinese.   Just my opinion.