Over the last couple of days, I have had two very interesting discussions concerning money, investments and regulators. I also heard that the President said "The Buck Stops Here".
The first discussion concerning money was from a guy whose wife was encouraged to move her 401 (k) into a stock market based annuity. She gave the agent $90,000 and he promised her that she would get her money back "no matter what". When they got a notice that their investment was now worth $56,000 they contacted the broker/salesman. Where is the other half of my $90,000? The man explained that what the contract said was that if she would start a regularly paid annuity the company would pay until she had received her entire $90,000. No, she could not have her $90,000 back today but she could have a set amount like $500 a month to the tune of $90,000. Of course, they would have to withhold 30% for taxes as the payments are made. This sounds like another Ponzi scheme to me.
That same guy told me that there is a provision in the Kansas State Personnel Retirement System (KPERS) for a person to take out a lump sum and then have a reduced annuity paid over the person's lifetime. His best friend took out half of the money he had in the system and invested it in a stock market based annuity. Guess who has to go back to work because between losses and taxes he was basically wiped out.
The MG I live with, said that we need more laws to protect us from the bad guys and those Pesky Republicans are blocking that process. I had a discussion with her about the fact that I think there are too many laws now and not enough people enforcing the ones we have. A first year business school student should have been able to look at the Madoff Ponzi scheme and realize it had no substance. When income is equal to outgo and salaries and there is no operating "nut" to really pay the bills, it is a Ponzi scheme. When you start selling shares of loans on houses to investors and return a maddening amount to the stock holders and exorbitant salaries to those in the business, it is a Ponzi Scheme. It was the fact that none of the people we think are guarding our money even looked at this is the problem.
If it sounds too good to be true, it probably is. No law can say it more simple. In fact it would take most people a lifetime to begin to understand the complexities of the current law and by the time you learn something, it is probably changed or loop holes made in the law to excuse those people that can afford to lobby the congress.
So, I don't have a lot of faith that anyone, especially the President, can have the buck stop there. Especially in this time where we really don't know where there or here is. More new laws that aren't going to be enforced isn't enough. Having the Government run in and saving us with money they don't have might be a part of the problem. Perhaps you can understand, I'm not sure I do. I love the MG's passion about this but I'm not sure that our caring enough is enough.
MUD
The MG said I need to be careful when I summarize her thoughts. I want to be the first to tell you all that she is not simple and I only summarize because of time and space. In fact if she was a University, I would have in 40 years qualified for a Doctorate in Human Relations just trying to understand the complexities of all the things she thinks and most important what she says. MUD
ReplyDeleteYou're right, if it sounds too good to be true, it probably is. Well, at least as far as things we humans can do anyway. I think we need a return to simplicity. All this financial talk makes my head spin. I also think we need to return to that motto that's on the back of our money rather than trusting in the money itself or the government that prints it.
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