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Topic: Washington State Legislators are Digging Themselves Into A Hole

David Favel
Jedi Master Film Handler

Posts: 764
From: Ashburton, New Zealand
Registered: Feb 2002

posted 01-16-2003 03:01 AM

I read an interesting article on 401k that are popular in the States. Anyway these are based mainly on the stockmarket investments. The Baby boomer generation are due to retire in or around the tear 2010 and they are sup[posedly going to take their money out of the market for their retirement. This would cause a mini crash.
The main problem I see with this kind of investment scheme is that you don't know exactly you will have to retire with.
Then again it may not come true.
I am hedging my bets by investing in superannuation, real estate (business & home) & growing my own business.

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Leo Enticknap
Film God

Posts: 7474
From: Loma Linda, CA
Registered: Jul 2000

posted 01-16-2003 04:26 AM

That is a big part of the problem here, too. Up until the late 40s/early 50s, company pension funds were invested almost entirely in bonds or other gilt-edged investments. Not much return, but zero risk as well so the flow of money in and out of a fund could be planned pretty accurately. There was then a move to investing pension funds in the stock market. Most of the big pension funds are invested almost entirely in stocks and shares now, thus exposing them to stock market boom and bust cycles. When the three-year decline in the value of the UK stock market seriously started to bite, many big companies abandoned (and are still abandoning) their final salary-based pension schemes and replacing them with ones that fully expose investors to the stock market. At the moment, people are taking one look at the stock market and deciding that it's a bad investment, with the result that Britons are now consumer spending like mad and also investing more in property, which has pushed house prices through the roof (excuse the pun). But the fact that this situation seems to have pushed people into just not saving at all is likely to be a real worry, IMHO. I wouldn't have thought that a large cohort of new pensioners around 2010 would provoke a crash, because they'll just be converting their pension fund investment into an annuity - and annuity providers invest in the stock market too. So that money won't actually be leaving the system, just being invested for a slightly different purpose. But if the overall value of stock markets in the developed world is in a long-term downward trend, then that spells trouble for everyone.

A nice cheerful thought to start the day...

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Barry Floyd
Phenomenal Film Handler

Posts: 1079
From: Lebanon, Tennessee, USA
Registered: Mar 2000

posted 01-16-2003 09:48 AM

Well if anybody else's 401K looks like mine... I feel for you as well. I've got mine spread over 4 different types of funds, and over the last year I've watched it self destruct to the point where all I have left is a 201K. I've lost almost HALF of my account within the last 12 months. The bright side is that I have another 30 years to make that up, and I feel confident enough in the future of the US economy that it will recover... and gain back everything it's lost plus much, much more.

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Greg Mueller
Phenomenal Film Handler

Posts: 1687
From: Port Gamble, WA
Registered: Jun 99

posted 01-16-2003 10:21 AM

Yah, this economy thing seems to be pretty cyclic. As close as I can figure it's an 11 year cycle (like sunspots). We'll be back on top soon. I keep telling my investment councilor to "make me money" too, and he usually says "Ok how much would you like?" [Roll Eyes]

I usually try not to ask him how things are going. It's to depressing and there's nothing I can do about it anyway, except wait it out.

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David Stambaugh
Film God

Posts: 4021
From: Eugene, Oregon
Registered: Jan 2002

posted 01-16-2003 11:21 AM

There's a book out about that forthcoming 401k debacle. In general the theory is that when 401k's were introduced, trillions of dollars were invested in stocks and stock funds, rather than traditional things like money market funds, bonds, or T-Bills. The money was coming from a wide cross-section of the working class, from young to old. All that money going into stocks contributed to drive stock prices up. The Internet bubble and corporate financial scandals have rocked the market, but most of the invested money is still in place. So time goes by, and more people will start retiring. The 401k laws state that you MUST start withdrawing your money no later than a certain age (I think it's 70 1/2?). So at some point due to the aging population, more people will be withdrawing their money than there will be new money going in from new workers. There will be far more sellers of stock than buyers, which will cause a major crash in the markets, lasting over a period of many years. This all happens just about the same time as the Social Security system will self-destruct too, for the same reason: too many retirees, not enough new money coming in.

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Paul G. Thompson
The Weenie Man

Posts: 4718
From: Mount Vernon WA USA
Registered: Nov 2000

posted 01-16-2003 01:53 PM

Nothing like thinking you have money in the bank and find out someone has been stealing it. Namely, the state. If your savings account shows inactivity for two (maybe 3 years), the banks must notify the state so the state can start stealing your money without you knowing it.

Washington State does that, I am curious how many others do. I have been a victim of this legalized stealing. [Frown]

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Leo Enticknap
Film God

Posts: 7474
From: Loma Linda, CA
Registered: Jul 2000

posted 01-16-2003 03:33 PM

They say that the stock market is the most accurate way ever invented of representing the true value of a national economy in the long term, but that it can fluctuate wildly in the short term. That's fine if, like me, you've got 35 years to go until retirement, or if you retire when the market is going through a peak. But if you have to retire when the market is at the bottom of a trough... not so nice.

quote:
The 401k laws state that you MUST start withdrawing your money no later than a certain age (I think it's 70 1/2?). So at some point due to the aging population, more people will be withdrawing their money than there will be new money going in from new workers.

Our personal pension (IRA) laws are similar. The age limit is 75. When you put money into a personal pension during your working life, it attracts income tax relief. That is to say, the government pays into your pension fund the value of the income tax you paid on the money you're investing. The quid pro quo for this is that what you can do with this fund when you retire is highly restricted. You can take 25% of the total fund value as a tax-free lump sum, but the rest has to be used to purchase an annuity. This is an insurance product which, in return for paying a fixed sum, guarantees you an income for life. The amount this income costs at the moment you buy the annuity varies from day to day on stock market values (and to a lesser extent other parameters, like your life expectancy), because annuity providers service their liabilities with the return from stock market investments. But once you've purchased the annuity, its income is fixed.

In the last three years, the stock market decline (the FTSE 100 is down from around 6,000 in January 1999 to 3,800 now) has driven annuity rates down, with the result that people are increasingly abandoning pension saving in favour of short-term consumer spending. If this is stock market decline is just cyclical like all the others then it probably won't be a big deal in the long term, but if not...

A cheerful thought to end the day, too!

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Paul G. Thompson
The Weenie Man

Posts: 4718
From: Mount Vernon WA USA
Registered: Nov 2000

posted 01-17-2003 02:48 PM

Gentlemen, I am not making this up.

When I was reading the Local Rag while I was drinking my shot of coffee, I ran across an article that caught me in such a manner where the hot coffee came out of my nose during a spontanious laugh!

http://www.horsesass.org

Mr. Eyman is the state's leading initiave sponsor. Voters have approved at least one of his initiatives each year for the last four years, starting with $30 car license tabs in 1999. Mr. Eyman's initiatives are the ones that voters approved by a slaughter and sent Washington's legislatures into a tail spin.

Please set your coffee cup down before you click on the link. Otherwise, you might experience hot coffee coming through your nose like I did. [eyes]

I don't think some people like Mr. Eyman.... [Wink]

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Ray Brown
Expert Film Handler

Posts: 111
From: Dayton, WA, USA
Registered: Sep 2002

posted 01-17-2003 05:15 PM

Hmmmm lets see. 49 senators. 98 represenatives. The governor. That's 148 signatures right there.

Any idea who David Goldstein is?

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Greg Mueller
Phenomenal Film Handler

Posts: 1687
From: Port Gamble, WA
Registered: Jun 99

posted 01-17-2003 05:49 PM

He was just interviewed on KVI (570am). He sounds like he's about 20 years old or so. I can't figure out what his angle is. I've voted for all those initiatives in the last few years. Probably he has a connection to the Gov's office behind the scenes. [Razz]

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Paul G. Thompson
The Weenie Man

Posts: 4718
From: Mount Vernon WA USA
Registered: Nov 2000

posted 01-17-2003 06:01 PM

Greg, according to the newspaper, he is a computer programmer and a technical writer. That's all it said about him.

Eyman said he thinks Goldstein's idea is hilarious, and should garner publicity for the latest initiative.

I also saw in the same paper on the next page -- the Washington State Ferries want to raise the ferry rates by 5% in May, and another 5% one year later.

I sent an Email to WSF today, saying to the effect that if the WSF would trim their $90 million annual payroll, they could eliminate the 5% fare increase.

This is a real zoo up here, and it is getting funnier as the days go by. [Big Grin]

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Ray Brown
Expert Film Handler

Posts: 111
From: Dayton, WA, USA
Registered: Sep 2002

posted 01-18-2003 08:45 PM

quote:
This is a real zoo up here, and it is getting funnier as the days go by.

I remember when some guy legally changed his name to "Absolutely Nobody" and ran for Lieutenant Governor in 1992. I voted for him just for the sheer hell of it.

1992 was another dark year in Washington State politics when Mike Lowry was elected govoner. [Eek!]

Yes it's a zoo, but our goverment is one of the few negatives of living here and we have them by the nuts right now. [Smile]

When I get frustrated with the [bs]

they are trying to pull, I head for a nice high spot where I can see for miles and think about how fortunate we are to be living in one of the most beautifull places in the country. [thumbsup]

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Paul G. Thompson
The Weenie Man

Posts: 4718
From: Mount Vernon WA USA
Registered: Nov 2000

posted 01-19-2003 12:44 AM

Ray said:

quote:
When I get frustrated with the they are trying to pull, I head for a nice high spot where I can see for miles and think about how fortunate we are to be living in one of the most beautifull places in the country.

Ray, I salute you for that statement. [thumbsup]

Let's hope they don't slap a "View Tax" on those areas lke they tried to do in Seattle a couple of years ago. [Smile]

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Ray Brown
Expert Film Handler

Posts: 111
From: Dayton, WA, USA
Registered: Sep 2002

posted 01-19-2003 09:54 AM

quote:
Let's hope they don't slap a "View Tax" on those areas lke they tried to do in Seattle a couple of years ago.

That would cover the entire state! YIKES! [Eek!]

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Paul G. Thompson
The Weenie Man

Posts: 4718
From: Mount Vernon WA USA
Registered: Nov 2000

posted 01-20-2003 02:29 PM

Ray said:

quote:
Yes it's a zoo, but our goverment is one of the few negatives of living here and we have them by the nuts right now.

Indeed, we do. But I guess we'll have to start squeezing harder until they finally get the word that we had enough of their BS.

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