Tuesday, August 18, 2009

Pension Funds Pare Stocks, Ignoring Economic Rebound (...and my editorial)

"The world’s biggest pension funds lost confidence in stocks as the best long-term investment, cutting holdings or leaving them unchanged during the steepest rally since the 1930s."

This teaches you two things:

1). You can do better investing on your own and going against the crowd.

and...more importantly...

2) Government (mostly Conservatives) have failed in their responsibility.

They have been preaching for so long that people must "own their future and save for their own retirements." The laws, tax structures, income policy, trade policy, home ownership policy and every other policy was designed to get people to do that. We were told by Conservatives like David Walker and others that Social Security was going bankrupt and that we shouldn't count on it.

So, what did we do? What choice did we have? We invested...individually and through mutual funds and pension funds, home ownership and other savings and investment vehicles. We did what they told us to do. Then when everything came apart those very same people who told us to invest stood by and said, "What did you do that for?"

They let the whole thing collapse and then, only grudgingly, when things were so bad that we were on the verge of experiencing another Great Depression, they applied a tiny bandaid with tremendous reluctance and displeasure and basically told us to go suffer some more.

In the middle of it all we get a president who preaches change, but then allows the "puppet masters" Robert Rubin and Pete Peterson to select and control the puppets (Tim Geithner, Larry Summers and a host of ex-Goldmanites) of what is now his economic team.

Getting back to the funds and their exit from stocks I'll just say this...I am no big fan of these large funds and generally like to do the opposite of what they do, however, you cannot blame them for getting out of the market and missing this rally. They were completely abandoned by the policymakers of this country--mainly conservative types (sorry, I was one)--and without leadership and owning up to their responsibility as dicated by the Constitution ("...promote the general welfare...") we have put our fate in the hands of nations like China, who have taken over economic leadership.

It almost makes me want to cry to see our great country mismanaged so. We've been emasculated by a belief system that will ensure that future generations inherit a lower standard of living than the current generation. This will be a first, in the 233 year history of our nation.

More is yet to come as people like Ron Paul and Peter Schiff (the latter is now running for Senate) take greater control over our government and policy. A new era of austerity and ascetisim is coming and it can only lead to bad things in a diverse country of 300 million.

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