By Nicholas von Hoffman, The Nation. Posted July 25, 2008.

People are discovering they have been forced into a system in which others have gambled with their retirement savings and lost it.

Our disfunctional financial system hit a new low last week when Citigroup, the hopeless wreck of Wall Street, announced it had lost $2.5 billion in the past three months -- a cheer went up, and so did the Dow. Only $2.5 billion; people were afraid the losses would be much higher. Happy days are here again.

There are no happy days for the millions of Americans who have been trying to put away some money for their retirement in tax-sheltered entities like IRAs, Roth Accounts and 401(k)s. For them, the market's downward slope has been harrowing and frightening. When will the steady erosion of their savings end? And when it does, what will be left of their future financial security?

Many of the millions suffering through these worrisome months didn't buy a house they could not afford, didn't speculate on their homes, didn't let greedy impulses lead them to the edge of foreclosure or bankruptcy. Nevertheless, the excesses of their neighbors and the criminal folly of American finance is destroying their plans for retirement. It is dragging down much of the value of their homes, on which they have never missed a payment, homes on which they were counting on selling at retirement to help finance their last years in comfort.

For years, the privatization propagandists have been telling people that when the time comes, Social Security will not be there for them. Now many are learning that it's their private savings that may not be there. They are discovering they have been forced into a system in which other people have, in effect, been allowed to gamble with their retirement savings and have lost it.

The way the private, you're-on-your-own retirement system was supposed to work had individuals, during their younger, working years, investing in stock through tax-sheltered accounts. Almost nobody who is not breaking the law can choose among individual stocks and make money, so future retirees have been encouraged to buy mutual funds run by professional managers, who are supposed to be able to pick the winners.

Most of them aren't much better at doing that than are their customers, but in a rising market, a chicken pecking at stock tables can pick winners. In boom times, it doesn't matter that the future retiree must choose among thousands of mutual funds, many of which carry ruinously high fees. The damage to people's savings goes unnoticed until the market begins to go down.

Even as the market falls, future retirees are told not to panic, to keep their money where it is, because in the long run the value of their accounts will go up and they will have many a happy sunset year traveling the globe and showering their grandchildren with presents.

As the retirement date comes near, they are advised to begin selling stocks and buying fixed-income securities -- as bonds are sometimes called -- because these pay the interest they earn on a fixed schedule, providing a regular income.

For this to work, stock prices must be high when the holdings are sold and the bonds purchased must pay high rates of interest. But what happens when the stock market is in a nosedive and interest rates are half of the inflation rate, as is the case right now? Panic and worry, no golden years of travel, no presents for the grandchildren. The energy that was to be expended on leisure activities is spent instead trying to figure out how to make ends meet.

The bright spot is Social Security. That check does come with the regularity of the calendar, whether the market is up or down, whether interest rates be high or low and if, as is the case now, the Greenspan-Bush inflation is destroying family budgets. Social Security adjusts for the rising prices.

But Social Security is too narrow a ledge to stand on through the years between retirement and death. It was designed as the base on which other retirement savings were to be built.

Those savings -- the house and the tax-sheltered retirement accounts -- are shriveling up and blowing away. The persons for whom Americans' savings have been a reliable source of income are the brokers, the lawyers, the account administrators, the whole tribe of Wall Street fee farmers. They get other people's retirement money regardless of the direction the market may be moving in.

You can't call it a broken system because it was a bad one from the start. It is failing, just as its critics said it would. And what lies ahead for those whose retirement savings are gone may be a very unpleasant old age.

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The privilege of the writ of habeas corpus shall not be suspended, unless when in cases of rebellion or invasion the public safety may require it. United State Constitution, Art. I Sec. 9 Par. 2

"Dissent is the Highest form of Patriotism" -- Howard Zinn

Yeah, I'm out of stock market and I'm trying to get my wife to move her 401K. she has about 10 days left in the window. I have no informed reason for moving it, just a 20 year watching of the market and the economy as a whole and the recent activities by Banks and bond markets have me worried. My pea brain says get the fuck out now, but I've been wrong before. BTW, anyone that would put their retirement into the hands of wall street, in My humble opinion, would be crazy. If the market corrects just when you retrire, goodbye a large % of your retirement.

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Life is good, the water is sweet. The ground keeps moving beneath my feet.

Over the long haul, the stock market has been a great hedge against inflation. It has its ups and downs as it follows the business cycles. Over that long haul, the stock market has done far greater, return wise, than our Socialized/fascist government retirement system has ever thought of doing.

Don't you guys ever get suspicious about articles that attack capitalism without stating government's complicity in the equation? Or, do you guys honestly believe that government policies had nothing to do with the housing collapse?

Vi

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Liberals are people that will believe anything twice.

capitalism sucks. its the worst economic system out there, except for all the others.

"Capitalism":
: an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market.

OK, thats the dictionary version, here's the real version: An economic and political system that rewards the wealthy and makes the poor poorer. A system that promotes strangulation of the free market by monopolizing areas of common interest and setting prices according to their (the owners) whims. A system that travels the world looking for cheaper labor, while leaving catastrophic ruin in every country they inhabit. A system that dumps chemicals with abandon and refuses to clean them up. A system that will fight a war for the interests of the top tier of capitalists, even sacrificing others sons and daughters, (Certainly not their own) for their interests. A system that promotes dog-eat-dog mentality with no concern for the citizenry. A system that considers lying and bribery to be everyday occurences, with no consequences, A system where the top dogs make world altering decisions while playing golf on billion dollar landscapes, while the poor are scraping out a 25cents a day living in a country where they (the owners) are making billions. I could go on for hours, but I think this covers a broader spectrum of Capitalism than the dictionaries version. For an explanation of the owners of society, google George Carlin, the owners of society. I think he pretty much sums it up. There's the link for you.

http://www.youtube.com/watch?v=qCXZKsLY5z0

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Life is good, the water is sweet. The ground keeps moving beneath my feet.

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Liberals are people that will believe anything twice.

That's all you have to say, figures!

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Life is good, the water is sweet. The ground keeps moving beneath my feet.

I agree with that.

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I have the urge to drink another fif and let shredded cheese melt all over my hairy chest cuz I'm hawt awwwwooo.