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Posted by on Oct 18, 2011 in TG Roundup

Ellen Schultz (Author of Retirement Heist) on the Daily Show


I learned something more appalling this morning. Investigative journalist, Ellen Schultz sheds light on corporate shenanigans that boost executive retirement packages at the expense of regular employees. Did you know that GE executive pension fund is $6 billion? Or, that Nestle, Walmart and Disney lobbied congress so that they can take life insurance policies on their employees? Watch it to learn more appalling things about how far these ‘executives’ have taken the ‘free markets’ to!

8 Comments

  1. The reason why Ron Paul deserves some ear is

    1) He is not hypocritical about what he is saying, even though he is wrong. All the other repub candidates come up with something very devious and willfully cover it up to appeal to the base so that it will not be clear to any one how they are going to muck the system. For all the uproar about earmarks in budgets, by repubs can they tell how many of the governors from their party actually didn’t use them?

    2) Ron Paul’s ridiculous propositions actually jolt even hard core repub folks when he says government support to education should end. I think he is making sure the opposite point of view is suddenly in lime light!

    For these two reasons alone we should support Ron Paul’s candidacy from the repub side! 🙂

  2. Mohan garu I think you mentioned something vaguely about supporting Ron Paul. Look at this plan from him

    http://news.sciencemag.org/scienceinsider/2011/10/ron-paul-would-erase-billions-in.html?ref=hp

    Don’t why republican’s go after departments like education and talk about eliminating the EPA, they may appeal to the right wing base but they look like Morons in the general public.

    I think they want to return to the wild west times, no regulations no consequences just pillage the environment all over again. Colbert had a good segment on this last night.

    • Surya garu,

      I saw your comment as an e-mail while I was doing the show yesterday. I responded to it on air. Here is the upshot.

      Yes, Ron Paul has some crazy ideas. But so do many presidential candidates. Eliminating EPA will be a ticket to environmental disaster – like it was before 1969. Likewise, there are other strong arguments against his proposals for elimination. It is nearly impossible for him to do some or all of these.

      But, if he can do one thing right, I “hope” he can eliminate the Federal Reserve Board. The Feds is the single biggest reason for the destruction of middle class in the country.

  3. I totally agree and thanks for alerting that “buy & hold strategy” is passe..

    ‘Long haul’ by whose clock? Its 0.4 to 0.6 seconds for a high frequency trader, few hrs for an active hedge fund, few months for cyclical investor, few yrs for Institutional investors, forever for pension funds??? Someone once said ‘markets can stay irrational lot longer than you can stay solvent’ so its always wise to be nimble and tactful in ones investment approach. That requires realistic expectations of returns of 3-5% for the next few years rather than the historical returns of 8-10%. Prosperity through preservation is the name of the game right now. Dont complain if tresuries are yielding paltry 1-2%.

    However, one strategy always worked which is MPT (modern portfolio theory) -spreading risk across stocks/industries, regions, and asset classes. Lately even this strategy is not working thanks to the converging correlations. This I think is a natural reactionary phenomenon due to massive deleveraging thats going on worldwide and the proliferation of ETFs is worsening the situation. I think this long overdue cleansing is good for ordinary investors in the long run but sadly those close to or already in retirement will pay dearly especially those living on fixed income.

    Evidence is unfolding; Citi thug said today that they are closing down their proprietary trading desk, Goldman sucks ‘wilfully’ showing losses to buy public sympathy (although I believe they are incurring some serious losses), Volker ax is falling, Tier-I requirements set to drain the edrinalin and tame animal spirits (hopefully).

    • “Goldman sucks ‘wilfully’ showing losses” It is a scary coincidence in thinking. I also thought the same – Goldman is showing losses to elicit some sentiment (not necessarily sympathy) that they are not infallible. Remember, they had 3 or 4 consecutive quarters with no single day of trading losses. Courtesy of Uncle Ben”s QE largesse.

  4. This explains a lot on why even the companies which manage 401K spend so much time on promoting some ‘investment’ benefits! One is caught between ‘investing in something’ which is sure going to be flat or declining in the long run, and not investing in which case some day whatever saved will be worthless anyway because of inflation. One has to choose between the devil and deep sea.

  5. Interesting when you know it for the first time and so is any sham that’s been going on for ages. As in any case there is always ‘the good, the bad, & the ugly’ and insurance is no exception. The problem is when CEOs abuse the good part of an insurance which can be fixed through enforcement of laws/regulations. But, what surprises many is when they know how the pension consultants peddle the solutions to turn the ‘ugly’ insurance in to out right fraud such as in the case of corporations owning the life policy benefits taken on their ‘key employees’ while aloowing the key employees benefit from tax-free loans on the surrender value of these policies while alive. No corporation can take a life policy on any employee without that employee willingly signing the insurance application & benefit assignment to his/her employer. On the other point raised re: CEOs using the ‘pension fund excesses’ to spruce up the corporate profits and use for M&As etc. while protecting the management’s own pension fund (separate of regular employee pension fund), we all need to blame the congress for allowing a feature some people enjoy which is: you can take a loan against your own retirement a/c while employed in a typical big corporation. How many ordinary people we know who have dipped into their retirement funds have repaid/replenished again that too quickly? Once you become desparate and dip once you can never recover as the market forces and time works agaist you. The same feature allows the corporations to tap into their own ‘pension funds’ to address the balance sheet shocks of the companies on a short term basis. However, these corporations with the help of pension consultants tap in to these pension fund excesses frequently and never replenishing the fund leaving it under funded leading to huge benefit cuts to current pension recepients. A smart and learned individual can not only protect himself/herself knowing that there will always be crooks and thugs in any field peddling rotten products/svcs but can also benefit using their own game with a little bit of planning.

    • Good stuff… I learned something new.

      One of the callers told me, “I know I have to take the long term view for investing (in 401k)…..” I told her things have changed, they have changed so drastically that if you cling to these misconceptions they peddled all this time, you will regret it one day.

      I gave her the example of the pension plans and their original charter and how people were told that pension would be there in retirement. Corporations (and even the states and soon the Feds) are too eager to negotiate the pension benefits down. Their weapon? Or else, we have to fire you. And then they get to do both (i.e reduce pensions and fire them).

      I remember when IBM abandoned their pension plans and switched to 401k plans for retirement. They didn’t want to have huge unfunded pension liabilities, a la GM – which broke GM’s back. Pension Benefit Guarantee Corporation is not only a toothless organization, but it is also projected to go broke by 2020. Forget pensions.

      For all those who are counting on their 401k plans – invested for the “long haul” – will find out the hard way that the investing for the long haul is a myth – especially in this boom and bust bubble economy. S&P hardly grew in the last 12 years. 10 year returns on many funds is either flat or negative. Oddly, many people don’t even take a notice of this.

      On top of these these structural problems in the retirement savings models I now hear about these the revelations of these corporate shenanigans with retirement plans.

      Somebody I know is going through an employer transition now – a small company to a Fortune 500 company through an acquisition. Her 401 k will be rolled into the new one. That’s why this topic perked my natural curiosity even higher.