Wednesday, January 13, 2010

The Unreliability of the Media Assuring America's Ignorant Citizens Look Forward Fondly to their Trip to the Poorhouse

As I view the carnage emitted from the financial and emotional fallout of the Meltdown of 2008, one thought occurs to me (again and again) in attempting to explain the wholly unexplainable nonoutrage of (and almost unbelievable acceptance by) the lower classes, who will ultimately be responsible for paying off the victors (swindlers) and living with the consequences of their actions in much-reduced circumstances (forever):

How else can the upper classes and their lawyers and financiers (and the reason I mention lawyers and financiers specifically is that this group comprises some of the smartest people I know and I haven't heard a word from them en masse or individually about how outraged they are) continue to go on as before if they don't do everything in their power to stop the real victims (the ones stuck with the bill) from comprehending what has really occurred, and then even more evisceratingly, making them believe that if they just "keep the faith" in the fairies of the "free market" a little while longer that they also will end up with (largely undeserved) riches - all of this springing from that hallowed concept of American Exceptionalism which explains why actions that would bring one result (mainly negative) in any other country will bring a completely different result (positive) in the magical territory of the USA?
So, is this the well-known secret, surfacing at the top-level cocktail parties, guaranteeing the survival of the upper classes (after this turmoil subsides)? If this situation continues to develop without violence on the part of the real victims, we'll see how Americans sidestepped the fate of the Roman Empire: better PR. P.S., I hope you are already aware that Politico is a Rovian if not Rove-sponsored, johnny-come-lately Rethuglican dirty trick on a still gullible blogworld, which pretends to give some inside info to the deserving. And P.P.S., if you think the powers-that-be didn't see this coming a very long time ago . . . just continue to clap your hands real loud(ly). The George Washington blog expands on these topics here. Glenn Greenwald documents the historical and continuing "Fundamental Unreliability of America's Media," which report in 150-decibel, show-stopping tones lost children, mad gunmen and celebrity fuckups, which leads logically to the low-key, non-reporting of actual news sure to ultimately damage irreversibly your financial future such as, for one new item, the coming announcement to direct money into the Treasury market by forcing the conversion of 401K's/retirement savings into annuities in order to bail out the Fed (and Federal government) in "Converting 401k and IRA Funds Into "Steady Payment Streams." Read all about it by clicking on the above links. (Emphasis marks added - Ed.)

Forcing people into Treasuries as an "annuity" is exactly what Social Security allegedly is. Except that Treasury stole the money that was collected in FICA taxes and spent it!

Guess what? They'll do that here too - you're going to "invest" in Treasuries which of course are effectively a CALL option on the future taxing ability of the government.

The problem is that with an aging population and the immigrant problem (illegal immigrants that is), along with offshoring, the aggregate wage base will drop and thus this is the most dangerous investment of all!

And you had thought you had lost enough of your savings (not to mention your mind) already? Heads up!
Consider the record of the American media over the last two weeks alone. Justin Elliott of TPM documents how an absolute falsehood about the attempted Christmas Day airline bombing -- that Abdulmuttab purchased a "one-way ticket" to the U.S., when it was actually a round-trip ticket - has been repeated far and wide by U.S. media outlets as fact. Two weeks ago, Elliott similarly documented how an equally false claim from ABC News - that two of the Al Qaeda leaders behind that airliner attack had been released from Guantanamo - became entrenched as fact in media reports (at most, it is one of them, not two). This week, Dan Froomkin chronicles how completely discredited claims about Guantanamo recidivism rates continue to be uncritically "reported" by The New York Times and then inserted into our debates as fact.

As I documented two weeks ago, government claims about which "top Al Qeada fighters" were killed by our airstrikes turn out to be untrue far more often then true, yet are always mindlessly featured by our media, ensuring little questioning of those actions; at least two of the three Top Terrorists claimed to have been killed by our airstrikes in Yemen -- and possibly all three -- are quite likely alive. As Greg Sargent writes, one of the most provocative and inflammatory claims of the trashy Halperin/Heilmann gossip book - that Bill Clinton told Ted Kennedy that Obama would have been "getting us coffee" just a couple years earlier - is not only completely unsourced (like virtually every one of their sleazy claims), but also "paraphrased."

Aside from falsity, what do all of these deceitful reports have in common? They're all the by-product of granting anonymity to people and then repeating what they claim as fact, protected by their journalist-guaranteed anonymity from any and all accountability for their falsehoods. It's exactly the same process that caused our leading media outlets to tell Americans about Iraq's massive WMD program and Al Qaeda connections; Jessica Lynch's heroic firefight with inhumane Iraqi devils and her "rescue" by our Marines; Pat Tillman's death at the hands of Al Qaeda monsters; and government tests that "confirmed" the presence of bentonite in the anthrax used to attack the U.S., which meant it was likely that Saddam was behind the attacks.

Unjustified anonymity -- especially when mindlessly repeating what shielded government sources claim in secret -- is the single greatest enabler of false and deceitful "reporting." Despite its unbroken record of producing lies, it will never stop, because agreeing to it is how "journalists" end up being selected as favored message-carrying servants for the powerful. This falsehood-producing method isn't ancillary to American journalism but central to it; the book which is occupying the attention of America's political and media class is based exclusively on unattributed, shielded sources, and that seems to bother one of them.

. . . None of the falsehoods documented here will ever lead to any accountability, because the identity of the falsehood-producers will be shielded by their loyal journalist-servants, and the journalists themselves will simply claim that they wrote what they did because their hidden sources told them to. That's not only the effect, but the intent, of the central method of American journalism: to disseminate outright falsehoods to the American public and ensure that neither the liars nor their loyal message-carriers ever face any consequences or even reputational loss. Anonymity is so common that "reporters" barely even bother any longer to explain why it's justified, notwithstanding numerous policies of media outlets requiring exactly that explanation. As the use of anonymity has escalated rapidly, so, too, has the pervasiveness of outright falsehoods and the inherent unreliability of much of what the American media "reports." Lying is so much easier - and thus so much more common - when you get to do it while remaining hidden.

And about that new scam revolving around how your last savings/401K's will bailout the bailouters:

Converting 401k and IRA Funds Into "Steady Payment Streams"

Last May, I wrote about the rumor that the Obama administration might seize funds from American's 401k and IRA accounts.

Last week, Bloomberg pointed out:

The Obama administration is weighing how the government can encourage workers to turn their savings into guaranteed income streams following a collapse in retiree accounts when the stock market plunged.

The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort...

There is “a tremendous amount of interest in the White House” in retirement-security initiatives, Borzi, who heads the Labor Department’s Employee Benefits Security Administration, said in an interview.

In addition to annuities, the inquiry will cover other approaches to guaranteeing income, including longevity insurance that would provide an income stream for retirees living beyond a certain age, she said.

“There’s been a fair amount of discussion in the literature taking the view that perhaps there ought to be more lifetime income,” Iwry, a senior adviser to Treasury Secretary Timothy Geithner, said in an interview...

One proposal raised by Iwry as co-author of a paper while at the Retirement Security Project, before joining the administration, has reached Congress. A bill requiring employers to report 401(k) savings both as an account balance and as a stream of income based on an annuity was introduced on Dec. 3 by Senators Jeff Bingaman, a New Mexico Democrat, Johnny Isakson, a Georgia Republican, and Herb Kohl, a Wisconsin Democrat.

Sounds innocuous, right?


But Karl Denninger and Jesse smell a rat.

Denninger writes:

In a short conversation this noontime ... Rick Santelli was talking about a potential to effectively force money into the Treasury market.

Where would they get this?

From your 401k and IRA accounts!...

Let me tell you what this is - it is an attempt to prevent the collapse of the Treasury market!

Forcing people into Treasuries as an "annuity" is exactly what Social Security allegedly is. Except that Treasury stole the money that was collected in FICA taxes and spent it!

Guess what? They'll do that here too - you're going to "invest" in Treasuries which of course are effectively a CALL option on the future taxing ability of the government.

The problem is that with an aging population and the immigrant problem (illegal immigrants that is), along with offshoring, the aggregate wage base will drop and thus this is the most dangerous investment of all!

What's even worse is that the government has intentionally suppressed Treasury yields during this crisis (and will keep doing so by various means, including manipulating the CPI - the "inflation index" - as they have for the last 30 years) so as to guarantee that you lose over time compared to actual purchasing power...

"Choices" have a funny way of turning into mandates, and this looks to me like a raw admission that Treasury knows it will not be able to sell its debt in the open market - so they will effectively tax you by forcing your "retirement" money to buy them!

This may be the only way for Treasury to hold down interest rates to something reasonable in the intermediate term, but doing so will instantaneously remove a major source of funding for the stock market - that is, the monthly and quarterly inflows from retirement accounts.

You can bet this won't be good for you, the ordinary American.

You can also bet that once such an "option" is made available there is a very high probability of the government doing things that either promote or simply don't stand in the way of another stock market crash as a means of "herding" your money into Treasuries - so they can blow it - all under the guise of being allegedly "safe".

Of course this begs the question - what if the government can't pay down the road when you retire, just as they can't pay on a forward basis with Social Security and Medicare?

This "proposal" can only mean one thing - Treasury smells smoke. Maybe you should pay attention to what they're huffing!

And before you say "oh they'd never do that" I want you to read this:

Here is a warning to us all. The Argentine state is taking control of the country’s privately-managed pension funds in a drastic move to raise cash.

. . . My fear is that governments in the US, Britain, and Europe will display similar reflexes. Indeed, they have already done so. The forced-feeding of banks with fresh capital – whether they want it or not – and the seizure of the Fannie/Freddie mortgage giants before they were in fact in trouble (in order to prevent a Chinese buying strike of US bonds and prevent a spike in US mortgage rates), shows that private property can be co-opted – or eliminated – with little due process if that is required to serve the collective welfare.

Jesse has a similar take:

As a rule of thumb, the worst possible time to convert lump sum savings into a fixed income annuity would be when interest rates are historically low. Although products may vary, this is roughly equivalent to buying long term bonds at a time when interest rates are likely to increase, substantially reducing your principal in real terms, and eroding your fixed returns through inflation. For some reason the Obama Administration is promoting the idea now that there should be some encouragement for Americans to start converting their 401K's and IRA's into annuities, to provide themselves with lifetime income. The effort is being spear-headed by Mark Iwry of the Treasury and Phyllis Borzi of the Department of Labor. Here is a paper written on the subject by Mark Iwry when he was at the Brookings Institution. The essence of this paper is that distributions from IRA's and 401K's would automatically be rolled into an annuity providing a monthly income by default. This concept is known on the Street as the handling fees for meager returns pork barrel pigfest. The Fed likes it because they will undoubtedly get a two year rolling chunk of the people's retirement cash to play with. Perhaps just rolling those 401K's and IRA's into Social Security or the Long Bond would be what they have in mind. Somehow the panacea of TIPS with inflation defined by the government sounds probable. The drawback perhaps is that this would not generate the highest recurring fees for Wall Street and the FIRE sector, which have to be eyeing that 'cash on the sidelines' hungrily. How about Patriot Bonds that are fully invested in Mortgage Debt formerly owned by the Fed, with some tranches of Commercial Real Estate to add some zest to the recipe? The Treasury can give this option a small tax break, which can be largely consumed by Wall Street fees and mispricing of risk returns ... My model for thinking about this annuitization is that the government wishes to appropriate your savings for a 2.0% return, ex fees and mispriced risk and inflation, as a source of funding for the bailouts of an oversized and insolvent FIRE sector (like AIG) and the imploding pretensions of a global financial elite. . . .

Administration Explores "R Bond" For Retirement Accounts Investment News 7 June 2009 Why have a separate "R Bond" instead of those government bonds they have now called 'Treasuries? And why have a mandatory universal retirement system when you have this thing called 'Social Security?' Think about it. Sounds like the kind of preparations governments make for things like 'new dollars' after a selective default.
Are Denninger and Jesse right? I don't know ... we'll have to wait and see.
But not for long obviously. Suzan _________________


Lisa G. said...

Anyone thinking that converting your 401K into worthless Treasury bonds is the way to go, is an idiot. The government is insolvent (just like AIG, Shitty bank and JP Morgan) and if the Chinese call our loans, we will be fucked.

Suzan said...

You rule, Lisa.

Thanks for your wisdom.

It's the same brilliant group who thought they could sell that no terrorist events took place under Cheney/Bush.

And that's working just fine on the MSM, isn't it?


BadTux said...

If the U.S. were being taxed at the OECD average of 38% rather than at 28%, I might have a problem with the notion that U.S. Treasuries will become worthless at some point in the future. But right now? Nonsense. Utter nonsense.

The only problem we have compared to our OECD neighbors is that our taxes on our wealthy are too low (taxes on our lower classes are about the same as the OECD average). Fix that, and we've fixed Social Security, and we've fixed the deficit, and we've fixed our entire social network. But hey, that would impact some of our Lords of the Universe, and we can't have that, right?

- Badtux the Cynical Penguin

Beekeepers Apprentice said...

I was never crazy about the 401K scheme (read: next best thing to ponzi) to begin with.

BadTux said...

401K's were a scam to deprive Americans of their retirement pensions. Companies converted from having pension funds to having 401K's so that they would no longer have any obligation to their employees after their employees were laid off so their jobs could be outsourced to China. So it goes.

IMHO, getting rid of 401K's is *not* a bad thing. I know of nobody whose 401K hasn't paid *negative* interest over the past ten years. Some "retirement fund" they've turned out to be... just a disaster for the American workforce. Which was the intent, of course.

- Badtux the Scammy Penguin

TomCat said...

Suzan, of course media cannot be trusted. They depend on the same corporations for their revenue that are telling us to smile and say the German word for Vaselline is Vienerschleider.

Isn't it interesting thet the term for the legal government seizure of private property is esCHEAT?

Suzan said...

Hi TC,

Heh heh. Yeah.

I made that same joke in a business class 25 years ago.

Got a good laugh then too.

Thanks for commenting.