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Massachusetts Liberal

Observations on politics, the media and life in Massachusetts and beyond from the left side of the road.

Thursday, July 21, 2011

Profiting on our loss

Leave it to Wall Street to figure out how to make a killing on the Republican refusal to clean up their mess.

The financial wizards whose excesses triggered the Great Recession are now squirreling away cash to snatch up US Treasury bonds in the event Tea Party Republicans choose to assassinate the economy by failing to pay our bills.

The unspoken terror in this high wire act is what happens to the retirement funds of millions of Americans if default sends stock prices into a tailspin. Many working people have seen their 401 (k) funds tank twice in the Bush era as market dives wiped out large chunks of their future.

Will it happen again? The sad is answer is yes.

Most Americans don't invest in the stocks that comprise the Dow Jones Industrial Average. We hold mutual funds. which in turn hold substantial amount of US Treasury securities. A default would be a double whammy -- falling stock prices depressing mutual fund values and no safe haven like treasuries.

I bet the mattress companies may start to see a booming business.

Yes, Eric Cantor and his friends will probably also see some hit to their own retirement funds but their $174,000 base salary will help ease some of the blow as they rebuild bank accounts.

As for the rest of us, what retirement?

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Anonymous Anonymous said...

They didn't have to figure it out. It was learned during the Great Depression. When you have money, crashes are periods of great opportunity. Why do you think Mitt Romney wanted the auto companies to sink on their own? It was because he didn't want to spend his tax dollars to help them out, and he saw a great opportunity in the depressed value in a failed company. It's how he made his millions.

July 22, 2011 10:28 AM  
Anonymous Anonymous said...

Buy Fidelity Low Price Stock fund. Up 34% for the year. Don't complain about the game, learn it and play it.

July 23, 2011 12:13 PM  

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