Guest Post: Is Obama Through?

Originally posted at Monty Pelerin’s World blog,

Is Obama through? That is, have his lies and incompetence finally caught up with him and emasculated what remains of his effectiveness. Has he taken the concept of “lame duck” to new levels?

Dan Henninger describes Obama’s credibility problem:

Bluntly, Mr. Obama’s partners are concluding that they cannot do business with him. They don’t trust him.

Henninger’s observation does not bode well for US – International relations. Nor is it likely to provide support for new domestic initiatives.

The International ramifications are especially dangerous. It is difficult to think of one ally that supports the US as strongly as it did when Obama took office. More damaging is the spectacle that the US has become for the rest of the world. Obama, supported strongly upon election by most of the world, is now held in lower esteem Internationally than in the US.

Nations that thought of the US as a model of democracy, economic strength and leadership justifiably are questioning these assumptions. Some now see us as just another country moving toward Banana Republic governance.

Domestically, matters may be worse for Obama. Republicans, who distrusted him from the beginning, are even firmer in this belief as a result of the budget shutdown and other false promises. Democrats see the tactics and competence of the man and his Administration. As he is perceived to shift from asset to liability, their loyalty will shift.

Political ideology is not absolute. Democrats love liberalism and progressivism but not nearly as much as they love their office and place in power. If it comes to a choice, ideology and political loyalty will be abandoned in order to retain office.

Mr. Henninger’s quote limited his observation to “partners,” which can be construed as other political leaders or figures. However, Mr. Obama still has most of his voter support. Obama still has the ability to lie and much of  his support base is too disinterested to care. Many are incapable of  understanding politics beyond the cult of personality and “what’s in it for me.” Many would vote for Ted Cruz if he convinced them he would provide more freebies than Obama.

While Obama’s cult status is gone, his popularity among the masses remains. He has lost his ability to work with “partners” but not with the masses. What remains may still be enough for Obama to continue to weaken the US economically and politically.

His popularity always was dependent on his unusual and unconscionable ability to lie and convince people that there was a “free-lunch” if they supported him. His messianic overtones were merely Hollywood enhancements to his mendacity.

How much remains of Obama’s ability to remain effective depends on what the “uninformed” followers believe. Some of these will never question him. Others may be influenced by the shallowness that passes for today’s media. The media have been Obama’s most loyal ally. Whether that continues in the light of the ObamaCare fiasco is moot.

It is going to be hard to support ObamaCare for the media when Obama supporters experience the sticker-shock at enrollment (if the enrollment system ever gets fixed). Many believe they are going to get free health care. Most believe they are going to get large savings and better plans. All are in for rude surprises.

The failure of ObamaCare likely means the end of media protection for Obama. Survival for them is just as strong a motivation as survival for politicians.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/X4Fi76W3JHM/story01.htm Tyler Durden

60% Of 401(k) Participants Accumulated More Debt Than Retirement Savings

The average 401(k) and other defined contribution (DC) plan participant now defers over 8% of their annual income toward retirement savings through their plan and social security taxes, making it one of the largest expenses for households. However, as HelloWallet found, retirement readiness remains stubbornly low: the typical worker near retirement only has about 2 years of replacement income saved, or about 15 years short of the median lifespan post-retirement.

 

One explanation for the stubbornly low retirement readiness of workers may be an increase in household debt. With more household income going to pay off debt, households may have less money to save and face higher costs of living in retirement. In fact, over 60% of workers accumulated more debt than they contributed to retirement savings between 2010 and 2011.

 

 

The study, which analyzed consumer finance data from the Federal Reserve and the U.S. Census Bureau, underscores the need for retirement plan sponsors to provide participants with holistic, independent financial guidance. Without that support, increases in 401(k) and other DC account balances will be off-set by growing liabilities on the other side of a participant's ledger.

The research finds that 20% of participants in 401(k) retirement programs added more credit card debt to their family balance sheet than they contributed to retirement savings. Other findings in the research include:

  • Monthly debt payments for households near retirement increased by 69% between 1992 and 2010, now totaling $.22 for every $1.00 earned by DC plan participants near retirement.
  • DC participants who accumulate debt faster than retirement savings have 50% less of their annual income saved for retirement compared to DC participants who contribute more to their retirement funds than they accumulate in debt.
  • Most DC participants who accumulate debt faster than retirement savings are over 40 years old, college educated, earn over $50,000, and have insufficient emergency savings.

"Through retirement plans and social security taxes, the average 401(k) participant now contributes over 11 percent of their paycheck to retirement savings every month, yet the typical worker near retirement has only about 2 years of replacement income saved," said HelloWallet founder and CEO Matt Fellowes, a former Brookings Scholar who led the study. "The growth in household debt is one big reason why retirement readiness is so stubbornly low."

"While there is no question about the fundamental value and importance of the 401(k), our research finds that it is just one piece of the puzzle," said Fellowes. "Until we work on improving all components of retirement readiness, it will be very hard for employers to fundamentally move the needle."  

While US companies invest $118 billion annually in 401(k) programs for their employees, and retirement savings is now one of the largest budget line items for US households, HelloWallet's new research suggests that these investments are not always producing the intended outcomes. In many cases, better holistic financial guidance could provide employees with the knowledge necessary to crawl out of their debt deficit and steadily build a secure retirement.

To receive a complete copy of the study, click here.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/ZmS8rVRL148/story01.htm Tyler Durden

Thomas Sowell Fears “Race Hustling” Consequences

Authored by Thomas Sowell via RealClearPolitics blog,

Years ago, someone said that, according to the laws of aerodynamics, bumblebees cannot fly. But the bumblebees, not knowing the laws of aerodynamics, go ahead and fly anyway.

Something like that happens among people. There have been many ponderous academic writings and dour editorials in the mainstream media, lamenting that most people born poor cannot rise in American society any more. Meanwhile, many poor immigrants arrive here from various parts of Asia, and rise on up the ladder anyway.

Often these Asian immigrants arrive not only with very little money, but also very little knowledge of English. They start out working at low-paid jobs but working so many hours, often at more than one job, that they are able to put a little money aside.

After a few years, they have enough money to open some little shop, where they still work long hours, and still save their money, so that they can afford to send their children to college. Meanwhile, these children know that their parents not only expect, but demand, that they make good grades.

Some people try to explain why Asians, and Asian-Americans, succeed so well in education and in the economy by some special characteristics that they have. That may be true, but their success may also be due to what they do not have — namely "leaders" who tell them that the deck is so stacked against them that they cannot rise, or at least not without depending on "leaders."

Such "leaders" are like the people who said that the laws of aerodynamics showed that the bumblebee cannot fly. Those who have believed such "leaders" have in fact stayed grounded, unlike the bumblebees.

A painful moment for me, years ago, when I was on the lecture circuit, came after a talk at Marquette University, when a young black student rose and asked: "Even though I am graduating from Marquette University, what hope is there for me?"

Back in the 1950s, when I was a student, I never encountered any fellow black student who expressed such hopelessness, even though there was far more racial discrimination then. We knew that there were obstacles for us to overcome, and we intended to overcome them.

The memory of that Marquette student came back to me, years later, when another black young man said that he had wanted to become a pilot, and had even planned to join the Air Force in order to do so. But then, he said, he now "realized" that "The Man" would never allow a black guy to become a pilot.

This was said decades after a whole squadron of black fighter plane pilots made a reputation for themselves in World War II, as the "Tuskegee Airmen." There have been black generals in the Air Force.

Both these young men — and many others — have learned all too well the lessons taught by race hustlers, in their social version of the laws of aerodynamics, which said that they could not rise.

You don't hear about racial "leaders" like Al Sharpton and Jesse Jackson among Asians or Asian-Americans. Here and there you may see some irresponsible academics peddling that line in the classroom — some of whom are of Asian ancestry, since no race of human beings is completely lacking in fools.

But they do not get the same attention, or draw the same following, as race hustlers operating in black or Hispanic communities. By and large, Asian youngsters rise and fly.

Other groups in times past also arrived on these shores with very little money and often with very little education, at least during the immigrant generation.

A poem by Carl Sandburg, back during that era, referred to a Jewish fish peddler in Chicago: "His face is that of a man terribly glad to be selling fish, terribly glad that God made fish, and customers to whom he may call his wares from a pushcart."

This fish peddler probably had not gone to college, and so had no one to tell him that he couldn't make it, and that his children couldn't rise, because this was such a terrible country.

No one can claim that there was no anti-Semitism in America, any more than they can claim that there was never any anti-Asian discrimination. There was plenty of both. But that is very different from following "leaders" whose message would only keep them grounded, after the skies were open to them as never before. 

 


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/VMXyzXhMv98/story01.htm Tyler Durden

Thomas Sowell Fears "Race Hustling" Consequences

Authored by Thomas Sowell via RealClearPolitics blog,

Years ago, someone said that, according to the laws of aerodynamics, bumblebees cannot fly. But the bumblebees, not knowing the laws of aerodynamics, go ahead and fly anyway.

Something like that happens among people. There have been many ponderous academic writings and dour editorials in the mainstream media, lamenting that most people born poor cannot rise in American society any more. Meanwhile, many poor immigrants arrive here from various parts of Asia, and rise on up the ladder anyway.

Often these Asian immigrants arrive not only with very little money, but also very little knowledge of English. They start out working at low-paid jobs but working so many hours, often at more than one job, that they are able to put a little money aside.

After a few years, they have enough money to open some little shop, where they still work long hours, and still save their money, so that they can afford to send their children to college. Meanwhile, these children know that their parents not only expect, but demand, that they make good grades.

Some people try to explain why Asians, and Asian-Americans, succeed so well in education and in the economy by some special characteristics that they have. That may be true, but their success may also be due to what they do not have — namely "leaders" who tell them that the deck is so stacked against them that they cannot rise, or at least not without depending on "leaders."

Such "leaders" are like the people who said that the laws of aerodynamics showed that the bumblebee cannot fly. Those who have believed such "leaders" have in fact stayed grounded, unlike the bumblebees.

A painful moment for me, years ago, when I was on the lecture circuit, came after a talk at Marquette University, when a young black student rose and asked: "Even though I am graduating from Marquette University, what hope is there for me?"

Back in the 1950s, when I was a student, I never encountered any fellow black student who expressed such hopelessness, even though there was far more racial discrimination then. We knew that there were obstacles for us to overcome, and we intended to overcome them.

The memory of that Marquette student came back to me, years later, when another black young man said that he had wanted to become a pilot, and had even planned to join the Air Force in order to do so. But then, he said, he now "realized" that "The Man" would never allow a black guy to become a pilot.

This was said decades after a whole squadron of black fighter plane pilots made a reputation for themselves in World War II, as the "Tuskegee Airmen." There have been black generals in the Air Force.

Both these young men — and many others — have learned all too well the lessons taught by race hustlers, in their social version of the laws of aerodynamics, which said that they could not rise.

You don't hear about racial "leaders" like Al Sharpton and Jesse Jackson among Asians or Asian-Americans. Here and there you may see some irresponsible academics peddling that line in the classroom — some of whom are of Asian ancestry, since no race of human beings is completely lacking in fools.

But they do not get the same attention, or draw the same following, as race hustlers operating in black or Hispanic communities. By and large, Asian youngsters rise and fly.

Other groups in times past also arrived on these shores with very little money and often with very little education, at least during the immigrant generation.

A poem by Carl Sandburg, back during that era, referred to a Jewish fish peddler in Chicago: "His face is that of a man terribly glad to be selling fish, terribly glad that God made fish, and customers to whom he may call his wares from a pushcart."

This fish peddler probably had not gone to college, and so had no one to tell him that he couldn't make it, and that his children couldn't rise, because this was such a terrible country.

No one can claim that there was no anti-Semitism in America, any more than they can claim that there was never any anti-Asian discrimination. There was plenty of both. But that is very different from following "leaders" whose message would only keep them grounded, after the skies were open to them as never before. 

 


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/VMXyzXhMv98/story01.htm Tyler Durden

NSA Website Allegedly Hacked Ahead Of “Stop Watching Us” Rally

Following our earlier comments on the vulnerabilities of the Obamacare websites, the fact that the United States National Security Agency suddenly went offline Friday is still surprising. As RT reports, NSA.gov has been unavailable globally as of late Friday afternoon, and Twitter accounts belonging to people loosely affiliated with the Anonymous hacktivism movement have suggested they are responsible.

 

It is perhaps not entirely coincidental that there is a major “Stop Watching Us” rally scheduled for Saturday in Washington, DC.

 

where the following letter was sent to Congress:

Dear Members of Congress,

We write to express our concern about recent reports published in the Guardian and the Washington Post, and acknowledged by the Obama Administration, which reveal secret spying by the National Security Agency (NSA) on phone records and Internet activity of people in the United States.

The Washington Post and the Guardian recently published reports based on information provided by an intelligence contractor showing how the NSA and the FBI are gaining broad access to data collected by nine of the leading U.S. Internet companies and sharing this information with foreign governments. As reported, the U.S. government is extracting audio, video, photographs, e-mails, documents, and connection logs that enable analysts to track a person's movements and contacts over time. As a result, the contents of communications of people both abroad and in the U.S. can be swept in without any suspicion of crime or association with a terrorist organization.

Leaked reports also published by the Guardian and confirmed by the Administration reveal that the NSA is also abusing a controversial section of the PATRIOT Act to collect the call records of millions of Verizon customers. The data collected by the NSA includes every call made, the time of the call, the duration of the call, and other "identifying information" for millions of Verizon customers, including entirely domestic calls, regardless of whether those customers have ever been suspected of a crime. The Wall Street Journal has reported that other major carriers, including AT&T and Sprint, are subject to similar secret orders.

This type of blanket data collection by the government strikes at bedrock American values of freedom and privacy. This dragnet surveillance violates the First and Fourth Amendments of the U.S. Constitution, which protect citizens' right to speak and associate anonymously, guard against unreasonable searches and seizures, and protect their right to privacy.

We are calling on Congress to take immediate action to halt this surveillance and provide a full public accounting of the NSA's and the FBI's data collection programs. We call on Congress to immediately and publicly:

  1. Enact reform this Congress to Section 215 of the USA PATRIOT Act, the state secrets privilege, and the FISA Amendments Act to make clear that blanket surveillance of the Internet activity and phone records of any person residing in the U.S. is prohibited by law and that violations can be reviewed in adversarial proceedings before a public court;
  2. Create a special committee to investigate, report, and reveal to the public the extent of this domestic spying. This committee should create specific recommendations for legal and regulatory reform to end unconstitutional surveillance;
  3. Hold accountable those public officials who are found to be responsible for this unconstitutional surveillance.

Thank you for your attention to this matter.

 

Via RT,

Twitter users @AnonymousOwn3r and @TruthIzSexy both were quick to comment on the matter, and implied that a distributed denial-of-service attack, or DDoS, may have been waged as an act of protest against the NSA

 

 

 

 

 

 

Allegations that those users participated in the DDoS — a method of over-loading a website with too much traffic — are currently unverified, and @AnonymousOwn3r has previously taken credit for downing websites in a similar fashion, although those claims have been largest contested.

 

 

The question, of course, is whether this is retalization from Europe (or Brazil) for the 'denied' allegations over spying?


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/_QlPPxLr2hI/story01.htm Tyler Durden

NSA Website Allegedly Hacked Ahead Of "Stop Watching Us" Rally

Following our earlier comments on the vulnerabilities of the Obamacare websites, the fact that the United States National Security Agency suddenly went offline Friday is still surprising. As RT reports, NSA.gov has been unavailable globally as of late Friday afternoon, and Twitter accounts belonging to people loosely affiliated with the Anonymous hacktivism movement have suggested they are responsible.

 

It is perhaps not entirely coincidental that there is a major “Stop Watching Us” rally scheduled for Saturday in Washington, DC.

 

where the following letter was sent to Congress:

Dear Members of Congress,

We write to express our concern about recent reports published in the Guardian and the Washington Post, and acknowledged by the Obama Administration, which reveal secret spying by the National Security Agency (NSA) on phone records and Internet activity of people in the United States.

The Washington Post and the Guardian recently published reports based on information provided by an intelligence contractor showing how the NSA and the FBI are gaining broad access to data collected by nine of the leading U.S. Internet companies and sharing this information with foreign governments. As reported, the U.S. government is extracting audio, video, photographs, e-mails, documents, and connection logs that enable analysts to track a person's movements and contacts over time. As a result, the contents of communications of people both abroad and in the U.S. can be swept in without any suspicion of crime or association with a terrorist organization.

Leaked reports also published by the Guardian and confirmed by the Administration reveal that the NSA is also abusing a controversial section of the PATRIOT Act to collect the call records of millions of Verizon customers. The data collected by the NSA includes every call made, the time of the call, the duration of the call, and other "identifying information" for millions of Verizon customers, including entirely domestic calls, regardless of whether those customers have ever been suspected of a crime. The Wall Street Journal has reported that other major carriers, including AT&T and Sprint, are subject to similar secret orders.

This type of blanket data collection by the government strikes at bedrock American values of freedom and privacy. This dragnet surveillance violates the First and Fourth Amendments of the U.S. Constitution, which protect citizens' right to speak and associate anonymously, guard against unreasonable searches and seizures, and protect their right to privacy.

We are calling on Congress to take immediate action to halt this surveillance and provide a full public accounting of the NSA's and the FBI's data collection programs. We call on Congress to immediately and publicly:

  1. Enact reform this Congress to Section 215 of the USA PATRIOT Act, the state secrets privilege, and the FISA Amendments Act to make clear that blanket surveillance of the Internet activity and phone records of any person residing in the U.S. is prohibited by law and that violations can be reviewed in adversarial proceedings before a public court;
  2. Create a special committee to investigate, report, and reveal to the public the extent of this domestic spying. This committee should create specific recommendations for legal and regulatory reform to end unconstitutional surveillance;
  3. Hold accountable those public officials who are found to be responsible for this unconstitutional surveillance.

Thank you for your attention to this matter.

 

Via RT,

Twitter users @AnonymousOwn3r and @TruthIzSexy both were quick to comment on the matter, and implied that a distributed denial-of-service attack, or DDoS, may have been waged as an act of protest against the NSA

 

 

 

 

 

 

Allegations that those users participated in the DDoS — a method of over-loading a website with too much traffic — are currently unverified, and @AnonymousOwn3r has previously taken credit for downing websites in a similar fashion, although those claims have been largest contested.

 

 

The question, of course, is whether this is retalization from Europe (or Brazil) for the 'denied' allegations over spying?


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/_QlPPxLr2hI/story01.htm Tyler Durden

Dear Recently Graduated Millennials: Prepare To Work Until You Are 73

Our advice to recently graduating Millennials? Live long.

Because according to a just conducted analysis by NerdWallet, looking at the future of the average recent college graduate, and more importantly looking at the mountain of student loans each graduate will be saddled with and the implications for the earliest possible retirement age onset, Millennials may well have no choice but to postpone their retirement by about a decade, to the ripe old age of 73.

The reason for this, of course, is the magic of compounded interest: that “manageable” debt load grows and grows and grows even assuming one dutifully pays interest on time. And with unemployment at graduation running at 18%, that is a rather generous scenario. Still, even under base case assumption, the median student loan of $23,300 will end up costing students over $115K by the time they retire.

What does that mean in practical terms? “When will students be able to retire given that many are spending the first ten years (or more) of their careers paying off their hefty loans? NerdWallet… found that while retirement is certainly not impossible, for most it will have to wait until their early to mid 70s— over 10 years later than the current average retirement age of 61.” It goes without saying that all else is assumed equal. Alas, in the America’s welfare state future, few things will be equal, and most things will be far worse.

Which, one wonders, may be the secret plan after all: since by now everyone knows that the US’ welfare state is unsustainable for the mid- and certainly long-term future, what better way to avoid draining it, than to force those who would otherwise benefit into at least ten more years of work to pay off debts accumulated over 50 years earlier.

Quite a brilliant strategy when one thinks about it. And to think, all that was required was record low interest rates, fooling everyone into believing all those tens of thousands of dollars of debt, was cheap.

From NerdWallet

Key Takeaways:

  • Most of today’s college grads won’t be able to retire until 73 due to high debt load —12 years later than the current average retirement age
  • Given a life expectancy of 84, grads will only have 11 years to enjoy retirement
  • The median debt load of $23,300 will cost students over $115,000 (in today’s dollars) by the time they retire
  • Employer 401(k) matches are crucial, and will compose 50% of retirement savings

Student Debt Will Follow Graduates To Retirement

With the total amount of outstanding student debt approaching $1 trillion, the plight of debt-straddled college students is more important than ever. In the past 30 years, not only has the number of high school graduates enrolled in four-year universities increased by 11%, but college tuition has also soared over 200%. As more students attend college at a cost higher than ever before, Millennials have increasingly turned to loans to help finance their education. While much of the college debt dialogue is over immediate issues like employment and repayment, there is another glaring challenge that graduates will have to deal with for years to come: retirement.

When will students be able to retire given that many are spending the first ten years (or more) of their careers paying off their hefty loans? NerdWallet conducted a study that examined the financial profile of a typical college graduate and found that while retirement is certainly not impossible, for most it will have to wait until their early to mid 70s— over 10 years later than the current average retirement age of 61.

Quick Facts On Students And Their Debt

Here are some quick facts to give context on exactly what students are grappling with:

  • Median debt for a student upon graduation: $23,300
  • Percentage of students who are unemployed at graduation: 18%
  • The median starting salary for those who do have jobs: $45,327
  • Standard loan repayment plan: 10 years
  • Average yearly loan repayment: $2,858
  • Number of college graduates currently estimated to be in default: Over 7 million

$23,300 In Loans Ends Up Costing $115,096 By Retirement

The goal of the study was to find realistic retirement projections for the typical college graduate and create projections that applied to a broad range of students. The study compared three different financial profiles: the median graduate, with median debt and salary; the struggling graduate, with high debt and a below average salary; and well-off graduate, with low debt and an above-average salary.

Graduate Retirement Outcomes

Clearly, student debt has an impact on retirement outcomes. Currently, the average retirement age is 61. But for most of today’s college grads, the realistic retirement age will be closer to their mid-70s. Given an average life expectancy of 84, this will leave only 10-12 years for people to spend in retirement. The main reason for this is that although the median college graduate leaves with a seemingly manageable $23,300 debt load, 7% of a student’s earnings go toward yearly loan payments of $2,858 for the first ten years of his or her career. This prevents any meaningful contributions toward retirement. In fact, by the age of 33, when the typical college grad has finally paid off their standard 10-year loans, he or she can only be expected to have saved $2,466 for retirement—over $30,000 less than if the student had graduated with no debt. Even worse, the foregone savings carry a serious opportunity cost, as this money would have been earning a compounded rate of return every year until retirement. At the projected retirement age of 73, the lost savings directly attributable to student debt is $115,096, nearly 28% of total retirement savings.

Surprisingly, for the struggling graduate, the retirement outcome isn’t dramatically different. Despite being in nearly twice as much debt and starting with 10% less pay, the expected retirement age is still just 75, only two years later than the median case. The main reason for this is social security. Much has been discussed about whether or not social security will be around by the time Millennials retire. To be conservative, social security benefits are factored into the study at $11,070 (75% of current average) per year beginning at age 67. That said, a substantial reduction in benefits or the disappearance of the program altogether would significantly alter the retirement equation. If the current social security payouts were to remain unchanged for the next 50 years, the benefits would provide future retirees a significant boost by covering nearly 15% of their required yearly income in retirement.

Well-off Grads Retire 7 Years Earlier

The retirement prospects for the well-off grad are significantly better than the others as illustrated in the graph above.  By graduating with a reduced debt load and landing a job that pays 22% more, the well-off grad can expect to retire at age 67. This is a huge departure from the other cases, and demonstrates the importance of contributing to a retirement
plan early on in one’s career. Compared to the median grad, the extra $40,406 that the well-off graduate is able to contribute during the first ten years of his or her career results in a $446,452 difference in retirement savings by age 73.

So How Do You Beat The Odds?

Given these circumstances, should students resign themselves to an eternity of work with little to look forward to in their latter years? Not necessarily. Though an increasing retirement age does appear to be an inevitable economic reality, being conscious of this problem and tailoring financial and career planning accordingly can go a long way toward achieving retirement objectives. There are many factors that influence the ultimate age at which people are able to retire, but there are a few variables that have a particularly large impact. Making above-average yearly contributions to a retirement account, working for an organization with a decent 401(k) match, and making sure to invest money in index tracking mutual funds are three ways to help add years to retirement.

Employer 401(k) Match Is Crucial

As fewer and fewer companies offer defined benefit plans, Millennials will have to depend upon employer 401(k) plans to save for retirement. According to a recent Fidelity survey, the current median yearly matching contribution is $3,420. As shown below, these employer contributions are expected to make up roughly 50% of the retirement equation for Millennials. By working for a company that offers a yearly matching contribution of $4,420 ($1,000 more than the median), potential retirees can reduce their expected retirement age by up to three years.

 401(k) Match Composes Half of Retirement Savings

Make Above-average Contributions To Retirement Accounts

While working for a generous employer can do wonders for retirement, not everyone is in a position to be overly selective about whom to work for. Another important component of retirement planning is the yearly contribution rate. Making above-average contributions can significantly improve retirement outcomes. Though the study projects a 6% annual post-tax contribution (the average personal savings rate for Americans), increasing that number to 10% reduces the expected age of retirement from 73 to 69.

Invest In Index Funds

Contributing money towards retirement won’t be helpful if the money is simply left in a savings account or a CD. To earn a return, Millennials need to be willing to take some risk and construct an equity-oriented portfolio. This may be difficult for today’s grads who have seen the stock market seemingly implode every five years, but unfortunately, retirement will be impossible if people invest too conservatively. The study assumed a 6% yearly return on retirement savings which is a conservative figure given the historical performance of the market. That said, it is a rate of return that can’t be achieved by completely avoiding equity exposure. The best way for an individual to overcome this problem is by investing in index tracking mutual funds, which will offer a market return with low fees.

Retirement Isn’t Hopeless, But It Will Be Difficult

Far more than their parents, Millennials will have to rely upon proactive financial management to achieve their retirement goals. Each generation is afflicted with distinctive financial ills, but the challenge of college debt is unique to Millennials. The decline of pension plans, the uncertainty surrounding social security and the college debt epidemic have placed the onus on graduates to make conscious, forward-thinking decisions about their retirement.

Methodology

Future retirement statistics were projected by profiling three potential situations that students might find themselves: the median graduate, with median student debt and median starting salary; the struggling graduate, with a high debt load and a below-average salary; and the well-off graduate, with a low debt load and an above-average salary. The study factored in a range of other relevant variables to create the projections: average 2012 social security benefit, average 2012 401(k) match, 30 year average national salary growth rate, 30 year average inflation rate, 30 year annualized S&P 500 returns, life expectancy, 30 year average personal savings rate, 2012 Stafford loan interest rates, and standard loan repayment terms.

All projected figures are inflation adjusted and discounted back to 2013 dollar-terms.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/0hOUYJxZulo/story01.htm Tyler Durden

JPMorgan Settles With FHFA For $5.1 Billion

It’s Friday afternoon, do you know where your fortress-balance-sheet bank’s massive settlement deal with the government is…

  • *JPMORGAN TO PAY $5.1 BILLION OVER FHFA MORTGAGE CLAIMS
  • *FHFA SAYS JPM TO PAY ABOUT $2.74B TO FREDDIE, $1.26B TO FANNIE
  • *JPMORGAN PAYS $1.1B TO RESOLVE REPRESENTATION, WARRANTY CLAIMS
  • *FHFA SAYS IT’S SETTLED FOUR OF THE 18 PLS SUITS IT FILED IN ’11

$4 billion of this appears to be part of the $13 billion settlement ‘agreed’ last week; but still leaves the criminal cases from what we can tell… Full statement below…

JPMorgan Chase has reached an agreement to resolve all of its mortgage-backed securities (MBS) litigation with the Federal Housing Finance Agency (FHFA) as conservator for Freddie Mac and Fannie Mae for $4 billion. This settlement resolves the firm’s largest MBS case and relates to approximately $33.8 billion of securities purchased by Fannie Mae and Freddie Mac from J.P. Morgan, Bear Stearns and Washington Mutual. The firm has also simultaneously agreed to resolve Fannie Mae’s and Freddie Mac’s repurchase claims associated with whole loan purchases from 2000 to 2008, for $1.1 billion.

 

Today’s settlements totaling $5.1 billion are an important step towards a broader resolution of the firm’s MBS-related matters with governmental entities, and reflect significant efforts by the Department of Justice and other federal and state governmental agencies.

 

 

FHFAJPMorganSettlementAgreement.pdf


    



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Guest Post: 4 Things To Ponder This Weekend

Submitted by Lance Roberts of STA Wealth Management,

It has been a very interesting week as the Government shutdown/debt ceiling debate debacle moves into the background.  The focus has now turned back towards the fundamentals of the market, economic environment and the ongoing Federal Reserve interventions.  What is becoming increasingly evident is that market participants are once again potentially throwing "caution to the wind" betting on a belief that the Fed's ongoing Q.E. programs will continue to trump valuations and economics.  After all, that has seemingly been the case up to this point.  The problem is that no one really knows how this will turn out.  However, as I discussed earlier this week, it is likely that we are close to finding out answer.

In the meantime, I will leave you with my weekly list of "things to ponder this weekend."

1) What An 81% Increase In Food Stamp Usage Means For The U.S. Economy

My good friend Doug Short, who is a daily must read, recently posted an article by Mohammad Zulfiqar on the impact of welfare, specifically food stamps, on the U.S. economy.  He states:

"Each day, there's growing evidence that suggests the American economy isn't experiencing any economic growth. Unequal job creation is just one of the main topics discussed in the mainstream, but sadly, there are many other facts and figures that show a gruesome image of the U.S. economy.

 

Consider this: since the financial crisis struck in the U.S. economy, the number of people using food stamps has been increasing. In 2007, there were 26.3 million Americans who were using food stamps; fast-forward to July 2013, and that number had enlarged to 47.6 million, an increase of almost 81% at the rate of roughly 13.5% per year."

Food-Stamps-1012513

"Considering all this, one must wonder what's going to happen to the key stock indices that continue to rise in value. Will the companies that sell consumer goods be able to earn revenue at the same pace as they did before?

 

The conditions in the U.S. economy are suggesting that consumers are struggling. One thing investors have to keep in mind is that when consumers are facing hardships, they tend to pull back on the spending that they don't necessarily have to incur. For example, a person who has lost a job and has very little savings will shy away from buying a new gadget, car, and/or house."

Read Entire Post

2) Where Did All The Bears Go?

In asking the question "Is A Major Correction Coming?" one my concerns have been the extreme complacency, or lack of fear of a market correction, by investors in the markets.  The good folks at Bespoke Investment Group recently pointed to this same issue.

"This morning's release of the individual investor sentiment figures from the American Association of Individual Investors (AAII) showed that bullish sentiment increased from 46.28% up to 49.2%.  This is the highest weekly reading since January and represents the fourth straight week of increases.  At the same time that bullish sentiment is rising, bearish sentiment plummeted to 17.6%, which is the lowest reading since January 2012!  With all the hype in the media regarding the shutdown in October, it is pretty amazing to see that individual investors were unfazed by all the hysteria."

AAII-Bull-Bear-102513

As Bob Farrell's Rule #9 States:  "When all experts and forecasts agree; something else is bound to happen"

3) Markets More Exuberant Than In 1996

Tyler Durden recently posted an excellent piece of commentary by Damien Cleusix about valuations now versus when Greenspan uttered his infamous phrase of "irrational exuberance."

"'It is really going to end badly,' is the ominous warning that Damien Cleusix has issued to his clients as he believes we are now reaching the top of the secular bull market. Crucially, he sees US stock markets as 'grossly over-valued' but that it is hidden from most people's perceptions because (just as in 2000 and 2007) there are marginal sectors that make the 'aggregate' seem reasonable (not to mention the dreams of forward earnings.)

 

His novel approach of a point-in-time Price-to-Sales comp shows the median valuation its highest in 23 years.. and Alan Greenspan's infamous 'exuberance' valuations in 1996 were 40% below current levels of elation. Today, the significant difference with 2000 and 2007 is that government and central banks have already spent a lot of firing power to 'make believe' that everything is fine again. He concludes; 'there will be no place to hide when the tide turns.'"

 Zero-hedge-102513

Read The Entire Piece

4) The High Cost Of A Cheap Dollar

For the last several months in the weekly missive, I have been discussing that the strength of the dollar earlier this year was fleeting.  Furthermore, the real danger to the U.S. economy has been an ongoing "weak dollar" policy.

This past week R. David Ranson of the NCPA (National Center For Policy Analysis) wrote an excellent brief on the impact of a weak dollar on the U.S. economy.

"Milton Friedman demolished this argument more than 30 years ago:

 

'Another fallacy seldom contradicted is that exports are good, imports bad. The truth is very different… Exports are the price we pay to get imports. As Adam Smith saw so clearly, the citizens of a nation benefit from getting as large a volume of imports as possible in return for its exports, or equivalently, from exporting as little as possible to pay for its imports.'

 

Those who advocate 'export-led growth' often assert that cheap currency policies will increase exports and national output (gross domestic product) over time. However, there is a 40-year history to the contrary since President Richard Nixon ended fixed exchange rates between the dollar and other countries and allowed the dollar to 'float.'

 

The question at issue is not whether currency depreciation benefits the United States relative to other economies but whether it benefits the U.S. economy in absolute terms."

NCPA-102513

"Exports are part of the cost side of the economy; imports are the benefit the country gains in return for that cost. Economic policies that promote exports at the expense of imports, such as currency depreciation, reduce the growth of GDP over time. That shift substantially lessens long-term gains in the real value of exports produced by a cheap dollar. Public policy can manipulate the currency and the economy to increase the amount that exports contribute to national output (GDP). But a country that succeeds in this effort has impoverished itself. The phrase 'beggar my neighbor' is an understatement."

Read The Entire Piece

What I'm Thinking About

Next week is once again loaded with economic, and earnings, reports as we head into the end of the year.  I believe that the impact of the Affordable Care Act on the U.S. economy is being greatly underestimated as the associated costs are hitting consumers where it hurts the most. 

I received an email this week from a listener, Tony in Florida, who stated:

"I have a pre-condition which means that Blue Cross would not give me anything more than their 'Go Blue Plan.'  The new plan I am buying from them is plan #1419, which has an annual deductible of $6250.  This is the high end 'Silver Plan.'

 

I have to pay for all doctors visits in full, and only basic wellness is free, including a colonoscopy. I even have to pay for my own blood work. 

While I am okay with paying the high deductible; what I have a problem with is that the monthly premium is $613.06.  I'm 57, do not smoke and live in South Florida and only have a finite amount of income to live on."

If his story is accurate, the economic drag that will come from the ACA in 2014, and beyond, could be larger than currently expected.  What concerns me is that few individuals have given thought about what the financial/economic costs will be by trying to give everyone else something for free.


    



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Stocks & Gold Soar As Macro Slumps

With US Macro slumping to 3-month lows, is it any surprise that markets everywhere traded with a decidedly Taper-off confidence this week. USD was sold (-0.6% on the week) though commodity currencies (CAD/AUD) were sold also. Stock 'traders' bought every dip, lifting the Russell 2000 for the 8th straight week (first time since 2003). Gold completed its best 2-weeks (+6.4%) in 23 months. Treasuries have been very quiet since Tuesday, ending the week 5-8bps lower in yield. Growth hope faded as Copper (-1%) and Oil (-3%) fell on the week and earnings overall tumbled. Of course, it wouldn't be Friday if we didn't melt-up into the close (helped by a VIX slammer) and sure enough the S&P tagged its all-time highs as panic buying ensued with just minutes left in the week. Headlines will crow of new all-time-highs for the S&P (but credit remains a non-believer, not buying the rip).

 

 

US Macro has collapsed at its fastest pace in 8 months over the last 3 weeks… (notice the continual lower highs of US Macro since the recovery…)

 

and as we have now been indoctrinated into the "bad news is good news" mantra, that means buy stocks… (with Trannies leading the way off the lows…)

 

Discretionary, Industrials, and Homebuilders lead the pack off the lows across sectors…

 

And on the basis that the Fed wil never step away, Gold has seen its best 2 weeks in 23 months…

 

and gold and silver recoupled perfectly in the week as Copper and Oil (growth?) slide…

 

Treasuries have been very dull as stocks soared the last 3 days…

 

and despite notable dispersion (CAD/AUD weakness – global growth?) the USD has sunk on the back of more EUR buying…

 

 

and of course the ubiquitous VIX-slam, ES melt-up into the Friday close…

 

 

and credit markets remain the great non-believers…

and this was NOT a short squeeze – as "most shorted" names sold off very rewardingly for the shorts… (doubling the markt's move to the downside)…

 

Charts: Bloomberg


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/jinpoYFnxD4/story01.htm Tyler Durden