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Politics : Don't Blame Me, I Voted For Kerry
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To: David Howe who wrote (56585)11/5/2004 11:30:09 AM
From: Karen LawrenceRead Replies (3) of 81568
 
I did not hear wrong, read this: his is the background that may help explain today's privatization scheme for Social Security. There actually is a dual problem.

On the one hand, as in the early 18th century, the U.S. Government has future obligations that it claims it will have difficulty in paying. This actually is not the case, but there is another factor at work. That factor is the desire by financial institutions to make money off a new stock run-up, and to find a vast new source of money management fees for their executives.

The problem facing money managers is that the domestic U.S. savings rate has fallen to zero (actually, it is negative, as indebtedness is building up more rapidly than new saving is being accumulated). Despite this unprecedented development, employees are obliged to accumulate forced savings, in the form of the income withheld from their paychecks by F.I.C.A. withholding for Social Security and Medicare, and put into government bonds in the accounts of these two government agencies.

The financial sector is looking at these funds like a shark that sees nice juicy prey swimming in the water. They would love to get their hands on Social Security and Medicare funds to manage, at a 2% fee. Even just 1% this would amount to tens of billions of dollars annually, not including the speculative gains that could be made on the turbulent market run-up.

Chile in the mid-1970s was a dress rehearsal for the immense management fees that the large financial conglomerates could rake off from privatizing Social Security. The financial conglomerates given control of these funds were well connected to the Pinochet....."
www.counterpunch.org/schaefer07122003.html
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