| Topic: |
Politics > Politics-USA |
| User: |
"NotBush2004" |
| Date: |
09 Jan 2004 06:39:32 PM |
| Object: |
What the stock market means to 75% of America. |
January 08, 2004
The myth of the populist stock market
By David Callahan
NEW YORK - Wall Street analysts are predicting another great year for the
stock market in 2004, and Americans are again pouring their savings into
stocks. Tens of billions of dollars have flowed back into equities since
last summer. As the Dow and Nasdaq soar, more money is likely to follow.
There are also signs of a revival of the '90s myth of the populist stock
market -a myth in which Wall Street gives everyone on Main Street a shot at
a better life.
Can Americans possibly fall once more for this nonsense? Maybe. The scandals
of recent years, most lately in the mutual-fund industry, have done little
to debunk the notion that Wall Street is geared toward ordinary investors
and that stocks offer a universal path to wealth creation. At the height of
the boom, however, the bottom three-quarters of American households owned
less than 15 percent of all stock. Barely a third of households hold more
than $5,000 in stock. Most Americans have more debt on their credit cards
than money in their mutual funds.
Stock-market gains have reflected the top-heavy ownership patterns. Between
1989 and 1997, the most recent year for which there is good data, 86 percent
of stock market gains went to just the top 10 percent of households. Yet
when the market tanked, it was often ordinary investors who felt the
sharpest pain - pain that many will cope with well into retirement.
According to a March survey by Greenwich Associates, major retirement
pension plans lost $1 trillion from the beginning of 2000 through beginning
of 2003.
Apart from getting burned by the vast scams in tech stocks, those ordinary
Americans who did try to benefit from the last bull market got mauled in
myriad smaller ways. Thousands of Americans are suing financial firms over
things like hidden fees and inflated commissions, dishonest investing
advice, and reckless trading practices. In the past two years, investors
have filed more than 2,000 cases alleging "churning" by their brokers - that
is, unnecessary trading to rack up commission fees.
Today, as middle-class investors go back into the water, the sharks are
still there. While many investors will make gains if the market continues to
rise - and stocks are probably a better place to put your money than under a
mattress - the crackdown so far on Wall Street abuses is not very
reassuring. Big firms like Merrill Lynch got only a slap on the wrist for
misleading investors and admitted no wrongdoing. In 2002, New York Attorney
General Eliot Spitzer helped to extract a $1.4 billion settlement from
America's top 10 brokerage firms, but not a single individual in those firms
faced criminal charges or admitted personal responsibility.
Although it's too early to predict the final outcomes of the mutual-fund
investigations - which revealed yet more unfair practices that hurt ordinary
investors - it appears that the accused in these cases are also headed for a
soft landing, given the lax laws governing the fund industry until recently.
In all, it's hard to see why future wrongdoers on Wall Street will be
deterred by any of the punishments that authorities have meted out so far.
Meanwhile, self-regulation, the first line of defense against bad behavior
by brokerage firms, remains something of a joke. The National Association of
Securities Dealers is notorious for its lax discipline of miscreant brokers
who prey on investors. NASD remains ill-equipped to police more than 600,000
securities dealers in the US or to dutifully investigate the 5,000 or so
consumer complaints it receives every year.
And the biggest cop on the Wall Street beat, the SEC, still lacks the muscle
to really do its job, despite all the lessons learned during the past few
years about the costs of weak regulation.
The SEC's weakness has been driven home anew by the mutual-fund scandals.
The SEC failed to prevent - or even notice - these scandals, not only
because it lacked the staff and expertise to adequately police the nation's
13,000 mutual funds, but also because special-interest money blocked
stronger reform efforts in Washington. Indeed, in the wake of the corporate
scandals that began with Enron, the financial-services industry has stepped
up its efforts to influence lawmakers.
In the 2002 election cycle, securities and investment firms gave $59 million
in campaign donations, according to the Center for Responsive Politics.
These firms have already contributed more than $20 million toward the 2004
election. That money comes on top of the $30 million-plus a year the
industry spends on direct lobbying.
Investors on Main Street think good times are here again. Yet amid signs of
a returning bull market, there is plenty of evidence that Wall Street has
not fully mended its ways.
In this climate, the most important asset for any smart investor is a long
memory.
.. David Callahan is research director at Demos, a public policy group in New
York. His new book is 'The Cheating Culture: Why More Americans Are Doing
Wrong to Get Ahead
http://www.csmonitor.com/2004/0108/p09s01-coop.html
--
During the last election cycle, while Frist headed the NRSC, the health care
industry increased its contributions to Republican candidates to just under
$ 4 million and became the largest industry contributor to the party.
"If you look at the money involved, it would be easy to say the medical
industry has bought itself a Senator and, now, a Senate," says Harleigh.
http://www.capitolhillblue.com/artman/publish/article_1470.shtml
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| User: "Werner Hetzner" |
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| Title: Re: What the stock market means to 75% of America. |
09 Jan 2004 07:48:58 PM |
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NotBush2004 wrote:
January 08, 2004
The myth of the populist stock market
By David Callahan
...
. David Callahan is research director at Demos, a public policy group in New
York. His new book is 'The Cheating Culture: Why More Americans Are Doing
Wrong to Get Ahead
Where do pension funds put their money? Putting it in government bonds
would be really dumb. All those governments and people who own our
government bond just got cheated out of many billions when the fed
devalued the dollar. Whant to know fraud? check out...
http://1marketsquare.com/CapLP/Social%20Security.shtml
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| User: "NotBush2004" |
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| Title: Re: What the stock market means to 75% of America. |
09 Jan 2004 08:26:50 PM |
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"Werner Hetzner" <whetzner@mac.com> wrote in message
news:3FFF5A0A.4060605@mac.com...
NotBush2004 wrote:
January 08, 2004
The myth of the populist stock market
By David Callahan
...
. David Callahan is research director at Demos, a public policy group in
New
York. His new book is 'The Cheating Culture: Why More Americans Are Doing
Wrong to Get Ahead
Where do pension funds put their money? Putting it in government bonds
would be really dumb.
Tell that to all the corporate employees who have lost their retirement,
i.e., Enron, WorldCom, Qwest, etc....
I'm sure many of them would give your right arm to have their money in a
government bond instead of a criminal's bank account.
--
During the last election cycle, while Frist headed the NRSC, the health care
industry increased its contributions to Republican candidates to just under
$ 4 million and became the largest industry contributor to the party.
"If you look at the money involved, it would be easy to say the medical
industry has bought itself a Senator and, now, a Senate," says Harleigh.
http://www.capitolhillblue.com/artman/publish/article_1470.shtml
.
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| User: "Steven Litvintchouk" |
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| Title: Re: What the stock market means to 75% of America. |
10 Jan 2004 10:57:19 AM |
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NotBush2004 wrote:
"Werner Hetzner" <whetzner@mac.com> wrote in message
news:3FFF5A0A.4060605@mac.com...
NotBush2004 wrote:
January 08, 2004
The myth of the populist stock market
By David Callahan
...
. David Callahan is research director at Demos, a public policy group in
New
York. His new book is 'The Cheating Culture: Why More Americans Are Doing
Wrong to Get Ahead
Where do pension funds put their money? Putting it in government bonds
would be really dumb.
Tell that to all the corporate employees who have lost their retirement,
i.e., Enron, WorldCom, Qwest, etc....
I'm sure many of them would give your right arm to have their money in a
government bond instead of a criminal's bank account.
Irrelevant.
The stock assets held by the pension funds of America's corporations
dwarfs what individuals hold thru their own mutual funds. And that's
because the rate of return of bonds just isn't enough to provide the
pensions that the companies have promised their employers on retirement.
(historically the long-term rate of return of stocks is around 11% per
year annualized)
So when you add pensions to 401(k)'s, then many, perhaps most, Americans
are now invested directly or indirectly in the stock market.
-- Steven L.
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| User: "" |
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| Title: Re: What the stock market means to 75% of America.. |
09 Jan 2004 08:52:13 PM |
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NotBush2004 wrote:
January 08, 2004
The myth of the populist stock market
By David Callahan
...
. David Callahan is research director at Demos, a public policy group in New
York. His new book is 'The Cheating Culture: Why More Americans Are Doing
Wrong to Get Ahead
Where do pension funds put their money?
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Pension funds are a long-term investment.
A VERY long term investment.
We are talking about 20 or 30 or 40 years.
Many people who put money in the stock market, think in much shorter terms.
The really hot players think in terms of minutes.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Putting it in government bonds would be really dumb.
All those governments and people who own our
government bond just got cheated out of many billions when the fed
devalued the dollar. Whant to know fraud? check out...
http://1marketsquare.com/CapLP/Social%20Security.shtml
.
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| User: "Werner Hetzner" |
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| Title: Re: What the stock market means to 75% of America.. |
10 Jan 2004 07:17:04 AM |
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wrote:
NotBush2004 wrote:
January 08, 2004
The myth of the populist stock market
By David Callahan
...
. David Callahan is research director at Demos, a public policy group in New
York. His new book is 'The Cheating Culture: Why More Americans Are Doing
Wrong to Get Ahead
Where do pension funds put their money?
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Pension funds are a long-term investment.
A VERY long term investment.
We are talking about 20 or 30 or 40 years.
Yes. In the long term, investing in Social Security is a losing
proposition.
http://1marketsquare.com/CapLP/Social%20Security.shtml
Many people who put money in the stock market, think in much shorter terms.
The really hot players think in terms of minutes.
They want to take on higher risks in order to try for a higher return.
Speculation is playing with fire. They should know that, and generaly do.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Putting it in government bonds would be really dumb.
All those governments and people who own our
government bond just got cheated out of many billions when the fed
devalued the dollar. Whant to know fraud? check out...
http://1marketsquare.com/CapLP/Social%20Security.shtml
.
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