Treasury running out of customers for T-Bills, wants to force them on your 401k and IRA accounts

www.businessweek.com...

...Jan. 8 (Bloomberg) -- U.S. investors oppose federal initiatives that would force them to give up control over their 401(k) accounts, the Investment Company Institute said.

Seven in 10 U.S. households object to the idea of the government requiring retirees to convert part of their savings into annuities guaranteeing a steady payment for life, according to an institute-funded report today.
...

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....

So the Treasury department is paying for these (unlawful) bailouts with Bonds, and the continued sale prevents the insolvency of the USA. China don't want to keep buying bonds, so the Treasury is looking to force these bonds down your throat.

I have a weird image in my mind of a snake eating it's own tail.

reply to post by Dbriefed


Wanting to Force the sale of their BAD debt to their own

citizens.

They have found a NEW LOW.

Edit to add ; Snake eating its own tail.. Perfect Analogy OP

[edit on 8-1-2010 by Sean48]

reply to post by Dbriefed


A number of people (myself included) have flat stopped contributing to their 401K plans until this depression truly ends. Why dump even 1 cent of your money down a bottomless pit, even if it is matched by the company you work for? So I suppose if this passes and the treasury gets what they want the next step will be for Obama and Congress to pass legislation requiring every American to carry a 401K in much the same way as they are trying to force every American to carry health insurance.

...this is a mess.

This should move all the toxic assets onto the shoulders of Joe six pack just in time for the elite to cash out. I cannot believe more people are not waking up to the fact that we are basically bankrupt.

If I bring up any of this to my family and friends and they look at me like I'm nuts. I just give up.

reply to post by Kellter


Don't give up, not yet. Keep hounding them so when the market does crash you can at least say " I told you so"

I am in the same boat, I have physical gold and silver in what I hope is a safe location. Its not much, most of what I am worth is in the market, but if you can't eat, carry or sell what you own its worthless, so I hope, as thin as hope is nowadays, that the market will turn and the fundamentals of the economy strengthen. Otherwise, it won't matter where you invested.

reply to post by Dbriefed


I don't see what this has to do with T-bills?

Annuities can be variable (stock etc) or non variable (usually bonds from local and state govs, federal, and other secure investments) ..

401(k)'s are one of the largest purchasers of US T bills... along with Mutual funds and IRA's. I believe the reason they are asking this is because many senior citizens had their life savings wiped out.. honestly, you should remove your self from the markets at least 5 years before retirement, leaving only a portion of say, 25% to be gambled with. You and I will have to pick up the tab on irresponsible seniors gambling in the market with their retirement money.

In short, if you don't get my stance: I agree with the Treasury.

Treasury-linked annuities are a way to package T-bills as annuities. But it would also include Treasury Bonds, Notes, Bills, TIPS, etc.

The government doesn't run anything well or profitably, so having the government control personal financials is not a good idea unless you want to lose all your money. Look at the fine investments they've made with TARP. Social Security was run into the ground and that was the original annuity plan. That's not the point though.

The big red flag is the fact that the National solvency of the US is propped up by the sale of Treasury securities and the signals are they're running out of buyers. Holders of US debt can be found here: www.treas.gov...
. Using China as an example, China ships products to the US for Dollars, and China swaps Dollars for US Treasuries (Bills, Bonds & Notes). Treasuries are seen as the safest investment and there is no real alternative for the volume of Dollars in question. Companies in China are mandated to put a percentage of their cash in very safe investments and that usually means Treasuries. If foreign countries don't buy enough US debt, we start devaluing the Dollar. China doesn't want this to happen since their holdings would lose value (they'd get paid with cheaper dollars), and they've warned the US about that. Since we needed to cover massive sudden debt that foreign countries couldn't afford, the Federal Reserve started buying Treasuries in another weird snake eating it's tail act and called it quantitative easing (aka - making money out of thin air).

The US debt is so massive, foreign nations can't afford it, the Federal Reserve can't afford it, so now the Treasury is signaling their intent to tap 401k plans to soak up the National debt. Technically it means we're in deep doo-doo.

[edit on 9-1-2010 by Dbriefed]

This is terrible news, obviously. Now the FED, to keepp corrupt corporate america gonig is forcing debt on US* like we dont have enough on our plates already. KIng george all over again...
Yes i hope the market does crash, jsut so we can say told ya so....and the embarrasing news comes out, how the FED is jsut as repsonsable, as corporations. They cannot force yuo to do this, legaly* and becuse its government run, they are amongst the biggest liars next to a thief whops been caught red handed...lokoat the IOU's states gave out to those who were promised by thier local governemnts for improvements and keep things running..they never got bailout money form the FED! example: california. Seems to me, the only states that acceted bailout money were states that had senators directly involved with any bailout money*
They can take it all away form you. IF they can take yuor rights away, jsut as they did the japanese americans durin WWII, they can do it again. as an example*

reply to post by Dbriefed


Right, but what I am saying is that Tbills are pumped into existing vehicles like mutual funds anyways.. most people invest in them without even knowing? .. The only difference between what currently happens and an annuity is that an annuity never looses base value (if it's variable), and non-variable (tbills etc) never loose incurred value..

I'd want to see old people getting 1% returns than -50% ... but that's just me....

Old people don't belong in the market. Or, at least, their commanding share of their retirement does not. IMO, whether or not the Gov stands to benefit, which I don't see because they are not mandating what TYPE of annuity, at the very least it's a good thing for old people. 95% of people have no idea how to invest their money.. now its 2010 and we have tens of millions of Boomers who just lost the shirt of their back in the stockmarket, and we are supposed to feel sorry for their greed and stupidity???? I know guys who literally were retiring millionaires and have lost half or more than half in some cases if they lost home equity values as well..

and my generation gets to pay for this.... it's a continued strain on the social benefits programs..

Pretty damn interesting story here. There's also lots of possible conspiracy/financial TEOTWAKI speculation too.

I first saw some speculation about this over at the Tickerforum maybe a year or more ago, and it was pretty much considered tinfoil then. Denninger has already opined on it and basically says this.

I have no quarrel with the government mandating that you have a choice in your IRA or 401k account to buy short-duration Treasuries - much like the "G" fund that government and civil-service workers have.

But - "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!

IRA/401k Screw-job-coming

I pretty much agree with both parts of that sentiment. I've seen several 401K's and 403bs that have crappy choices as far as ultra-safe annuity and T type investments and would have no problem with the government mandating that plans require them as options.

But let's face it given the criminality of those currently in power on Wall Street and DC do you really think this idea coming now is for any reason other than they see a problem funding the government in the not to distant future and need a large pool of money to continue the buying of our debt.

Another nefarious posibillity is this, think about all the toxic crap on the FED's balance sheet, and the still being written sure to default Fannie and Freddie (Fraudie and Phoney) paper. What if the annuity idea is not only to increase T purchases but to also find a place to put all this crap.

I think the tell will be in the details and speed of whatever plan comes out of this. If it simply requires retirement plans to offer a certain type of low risk investment as an option that, on balance, is a a good thing. We will have some idea of how screwed we are when we see the percentages of required contributions (and if rebalancing is required) to be placed in the annuity/T investments.

A year ago this was tinfoil, 6 months ago rumor, Friday was the trial balloon, and this story is getting some internet wings. Keep an eye out on the details and speed with which this idea moves through .gov. It is important and remember that one of the things Argentina did on it's road to defaul was seize private retirement accounts.

I agree with Rockpuck that the retired shouldn't invest in high risk investments, simply because they're no longer adding money to their investments. But this is a choice. It's their money. One day it will be my money and my choice as well.

From the link in jefwanes' previous post, Denninger made some interesting comments:

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.

Let me tell you what this is - it is an attempt to prevent the collapse of the Treasury market!
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This "proposal" can only mean one thing - Treasury smells smoke.
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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.