Trump Just Fulfilled His Billionaire Pal's Dream

[BigmanPigman]

"Trump just changed the rules to let Wall Street’s most predatory industry get its hands on hundreds of billions of dollars of ordinary workers’ retirement savings. Now his friends in private equity are celebrating."

"...the trick Trump just pulled off for his billionaire pals was something particularly special — it could end up being one of the single biggest financial heists in history."

"While long-standing worker-protection regulations have prevented 401(k) plans from investing in high-risk private equity firms, the letter now permits corporations to funnel that money to those firms, which charge notoriously giant fees."

"Trump’s administration argued that workers should feel fortunate and thankful that the administration will now let employers turn their savings over to private equity barons."

https://jacobinmag.com/2020/06/trump-just-fulfilled-his-billionaire-pals-dream

[Kaiserguy]

1. Trump once again shafts

the American worker.

[empedocles]

2. Pirates going wilder

[DanieRains]

3. F

[SergeStorms]

4. Trump is the gift that keeps on giving for the wealthy.

<snip> “This information letter will help Americans saving for retirement gain access to alternative investments that often provide strong returns,” labor secretary Eugene Scalia said in a statement announcing the new policy. “The letter helps level the playing field for ordinary investors and is another step by the department to ensure that ordinary people investing for retirement have the opportunities they need for a secure retirement.”

Scalia previously represented Wall Street banks and investment firms at the law firm Gibson Dunn, including Goldman Sachs, which has been working to raise more money for its private equity funds.

In practice, private equity firms will now be allowed to access — and skim fees off of — the $9 trillion in 100 million workers’ 401(k) plans and IRAs.

“If just 5 percent of the money in these retirement funds were available to private equity, it would be a windfall of $435 billion — real money even to private equity millionaires and billionaires,” wrote Eileen Appelbaum of the Center for Economic and Policy Research (CEPR).
<snip>
Yes, Eugene Scalia is the only son of the detestable Antonin Scalia, the Opus Dei right-wing son-of-a-bitch that Ronald Reagan infected the Supreme Court with.

[bucolic_frolic]

6. This is even worse than mutual funds

After 45 years in a mutual fund, you get market average returns punctuated by a few market crashes. It seems you're fine, but when you look at how the 1% or so annual fee has been skimmed and grown, you realize you paid 1/3 of the value of your final sum to management fees.

Hedge funds are even worse. Far worse. 20% fees are common. Returns greatly variable, sometimes negative, sharply so. Inability to exit when you want. Managers all riding around in Bentley's with 3 houses in the toniest neighborhoods and mistresses in 3 different cities.

Books about Wall Street.

The Buy Side: A Wall Street Trader's Tale of Spectacular Excess - Turney Duff

The Sellout - Charlie Gasparino

Straight to Hell - John LeFevre

[Squinch]

7. This is very true. Vanguard has lower fees, I think .25%

but still. Over the years even that adds up.

PS thanks for the reading list. Currently reading Dark Towers about Deutsche Bank.

[bucolic_frolic]

8. Thanks for the Dark Towers rec

About time someone picked up that subject and told the world. Amazingly it's in our public library!

[bucolic_frolic]

5. Equity markets are no longer free

Everything is run by indexes, computers, and hedge funds. Compare with the 1980s - they just don't exist anymore.

1980s was mutual funds and small investors and CNBC and shoe leather. Managers actually visited companies to research potential investments. This was the era of Peter Lynch and John Neff, who ran two of the most successful funds of the era. Early hostile takeover artists exploit valuations to gain control and plunder assets and ditch labor to move overseas.

1990s - computer cowboys and tech investments and investing.

2000s - reexamination of technical analysis, which became widely accepted if lacking in long term insights.

2010s - high speed internet brought it home to most day traders. But it became a momentum game with QE1-2-3 and business media and hedge funds and the rise of educational gurus. Too big to fail banks support investment managers following collapses AIG, Lehman.

Today - algorithm trading, quant analysis, indexing, ETFs, hedge funds. News drives hedge fund hot lists which drives order flow and the trend. More important now is sector analysis which invests in a myriad of ETFs. Global news drives the dialogue, markets are manipulated by business, takeover artists, governments decrees.

Tomorrow - yes, could be this week! Fed action drives and owns the world. Stocks, bonds, ETFs. Hedge Funds and the Fed must account for 50% of trading, and they own much of it. Too big to fail? No failure to small to notice because even the tiniest failure gets magnified coverage and is a potential threat to the system that buys everything. Government, banks, investments, central banks - they are all merging. This is not a fascist government, this is a global, one-world, fascist economy.

There is no set and forget, which is what Trump is after. I doubt that rule will survive 2021. Invest and hedge is the way to self-preservation. Indexes are a delusion, read up on Robert Kiyosaki, "Conspiracy of the Rich".

[Baked Potato]

9. They want all of it... every drop.