Guest Post: It’s Another Assault On Retirement Accounts

Tyler Durden's picture

Submitted by Simon Black of Sovereign Man

It’s Another Assault On Retirement Accounts

When I was a kid, it was a big deal when the postman came around. He was an important man carrying important documents from far away lands that we could only dream about… and each time he pulled up there was a brief glimmer of anxiety, wondering what unexpected surprise he might be delivering that day.

At the time, I remember postage stamps for first class mail costing about 20 cents. If you’re a bit older than me, you might remember them being much cheaper than that.

In fact, prior to President Nixon taking the US dollar off the gold standard in 1971, stamps cost 6 cents. In the 40 years since then, the price of a first class letter has been raised 20 times, nearly 8-fold higher than before.

To put things in perspective, the price of a stamp in 1863 was 3 cents… so we’re talking about a 100% increase in 108-years, followed by a 733% increase over the next 40-years. And yet, despite such rampant price inflation, the US Postal Service is hemorrhage cash and nearing failure.

In fiscal year 2010, the Postal Service suffered a $8.5 billion net loss, the latest in a serial trend of widening losses.  The only way the Postal Service keeps surviving is from the generosity of US taxpayers and Chinese bondholders who foot the bill for its continuance.

The Postal Service has nearly 600,000 employees; it’s larger than the active component of the United States Army, in fact, and, similar to how the Army is far-flung all over the world in places where it has no business operating, the Postal Service has offices across small-town America where there is no chance of profit.

There are over 3,000 post offices across the country that generate less than $27,500 in annual revenue. It’s barely possible to pay rent and keep the lights on with that kind of revenue, let alone hire a staff, maintain delivery vehicles, or pay for fuel.

An organization with such a costly structure is doomed to fail, and if it weren’t a government agency, it would have gone bust a long time ago. By the government’s own admission, the US Postal Service can’t compete with private courier services, yet politicians insist on keeping it alive in the only way they know how– theft and deceit.

Senator Tom Carper recently introduced a bill called the Postal Operations Sustainability and Transformation (P-O-S-T… get it? See how clever they are?!?) Act of 2011.

The bill is filled with oodles of luminous wisdom like, “The United States Postal Service shall develop a plan for the expansion of retail alternatives to post offices, such as… the Internet.”

It literally takes an Act of Congress for the Post Office to incorporate the Internet into its business model… and this is what passes for a turnaround business plan in Washington.

More importantly, a full 50% of the legislation provides for all sorts of accounting tricks that the Postal Service can use to misstate its fiscal condition, as well as provisions to steal from federal pension and healthcare funds.

Last month, in fact, the Postal Service stopped making payments into the Federal Employee Retirement System in order to conserve cash… and this is becoming a bigger and bigger theme across government.

Retirement funds have become the ultimate fudgemaking tool of corrupt fiscal policy around the world. Treasury Secretary Tim Geither has been robbing federal pensions for the last several months in the absence of a debt deal, and several governments overseas have also stolen from retirees in order to continue financing their largess.

Bottom line- if these bankrupt governments and agencies owe to retirement funds, they’ll stop paying whenever it suits them. If they have access to steal from the retirement funds, they’ll steal.

We’ve seen several examples of this over the last two years, and we’re seeing more all the time. This is one of the issues that concerns me the most because I know how many people are completely unprepared for this eventuality.

Even private retirement accounts are fair game in the political calculus… and it’s a simple matter of arithmetic.

When a bankrupt government has to come up with at least $1 trillion annually to plug its budget gap, and several trillion dollars worth of retirement accounts are ripe for pillaging with few other options available, the choice is clear.

I’ve been a vocal advocate of internationalization. With the right kind of structure, it’s possible to safely and legitimately ship your assets overseas to a place where your money cannot be plundered by bankrupt politicians.

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SheepDog-One's picture

LOL, MsCreant said 'Raging Boner'.

buzzsaw99's picture

a turgid oratory to be sure

TheFourthStooge-ing's picture

"Raging Bhoaner Erupts in Spasms of Fury"


Bastiat's picture

Raging Boehner says "get your ass in line."  Genghis Khan or what?

Sudden Debt's picture


Use of Weapons's picture

It is moments like this, that after 72 hour hardline negotiations on multi-million [yes, so... 1980's for impact] deals that you realise that...

The people running the show are far more puerile than you ever imagined1.


Srsly.  And we wonder why real shit never gets sorted.


  • 1. Public School Humour. [UK variant]
Cognitive Dissonance's picture

This truly is the bottom line. We must all come to grips with the idea that this insanity can not only go on much longer than seems possible, but escalate beyond anything we could possibly imagine.

Desperate (wo)men will most definitely do desperate things. And their desperation will escalate exponentially.

Bottom line- if these bankrupt governments and agencies owe to retirement funds, they’ll stop paying whenever it suits them. If they have access to steal from the retirement funds, they’ll steal.

SheepDog-One's picture

Theyre not desperate at all, its all been planned. Suddenly Mr and Mrs America will wake up to find their pensions looted, and what are they gonna do about it? Hold up a sign? This was a planned takedown, not an exercise in 'How long can we keep it going for'. They have a date to pull the rug, I dont know what it is, but its not far. 

Cognitive Dissonance's picture

I'm really talking about the puppets and enablers here SD1. The Congressional critters are being used to play this out along with various other tools and enablers. They can truly screw up things here and in fact it is expected that they will, it being part of the planned takedown.

trav7777's picture

this shit is FAR from scripted, man.

Why you guys must subscribe to the Potent Directors Fallacy all the time is beyond me.  They haven't got a clue.

Ace Ventura's picture

I don't think SD1 means the morons in congress are the script authors. They are merely serving as useful idiots in what has been scripted at levels way beyond a mere 'elected representative(s)'. I believe he refers to the people who've owned congress for generations. Not saying there isn't some 'moron quotient' possible even at such high levels, or that this will play out exactly as TPTB hope. Only that there is a script of sorts, and so far it's playing out closer to what the original intent was than not.

mess nonster's picture

I, for two, lean more towards the " incompetent socerers apprentice/cat in the hat theory myself. These guys could fuck up a wet dream. Final test- window jumpers versus Rio tickets. If they jump, they were fuck-ups. If they run, it was all planned.

andybev01's picture

Ah yes, Boehner's Potent Fallacy.

VisualCSharp's picture

I think you meant "Boner's potent phallusey."

cossack55's picture

They trotted out those two buffoons from Commerce and Treasury in January to put out infor for "public debate".  Ususally 6-month window until action is then viable.  This is the conversion of 401s and IRAs into "gubmint annuities". LOL  Let the seizures begin.

Snake's picture

more wood to the fire?

Mercury's picture

Bottom line- if these bankrupt governments and agencies owe to retirement funds, they’ll stop paying whenever it suits them. If they have access to steal from the retirement funds, they’ll steal.

In the USA at least this is bad news only for owners of significant private wealth and taxpayers. 

 The retirement funds that Geithner has been replacing with IOUs are defined benifit obligations to public sector employees - the most rock solid supporters of government largess there is in this country.

 The federal government will suck your bank account dry and tax the crap out of everything you own before they stop paying federal pensions.  If you're in the executive branch of a statist thug government you don't stop paying the praetorian gaurd and you don't stiff public sector employees - they aren't the ones being screwed here.

OS2010's picture

The retirement funds that Geithner has been replacing with IOUs are defined benifit obligations to public sector employees - the most rock solid supporters of government largess there is in this country.

Wrong on two counts:

1)  The IOU's have not been going into a defined-benefit program, but into the fund that employees themselves pay into from their own paychecks, specifically the Thrift Savings Plan G (for Government Treasuries) fund, supposedly the safest 401k you could have (once upon a time). 

2)  O placed a gag order on Federal employees during the off-year election, preventing any political discussion in the offices, which is still in effect!  Clearly he knows that, if he were to walk the halls at (more than one) government Agency, he would get an earful.  The vast majority of Civil Servants (outside DC, at least) keep "Remember the taxpayers" in their lexicon at all times. 

And no, most earn only a fraction of what the Senior Executive Service employees in DC do.  Rather than "sucking at the teat," most are simply "sucking it up" and waiting for the next shoe to fall while waving goodbye to former co-workers.

ping's picture

Oh you funny, wonderful, beautiful man. I wish I could see your world too. Say hello to the unicorns for me.

Bendromeda Strain's picture

He is 100% correct about item 1, and I would imagine more right than wrong on item 2. Obama froze Fed salaries for 2 years a while back - did you see any protests? Away from DC there is a multitude of GS-5 through GS-9 workers who make a solid "middle" middle class living, and they feel the debt target squarely on their backs. You on the other hand, are likely suffering from projection. It ain't just a river in Egypt, you know.

Mercury's picture

1) Thanks. That's interesting and I think more (better) detail than I've seen in any ZH posts on the subject.  Nonetheless it would be completely irrational for the executive branch to screw these people in the long run and I bet they find a way to transfer that debit onto more politically expendable wallets.

2) I don't think that relates specifically to raiding pensions funds (it predates the debt ceiling issue by a while)  but it's atrocious anyway and typical of this fascist bastard.

koaj's picture

we will not default...the checks will go out but all authority for payments of any social service and entitlement will be transferred to the federal reserve

print check, mail to grandma

$10 gas? sorry hey we didnt default. A Lannister always pays his debts

Dangertime's picture

Ha, I love those books.

wang's picture
wang (not verified) Jul 28, 2011 3:29 PM

I have a hard time feeling bad for a 50 year old retired civil servant who either spends his/her time on the links or has landed a job with a supplier to the gov or better still another job in the civil service ... of course it will only be a matter of time before the retirement accounts of working folks also becomes fair game

Bendromeda Strain's picture

Another confused person. Stop conflating Federal retirement rules with your local muni shenanigans. The states may also have a lot of that nonsense, but allow me to direct you to the OPM link that calls bullshit on you:

Zymurguy's picture

They've borrowed against Social Security for years.  It's so over leveraged that it is certain to fail as well.  What will the politicians say at that point?  "Uh, I inherited that problem."  "Uh, it's not my fault."

HarryHaller's picture

That is until the public gets so pissed off that they simply don't care about excuses and demand that the politicians fix it.  When smoke and mirrors and accounting tricks no longer calm the populace, then it will be apparent to all politicians (current and aspiring) what a death march it is to fix the problem, and noone will want the job.

A similar situation occured the the later days of the Roman Empire.  Provincial administrative positions became hereditary not because of the privileges that came with them, but becuause of the burdens of carrying out the responsibilities tied to them.  

SheepDog-One's picture

Anyone who thinks theyre just going to leave $5 trillion in 401K/pensions just sit there all oblivious and unmolested must be smokin some real good stuff.

The Treasury Is Soliciting Your Feedback Regarding The Proposed Annuitization Of 401(k) | zero hedge

trav7777's picture

those funds only have value if sold.  The government can really only effectively tax them, not seize then sell.

Obviously, they might try seize and use as collateral and hand over another $5T in real wealth to those who get to create money.  But that sort of shit will provoke revolution because the trade classes and the professionals and the lower upper and upper middle are always where the revolutionaries come from.

Dolar in a vortex's picture

Pillaging private retirement funds would result in tanks in the street.

I hope.

SheepDog-One's picture

Yea tanks in the streets, to mow down Mr and Mrs America who just got their 401K and pensions taken by the Treasury. This has all been planned for a very long time people, dont listen to those who are buying into this 'Demican/Republicrat WWF fighting it out cage match style' NONSENSE, which is all it is.

The Treasury Is Soliciting Your Feedback Regarding The Proposed Annuitization Of 401(k) | zero hedge

cosmictrainwreck's picture

thanks for the link, Dog............ holy shit! article appears here Feb 1, 2010, ergo "too late now". They got all their nice little "feedback" from Ms America in what 90 days? Then "thanks for your comments....see ya!" no doubt. I'm just dyin' to see what form the Notice takes.... or will we have "emergency order" by Prez, or what?

Chuck Walla's picture

Mowing down one's Middle Class in the streets is really bad PR for enticing or inducing foreign investors.  It might even induce others to see such an administration as illegitimate.  On an unrelated note, Obama wants more tanks.

Long-John-Silver's picture

No it will not. As a matter of fact the population will heap praise and high polling numbers on whoever does it.

All it will take is Wall Street crashing again. The President will come on TV and radio announcing that he/she

will replace the funds lost in the crash and will fold all retirement plans into Social Security where it will be safe.

You will not be able to cash it out early nor will it go to the estate of the deceased on death. The people will

celebrate thinking their retirement is safe.

mess nonster's picture

Oh. Fuck. I think you are right.

TheDriver's picture

And as the tanks roll down quiet suburban streets, they'll be lit not by angry men with torches but rather by the soft blue glow of televisions as America watches the next season of Dancing With the Stars.

monopoly's picture

They will not get my gold.

mess nonster's picture

When you bought your (physical) gold...did you give anybody your name or address, tel, or creditcard #, or any other ID? 'Cause if you did, you have a choice (when the day comes), either give up your gold within the grace period, in exchange for some sort of deposit slip, or face the SWAT team. It's not just enough to buy physical. You need to buy on the black market. But maybe your gold was stolen, and you filed a police report to that effect? That would be handy.

uniman's picture

When the Enemy decrees that it is time to surrender your gold, plata y plomo, then you will fill out the paperwork declaring your ownership of such things and surrender them, just as you presently do the same via your income tax now. What is going to change between now and then?

youngman's picture

anyone remember the term  LOCK BOX........that is where all your Social Security money is......well guess what...its not to say they just stole it is a lie..they have been stealing it for years...and you have been voting them back in every two whos fault is that...

Long-John-Silver's picture

Argentina nationalized retirement accounts. It was done to "save" them from falling stock and bond prices.

The same thing will be done to "save" Social Security and Medicare here in the USA. When it's all done the

MSM will praise this wonderful way to save the retirement accounts from destruction  while providing a safe

single payer system.

Argentina Nationalizes $30 Billion in Private Pensions

Bastiat's picture

Yep, I can see it going down that way. It's been studied (over a year ago).

Bendromeda Strain's picture

And given a nifty spiffy name like "The Super Duper Guaranteed Universal Retirement", doncha know!

AGuy's picture

"The US is a Banana Republic" --David Stockman

David Stockman (Former OMB Chief under Reagon) has some harsh words about the US credit rating. David was a guest on Strategy Session with David Faber.



cdskiller's picture

Great link. Everybody should listen to what Stockman says. His part begins around 3:35.

At one point, after Stockman has pointed out the criminal lunacy and negligence of Washington not addressing the need to raise revenue, they show a graph for only a few seconds of the top marginal tax rate over the past 100 years. It falls off a cliff after the 70's. This is what historians will write about when it all falls apart.

I can think of no person in the world more deserving of extraordinary rendition that Timothy Geithner.

Last, but not least, what's a retirement account?

RockyRacoon's picture

Yes, the USPS is in trouble.   Labor costs have driven the institution to insolvency.   Actually, there are two different entities, the Post Office and  the U. S. Postal Service.   The difference happened on July 1, 1971.   The old Post Office had a mandate to deliver mail to areas that would not be cost efficient for private companies, per Ben Franklin's original concept.   The USPS, on the other hand, seemed to have the mandate to build a gargantuan union bent upon the pillaging of a "corporation" which was much like Freddie and Fannie.   The system has gone down hill since the inception of the USPS in 1971.   Originally, air mail service by such luminaries as Charles Lindbergh and carried in The Spirit of St Louis clones, could get a letter cross country to your house in 3 days!  An RPO (rail post office) train could get a letter cross country over night in 2 days.  There was twice a day mail delivery.   ...on and on.   Service has suffered over the years as the bureaucracy has grown.   It's the story of government in microcosm.

To be fair about the cost of mailing a letter, one paid about 3% of his daily wage in the 19th century to mail a letter.  That would be out of the question today.   The fact is, delivering a letter from Miami to Hawaii, house to house, for 44 cents is one of the world's bargains.  There is NO private industry that could/would do that.  The USPS is subsidized, true, but be careful of what you wish for.


trav7777's picture

look at the demographics of the USPS workforce if you have any questions.  It has been a jobs program and it has neither hired nor promoted based upon merit.  The entire federal umbrella (including FNM/FRE) have been this way for 3 decades.  WTF do you expect?