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>How Bernanke FAiled America and Will Continue To Get It Wrong

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Ben Bernanke’s Rude Awakening
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Uncommon Wisdom   

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This is a critical trend. Don’t miss it. — Larry
Uncommon Wisdom
Weekend Edition | Sunday, December 12, 2010
Ben Bernanke‘s
Rude Awakening 

by Martin D. Weiss, Ph.D.
Dear Don,
Martin D. Weiss, Ph.D.

We’ve just posted a brand new presentation with ourforecasts for 2011. With interest rates suddenly surging, the timing couldn’t be better.
Look: Fed Chief Ben Bernanke thought HE had the power to manipulate interest rates. So when he announced he was creating another $600 billion dollars out of thin air and using them to buy Treasuries bonds, he assumed he would push bond prices up and force their yields down.
That was the entire goal of “quantitative easing #2.”
But something funny happened on the way to QE2: It turns out that the REAL masters of the Treasury and bond markets — investors — had only been letting Bernankethink he was the one in charge.
Ben Bernanke's rude awakening: In the end, investors control yields — NOT the Fed!
Ben Bernanke’s rude awakening: In the end, investors control yields — NOT the Fed!
Almost immediately after the Fed chief’s announcement, investors popped the bubble in bond prices that had been growing since late 2008.
It must have been a rude awakening for Bernanke: Instead of falling as he’d expected, bond yieldssuddenly began rising!
So far, in the three months since Bernanke revealed his newest dollar-printing scheme, 30-year Treasury bondshave lost 9 percent of their value; and the popular iShares Barclays 20+ Year Treasury Bond ETF has declined 15 percent in value.
Worse, because many of the interest rates we pay are tied to these yields, we’re now staring down the barrel of rising rates — like poison to an economy as troubled as ours is.
So why have the Treasury and bond markets confounded the Fed?
Simple: Investors are not dumb. They know that the Fed’s out-of-control money printing can only gut the value of every dollar they invest in U.S. bonds markets — and also every dollar they earn in yield.
Adding insult to injury, the Obama Administration and Congressional Republicans have cut a deal to make the budget deficit FAR bigger, requiring even MORE money printing by Mr. Bernanke.
THIS is the key reason the Treasury market is crashing and yields are surging. And it’s also why we’ve seen enormous volatility in the U.S. dollar and in gold over the past three months:
Gold has spiked three times in the last 90 days, taking us to a new all-time high of $1,432.50. And after each of those spikes, it has corrected sharply.
The same is true for the U.S. dollar: It plummeted 8.8 percent between early September and early November … recovered some of its losses before diving again in late November.
This is precisely what we’ve been warning you about for many months: EXTREME volatility in all the markets. An explosion of profit opportunities; and with them, greater short-term risk.
And this is also why we just posted our 8 Alarming Forecasts for 2011 online:
At a time like this — with volatility rising — 
everything depends on getting 
the answers to these critical questions RIGHT:
  • Stocks are within a few points of setting new highs for the year: Can this rally continue? Or is it destined to suddenly reverse? Which sectors are in greatest danger now? Which seem to be the safest and most promising for 2011 and beyond?
  • Treasury yields continue to rise: Is this just a fluke? Or is it the beginning of what could be the most serious bond market catastrophe in decades?
  • The U.S. dollar is scraping bottom, flirting with its LOWEST levels of the year: Is this the beginning of the greatest dollar disaster America has ever seen? Or is it merely another blip in the market? (Hint: China holds the key!)
  • Gold is on a tear again, hitting one new all-time high after another: Will this bull market last? Or is gold overbought and overdue for a correction? How high will the yellow metal ultimately climb? When should prudent investors double down on gold bullion and mining shares? When should they take their profits and run?
  • Food prices are on a rampage: Will agricultural commodities continue to skyrocket in 2011? If so, which ones?
  • Oil prices continue to edge higher: Will we see new all-time highs in black gold in the year ahead? Or will economic woes in Europe and the U.S. send oil prices careening lower?
  • Economies and stock markets in China and other emerging markets are still exploding: Is now the time to buy emerging market stocks and ETFs? Or are these countries overdue for corrections that create major buying opportunities for you in 2011? Which ones are likely to perform the best?
In the year ahead, each of these forecasts — and the investment recommendations that come with them — could make you a bundle if you heed them … or cost you a bundle if you don’t.
8 Alarming Forecasts for 2011 has answers you need to protect and grow your wealth in the year ahead. It is online now.
Click this link and it will begin playing immediately.
Good luck and God bless!
Martin
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>Watch Out! Obama Wants Your 401(k)

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Government wants your 401(k)

Hearings set on plan to require Treasuries in ‘automatic IRA’


Posted: August 26, 2010
11:03 pm Eastern

By Jerome R. Corsi
© 2010 WorldNetDaily
WASHINGTON - AUGUST 17: Treasury Secretary Tim Geithner speaks during a Conference on the Future of Housing Finance at the Treasury Department on August 17, 2010 in Washington, DC. Secretary Geithner hosted the future of housing finance conference with industry experts, leading academic experts and other stakeholders. (Photo by Mark Wilson/Getty Images)
The Obama administration appears to be proceeding with a novel way of financing trillion-dollar budget deficits by forcing IRA and 401(k) holders to buy Treasury bonds by mandating the placement of government-structured annuities in their investment accounts.
The requirement to invest private retirement assets has been cleverly buried within plans to create “automatic IRAs” that would mandate employer groups enroll all employees in 401(k) or IRA plans.
The U.S. Department of Labor released yesterday anagenda for an upcoming joint hearing with the Department of the Treasury scheduled for Sept. 14 and 15 on whether government life-time annuity options funded by U.S. Treasury debt should be required for private retirement accounts, including IRAs and 401(k) plans.
WND reported in January that Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry are planning to stage a public comment period before implementing regulations that would require private investors to structure IRA and 401(k) accounts into what could amount to a U.S. Treasury debt-backed government annuity.
In a 2010 budget blueprint unveiled Feb. 26, President Obama proposed that employers sponsoring 401(k) plans or other defined contribution plans should be required to offer automatic enrollment in these plans, or in direct-deposit IRAs, as steps that would change the nation’s voluntary retirement plan into a government-mandated nationalized program.
With the Treasury needing to sell another $1.4 to $1.5 trillion in government debt to finance the anticipated fiscal year 2010 federal budget deficit, the Obama administration is obviously scrambling to find ways to sell government debt without having to raise interest rates.
Under ERISA, the Department of Labor regulates approximately 700,000 private pension plans, with approximately $4.7 trillion in assets.
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The Investment Company Institute estimates that IRA assets have grown from $25 billion in 1980 to a peak of $4.747 trillion by the end of 2007, declining to $3.613 trillion in 2008.
For 401(k) plans, the ICI estimates a peak of $3.025 trillion in total assets was reached in 2007, declining to $2.350 trillion in 2008.
The ICI estimates that total U.S. retirement assets decreased to $14 trillion in 2008, down 22 percent from the peak of $17.9 trillion in 2007.
Kerry introduces ‘Automatic IRAs’
Earlier this month, Sens. John Kerry, D-Mass., and Jeff Bingaman, D-N.M., introduced legislation in the Senate to create “Automatic IRAs,” a plan in which employees whosecompanies do not provide a retirement plan would be enrolled.
Under the Kerry-Bingaman plan, in the first year of enactment, private companies with 100 or more employees would be automatically enrolled into government-mandated IRAs, forcing these businesses to contribute on behalf of their employees a “default amount” equal to 3 percent of an employee’s pay.
Employees would be allowed to raise or lower their contributions, or opt-out of the plan.
In the second year, companies with 50 or more employees would be required to provide Automatic IRAs; in the third year, 25 or more; and in the fourth year, 10 or more.
Workers 18 years or older and employed for at least three months would be automatically enrolled.
The Automatic IRAs would be permitted to invest only in options determined by Treasury and Department of Labor guidelines. A mandatory investment option would include a “principal preservation fund” that would have to invest in a newly created Treasury Retirement Bond, the “R-Bond,” specially designed for use with an Automatic IRA.
WND obtained a letter from the Treasury Department, Bureau of Public Debt informing U.S. citizens that Treasury will soon stop offering paper savings bonds through payrollsavings plans.
As of Sept. 30, federal employees will no longer be able to purchase paper savings bonds through payroll deduction.
Instead, the federal government is rolling out a new program called “Treasury Direct” that “allows you to purchase, manage, and redeem electronic (paperless) savings bonds 24/7.” It has the option of setting up a payroll plan or direct deposit investment program with Treasury Direct using a personal bank account to purchase Treasury debt “on a schedule you choose.”
The Service Employee International Union, or SEIU, a key labor union ally of the Obama administration, has mounted an effort to create government-mandated worker retirement accounts as an entitlement program, with the possibility that a portion of all private retirement funds could be forced into U.S. Treasury debt.
Branding the program under the banner “Retirement USA,” SEIU the has joined with the AFL-CIO, the Economic Policy Institute – a Washington-based economic left-leaning think tank that receives substantial labor funding – and two other left-leaning interest groups, the Pension Rights Center and the National Committee to Preserve Social Security.
Retirement USA promotes the concept that all workers in the U.S. have a right to a government retirement account that would fund a secure retirement with adequate dollars in addition to Social Security and private ERISA-retirement workplace retirement programs such as 401(k) programs.
“Our goal is to involve all workers and all employees in a government-mandated retirement program, with the government putting up the difference for lower paid employees,” Nancy Hwa, a spokeswoman for the participating Pension Rights Center, told WND.
The Retirement USA government-mandated workplace retirement account would require by law employers and employees to contribute into a retirement account for every employee and demand that a portion of that contribution go into a federal-government created annuity that would be funded by purchasing Treasury debt.
“Retirement USA is basically an effort that amounts to nationalizing 401(k)s and IRAs,”David John, a senior research fellow at the Heritage Foundation, told WND.
Under the guise of making workplace retirement savings accounts available to all Americans and insuring that existing retirement savings accounts pay lifetime income, the SEIU-led Retirement USA effort is quietly exploring strategies that would create “Universal IRAs” or “Guaranteed Retirement Accounts” for all workers.
Mutual fund industry pushes back
Not surprisingly, the U.S. Treasury and Department of Labor are getting serious pushback from the mutual fund industry objecting to what some financial planners see as a government attempt to divert hundreds of billions of dollars of private retirement accounts into federal government debt, regardless whether the investment in Treasury bonds is in the best investment interests of the retirement-oriented investor.
While many investment specialists in the retirement field favor “automatic” plans that would increase employee participation in job-related retirement programs, there is concern over investment options that would establish government mandates to require a proportion of the retirement investment to be placed in a government-guaranteed annuity invested in Treasury debt.
Right now, IRA holders and investors in 401(k) plans are free to invest in Treasury bonds if they choose.
Also, annuities are a popular settlement option for IRAs and 401(k) plans that transition from the accumulation phase to the payout phase.
Annuities are an attractive payout instrument because annuities offer the part of lifetime income and only a portion of each payout installment is considered taxable as return of investment principle.
Interest or investment earnings in annuities accumulate income tax deferred until the annuitant takes out money, either in an unscheduled withdrawal, or in a payout option extending over a specified number of years in retirement, or for the lifetime of the annuitant.
survey conducted by the Investment Company Institute showed more than 70 percent of all households disagreed with the idea of requiring retirees to buy annuities with a portion of their assets, whether that annuity is offered by an insurance company or by the government.
Moreover, 96 percent of households in the Investment Company Institute survey responded that retirees rejected the idea that the government should mandate turning IRA or 401(k) assets into annuities, asserting instead that retirees should make their own decisions about managing retirement assets and income.
The ICI’s Paul Schott Stevens is scheduled to testify at the DOL/Treasury hearing Sept. 14, as are mutual fund representatives from Fidelity Investments, Putnam Investments, Lincoln Financial and Vanguard.
The Investment Company Institute member companies manage some $11.62 trillion in mutual fund assets for some 90 million mutual fund shareholders, including retirement-oriented investors participating in defined contribution plans such as employer-sponsored 401(k) accounts.

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Jerome R. Corsi, a Harvard Ph.D., has authored many books, including No. 1 N.Y. Times best-sellers “The Obama Nation” and “Unfit for Command.” Along with serving as WND’s senior staff reporter, Corsi is a senior managing director at Gilford Securities.

Gilford Securities, founded in 1979, is a full-service boutique investment firm headquartered in NYC providing financial services to institutional and retail clients, from investment banking and equity research to retirement planning and wealth management. The views, opinions, positions or strategies of the author are his alone, and do not necessarily reflect those of Gilford Securities. Gilford Securities makes no representations as to accuracy, completeness, currentness, suitability or validity of any information herein and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use.