Alternet: How Wall Street and the Toxic Philosophy of Ayn Rand Are Destroying Our Retirements

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AlterNet / By Les Leopold

How Wall Street and the Toxic Philosophy of Ayn Rand Are Destroying Our Retirements

Washington is talking about balancing the budget on the backs of the elderly, but the economic security they enjoyed at one time is already imperiled.

May 3, 2011 |

It’s tough growing old. And it’s even tougher growing old in America -- unless you’re rich.

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The Premeditated Murder of Private Pension Funds

The birth and death of private pension funds are directly connected to the rise and decline of unions. In 1955, more than one in three private sector workers belonged to a union and those unions fought hard for pensions and health care benefits. Currently fewer than 7 percent of all private sector workers are in unions so private employers feel little pressure to provide such benefits. Corporate America has stopped offering pensions because it doesn’t have to.

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So doesn’t that mean that public employees are overpaid and killing our state and local governments? NO! Every reputable study shows that public sector workers do not receive more total compensation than their counterparts in the private sector when you compare them by education and experience – the proper way to compare workers across industries and sectors. In fact, public employees earn a little bit less in actual wages than their private sector counterparts, but, they make it up in benefits. (See the excellent report by Jeffery Keefe of the Economic Policy Institute.)

Public Pensions Poisoned by Wall Street

Unfortunately, public sector pension plans are in trouble and we can thank Wall Street for that as well. Writing for Bloomberg Markets, David Evans describes Wall Street’s systematic efforts to sell toxic assets to public pension funds. They didn’t just peddle risky mortgage-backed securities and CDOs filled to the brim with liars-loans and such. Wall Street firms actually pushed pension funds to buy the bottom slice (the equity tranche) that would be the first one to fail in case the housing market declined (which it did later that year).

How bad were these securities? They were so bad that even the whorish rating agencies, which doled out high ratings for their Wall Street johns without blushing, refused to rate these equity tranches. Nevertheless, pension funds foolishly trusted their bankers and bought 18 percent of all of these unrated slices. Today these investments are worthless, costing pension tens of billions of dollars in losses.

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