kane

You are correct. IRA and 401K are risks. They are essentially investments. Here is the problem. If you work your normal job and you take, say, 10% of your income and put it into a regular FDIC insured savings account and let it collect a few percent interest and your employer matches your contribution most people would end up with less than about 10 years worth of salary waiting for them when they retire. So it doesn't work. The IRA and 401K provides people an option where they can have this investment with very little risk, and frankly, these bank failures don't have anything to do with that risk.

If you make the national average of 45K per year and you put in 10% and your employer matches it that is around 9K a year. Times that by 30 years at around 2% interest and you get 388K that is around 8.5 years worth of salary. If you got 4% it is around 555K or about 12.5 years worth of salary. Some people might not live long enough to go through that, but if you retire at 60 when you hit 72 you are out of money unless you want to live on less than you were when you were working.

My point is that our government loves to preach personal responsibility. they want people to set up IRAs and 401Ks so they don't have to live off the system when they retire and so when they get older and retire they are actual consumers who spend money on things, not just people barely getting buy and taking money from the economy, not putting it back. Mutual funds and responsible investing allows the average working guy to invest their money with very limited risk and with companies like AIG in place to insure transactions it makes the risk even less yet. But when these companies get greedy it costs the average guy. If the market goes through a normal downturn and you lose a little money, in the long run it will probably balance out and you will have an upturn and make it back. That is your risk. You expect the market to fluctuate and as long as everyone does their job correctly, the market almost always rebound especially if you invest in the lower yield low risk type of funds. When some CEO of a company gets greedy and does very risky things that causes his company to go under only to let him escape with a multi-million dollar settlement, it is not part of the typical investment plan. When you ask for a prospectus on their mutual funds they don't include the part in the long term predictions about their CEO driving them into the ground.

You don't want to spend YOUR tax money to bail these guys out. I hear and understand that. But would you rather see millions of people lose their entire retirement and then end up on social security as their only means of income? How much of your tax money do you think that will cost? It will be a whole hell of a lot more than it is going to cost to bail these companies out.

I think some people don't understand exactly what letting these banks and companies fail would mean. Potentially letting an entire generation of people lose their entire retirement will not teach them a lesson. Unless they were sitting in the board room and knew what these companies were doing on a day to day basis they, like most of the nation, would have never known this was going to happen and if it was allowed to happen, no good would come of it.

I'm not saying people should not take responsibility for themselves. I am saying that sometimes there are crooks that fuck things up for everyday average people and in this case not bailing these companies out would be devastating to the economy of this country.