Wandering through the forest

Here is one of those Cases where the judicial system is screwed either way it goes: one way, nuisance suits multiply without end; the other way, the actual viability of 401(k) style funds will be threatened because of a lack of institutional discipline. The real Answer may be passage of a new Law governing such structured investments, one I like to call the Three Plus Profits Rule. It is a simple thing, insisting the average gain on Accounts must exceed 3% per year, before the investment institution can declare a Profit, the intervening funds to be distributed between the Accounts evenly, to maximize growth of Accounts. This Rule does not say that Accounts must make a Profit yearly, but does insist that institutional employees and Stockholders cannot engage in Profits-sharing before such a gain for the Accounts is reached. Such a law nullifies Court commitment to a set of Suits which are unsatisfactory, and provides protection to Account-holders automatically; the IRS can insist upon the necessary documentation.

This Puppy will make people happy, but will play too long; the Fed should have closed the funds down within the year, I would have chosen December 27. The Fed is trying the wrong help for the Banks. It should have forced the Banks to carry the losses within this fiscal year. The attempt to average out the losses will only destabilize the financial markets for a much greater Period. The uncertainty introduced into the financial markets will impede economic growth far more, than the jolt therapy of registered losses on the Books. Next year will be a Repeat of this year, with Banks still in a race to discount losses on their balance sheets.

I agree with the supposition, but disagree with the rationale behind this Peak analysis. The U.S. economy will not weaken that much, the Dollar will gain renewed strength, and China will face more problems with Quality Control which will deter the American Consumer. China’s lost position, though, results from inability to bring more Power online because of Construction delays, clogged Transport networks which cannot transport both Coal and Finished Products, and increased material Costs in construction materials for Ports, which is almost in direct competition with Dam construction and City Skyscrapers’ construction. The averaged increase in Wholesale Costs of Chinese Products will lead American Purchasers to the more-normalized Cost structure presented by India and Latin America. I may not be right in this analysis, but the Chinese Government no longer has the power to prioritize the Production Schedule. lgl