Year End Predictions Review - Part 2

401K Collapse
Real Effect -

Banks will start to claim ownership of 401k and pension funds (private and public) and begin "looting" them. (Read as taking your cash and continue to "invest" as they double-double down) and the government moves to “protect” them by seizing them. I would assume they would be placed in a new 'secure conservatorship'.

Evidence -
Let's break this down shall we?

• Banks...(when the government runs the banks and vice versa, can there be much distinction?) will start to claim ownership of 401k
• and pension funds (private - Via higher "Capitol Gains" taxes, estate taxes, dollar debasement, and permission of rules which allow a company to hoodwink the policy holder into thinking his funds are secure by lying about the true status of your funds. Think marked to market shenanigans.
• and public) See Illinois, California and the following bit about raising the age of retirees -

The time has come for the nation to face some facts, and according to Republican U.S. Rep. John Boehner of Ohio, the House minority leader, that means fixing Social Security by raising the normal retirement age to 70 for future retirees, from the current 67.

Boehner wants to increase the retirement age to 70 for people who have at least 20 years until retirement. He also wants to tie cost-of-living increases to wages rather than the consumer price index and to limit payments so they go to only people who need them, according to published reports. The current Social Security "normal retirement age" for those born in 1960 or later is 67.

Now imagine for a moment that Big Insuro Inc. did this to a given policy holder, much less millions, that had paid his premiums faithfully for 40 years? There would be Congressional hearings, trials, jail terms, public outrage and mutiny.

There is this mistaken idea that there is a "trust fund" somewhere with trillions of dollars in it that the government will one day whip out of it's magical drawer and POOF! Social Security problem is solved. Of course, this couldn't be further from the truth as anyone one with a modicum of sense knows that the "premiums" that are paid today by SocSec enrollees are simply gobbled up by the current spending of the governments.

I think there is little doubt that municipalities are seizing pensions and benefits as they declare bankruptcy and while the magic shell game is being played with the first two bullet points, it has not quite "happened" yet.
Points (1 of 3 - Pending 2)

Annuities Collapse
Real Effect -

Annuities will begin to default and the state insurance funds will become a backer of last resort, which will bankrupt many of them. Many if not most insurance companies will go belly up. This will cause the rates at the surviving institutions to go through the roof.

Evidence - 
While it is arguable that something is happening here, there simply is not enough evidence either way, yet.

Points (0 of 1 - Pending 1)

Municipalities Collapse
Real Effect - Unfortunately, I didn't specify much beyond the title.
Evidence - This has been perhaps THE story of 2010 in the US with countless counties and cities collapsing under the weight of their own pension legacy costs. For example -An Ohio town is telling citizens to arm themselves, Jefferson County, Alabama in debt $5 billion.
Points (1 of 1)

FDIC
Real Effect -

As companies take these blows, the FDIC will frantically try to raise capital to cover the losses but will eventually be unable to cover and the first wave of defaults will take place.

Evidence -
We are still "extending and pretending" as the losses, while real, are being obfuscated by shady government bookkeeping and talks of further quantitative easing.
Points (0 of 1 - Pending 1)

Bond Market Collapse
Real Effect -

Within the next 2 years, the United States will default on their debt for the first time in their history. This will cause not only domestic, but major international geopolitical issues as well.

Evidence -
At one point China had stopped buying bonds but for now is shifting it's focus to shorter and shorter term US Treasury debt as our future becomes uncertain. 10 year bonds are at 2.74%, others appear shaky and the Fed begins to rob Peter to pay Paul as capital formation becomes not only punished, but flogged to death. It is possible that some magical Bond Genie exists somewhere that will grant Bernanke a magic printing press, but for now we wait.
Points (1 of 2 - Pending 1)

Tax Protests
Real Effect -

If the institutions don't have to pay their bills, why should I? This could get very ugly.
Receipts will plummet and to cover governments will begin the implementation of new taxes, most notably a VAT AND a National Sales Tax in one name/form or another.

There will begin a reduction and repeal of some Social Programs - most notably Medicare, Social Security and reductions in food stamps.

Evidence -
Bulls-eye! We had Joe Stack fly a plane into an IRS building, Glenn Beck push the VAT tax and countless "conservatives" support that position. Where the real paydirt is - receipts have plummeted, and countless new "fees" (taxes) have been introduced as well as the expiration of the Capital Gains taxes, discussions over the reductions of Medicare and Social Security and reduction in foodstamps.


Points (3 of 3)

Dollar Collapse
Real Effect -

This will be the pivotal event that if it occurs, will destroy much of the wealth that the people of this nation possesses.

Evidence -

The dollar has fallen to multi-month lows against the world’s major currencies as investors bet that evidence of a faltering US recovery will lead to .

Currency traders said expectations of looser US monetary policy raised the prospect of a return of the so-called dollar “carry trade”, in which investors take advantage of low US interest rates to invest in higher-yielding currencies.

Rallied to 89 for the first quarter, but is showing major signs of weakness again as it gave up April and May's position as quickly as it gained them. (Remember the still existent Euro crisis?) Looks like the fireworks for this one will be at the back half of 2010 into 2011.
Points (0 of 1 - Pending 1)

Total Points for Part 2:  ( 6 of 10 with 4 outstanding - 60%)

Total Points for Parts 1 & 2:  ( 10 of 16 with 6 outstanding - 62%)