Baby boomer asset liquidation isn't really a financial market issue because (1) there's plenty of liquidity in the global economy; (2) as the rest of the world becomes wealthier, people outside the U.S. will own a greater percentage of global assets and they'll want to keep a share of their net worth in America; (3) liquidity will grow in both developed and developing nations as they adopt recent American financial innovations and market structures; (4) as baby boomers live longer and healthier, their new mantra will become "Who wants to retire?" and (5) most assets won't need to be sold.In other words, only the little people (the same people who paid taxes so Leona Helmsley could skip hers) need to sell their stocks. The need arises from the fact that they'll be spending their modest nest eggs fairly quickly, on travel or perhaps a retirement business.
The Federal Reserve reports that the wealthiest 5% of American households own about 60% of the nation's assets. Ninety percent of all stock is owned by 10% of investors. Debate continues about how this concentration of wealth affects our society, but what seems irrefutable is that the owners of most wealth will have no urgent need to raise cash. A retiree with a $10 million net worth doesn't sell stocks to buy groceries or pay the mortgage. He can easily live on dividends and interest while preserving assets for his grandchildren or a favorite charity. And if wealthy retirees don't sell their assets, they won't put pressure on valuations.
Investors are now taking more money out of retirement plans than they are putting in, according to Cerulli Associates, a Boston-based financial research and advisory firm. Using its own analysis and trends identified by the Department of Labor, Cerulli estimates that in 2005, investors made $5 billion in net withdrawals from these plans and the outflow will increase to $39 billion in 2010.
The thinking seems to be that Democrats then will be more willing to buck the party line and Harry Reid's passsionate opposition to estate tax reform.
"We're hearing from Democrats' staff that . . . the Democrats aren't going to let us have any victories between now and September 30 because they obviously know that it enhances our opportunity for maintaining control of Congress," Grassley said.
That stance could lead to consideration of either the original trifecta bill or a revised version when Congress returns in November for a lame-duck session. That strategy has been pushed by Senate Budget Committee Chair Judd Gregg, R-N.H., who previously said that Democrats would be more willing to vote for the bill -- and against the wishes of Democratic leadership -- after the election season.
The fund, based in Connecticut, told investors in a letter yesterday that it ran into a nasty patch in September, with its energy-trading desk losing $5 billion in about a week. Its assets under management have dropped to $4.5 billion, from $9 billion at the start of September.The peak to trough loss this year was 57%, and the firm could be forced to unwind positions in other markets as well. On the other hand, several hedge funds have handsome returns in the same markets that burned Amaranth, according to the report.
. . . the laser-silicon chips — composed of a spider’s web of laser light in addition to metal wires — portend a vastly more powerful and less expensive national computing infrastructure. For a few dollars apiece, such chips could transmit data at 100 times the speed of laser-based communications equipment, called optical transceivers, that typically cost several thousand dollars.We live in interesting times.
Currently fiber optic networks are used to transmit data to individual neighborhoods in cities where the data is then distributed by slower conventional wire-based communications gear. The laser chips will make it possible to send avalanches of data to and from individual homes at far less cost.
“I’ve seen guys who work on a ship channel and they get to a certain point and they’re confident. You can look in their faces, they’re longshoremen, and they have this confidence about them.”Does George himself have that confidence? No, he says, After going bust, “I will never feel secure again, I’ve got to earn, earn, earn, earn.”
He says he can spot a longshoreman who has enough equity in his home and enough money in the bank to feel secure, and that some people, no matter how much money they have, never get there.
“I’ve seen a lot of guys with millions and they don’t have any confidence,” he says. “So they’re not wealthy.”
In the simplest version of the trust game, one player gives some money to another player, who invests it on his behalf and then decides how much to return to him and how much to keep. The more the first player invests, the more he stands to gain, but the more he has to trust the second player. If the players trust each other, both will do well. If they don’t, neither will end up with much money.
Fehr and his collaborators divided a group of student volunteers into two groups. The members of one group were each given six puffs of the nasal spray Syntocinon, which contains oxytocin, a hormone that the brain produces during breast-feeding, sexual intercourse, and other intimate types of social bonding. The members of the other group were given a placebo spray.
Scientists believe that oxytocin is connected to stress reduction, enhanced sociability, and, possibly, falling in love. The researchers hypothesized that oxytocin would make people more trusting, and their results appear to support this claim. Of the twenty-nine students who were given oxytocin, thirteen invested the maximum money allowed, compared with just six out of twenty-nine in the control group.http://www.newyorker.com/archive/2006/09/18/060918fa_fact
Beginning in late 2003, the last will and testament of the socialite and philanthropist Brooke Astor was amended by a series of documents that redirected millions of dollars to her son, Anthony D. Marshall, and made him sole executor of her estate.Mrs. Astor’s court-appointed lawyer, the Times reports, is “asking a judge to order the socialite’s last law firm to turn over the originals of her latest will, the three codicils that amended it and another document that gave Mr. Marshall, 82, the authority to handle her affairs.”
Now the propriety of those documents is being challenged by Mrs. Astor’s legal guardians. They question whether Mrs. Astor, now 104, was mentally competent to understand the changes to her will that she signed. In court papers, they also say that they intend to hire handwriting experts to determine if the signature on the documents is really Mrs. Astor’s.
The papers — and the suggestion that Mrs. Astor’s signature was either forged or procured through deception — indicate a new level of bitterness in the developing legal battle between Anthony Marshall and his son Philip, who has accused his father of neglecting Mrs. Astor’s care while enriching himself.
Joyce and Sybil Burden, aged 88 and 80, have lived in the home they inherited from their parents since birth. They jointly own the house and land, and with other properties their estate is valued at £875,000. Each sister has made a will leaving all her property to the other.
Under current law, when a married person dies the surviving spouse is exempt from inheritance tax. The same rules have applied to same-sex couples in civil partnerships since 2004.
However, there is no such provision for siblings and the sisters fear that when one of them dies the other will have to sell their home to pay the inheritance tax bill, levied at 40% of the value of the estate over a threshold of £285,000.
The Burden sisters are now seeking a European court of human rights ruling that their exposure to inheritance tax breaches their human rights. A hearing will be held in Strasbourg today to decide on the "merits and admissibility" of their legal action.
Despite the trifecta bill's failure on a 56-42 procedural vote, GOP senators have not yet shelved it, and Frist has left the door open for bringing the bill back to the floor in the near future. Frist on September 7 met with a group of senators that included Finance Committee Chair Chuck Grassley, R-Iowa, taxwriter Jon Kyl, R- Ariz., and Budget Committee Chair Judd Gregg, R-N.H., to discuss the next step for the legislation.Interestingly, Ways and Means Chair Thomas does not consider the extenders bill a must-pass before the election, in contrast to many other legislators. Thomas hates extenders, and believe that if the provisions aren't worth making permanent they aren't worth having at all.
When asked whether provisions to make the increased child tax credit and other tax cuts permanent could be added to the trifecta bill, as some have suggested, Frist responded, "Everything's on the table, but not just that. Lots of things are being considered."
Frist then quickly flashed a paper to reporters that he said listed 20 options for things that could be added to the trifecta bill to make it more appealing to Democrats and to win more support for the overall package.
A recent report, published by the Spectrem Group, Chicago, shows that, ironically, just as the baby boomers need trust services more trust money is leaving banks. Personal trust assets held by U.S. banks fell 10% to $986.2 billion in 2005 from a peak of $1.1 trillion in 1999, it says.And that's not the worst of it, according to another story on the Spectrem study from InvestmentNews.com.
The managed-trust assets at banks totaled $704.3 billion at the end of 2005, down 25.6% from their 1999 peak of $946,391, according to the study. Meanwhile, non-managed-trust assets at banks climbed 89% to $281.8 billion from 1999 to 2005.The Spectrem report also indicated "the number of personal-trust accounts held by banks dropped more than 23% to 719,658 in 2005, from a peak of 940,961 in 2002."
"It appears while individuals still need a trustee/custodian, they did not want a bank to manage assets," the report stated.
The baby boomers most likely to use estate-planning services today may not respond to the stodgy image of a bank and trust. But they probably don't mind the stodgy way that their inheritances have been preserved there.
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