Retirement Funds and Stock Market

* Robert Kuttner failed in his commentary of Dec. 2 on the stock market to address the chief reason for its explosive growth, i.e., the demise of the traditional pension plan and its replacement with the individual retirement account and the 401(k) and similar investment plans. With this change, virtually all of America’s retirement savings are now funneled into the stock market.

It is no wonder that under these conditions the stock market soars. Once again, we have legislated disaster by making these stock market investment plans the only viable ones for the majority of retirement savers, thus ensuring that the inevitable “corrections” will hit everyone, this time much harder than the S&L; failures hit. And lest any of these stock market investors cry that they are assuming the whole risk themselves, I would like to point out President Clinton’s response to the Mexican financial crisis of a couple of years back. At that time, he did not say that he was engineering a bailout for the bankers at Goldman Sachs, he said he was doing it for all of those Americans whose retirement plans had invested in Mexico. With so many people invested in stocks, they have an implicit guarantee from the U.S. government, if only due to their sheer number, and we can expect that we will all be footing a very large bill, and maybe not so far down the road.

ELLEN I. LOWE

Hesperia