“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx
Nov 22, 2004
The Teamsters' Central States pension plan is in trouble. In recent years, it lost money in the stock market. Earlier this year, the fund reduced retiree benefits for the first time in its 49-year history.
How did this happen?
In 1982, the U.S. government "rooted out corruption" from the pension fund. Saying they wanted to stop gangsters from skimming money from the fund, the government took control of it from organized crime and handed it over to new gangsters to manage: a string of different Wall Street brokerage firms.
These firms invested the fund heavily in the stock market, in areas that might produce high returns, but which were risky. These included lots of technology stocks that became worthless when that stock market tanked; and 77 million dollars in a Russian bank that disappeared.
Why would Wall Street firms invest pension money in such risky places, when so many retirees depend on the fund? They SAY it's because the returns could be very high. And, of course, the more they lost, the more risk they had to take to try to regain it.
But what they DON'T say is that they get lots of money in "research" fees when they put the money in stocks. The riskier the investment is, the more they made sure to get their fees ahead of time. And they get more fees each time they move the money from one set of stocks to another.
The pension fund was managed by four different Wall Street firms. Each time, the new managers had to make sure to get their cut in fees – by shifting the fund to a whole new set of stocks.
The government pretends to be monitoring the fund to stop any self-dealing by gangsters. But let the self-dealing be done by Wall Street gangsters, it gets a government stamp of approval!