For the week of September 2 thru September 8, 1998
Temper temptation to tinker with Social Security
The stock markets eight and half year climb stalled this week and dove 500 points Monday to a level that wiped out the years gains. Since July 17, the Dow Jones industrial average is down 20 percent.
The drop was big enough to produce headlines in every major newspaper and to lead the evening television news. We hope its enough to get the attention of those in Congress who advocate privatization of the Social Security system.
The numbers of advocates of privatization grew every time the stock market surged. They argued that all or part of the nations retirement kitty should be invested on the open market, instead of in boring old government bonds, because of the greater gains to be earned.
They said Wall Streets wizards had proven they could do a better job of fattening the wallets of retirees than dowdy government bureaucrats. To force citizens to invest in a Social Security system with a paltry payback instead of in the soaring market was unfair, they argued. Furthermore, investment on Wall Street would get the retirement monkey off the governments back, if only nay-sayers would see the light.
Well, the light shone brightly Monday, and some still suspect it could be the light of on oncoming train. Some experts say the bear marketin which investment values get clawed to shredsis back. Others say the fall is just a necessary correction to inflated values, one thats been too long in coming.
Gains in the market in eight years were remarkable. It was easy to make money even for ordinary investors. However, this year investors have been whipsawed. Some would have been as well off had they put their money in a mattress Jan. 1. No one called any press conferences this week to talk about the glories of privatizing Social Security.
This is not the crash of 1929. Stocks recovered part of the loss on Tuesday. However, the plunge should bring privatizers and their rhetoric up short.
There are no government guarantees in the stock market. What goes up may come downdramaticallyat times when many retirees can least afford it.
The Social Security systems plodding performance lacks the stock markets panache, but its reliable and steady. Any temptation to tinker or toy with investments more trendy than government bonds should be tempered by the knowledge that the bear on Wall Street may sleep, but may be voracious if awakened.
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