Randomly Noted

To those fretting about the very real budget problems of U.S. cities and states, their difficulty in fulfilling  financial promises they made and the implications of all that for the market in tax-free bonds, here’s a number that might offer a measure of reassurance. 72. Or, if you like, 77.

These numbers represent the percentages, respectively, of the number of polled New Yorkers who support the tough budget proposal of the state’s new Democratic governor, Andrew Cuomo, and the percentage who have a favorable view of him. (The source is the Siena Research Institute.)

That’s New York, the fabled liberal state. Across the river in New Jersey, the controversial Republican governor, Chris Christie, is lighting into government worker benefit and retirement plans that threaten the state’s fiscal future.

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Here’s an agenda item for the Group of 20 major nations’ economic meeting later this week: agree that you all need to raise retirement ages and make sure you pick a high number.

How about 72?

Retirement age might seem a small and arcane issue when the powerful from the G20 nations grapple with such macro notions as how to sustain nascent economic recoveries while simultaneously developing plans to eventually return to fiscal sanity.

But retirement age is part of the long-term answer to the second part of that delicate equation. And, among the host of changes in the social contract between citizens and governments that will be necessary because many countries simply don’t have enough money to keep it up, retirement age increases rank among the most palatable choices.

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The press releases come regularly, announcing the Securities and Exchange Commission taking action against this alleged scam and that one.

Good news. The SEC certainly is interested in being seen on top of things enforcement-wise, especially after the spectacular failure to detect the supreme scamster, Bernard Madoff, for so many years.

It’s depressing in that humankind seems endlessly capable of launching new schmes to defraud. It’s depressing in that a certain sector of humankind seems endlessly susceptible to scams.

Whatever the SEC and other watchdogs are up to and capable of detecting, caveat emptor has to still be the standard for investors. At a minimum, the bad guys are only caught by the securities cops after they’ve done some hoodwinking.

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In a speech last week, a commissioner of the Securities and Exchange Commission zeroed in on an interesting topic: the changing nature of direct share ownership in America.

“One of the most significant changes in our financial markets since the 1930s and 1940s has been the decrease in the relative percentage of securities owned directly by retail investors and the substantial increase in direct holdings by institutions,” said Commissioner Luis A. Aguilar  in the text of an Oct. 29 speech.

“Estimates indicate that in the 1950s, individuals directly owned more than 90% 0f public companies, and today that number is closer to 30%.”

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The 401(k) movement was always a disaster waiting to happen. Trouble is, when markets were rising, no one bothered thinking about the fact that we ordinary mortals were ill-equipped to manage our nest eggs. And so, during the 1990s stock market boom – and again prior to last year’s financial meltdown – we watched as the value of our self-administered retirement plans rose and rose … and we thought: “Wow, we’re so well-off!” What we didn’t think was, “What do we really know about investing for the long-term?”

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