Q: When will the markets address the incredible deficit?
A: My answer to the question is simple -- when interest rates start to rise. Beyond that, there are, of course, the demographic problems associated with an aging population, including the boomers. I've also seen some recent research that indicates that when the 50-65 population group has increased in relative size, there has been a slowdown of growth in the past.... For the moment, I would say watch interest rates and the inflation rate for signs that the deficit is really starting to have an impact.
Q: This question obviously relates to your book, The Great 401(k) Hoax. Will the 401(k) programs ever be reversed back to the traditional pension plans?
A: I fear that the answer to that question is no, barring a basic political change in the U.S. Except in a few key areas where unions are strong and continue to be strong, the power of the corporation to scale back on both pensions and 401(k)s is very, very strong. History suggests that when private pensions become oppressive to corporate profits, they tend to be scaled back, which is a basic point of The Great 401(k) Hoax, which I co-authored with Anne Colamosca.
Q: Do you see any major withdrawal of funds from the U.S. that have accumulated because of the foreign balance of trade?
A: That is the $64 billion question. It seems to me that history suggests that something like this kind of withdrawal