Individuals are the last ones holding the bag

One of the most insightful comments on the U.S. Treasury bailout of the banks came from a recent "Doonesbury" cartoon. One character notes that America is privatizing wealth and nationalizing risk. In other words, people at the top are extracting riches from the financial system, while the taxpayers hold a safety net under those same institutions when they fail. They're "too big to fail," right? These days, I feel that we middle class householders are too little to succeed. I look at my 401(k) and college savings plans with real dread after last week's stock market plummet. The trend has all been toward handing us more risk for our own financial futures.

A story today from the Associated Press explains that college savings funds -- the New York State 529 plans -- have been hit by the recent whallop on Wall Street. Over the past two decades, secure company pension plans have mostly been replaced by 401(k) retirement savings -- which have also ridden the ups and mostly downs of the stock market. If President George W. Bush had had his way in 2005, the nation would have privatized Social Security as well.

Imagine tens of thousands of people waiting until the stock market recovers so they can retire, because both their 401(k) plans and privatized Social Security benefits were bottoming out with a bear market. As former Clinton Labor Secretary Robert Reich argues in his book "Supercapitalism," in the past 40 years or so, we have gone from a nation of beneficiaries to a nation of investors. And we have taken on all the risk that implies.

Now, if only Americans can figure out a way to time college readiness, aging and death to coincide with the appropriate phase of the market, this investor nation idea just might work. (Insert sarcastic tone here.)

This timing thing matters a lot to the middle class, which has very little cushion. But surely it matters far less to people who are rich enough to be insulated from market swings. This is how politicians lose touch with middle-class reality -- they become rich. Mr. Bush and the people around him are far out of touch.