The Best Thing that Didn't Happen During The Bush Administration
The best thing to have occurred during the Bush administration is something that did not happen. We did not privatize Social Security.
Had we done so, boomers facing retirement over the next few years would be even worse off than they are today. Now they’re struggling with pension plans worth less than they counted on, and home values that are tanking. At least they can rely on a monthly Social Security check.
But had we privatized, they’d be totally reliant on the stock market. And look what’s happened to the market: Compared to stock values ten years ago, the S&P 500 has risen a little over 1 percent a year, adjusted for inflation. Even Treasury bonds have done better. Go back nine years and there’s been no gain at all. Go back eight years and the market has been off an average of 1.4 percent a year.
Yes, I know, it’s been a rough time. First the tech bubble bursting, then 9/11, then Enron, then the housing bubble bursting, then the credit crunch. But that’s my point. We can’t necessarily rely on the stock market.
And anyone who thinks the market will shortly regain all the ground it’s lost has been drinking Wall Street cool-aid. The Fed can only do so much. The stimulus package is a laugh. Consumers paying much more for fuel and food and health insurance, with shrinking paychecks, large debts and declining home values, won’t be turning around this economy any time soon.
Sure, the stock market has done well over the past half century. But there have been decades like the 1970s and this one, so far, where it’s been a disaster. That’s why we have Social Security – so that if your timing is bad and you get caught in a downdraft, you still have something to fall back on in retirement.
If we had privatized, you’d have had nothing to fall back on. You’d crash.
Had we done so, boomers facing retirement over the next few years would be even worse off than they are today. Now they’re struggling with pension plans worth less than they counted on, and home values that are tanking. At least they can rely on a monthly Social Security check.
But had we privatized, they’d be totally reliant on the stock market. And look what’s happened to the market: Compared to stock values ten years ago, the S&P 500 has risen a little over 1 percent a year, adjusted for inflation. Even Treasury bonds have done better. Go back nine years and there’s been no gain at all. Go back eight years and the market has been off an average of 1.4 percent a year.
Yes, I know, it’s been a rough time. First the tech bubble bursting, then 9/11, then Enron, then the housing bubble bursting, then the credit crunch. But that’s my point. We can’t necessarily rely on the stock market.
And anyone who thinks the market will shortly regain all the ground it’s lost has been drinking Wall Street cool-aid. The Fed can only do so much. The stimulus package is a laugh. Consumers paying much more for fuel and food and health insurance, with shrinking paychecks, large debts and declining home values, won’t be turning around this economy any time soon.
Sure, the stock market has done well over the past half century. But there have been decades like the 1970s and this one, so far, where it’s been a disaster. That’s why we have Social Security – so that if your timing is bad and you get caught in a downdraft, you still have something to fall back on in retirement.
If we had privatized, you’d have had nothing to fall back on. You’d crash.
posted by Robert Reich | 10:33 PM
67 Comments:
For that I am grateful to the people who designed Social Security. Many people at my office have seen their pension vanish before their eyes. I still have 20 years to go before I retire, but I do depend on Soc Security to be there.
Well said. Even suggesting privatization of the safety net of the most vulnerable group of our population presupposes that it has been tried successfully elsewhere. That people know how to invest wisely. That returns are warranted.
If these conditions are not met, then privatization equals lottery. Or Russian roulette.
I love listening to Robert Reich, but this piece lacks something in the fact-checking department. Some quotes:
"Had we done so, boomers facing retirement over the next few years would be even worse off than they are today." Actually, the accounts would have only been for younger workers -- 55 and under -- and even if passed in 2005 probably would only have been introduced around now. This sounds like a trite objection, but the restriction to younger workers was to avoid short-term market bumps like the on Mr. Reich cites.
"But had we privatized, they’d be totally reliant on the stock market." Actually, no. First, workers would have had a COMBINATION of a personal account and a traditional defined benefit. For lower earning workers in particular the defined benefit would have been the great part of the total. Second, the Bush accounts would have mandated a shift to a "life cycle" fund as of age 55, which would have shifted accounts out of stocks and into corporate and government bonds as they neared retirement. So not only would people not have been "totally reliant" on the stock market, I'd be surprised if people retiring today would have been 5% reliant on the stock market.
There are good objections to personal accounts, but these aren't really them.
Andrew Biggs
http://andrewgbiggs.blogspot.com/
Dr. Reich,
It's good you brought this subject up. Andrew Biggs makes some valid qualifying points. I don't think we should be market gambling in with a minimum security pension like Soc. Security, although an optional capped stock investment feature for high income earners might be a possibility.
I feel, as mentioned to you in an earlier post, all taxpayers should receive annually a simple one-page transparent summary(with charts) of Revenues/ Outflows and Net Cashflow performance of this Trust Fund-- including to what extent our Government has been borrowing from this fund to cover our deficits and/or other annual budget expenditures.
Frank Thomas, The Netherlands
Dr. Reich,
Another point I'd like to bring up again is that our annual national budget, and the Trust Funds (Soc. Security and Medicare) should have SEPARATE one-page summaries for annual distribution to taxpayers.
Our government data often includes Soc. Security figures in the national budget figures when showing, for example, what % of total expenditures go to Defense.
This is a misleading game that distorts the level of such expenditures to the general public by making the expenditures look smaller in percentage scale than they actually are. Soc. Sercurity has its own Tax Revenue/Outlay flows.
I composed a long response, but it got lost in the ether. I'll summarize instead:
1. Good investors plan for the long run and anticipate down cycles. Past performance (negative AND positive) is no indication of future returns. The US and world stock markets have produced positive returns WAY more frequently than negative.
2. Just propping up SS as it's currently structured is a very short-view solution, and using the current market's down-cycle as an example of why privatization is "bad" is a scare tactic and disingenuous.
3. Former Treasury Secretary Snow (I'm no Bushie, but I like this idea) suggested national savings accounts for all Americans. Every US Citizen gets $1,000 deposited into a high-yield savings account at birth and then on every subsequent birthday until they die. Even at only a 7% return, every American would have well over $1M available to them at the current "full retirement" age of 67. (Obviously there are issues like inheritance and survivorship, etc., but I think if gov't was serious about REALLY fixing SS and making it sustainable, we could work within that general framework.)
IMO, the best way to make sure that SS will be solvent and available to future generations is to take the money out of the hands of Congress and the President, who've proven repeatedly that they're unwilling or unable to really manage it responsibly.
When all is said and done, no sane congressman or women is going to go before the American people and ask to be re-elected after they have cut Social Security and/or Medicare, explaining the reductions are necessary to cover the shortages caused by the tax cuts given to the very high income folks.
The average worker earning a median salary of $36,000.00 a year will never be in a position to finance his or her own retirement independent of Social Security. So unless we reinvigorate the US economy to create median income jobs that pay $100,000.00 or more a year, we will have three possible options regarding retirement; Retain Social security, canceli it and let old folks starve to death, or automatically enroll everyone at age 65 in a welfare program.
Biggs:
"Actually, the accounts would have only been for younger workers -- 55 and under -- and even if passed in 2005 probably would only have been introduced around now. This sounds like a trite objection, but the restriction to younger workers was to avoid short-term market bumps like the on Mr. Reich cites."
It is very trite. The younger workers will get older one day. How do you know it's short term? Will there be no bumps - short or long term - in the future when younger workers are older? All this seems fairly obvious.
""But had we privatized, they’d be totally reliant on the stock market." Actually, no. First, workers would have had a COMBINATION of a personal account and a traditional defined benefit. "
Yeah at first. But the goal of opponents of social security is to undermine it piecemeal. At first there would be a combination but after this is accomplished there would be a constant push to enlarge the personal account at the expense of the defined benefit. Again, this is well understood by most people who follow the debate.
Robert said...
"If we had privatized, you’d have had nothing to fall back on. You’d crash".
Social Security is part of the social contract and will be defended with a vengeance.
The Bush attempt to privatize as part of his "ownership society" recklessness was seen through and overwhelmingly rejected.
If I'm not mistaken, McCain subcribes to this approach as well. This actually could be an issue that tilts the election toward the dems if they play it right. It must become a central theme with differences reinforced over and over ad nausem.
We can assume that younger voters are going to gravitate toward Obama while older voters may favor McCain. A detailed approach to shore up the trust fund must be articulated early on by the dems. Getting those older voters to vote for Obama may be as simple as advocating for an approach that preserves the system for their children and grandchildren. Obviously McCain and his privatization predilection does him no good with most of these older olders. Playing it right could sway the election.
you should be president.
This is an excellent post! Thank you, Prof. Reich. This needs to be said and re-iterated.
Laissez-faire economics has been discredited by the series of crashes (one every 5 years) since the Reagan administration set us on the road to deregulation.
To Reagan, government was the problem. Thanks to deregulation, the stock market has shown that lack of government is a bigger problem.
andrew g. biggs:
I have a really hard time understanding the thoughts that some folks posit as reasoned.
This sounds like a trite objection, but the restriction to younger workers was to avoid short-term market bumps like the on Mr. Reich cites.
Is that a prognostication that in the future there will no longer be short-term market bumps? In my lifetime we have seen many along with a few longer term bumps. As an objection it is not trite; it is inane.
Actually, no. First, workers would have had a COMBINATION of a personal account and a traditional defined benefit. For lower earning workers in particular the defined benefit would have been the great part of the total. Second, the Bush accounts would have mandated a shift to a "life cycle" fund as of age 55, which would have shifted accounts out of stocks and into corporate and government bonds as they neared retirement. So not only would people not have been "totally reliant" on the stock market, I'd be surprised if people retiring today would have been 5% reliant on the stock market.
SS is a nice safety net. It ain't gonna make anyone wealthy by itself. Placing any part of it at risk will only lessen the retirement amount available unless one is successful in their investment wagers.
If lower earning workers are to be restricted to maintaining a higher defined benefit portion are we not establishing the program to be for the benefit of higher earning workers? Not exactly consistent with Bush's proclamations of the benefits.
Now we have resolved the risk factor by mandating that workers must move out of stocks at age 55. What happens if at age 55 the stock market and your investments have tanked and you are forced to take what little you have left and convert to bonds; your "life cycle" accounts? The flaw, as Dr. Reich has pointed out, was always the value of your investments at the point of demarcation. Whether you are forced to do it at 55 or you are allowed to wait until 65, even if you had to do it at 45, the state of the market at any given point in the future is indeterminable and therefore you can never be assured that your "nest egg" will have more value than the current system provides.
Not quite sure why this fact didn't jump right out at you but thinking like this is part of the reason we have our current financial mess.
Then we have: pete mann:
Good investors plan for the long run and anticipate down cycles. Past performance (negative AND positive) is no indication of future returns. The US and world stock markets have produced positive returns WAY more frequently than negative.
Good investors have been known to lose their shirts. Many of the folks availing themselves of any SS privatization attempts will fall far short of what you would define as "good investors". Gullibly they will have bought into Dubya's get rich quick scheme.
Past performance is no indicator of future losses either, other than we know they will happen. No one disagrees that over time the stock market rises. All stocks and funds within the market do not all enjoy that same degree of growth. The fact that positive returns are produced more often than negative ones does little to solve the above issues regarding a drop dead point for getting out of your investments and the status of the market and your specific investments at that point.
Just propping up SS as it's currently structured is a very short-view solution, and using the current market's down-cycle as an example of why privatization is "bad" is a scare tactic and disingenuous.
SS would have been fine as far as the eye can see had it not been loaded into the general fund available for general spending. The excess over the last two decades invested in Treasury Bonds and held in a "lock box" would have generated returns sufficient to cover future SS payouts for decades, if not centuries. That Congress decided to spend that excess as part of the general funds available, merely means that they will have to start paying back the loan they took, starting around 2017. SS payouts are not the problem. The budget deficit and spending are the problems.
The current market's downturn as an example is neither a scare tactic nor disingenuous. The markets have always gone up and down. In the long term they have trended up but not on a smooth trajectory. Dr Reich merely uses the current downturn (one of likely many in future years) as an example of where a retiree would be today had privatization been available in the past.
Dr. Snow's plan:
First of all where are you finding "savings" accounts paying a consistent 7% yield year over year?
Secondly, ponder a 28 y/o young man with an MBA making a good salary for a few years. He has a wife and three toddlers and he dies. Not thoroughly familiar with the calculations but essentially his kids would be provided SS benefits until their 18th birthday. That could conceivably be worth $300,000 per child. His $1000 annual gift at age 28 would not even come close to that number.
The only way Snow's plan would have flown would be because it would eliminate SS. Other than that conservatives would have viewed it as more "welfare".
Although it sounds conspirtorial, peter k. is right. Bush's privatization scheme was nothing more than Step 1 in dismantling SS and eliminating the last vestiges of the "New Deal". Next on the list would be Medicare and the circle would have been complete.
Read Dr. Reich, without blinders, and learn.
Robert,
I'm a huge fan. Unfortunately with high inflation (energy prices and food prices) living on a fixed income isn't the best security that one would like.
Better than the stock market, absolutely.
I got my yearly update from USSSA yesterday. On the front page is a warning that the fund will be 'upside down' in 2017, and "exhausted" (their word)by 2041. I don't think privatizing would have helped. And with what the securities markets have been up to of late, wouldn't most people be in worse shape now than before? Isn't the whole point that the government saves and invests for us so that we don't have to worry about at least having a safety net? BTW, how's the other dergegulations going- airlines, phones? NAFTA?
Those over 55 are the richest portion of our population. Why do we consider them the most vulnerable? Social security was not intended as a retirement program. I for one would rather have the money I've paid into it back.
I hate Bush and virtually everything he's done in office, but I have to agree that these objections are really not well framed or thought out. Nobody in their right mind would be fully invested in stocks if they were within sight of retirement (and bonds/TIPS have done great over the last year). Additionally, I really can't imagine any true reform of SS being something that rolls out over a period of less than a decade. There has to be some decision point for younger citizens such as myself, to opt in or out. Personally, I'd be more than happy to opt out, and put my SS dollars away in a private account holding a lifecycle fund composed of broad index funds (including stocks and bonds from the rest of the world). I don't expect to ever see a dollar of SS.
Also, why in the world can't the Federal Govt. see clear to allow people without access to employer sponsored retirement plans to put a significant amount of money away in an IRA? If I had a 401(k), I'd put $15k a year into it, but as it is, I'm stuck with my dinky $5k/year Roth IRA, which really, isn't enough to retire on, even starting in your 20s.
Yes, you get your SS with a cola that will in ten years be enough to buy you a pepsi
hey what do you think of mr. holtz-eakin's reply to the WSJ article mapping out the costs of mccain's economic plan?
http://article.nationalreview.com/?q=N2I1OTljNWU3MzRkNzgyYTMxYWY4YjVhYTJhMGFjMmM=
I never understood why conservatives view social security as welfare. Don't they read the FICA deductions on their pay check stubs? Are they that out of touch? Workers pay into the system. I have been paying into it for 34 years and I don't want some buccaneer on Wall Street playing around with the social security safety net. Its time we had a President who wants to protect social security, not hand it off to the philistines on Wall Street in the guise of giving people control over their own money.
Anonymous,
The money that you have paid in has been spent long ago, man. Wake up, there is no "Trust Fund" or safety net. The money you are paying is being spent in Iraq and New Orleans and every other boon-dogle these "buccaneer" politicians can think of; furthermore, SS programs already eat up more than half our revenue. When the boomers retire it will only get worse eventually bankrupting the system.
Mr Biggs -
"For lower earning workers in particular the defined benefit would have been the great part of the total."
- does this mean that those who may need social security the least would actually have had the greatest opportunity for the biggest returns? That doesn't make too much sense to me. Social security should be a safety net and not a chance to widen the wealth disparity in this country.
"the Bush accounts would have mandated a shift to a "life cycle" fund as of age 55 ..."
- Look at the one-year return on some of the Life Cycle funds out there that are in the "retirement phase". Many of them had significant losses, which would have required retirees to reduce their principal in order to meet cash flow needs, but that in turn would jeopardize future retirement income.
http://screener.fidelity.com/ftgw/evaluator/mf/goto/search?&assetClass=Asset%20Allocation&invObj=Target-Date+2000-2014&fundPref=Open&fundPref=NTF&fundPref=NL&perf3yr=ON&er=ON&rtng=ON&sd=ON&sharpe=ON&beta=ON&mgrTnr=ON&asset=ON&etr=ON&ad=ON&amt=ON
https://www.principalfunds.com/allweb/docs/ris/investments/factsheet/PALTX_combined.pdf
https://personal.vanguard.com/us/funds/performance?FundId=0308&FundIntExt=INT&DisplayBarChart=false
Sorry did not realize that the URLs I pasted would get cutoff, but search for PALTX from Principal.com, FFFAX from Fidelity.com, or VTINX from Vanguard.com (good perf).
Ledsepp said...
"Those over 55 are the richest portion of our population. Why do we consider them the most vulnerable? Social security was not intended as a retirement program. I for one would rather have the money I've paid into it back".
This is why:
According to SSA.GOV:
"Social Security is the major source of income for most of the elderly".
"Social Security benefits represent about 40% of the income of the elderly".
"Among elderly Social Security beneficiaries, 52% of married couples and 72% of unmarried persons receive 50% or more of their income from Social Security".
"Among elderly Social Security beneficiaries, 20% of married couples and about 41% of unmarried persons rely on Social Security for 90% or more of their income".
Not so fast, I am not proposing the immediate termination of SS benefits. My comment was only to demonstrate that SS, like anything else, needs to be reexamined for its usefulness. The system, as it exists presently, is an outdated depression era dinosaur. Incidently, I find it ironic that a person who has an Anarchist symbol as an avatar would so vehemently defend a government institution.
Hooray! It doesn't matter if SS returns are single digits or even zero. It's an insurance policy and a social safety net. The neocons would have us believe all government is bad so we should dismantle it. And, in the process dismantle society. Murikans are waking up. They've been fed a large line of bullshit. And, both parties were part and parcel.
Ledsepp said...
"I find it ironic that a person who has an Anarchist symbol as an avatar would so vehemently defend a government institution".
In the absence of an anarchist derived libertarian socialism, the state is going to have to provide for the vulnerable despite the oppression and exploitation that comes with it. Capitalism is just too brutal for too many people. Maybe some day things will change but things are what they are.
This is bunk. Of course SS should not be privatized, but the trust fund should be invested for a better return. Take a look at the S&P500 over a 30 year term. The stock and bond markets always do better over Treasuries over the long run.
What the heck is going on with hillary and Fox News? ha Their affair will end like this:
ml
lol
Wednesday, April 23, 2008
Freedom and Democracy
Regarding new elections in Florida and Michigan, Senator Obama said we should play by the rules, I contend. In other words, we should not change the rules in the middle of the game.
Senator Bradley and Senator Daschle--both Obamanites--said the same thing as Obama. Play by the rules.
Play by the rules even though the voters of Florida and Michigan have been disenfranchised.
Ok.
Well, the rules also say that superdelegates can vote for Hillary even though most pledged delegates are for Obama.
Those are the rules. And we should not change the rules in the middle of the game, says Senator Obama, Senator Bradley and Senator Daschle.
I wonder if the corporate media will remind them that they are sticklers for the rules and for not changing the rules in the middle of the game.
I would imagine if the senators forget their rulesmanship it will look to the public as if they will say whatever they have to say in order to win. In other words, it will look as if they are practicing that old style politics they say they are so adamantly against.
For example, you might hear them say that superdelegates should be punished by the voters if they choose the rules over freedom and democracy.
Hmmmmm?
Then I suppose Obama, Bradley and Daschle should also be punished by the voters because they defended the rules against freedom and democracy for Florida and Michigan voters.
yeah, what a great time this would be to invest $1 trillion of soc sec money in the stock market.
and i'm sure the current oldsters won't mind the cuts in their income.
"But had we privatized, they’d be totally reliant on the stock market." Actually, no. First, workers would have had a COMBINATION of a personal account and a traditional defined benefit. For lower earning workers in particular the defined benefit would have been the great part of the total. Second, the Bush accounts would have mandated a shift to a "life cycle" fund as of age 55, which would have shifted accounts out of stocks and into corporate and government bonds as they neared retirement. So not only would people not have been "totally reliant" on the stock market, I'd be surprised if people retiring today would have been 5% reliant on the stock market.
SOUNDS COMPLICATED AND MESSY LIKE BUSH'S MEDICARE DRUG PLAN TO BENEFIT DRUG COMPANIES.
they would restrict it to younger workers? but they'd have to take $1 trillion from current recipients to invest in the stock market.
bush forgot to mention that.
Well, Every time I have a hope, My American Brothers erase it.
Hee we go again:
1) privitasion in some form ( not bushes form) would have been wonderful.
2) SOCIAL SECURITY is depreciated 50% in last 5 years via Dollar depreciation and DR. REICH loves . So do the SOPITALISTS( they are not on SSecurity) they have seperate plan of their own, which FED cannot depreciate to ZERO.
Did any of the readers bring the depreciation up? No...
I am afraid I better give up. You can not help economic illiterites and especially the SOPITALISTS who have done everything to keep them that way.
GOVENRMENT(DEMS/REPS all) like SOCIAL SECURITY money, cause they depreciate it and it come back eas earnging from overseens by BUFFET/GAITS/IMMELT/BLOOMBERG and richest people in the world.
Do you think they want you to know that?
Do you think Dr Reich does not know this ( 10 Trillion of purchasing power) was stolen from Social Security in last 5 years.
It ended up in 100 million Dollar homes, Getaway boats, Dachas near MoSCow. Inflated homes in Arab counties and Israel and Spain and etc etc...
It also ended up in Parachutes for GRASSO, EXXON head ( .5 billion Dollars). And dealyed "stock" options of many of our friends on wall street and SILICON VAlley.
My my, how stupid are My American Brothers to even respect this post for response.
The choice as presented is PRIVITISATION (BUSHES) or not.
No, the choice is Privitisation, transfer of money to whom it belongs, instead of GOVERNMENT Dems/REPS stealing it on a daily bases.
Do you see why I tell you Dr. Reich. is a hypnotist. He does not have to master it anyway?
Did anybod see the sleith of hand.
Unfortunately no. 10Trillion Dollars , totally invisible. No wonder None of the responders read or understand this.
"There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." Lord John Maynard Keynes (1883-1946), renowned British economist.
Dear Lord John Maynard Keynes knew all about this.
None of the responders or readers know this and Dr. Reich. is free to pratice ignorence and/or hypnotism..
Long live PT Barnum.
Sucker is born every day.
Good Trading
Dear American,
Dear Brother, read this, before it is too late for all the SENIROS and honest workers in USA
"There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." Lord John Maynard Keynes (1883-1946), renowned British economist.
is 50% debauching of currency in last 5 year good enough for you?
You want more?
Ask Obama, is he going to have "strong Dollar policy" like the current Treasury Secretary Dear Paulsen has.
I am tempted to ask him. I need to learn ENGLISH, but even I know that Strong Dollar can not mean 50% depreciation.
What gives hahahahaha....
Good Trading
Everybody who is afraid of Stock Market crash... Please worry not more, Stock market has already crashed. And it is not that Stocks have crashed, they are only down 1--15%. It is the Dollar that is 50% down, so
IN POLISH ZLOTTY
Usa stocks market is down 65%
GOT this?
I hope now you got it.
GOod Trading
And now that you got that.
YOur goverment is the worst that can happen to your Social Security money.
It and only it could have done this.
Demage your savings by 50% in 5 years.
Do you think former government and current aspirant Dr. REich would want you to do that?
Then it would be legitimate to ask Dear's Obama and Reich.
Will you stop the theft( sorry , depreciation, just learned this word).
You will never get an an answer to this, cause this a 10 Trillion dollar question.
Highest bid any question obtained on any market? Hallelujah
I hope I woke you up brogther. You have been listening to people who rob you blind everyday and you tell them thank you.
This is wors than slavery. This is unemaginable...
GOod Trading
What do y'all think of this article that
suggests high oil prices are being manipulated by criminals and terrorists to rob the US.
http://www.cnn.com/2008/CRIME/04/23/organized.crime.threats/index.html
Dear Anonymous.
Get it straignt please.
High OIL prices are the result of the low dollar. If anybody is manipulating OIL prices higher it is OUR FED and goverhment, for I wroute ampteen times on these pages, that they collect 100s of billions of taxes on OIL and that is the end of the story. If you are looking gor criminal manipulation of OIL you need to go no farther than our own confiscation ministers in goverhement and FED.
Good Trading
Good Trading:
After awhile your paranoia gets tiresome.
Dear Readers,
Some Debauched fools.
Apparently can not tell the difference between paranoia and truth.
So, be it. Some of us have to learn ENGLISH, I GUESS.
Good Trading
Hi,
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I like to invite you to post all your valuable articles in my website! To post your articles just send the articles with Title: Tags: and the articles to patelarp@gmail.com.
Our Administrators will upload your articles within 24 hours.
We are also interested to exchange a link also.
Thanks
http://www.india-stock-market-news.com
Dr. Reich (cc: Art Layman)
Regarding another subject:
In your blog article `The Fed and Democracy, I have written PARTS I, II and the Introduction to PART III pertaining to the complex economic mess we are in. The final section to PART III will be done soon, as time permits.
Comments and critigue are welcomed as Diagnosis and Cure proposals to our economic dilemmas can take many directions. You try to get all the facts straight, as you discover and interpret them, and then make up your mind to recommend the right things.
As a U.S. citizen abroad who´s very proud of his country, my wish is to contribute in a small way to a creative, constructive dialogue about Where we go from here and How.
Frank Thomas, The Netherlands
Good Trading:
Paranoia is not the opposite of truth. One can truly believe in a premise and yet be paranoid about it.
Example:
anonymous referenced an article about organized crime being involved in manipulating the price of oil and other financial activities.
You then responded with a derisive ranting once again about the Fed and the government as the only culprits of concern.
As a scientist one would presume you are familiar with the concept of mutual exclusivity.
Even if your "truth" is in fact true, it does not preclude the possibility that another force could also be manipulating the financial markets exclusive of the Fed and the government. Ignoring the possibility of this mutually exclusive action is what tends you toward paranoia.
The recent and continuing debacle with adjustable rate mortgages -- including the tremendous earnings of the individual mortgage brokers -- should be kept as a reminder to the next person who proposes privatizing social security.
If people can't read the small print on a mortgage and make sense out of it, how can they manage complex investments?
And why should they pay investment brokers a significant chunk of their retirement returns to do for their retirement portfolios what the mortgage brokers did for so many people's housing situations?
The markets go up, the markets go down. One's retirement need not depend on where the market is on one specific date.
Programs similar to the federal Thrift Savings Plan can manage millions of workers' accounts for pennies per year per hundred dollars principal. That should be the core of our retirement.
If some people want to gift other brokers with a portion of their savings over and above that, they're on their own.
Dear Readers,
When accountants try to speak PHysics, something gets lost.
In physics and in anything the attention is payed to the largest of the forces. All else is the kids play and diversion.
I could care less about petty subjects , all of you discuss here.
Somebody here wants to contribute to "going somewhere"....
Well, unlike the quantum physics ( uncertainty principle) us humans have history and we came from somewhere, and those who have no understand of MAJOR forces that brought us here cannot/will not lead anywhere but deadend. We are already there. Thanks
Good Trading
Good Trading:
Do you post for any other reason than to hear yourself think?
Your premises are absurd. The Fed and our government have a fairly long history as well and most of that history has made us the economic leader of the world.
Focusing on Major forces and ignoring minor ones is akin to missing the forest because of the trees. The Sun is Major force, if not the, yet I can effect the same skin damage in a tanning salon with a much lesser force.
Get over yourself. To the extent that you have a valid point, argue it. It is fatuous nonsense to suggest that contrary views do not have valid points as well.
There are sound reasons that physicists do not run the world.
Dear readers,
We have fools publishing follish BS. Again.
The simple truth this board does not want you to know is simple. they benefit from your misfortune.
Accountatns will have absolutely no job in the honest society.
Politicians will be the voluntary workers instead of burden on society ( with rules that favor them and denegrate the ordinary citizen)
By talking petty subjects they disorient you and divert you from thinking , really, or you would thorw them out in one minute from this board and from anywhere you can find them.
They would rather feed you nonsence of physicist do not run the world ( because they are not out ther to such the blood out of innocent)
Ok Once and for all
1) Government is a selfpreseving
mafia.
2) They have pushed the FED on USA
to steal in a clandestine way. See the SOPITALIST himself Lord Keynes express how government does it.
3) Accountants and politicians are not trustable
4) the only way for you to survive is to demand accountability.
5) Dr. Reich tried even to sell you on the idea that FED is a branch(4th) of the GOV.hahahahah..
6) USA is not the biggest power in the world. USA is bankrupt country. Dollar Demise is a proof of that. Accountants do not know that
7) USA will be great again when we remove the power from the benefactors of SOPITALIST slavery and return it to people, where it belongs
8) Ask this fool what is he doing except trying to spread the lies?
9) See how I help the world , people from 70 countries to get thier lives better and immprove their finances, read the thank you letters I get for opening their EYES to the deception and "feel good" nonsense the Accountant gives you.
10) differnece between accountant and physicist is that Accountant learns very early HOW TO LIE ( otherwise ENRONE will not pay them) and PYSICISST learns early on the truth/objectivity is the only way to concieve the universe.
That is why everybody loves SACHAROV and hates BREZNEV. That is why EVERYBODY loves GASPAROV and hates PUTIN. That is why nobody ever said EINSTAIN was lier and cheater. While Accountants. Well, Ok.
But this is not profession versus profession
Dear Reader. Your life has been ruined by those much more powerful than ACCOUNTANTS. It is there you need ot pay attention. They will lie and cheat to be elected and then will do what the "highest bidders" want.
Unfortunately system has made them that way. System that gave them endless supply of Social (In)Security money. Whcih was moved from the stand alone trust to the common budget to hide the deficit ( accountants would not know and if they did would not tell). This money is spent , gone .
There is no trust and there will be nothing for you when you retire. Even if there is some left it will be so deprecaited( sorry it is ) that it will buy you nothing.
Everybody on this board is either incapable and/or unwilling to tell you truth. But that is exactly how USA is today. THose that are incapble are SCREWED by those that are UNWILLING to speak truth. Is speak TRUTH that even 10 year old will understand if the can listen.
That is it. For now. It does not matter how much the FOOLS hate it. I will keep telling you truth, until you know and do something about it. I hope first thing will be to tell the FOOL to just discuss what is important and that you know what is important.
BIGGEST THEFT INT THE HISTORY OF THE MANKIND, SOCIAL SECURITY LOOTING BY OUR GOVENMENT, POLITICIANS, MULTINATIONALS And WALL STREET, all together called SOPITALISTS.
HOW BIG ??? 10,000,000,000,000.00=10Trillion. That is how much PURCHASING POWER your trust fund has lost in last 5 year alone.
And the fool wants to discuss ... whatever...
Good Trading
I agree it's clearly preferable to have the Government continue to promise benefits it can't keep without real reform and to continue the illusion that SS is a pension plan and not ultimately a welfare plan designed to punish those who have saved. There is no political will in Washington to do things like gradually increase the retirement age (Social Security was never thought to be paying large numbers of people for 10-20 years after retirement).
The numbers you come up with are nothing more than selective start and end points to arrive at a result you've already preordained.
The fact is, it doesn't at all represent the way people ACTUALLY invest and save for retirement. In the real world people squirrel away money every week over a long period of time.
Analyzing stock market returns in this manner reveals that there is no starting point in the past which under performs treasuries at the end of 2007.
Also, as I'm sure you're aware, a balanced portfolio containing more than just stocks, reflecting the needs and degree of risk aversion of the individual investor, is an important part of an investment strategy. This too is not reflected in your shallow analysis of the market.
There is a bit of truth to your blog though. Because of social security baby boomers will not have to draw as much out of their retirement savings. In this manner it is clearly seen that what social security actually accomplishes is transfer of savings of younger generations to the savings of older generations.
Lots of good comments. I agree with R. Reich in sentiment, but I am surprised of the simplistic view of this article.
Had baby boomers invested in the stock market they would have begun in the 60's, and the market has been growing since then pretty well.
The comparison made should be with the uninvested tax dollar. But, the solution is not to make SS an investment in the stock market, but to expand programs such as IRA/401K in addition.
One other point is that it is mentioned the simple steps taken to be able to be a good investor, the division of labor in our country means that most people have an expertise outside finance. The most people rely on professionals to manage their investments because they are busy doing other work for the country and themselves. We see how competent and professional are the people we rely on to do their jobs taking care of American's investments - in the stock market crash, and the housing bubble - not to mention health care.
It is a strong argument for socialistic style programs like national health care/expanding Medicare.
-Bruce K. Palo Alto, CA
In the past 5 years I've worked for 3 companies. The first for a bank (actually 10 Yrs) and then they merged with a large bank, so I was cut... unless I wanted to move my husband and kids to Wilson, NC... no thanks. The next was a very large contractor that specialized in helping companies outsource their jobs...no thanks and now finally a credit Union that's doing lousy things to cut costs. What happened to American?
I'm 51 and I feel Corp USA has shit on me. I'm a computer programmer/analyst and my jobs have shipped to India. Friends that are engineers are experiencing the same. At 51, I'm forced to retrain or follow the jobs. I'm settled and I don't want to retrain and start at the bottom. I doubt I'd be able to compete with 20 somethings right out of school. What am I supposed to do.... work at Walmart?
I'm really discouraged and disgusted. I wish we never went global. It sucks.
Hey 51 year old anonymous, we are the same age and in a similar boat. Americans simply will not demand that the country change at take care of its own, it is considered unmanly, or unAmerican, and thus life gets better in Europe and South America. One no-brainer to me is we have to stop existing for the corporations. For decades corporations have been telling us their plans when our labor gets to expensive, the oursourcing, the union busting, the illegal immigration, etc, and American have been too busy partying to listen. We have to get something for allowing companies to use our market, infrastructure, labor and intellectual capital.
We have to make demands as Americans, and I do not see that as being very likely because we are not very educated and we are beaten down. Instead of the slaves being freed, and opportunity being equal, we have just been sold out in a lots of ways.
Our jobs are currently being outsourced to India, or insourced to Indian here on visas. Corp USA is selling our souls and our future away as the politicians fatten their wallets. I hope they rot in hell!
This post has been removed by the author.
The standard advice on investing is always diversify your investments. Since most retirement plans invest in the stock and bond markets privatizing Social Security makes no sense economically. Look what happened when Enron encouraged their workers to invest all their retirement in the company.
There is a good reason all competent investment advisors encourage diversification. Keeping Social Security as a government run program is the wise choice.
Anonymous said...
Yes, you get your SS with a cola that will in ten years be enough to buy you a pepsi
8:33 PM
-----------------------------------
With todays food dollars, will you be able to afford a Pepsi?
I think that younger people who like private accounts are missing something.
While they put away savings for themselves, the current system would still have to be funded.
They will be paying twice and then have no safety net when the get there.
It would be a really bad deal for them.
When it comes to oil, many people seem allergic to the idea that market forces are a factor in price. The Fed tax of 18% has little impact when a gallon of gasoline is $3.60 / gal. Add in the welfare queen subsidies for big oil and I think the Fed intervention is negligible.
Every major oil field is in decline. Brazil's new six billion barrel field has turned out to be a 500 million barrel field. And even at that we need a half dozen trillion barrel fields to make a minor dent in the oil depletion curve.
Conventional oil production has been in decline since 2005.
Oil/Energy drives industry. Industry drives jobs and production.
With world energy energy essentially flat, and the world population continuing to rise, the population is outgrowing industry. The population is outgrowing jobs. The population is outgrowing the food supply.
Greenspan and Bernanke believe that we can have economic growth, based on pushing debt back and forth between financial institutions. All this does is increase the dollar supply. So we have more dollars chasing a fixed supply of goods and services.
As more dollars chase a declining supply of oil and demand is outstripping supply, the price keeps going up.
The only way to keep our industry and food supply growing is to find a radically new energy supply that is cheaper, more convenient and more plentiful than oil. And it has to be instantly implementable. Every decade that we wait for it to appear, our economies decline. So at this point, we also need time travel, so that we can start implementing this new source in the past, to avoid disruptions next year.
Now if magic and time travel don't save us, we're just left with coping with a slow decline.
A permanent industrial decline, coupled with a continuously growing money supply isn't going to be good for the stock market. It's also going to mean that the value of SSI payments are going to quickly erode as food and energy prices out pace cost of living adjustments.
We can hope and pray that a miracle energy source will be found in the future and that time travel will allow the inventors to come back in time and deliver the technology to us, but I wouldn't bet my money and my life on it.
Social Security is a ponzi scheme. Eventually, someone will not get back what he/she put in. Young people understand this, and don't want to be the ones holding the bag. They figure they can do better themselves.
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Anonymous said...
Yes, you get your SS with a cola that will in ten years be enough to buy you a pepsi
....................
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