A Forum for Grinches and Ho-Ho-Hoes

[Tyrone Slothrop]

Originally posted by Adder
Yes, but that doesn't mean it has to be.

No, but it means that "privatization" isn't really a reform of what we're doing now -- it's completely different, apart from the "private" aspect, in that individuals are saving for themselves instead of paying for the retirement of others.

Yup. And the biggest obsticle I see to a transition is the totall cowardice of our leadership to admit that while privatization might be good, it will also be costly. And I don't think it is a huge a problem as you think (but it get huger every day).

It's a much bigger cost than the shortfall Social Security is expected to face down the road, although of course that depends on how much revenue is diverted.

These people are predicting, at best, substantially reduced market returns (or, in other words, they are being highly conservative). That makes more sense to me that saying that even these super-conservative estimates are way too positive, which seems to be what you are saying (i.e. the better guess is that things will be largely the same, rather than radically different).

Again, this is what we are talking about. One need not think the demographic factors are going to substantially hurt the larger economy in order to think it might be a good idea to privatize (note: the historical stock market return is something around 11%).

Drum's posts suggest that they are hardy being super-conservative, so that's where we appear to differ. And that 11% figure is only for certain periods, I think. Read Drum's posts. How do you explain stock market returns over time that outpace economic growth by so much?

This is the promise of privatization: Everyone's investment grows faster than the economy as a whole! It's like Lake Wobegone -- we'll all be above average.

Or because, having watched what has happened to private pension plans (the near complete replacement of defined benefit with defined contribution, with much larger retiree resources) over the last 30 years, they believe that actually setting aside funds to pay future benefits, and earning a return (any return) on them makes for better off retired people.

Well, no kidding. I'm certainly doing that for my retirement. But then who's paying for our parents' retirement? Because the social compact we inherited, borne of the Great Depression, is that we pay for current retirees, and anothe generation will pay for us.

[/QUOTE]
What I don't get is the dogmatic democratic committment to the current system. I certainly don't believe that social security should be removed as a safety net. But I absolutely believe that people would be better off, and the system would be more sustainable, if people were investing the funds instead of loaning them to the government to pay for current expenses. [/QUOTE]

It's not a loan.

We inherited this obligation to our parents. No one is suggesting that we shirk the duty. So the question, in essence, is whether the government should borrow a lot of money now to invest in the stock market. It's hard to believe that so-called "conservatives" want to do this, but there it is.

[Hank Chinaski]

Originally posted by Tyrone Slothrop
I'm sorry about your plumbing problems.

You mean residential, or have you been talking to my wife?

[Tyrone Slothrop]

Originally posted by Hank Chinaski
You mean residential, or have you been talking to my wife?

She said she always makes you do the mopping. That's so sweet.

[Adder]

Originally posted by Tyrone Slothrop
No, but it means that "privatization" isn't really a reform of what we're doing now -- it's completely different, apart from the "private" aspect, in that individuals are saving for themselves instead of paying for the retirement of others.

Yup.

It's a much bigger cost than the shortfall Social Security is expected to face down the road, although of course that depends on how much revenue is diverted.

Yup.

Drum's posts suggest that they are hardy being super-conservative, so that's where we appear to differ. And that 11% figure is only for certain periods, I think. Read Drum's posts. How do you explain stock market returns over time that outpace economic growth by so much?

You mean, acccepting your assumption as true, how can I disagree?

And the 11% (10.4, to be precise) number is the S&P since 1926.

I am too lazy to google it right now, but what has the annual growth in GDP been over that period?

Because the social compact we inherited, borne of the Great Depression, is that we pay for current retirees, and another generation will pay for us.

Because we made a mistake then, and chose the more expensive and less sustainable system means we should be continually wed to it?

In your own words, its a Ponzi scheme. Isn't that reason enough to change it?

[Tyrone Slothrop]

Originally posted by Adder
You mean, acccepting your assumption as true, how can I disagree?

And the 11% (10.4, to be precise) number is the S&P since 1926.

I am too lazy to google it right now, but what has the annual growth in GDP been over that period?

You don't have to accept my assumption, but since I'm talking about a pair of Drum posts that you apparently haven't bothered to read, why not read them and respond to what they say?

And why 1926 as a starting point? And what about the observation in his posts about PE ratios?

Because we made a mistake then, and chose the more expensive and less sustainable system means we should be continually wed to it?

In the midst of the Great Depression, one can see why the idea of betting government money on the stock market seemed like a bad idea. Would you explain to me why you think markets can be expected to outpace the growth of the economy as a whole over time?

In your own words, its a Ponzi scheme. Isn't that reason enough to change it?

I don't object to changing Social Security. For example, people live much longer now than they did back then. But that doesn't mean we should incur massive deficits to bet government money on the stock market.

[taxwonk]

Originally posted by Hank Chinaski
you realize I'm stalking you, don't you?

Until now, I thought you were just obssessed.

[Adder]

Originally posted by Tyrone Slothrop
And why 1926 as a starting point?

Because it was the first number I found, and it was suitably long ago to capture the very worst years of stock returns. Would you prefer that I begin after the Depression?

And what about the observation in his posts about PE ratios?

A PE ratio is essentially a meaningless number. To the extent that it should be relied on at all, it is a useful shorthand whether a give stock is over or under valued in the market.

But it should surprise no one that PE ratios are higher than ever in times when there is more money than ever invested in stocks (i.e. people will pay more for scarce commodities). Indeed, this phenomenon alone suggests that stock prices (and returns) can increase faster than GDP growth (i.e. they already have).

As for the Drum posts, to the extent that they even oppose privatization, they argue only that Social Security may not really need to be fixed. Which is something you and I are not discussing. (in other words, don't take anything I am saying to be specifically support the President's or anyone else's, plan)

Further, Drum says, "However, lower population growth means lower GDP growth. No way around that," which I am not sure is true.

In the midst of the Great Depression, one can see why the idea of betting government money on the stock market seemed like a bad idea.

Yup. Totally understandable mistake, but that doesn't mean it wasn't a mistake.

[Hank Chinaski]

Originally posted by taxwonk
Until now, I thought you were just obssessed.

his records show you have a small cavity in your top left canine, and that was 34 years ago.

[Secret_Agent_Man]

Originally posted by Hank Chinaski
there were draft riots in the War Between the States. Why are you surprised that people who thought they were beating the system, are upset when the system wants to collect?

That's pretty low coming from a patent lawyer sitting on a well-padded rear in a Detroit-area office building.

S_A_M

[Hank Chinaski]

Originally posted by Secret_Agent_Man
That's pretty low coming from a patent lawyer sitting on a well-padded rear in a Detroit-area office building.

S_A_M

One- I'm buff.
Two- what I was referring to was people in the National guard complaining because they had to spend time in the National guard.

I fully sympathize about armor or whatever, but people complaining that the National guard actually required them to put in time after they had been paid for years, for the off chance they might do time? I'm cool with what I said.

[Adder]

The U.S. government has taken to spying for political retribution

[Secret_Agent_Man]

Originally posted by Hank Chinaski
One- I'm buff.
Two- what I was referring to was people in the National guard complaining because they had to spend time in the National guard.

I fully sympathize about armor or whatever, but people complaining that the National guard actually required them to put in time after they had been paid for years, for the off chance they might do time? I'm cool with what I said.

People who say that never are.
If you get to make up what people are saying, its easy to come up with clever putdowns.

S_A_M

[Hank Chinaski]

Originally posted by Secret_Agent_Man

If you get to make up what people are saying, its easy to come up with clever putdowns.

S_A_M

Huh? We give Ty plenty of leash on the first part of that, and he still doesn't come through on the second part.

[Tyrone Slothrop]

With all the dirt coming out about Kerik now,* I feel a lot better knowing that the guy who vetted him is going to be the next Attorney General.

* If you don't know what I'm talking about and think it's just about this nanny, check out the coverage in Newsweek and Newsday, as discussed by Josh.

[Hank Chinaski]

Originally posted by Tyrone Slothrop
With all the dirt coming out about Kerik now,* I feel a lot better knowing that the guy who vetted him is going to be the next Attorney General.

* If you don't know what I'm talking about and think it's just about this nanny, check out the coverage in Newsweek and Newsday, as discussed by Josh.

You're aware the Bush administration is sucessfully performing combat surgery daily in Iraq, right? You've got to start giving up some credit.