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Gettin Ugly
I got into a bit of an Internet tussle with Marketwatch 666. This was another of those posts from the defenders of Social Security, and like most of these articles, this one fell back on an old tired line. The author quoted Ronnie Reagan: (I wanted to barf)
Social Security can’t add to the deficit.
So I dashed off a comment:
Social Security does not add to the deficit. Ronnie was right.
Social Security DOES add to the DEBT of the country.
Both statements are true. Which one is the one to focus on?
In 2013 the answer is that it is the debt that matters, not the deficit, and SS is adding to the debt.
The author, R.J Sigmund, comes right back with: (and I’m grabbing for the wastebasket again)
Bruce, the debt is not a problem....the world economy is suffering from a shortage of safe assets, and the only way to alleviate the shortfall is to increase the debt
Then he goes on to add:
you've conveniently omitted the fact that it also earned more than $117b in interest on the government bonds in the trust fund....
I love it when this happens; folks playing “gotcha”, not even understanding the facts. I come back with my standard response:
Careful where you go with that interest income line. Interest is a NON CASH ITEM. SS needs cash to make benefit payments. So SS has to hock its bonds with Treasury to come up with the CASH needed. Treasury, in turn, must borrow from the public to fund the SS shortfall.
I told them to go to SSA, and look at the bottom line results at SS for 2011:
Every penny of the $45.379B cash shortfall had to be borrowed by the Treasury. Treasury did that by issuing more Debt to the Public. I added some number about what's in store for the future with cash deficits at SS:
2010 SS deficit = $47B,
2011 SS deficit =$48B,
2012 SS deficit = $60B,
2013- 2023 SS deficit = ~$1T
Anyway, I doubt I changed RJ's views on this too much. This is an emotive topic, and I suspect it is going to become more charged in the weeks to come. It’s very hard to have a debate with someone who starts with, “debt is not a problem”. It’s even harder when the debate is ended with:
...so take your ranting back to zero hedge, where you might find some other chicken little types who'll buy into your theories...
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....the world economy is suffering from a shortage of safe assets, and the only way to alleviate the shortfall is to increase the debt
LOL. So debt owed by a government with a debt/GDP north of 100% and rising rapidly is a "safe asset"? Just like skydiving without a parachute is a "safe hobby".
parachuting with or without a parachute, has the same risk. either everything has a safety net, or none of it has a safety net. risk isnt' being priced implying that those who bother to carefully pack their own parachutes are at a distinct disadvantage
I noticed that too.
These finance types live in a world of abstractions totally disconnected from reality. As long as there is a system and it has more than three moving parts and as long as there are more than 15 minutes between major events, the author can continue to drop all context and seize on any individual data point to support the view that all is well and that those who doubt him are uneducated at best and the masses will be always befuddled.
What kind of asset do you think the author considers gold to be? Would he find the system to be "safer" now that it has no connection to anything phsycal?
But evidently, no shortage of asshats... ;-)
When I think about all the foreign adventures (facilitated by 1000 military bases abroad + 4000 in the states) and all the resources being expended for these adventures AND the outcomes (Iraq, Afganistan, Libya, LA and SA - War on Drugs, and now the pivots to Asia and Africa,
I can not understand why the elderly in the country who PAID IN to Social Security should have to sacrifice this modest amount when the US seems to have unlimited monies for all kinds of wasteful endeavors. Many seniors will suffer extreme poverty without Social Security.
I think the US has lost its humanity and people are unable to empathize with the plight of others.
Sad.
Those elderly people had votes too. Maybe if they hadn't been so apathetic during all those years of foreign adventuring and spoke out against the massive spending then we wouldn't be in this situation. Unfortunately the boomers have increased spending on everything and now expect young people to take on the extra taxation to pay for all the wasteful spending of the boomers.
Hmmm. This is another of those "lines". "I paid in, now I should get"."That's the 'fair' thing to do."
SS is INSURANCE. If you need the insurance, it should be there for you.
But, on the other hand, if your 68, living in Boca with the young second wife, new member at the club and all; well, good for you. You don't need (or deserve) the $24k SS is paying you a year.
You pay for fire insurance, all the timing praying you never have to call on it. SS is no different in my view.
75% of all SS beneficiaries would be in trouble if their benefits get cut. That would be a stupid outcome. One that would question the "humanity" you speak of.
But you would not agree with me on this. If we did it my way, SS would be an official Entitlement. It would quickly lose its popularity. And you "Rooseveltians" would hate that outcome.
PS: Sticking the SS bill on those under 45 is an unfair outcome. Just where is that "empathy" of yours? In your pocket?
Arguing about fairness is one thing, giving politicians more and more scope to determine and administer what is fair is something else.
"PS: Sticking the SS bill on those under 45 is an unfair outcome. Just where is that "empathy" of yours? In your pocket?"
No problem sticking students with non-dischargeable student debt, however. That's not the hated social security. I suspect the under 45 student debt slaves would gladly exchange a lifetime of slavery and pernury for allowing their elders to get back what they were forced to defer to their retirement with a pittance interest rate. Perhaps its the name that causes all the problems. "Social" sounds like "socialism", so why not change the name to what it really is, "Wages defered to retirement"? Somehow, I don't see defering wages as equivalent to buying insurance, nor do I see it is an entitlement. But bang those drums of socialism and discrimination against the young, even though we never hear you complaining about their non-dischargeable student debt that will dog them the rest of their lives and will even be taken out of their social security when they reach retirement age, assuming all your efforts to abolish social security come to nought.
What a joke to think you can do anything about the debt--read Antal Fekete. This reduce-the-debt nonsense is just pandering to the vast majority who don't understand math and think all we have to do is run the economy like the household food budget, which they do understand, not withstanding the fact that we have long passed the point where any attempt to reduce the national debt will make any difference whatsoever. All cutting social security will do is deflect the defered wages of the aged into paying interest to the coupon clippers, which is probably the underlying agenda here in any event.
Sombody once said that Americans would rather starve than tolerate that some undeserving type gets a free sandwich.
Wish that I were 45 to continue working to recoup my loses from the 2008 crash.
I played by the rules and still got burned.
I never minded the crashes before (1987 for ex) as I would just regroup and go on.
Eventually you run out of years. And, you are not always in control of circumstances.
I just feel like we need some kind of program that protects old people from homelessness and cat food.
"I just feel like we need some kind of program that protects old people from homelessness and cat food."
Wonderful - let's create such a program. Just don't put the federal government - of $1.3T deficits, of $60T national debt, of no budget for 4+ years and SS ponzi schemes - in charge of it.
I agree with you about the incompetence of government. But who would you suggest be in charge of it? Surely NOT Wall Street!
The only answer that works is cold - you must run your own retirement program. And, if you fail to fund it / invest it wisely / maintain constant, attentive vigil over it, you will be broke when you're old.
YOU HEARTLESS WRETCH! YOU WANT OLD PEOPLE TO STARVE! AND, NOT EVERYONE'S AN INVESTING WIZARD: WHO WILL ADVISE MY AUNT SALLY ON INVESTING, SHE KNOWS NOTHING ABOUT IT!
There may be several alternatives:
1) Hire an accountant, investment banker or tax lawyer to manage your retirement funds. This approach could work, but see: Madoff, Bernie, and Corzine, John.
2) Form a group of like-minded investors, and hire / choose someone to run it. This approach could buy expertise you don't have, but see: Madoff, Bernie, and Corzine, John, and most hedge funds / mutual funds / dark pools and so forth.
3) Propose a private version of SS, structured like a 401k; let some investment advisors such as Putnam, Fidelity, etc. manage it. This approach could buy you economics of scale and magnitude, but see CALPERS, union retirement funds (looted for political contributions), actual 401ks of bankrupt companies, and so forth.
Get it yet? anytime you let anyone else mind your funds for you, you incur additional counterparty risks, some of which are astronomical. None of Corzine's custormers thought he would lose all their money on a bad bet on Italian government bonds, but that's what happened. I hear recovery is up to 80% of account value so far; is an instant 20% loss acceptable, followed by ages of lawsuits to get back what was yours?
Mind your business: always, continuously and attentively, or be prepared to suffer greater losses (you're going to hit a clinker once in a while, no matter what, so be prepared, diversified, and hope your gains outweigh your losses in the long run. Otherwise, see ZeroHedge motto at the top of the page!)
Who are you to tell me what I need? The next idea you will promote is that I do not need a Gun. Or I do not need a 3000 sq. ft. home. Or I do not need a Humvee.
Well you are right. I do not need them. I want them. And if I can pay for them then I shall have them. That is Freedom.
If the Government took away my wages and now they see fit to reimburse my money with deserved or undeserved interest then sobeit. It is not about NEED. I do not base my life on NEEDS. I base it upon my desires. That is what gives me the ambition to go and create more. If I stopped at what I needed then many will have gone without their needs fulfilled.
That is the difference between SOCIALISM and CAPITALISM. Capitalism provides the drive to go out and innovate so that we can acheive what we want well and above that of what we need.
socialism is for fuck ups?
I don't think that's what he said. He said there are 5000 bases not only wasting huge sums of money, but also resources that make the price of gas and everything else go up. In addition to that you have them buying dozens of $30 million cargo planes and then throwing them away in the desert to rust the next year, before they've all even been flown, because they saw a shiny red corvette type aircraft(F35) and deciding they want $400 billion worth of those instead of hundreds of cargo planes. They are having problems with the F35s and will probably throw $100 billion worth of them next year or leave more equipment dollars than that sitting in Afghanistan.The military says the cuts are devastating but they can throw away a billion dollars worth of planes in one year without even flying them and had an order for 4 times as many. Money is no problem to waste for the military.
The F-35 program originates in 1998, and they should be in service in large numbers by 2016 (18 years; longer than both World Wars put together). They are scheduled to be in use until 2030 (15 years of service; less than developement time) when they will be replaced with the next generation fighter, which is supposed to have LASERS and MASERS.
Regan wanted satellite lasers back in the 80s for trillions of dollars(when trillions of dollars was a lot of money). At the same time I think he wanted trillions of dollars for 100s of bombers to be in the air to nuke Russia after they had already nuked us, so we could get even. Luckily, the savings and loan crisis put the kibosh on all that.
Spot on. As you note, this topic is emotive, not logical. It's amazing just how far some people veer off this path rationalizing logic on top of their emotions, while ignoring the logic that otherwise invalidates their premise.
You've now written two coherent articles in a row, and this one isn't even fabricated!
Kudos! ;)
(Oh, honestly, you're better off here at the ole "Fight Club")
I can opt out of fire insurance - I guess that is too complicated to figure out? Just give me the money back and shove your holier than thou altruism where the sun don't shine. 50 fucking years of paying into it... My corp pays into UE insurance fund too and that is a another shitload of money I will never see.
Bruce, lindaamick made a perfectly valid point, and you went off on a tangent to discuss means testing for SS. That's not the way to debate. Stick with the point raised: A program like SS, which is largely funded directly by it's participants, can get raided by the government to fund non-defensive wars. O.K., let's means test SS, but then garuantee that wars be financed by sur taxes on the population, agreed to by that population.
Those wars buy dollar hedgemony. Do you have any understanding what your social security check would be worth in the absence of that hedgemony?
It's hegemony.
The people in China probably laugh at our decades long wars against people with civil war rifles and cans of gasoline. China wants to add 25 million real jobs a year and when they have enough consumers of their own, they will let the dollar fall and it wont have anything to do with the military. It will have to do with prices of all the Chinese goods in all the stores because they will have all the factory production. The housing bubble was the first fake economy to provide some jobs to replace the ones going to china and the wars are the second fake economy, they dont have a third one, I hope.
I think people grossly overestimate the amount of control and overall effectiveness of the Chinese Government. What they want to do, and what they can actually do, are far apart.
Lots of manufacturing is coming out of China, either to cheaper places, or back stateside with 90% of the workers replaced with robots.
China may end up skipping the Reserve Currency phase and going straight to bailouts and collapse, unless they come up with something radical like a jubilee for all internal debt.
China controls their currency and monthly labor at $250 a month. They hold $1 trillion in American IOUs, that we could soon have a harder time selling, for a nuke option. I think the $250 includes workman's comp and EPA and social security and unemployment. I'd say the cities and counties and states will be getting their butt kicked by corporations and China. That may be the result in the second phase of the trade war that we're losing badly. If we can just cut those corporate tax rates, all the overseas profits could come back to the U.S. and they would build factories here because we would be so much more competitive. The corporations are really raking it in with that $250 a month labor, if they could just cut the tax rate from 35% to 10% the federal government would get mucho dinero. I hope China steals their factories because the $1 trillion in paper isn't worth anything and the jobs come back here. There's no logical reason to ship the stuff from the other side of the world.
Bullfuckingshit.
"the elderly in the country who PAID IN to Social Security should have to sacrifice this modest amount when the US seems to have unlimited monies for all kinds of wasteful endeavors"
you don't control the world with retired people, but with mighty military - up to a point
Let them attack Korea or Iran or China if they want a war.
Liberals, they cannot think, reason, or use logic, they can only feeeeeeel. Feeeeeelings and emoooootions are all they know.
Hedgetard, is it a provable fact that liberals cannot think or reason, and feelings and emotion are all they know? Or is this a feeeeeling that you have?
The Founding Fathers were liberals, and hecka lot better at those thinking/reasoning/logic thingies that you seem to have such difficulty with.
The Founders were Classical Liberals...today's Libertarians.
Today's Liberals are SOCIALISTS. Today's Conservatives are SOCIALISTS.
The best I can make out today's US liberals and conservatives are all Fascists.
The connotation of liberal has changed a bit over the years and many if not most of the current crop of liberals can be seen as supporters of the status quo.
The connotation has changed because people prefer to be brainwashed by their media-masters at places like Fox News and the WSJ rather than think for themselves.
I won't grant the media the authority or power to redefine the English language for me.
I'm a gun-loving, free-speechifying, authority-hating LIBERAL, and damn proud to be one, especially in a country which was unapologetically FOUNDED by men of similar philosophy and inclination.
Do what you like with your words, I know what mine mean.
All of TV and Hollywood support the elites and the TV networks are all the same. My guess is you are a moron who still watches and supports The Matrix. You probably voted for Obama twice. You are a serf.
The problem is that the Republicans are also liberals. Anyone who is a traditional conservative from what the term meant 30 years ago is considered a total nut. The vast majority of americans are sheep -granted there are red sheep and blue sheep, but other than the color of their wool, they are still sheep--the type that can only think about their next meal and occasional urges to go out and screw other sheep.
I trained the sheep to come to me.
Sheep are pretty filthy. I bet your place must be a mess.
“debt is not a problem”.
It is true that debt is not a problem. Paying off debt or even just servicing debt obligations are problems. So if you can imagine a way to make someone else deal with those two real problems, you don't have a problem.
Of course making someone else pay your debt is theft. But there are lots of people these days who have no trouble whatsoever with theft. Hell, I'll go out on a limb and claim that for the near term future of America theft will be our chief export, our chief GDP component, and our chief source of income for individuals in the financials vertical.
debt is other people's money.
We all know other people's money is their problem not ours
http://www.youtube.com/watch?v=6xGuGSDsDrM
Yeah, you know me.
Arguing with people who don't think debt is a problem is arguing with the same people who think the answer to a shortage of money for the poor is to simply print it.
If only they could print an IOU without actually having to borrow...
Yeah, but you can just dump that debt onto the Fed. And then the Fed pays the interest back. Free money, right? At least on a nominal basis?
Funny how easy it is to forget the concept of real value.
I suspect Mr. R.J. Sigmund assumes 3% GDP growth until Jesus returns and assumes debt can rise faster than growth until that day as well.
I'm not a chicken little, I'm a Big Chicken. So there.
Unfortunately Bruce, its like arguing religion. If someone starts off by believing some impossible thing MUST be true, then none of your arguments are even going to get listened to.
In the meantime relax with this
http://www.youtube.com/watch?v=HnyB0a8G71Y