Holy crap that was a terrible idea. Ugh.

Quote :

"What would have happened if George W. Bush had actually succeeded in his plan to privatize Social Security? Ask the Italians. Italy did for retirement financing what President George W. Bush couldn’t do in the U.S.: It privatized part of its social security system. The timing couldn’t have been worse. The global market meltdown has created losses for those who agreed to shift their contributions from a government severance payment plan to private funds meant to yield higher returns. … Gaetano Turchetta, a Rome office manager, made the irreversible move to a private plan after a union representative boasted of the potential for 20 percent annual returns. The 43- year-old father of three now says he would sign with “two hands and two feet” if he could switch back."

-Krugman

1/6/2009 6:18:23 PM

Id still rather have my private account and you would too, its just you might not realize it.

Id rather have 50 cents on my dollar invested and 35 yrs to go, than the promise that ill get SOME money out of this insolvent system that may or may not be around in 35 yrs.. and if it is.. im sure some politician will means test me out.

[Edited on January 6, 2009 at 6:26 PM. Reason : .]

1/6/2009 6:21:28 PM

This thread is stupid.

I'd much rather invest in a private retirement account than pay into the insolvent transfer system known as Social Security, which likely will be severely scaled back by the time we retire.

As for Italians who shifted all of their savings into private funds right before the global economy tanked? Well, they made a choice and screwed up, partially due to forces out of their control. The onus is on the account-holder to understand the risks involved in investment. I, for one, accept those risks and welcome the freedom to choose where my retirement money goes.

[Edited on January 6, 2009 at 7:04 PM. Reason : 2]

1/6/2009 7:03:50 PM

I don't care that he won the Nobel, Krugman is a weasel.

1/6/2009 7:40:54 PM

^ as is anyone who doesnt toe your party line.

Quote :

"Id rather have 50 cents on my dollar invested and 35 yrs to go, than the promise that ill get SOME money out of this insolvent system that may or may not be around in 35 yrs"

yeah, because everyone is 30 years old just like you, doctor eyedrops.

1/6/2009 8:13:04 PM

I missed the proposal that all private acccounts would contain a 100% weighting in equities, of which is to be bought within a year of retirement.

1/6/2009 8:28:11 PM

Anyone from our generation thinking SS is retirement plan is pretty laffo. That money is gone.

1/6/2009 8:32:19 PM

The above arguments for privatization revolve around the fact that privatization would more than likely be beneficial for 20-something college graduates.

I mean, screw everyone else, rite?

1/6/2009 9:09:51 PM

SS (and the finances of our government in general) -- just a big Ponzi scheme.

1/6/2009 9:20:38 PM

^^ And your arguments revolve around the fact that privatization would more than likely be harmful to people to 60 something retirees.

I mean, since it will hurt some people, we shouldn't do anything at all to change the system, rite?

1/6/2009 9:25:55 PM

No, it's centered around the fact that it'd be directly harmful to all people who aren't young and wealthy.

And then in turn, to the economy as a whole, and thus indirectly harmful to people like us. Where would aggregate demand go if we didn't have some sort of government-backed safety net behind us in times like these?

[Edited on January 6, 2009 at 9:30 PM. Reason : ]

1/6/2009 9:29:55 PM

why did those Italians put all of their money in one spot? diversification is a basic rule. thats their bad.

let me handle my own retirement mr. guberment man kkthxu

1/6/2009 9:36:06 PM

Never thought I'd see somebody our age be in favor in Social Security.

1/6/2009 9:40:51 PM

Quote :

"in one spot?"

By one spot, I assume you mean the private market?

Quote :

"diversification is a basic rule. thats their bad."

It was almost our bad, too.

Quote :

"Never thought I'd see somebody our age be in favor in Social Security."

I dislike anything not in my immediate, short term personal interests.

1/6/2009 9:46:31 PM

1/6/2009 9:52:31 PM

Expensive things are bad. Always. No exceptions.

1/6/2009 9:56:09 PM

boone

you should split your assets among several things, one being the private market.

another would be bonds

still another would real estate

go see Dr. Huggard.

1/6/2009 9:58:54 PM

^ good point.
That way you can lose 50% of part of your money, 40% of some of your money, and only 30% of the rest of your money!

1/6/2009 10:02:18 PM

Quote :

"you should split your assets among several things, one being the private market. another would be bonds still another would real estate"

Which of these would not be tanking right now? Between double digit decline in real estate and stocks, and 1% interest treasury bonds, you're screwed. If you're diversified, you're being screwed in diverse ways.

Meanwhile, SS (which will of course need some tweaking in the future) is steady, and propping up a healthy chunk of the nation's aggregate demand.

1/6/2009 10:07:04 PM

speak for yourself. its a wonder how any of us do anything anymore without the government. maybe they should make our grocery lists for us too, so we dont eat anything unhealthy we americans shouldnt be trusted to take care of ourselves.

besides even if I do squander my retirement, at least I wouldve lost it myself, taking the risks on my own research instead of some mindless politician.

1/6/2009 10:09:06 PM

Quote :

"Which of these would not be tanking right now? Between double digit decline in real estate and stocks, and 1% interest treasury bonds, you're screwed. If you're diversified, you're being screwed in diverse ways. "

if you are looking at your investment in a 12 month window, your bonds and stocks probably arent doing well but thats not the point of those investments.

true, my IRA's are suffering at the moment, however, my house is appreciating and the commercial rental properties I am involved in are enjoying their most profitable leases ever. I am making very good returns on both of those investments.

let daddy government handle your shit. Im just fine managing my own thank you.

1/6/2009 10:12:21 PM

^ yes, sounds great for a 30 year old with a nice job, 35 years from retirement.

What do you suggest for 45, 50, 60, 70 year olds to do? Just stuff it all in a mattress?

1/6/2009 10:15:08 PM

"What's good for wealthy 20-somethings is good for America!"


Pretty near-sighted/dumb, if you ask me.

(and holy crap, could you imagine what would happen to the rental market in a deep recession without government economic safety-nets?)

1/6/2009 10:15:50 PM

Quote :

"^ yes, sounds great for a 30 year old with a nice job, 35 years from retirement. What do you suggest for 45, 50, 60, 70 year olds to do? Just stuff it all in a mattress?"

if they spend their life using sound strategies, they wont have their money in the market come retirement time. if they have a brain, they have moved more of it to safer returns as they have gotten older.

a 45 year old has plenty of time to re-invest and move his money around.

look, some people need the government to wipe their ass for them. thats cool. make programs like SS optional. however, dont make me sink money into a lost program for the F of it. thats pointless.

1/6/2009 10:18:12 PM

Quote :

""What's good for wealthy 20-somethings is good for America!""

yeah i am hugely wealthy

I would wager I make an average salary for someone my age. dont hate because I am smart with my money.

none of my renters get any government money. not sure what you meant by that. they have their own sustainable business. a neat concept!!

1/6/2009 10:20:31 PM

Quote :

"if they have a brain, they have moved more of it to safer returns as they have gotten older."

you ahve yet to name a safe return in today's market

1/6/2009 10:21:40 PM

my 3% ING savings account is pretty safe.

1/6/2009 10:23:38 PM

Quote :

"No, it's centered around the fact that it'd be directly harmful to all people who aren't young and wealthy."

How is it harmful to the elderly and poor? Again, you are assuming a portfolio of 100% equities, all of which were bought close to retirement. It is all but common knowledge that you gradually transition out of equities as you get closer to retirement. Besides, we can still have private accounts, but place limits on the asset mix once a retiree is 10 years from retirement (e.g. make retirees gradually shift into treasuries as they approach retirement). I personally think this is far, far too paternalistic, but if it means having a private account that I can call my own and an I.O.U. from the government, I would gladly take the former.

Quote :

"And then in turn, to the economy as a whole, and thus indirectly harmful to people like us. Where would aggregate demand go if we didn't have some sort of government-backed safety net behind us in times like these?"

Perhaps savings. One of the potential reasons our saving rate is so low is because we have become overly reliant on government insurance systems (Medicare, Medicaid, Social Security, Unemployment insurance, ect). After all, why save for future contingencies when the government has promised to get your back? That is why countries that do not have such generous welfare systems also have high saving rates. (e.g. China)

1/6/2009 10:26:18 PM

Quote :

"make programs like SS optional. however, dont make me sink money into a lost program for the F of it. thats pointless"

You really don't understand why SS is valuable, do you?

SS retirement and unemployment maintain aggregate demand in recessions. Thus blunting recessions.

I'm under the impression that even die-hard monetarists accept this.

Yet you seem incapable of addressing it on anything but a purely idealogical level.

Quote :

"Again, you are assuming a portfolio of 100% equities"

And you're assuming a portfolio. Can we agree that the cost of kicking millions of low-income retirees out on the street is higher than paying them a subsistence wage.

Quote :

"That is why countries that do not have such generous welfare systems also have high saving rates. (e.g. China)"

That's hilarious. And wrong.

Quote :

"SS isnt valuable. I will likely see ZERO of the money I put into it. you dont understand the concept of taking care of yourself."

Yeah. I've already addressed this line of thought: "nearsighted/dumb." Let me throw "disgusting" in there while I'm at it. I certainly hope you never collect unemployment/COBRA should you ever find yourself out of work.


[Edited on January 6, 2009 at 10:35 PM. Reason : ]

1/6/2009 10:27:43 PM

get outta here wit ur dayum logic and thinkin!

1/6/2009 10:27:57 PM

Quote :

"You really don't understand why SS is valuable, do you?"

SS isnt valuable. I will likely see ZERO of the money I put into it. you dont understand the concept of taking care of yourself.

1/6/2009 10:29:07 PM

yeah, and you don't understand that sometimes what is good for society is good for all of us

1/6/2009 10:33:46 PM

Quote :

"You really don't understand why SS is valuable, do you? SS retirement and unemployment maintain aggregate demand in recessions. Thus blunting recessions. "

What inherent advantage does SS have over private accounts in this respect?

1/6/2009 10:34:21 PM

Quote :

"What inherent advantage does SS have over private accounts in this respect?"

Private accounts (income for many, therefore demand) tank when the economy tanks. Social security doesn't.

1/6/2009 10:38:32 PM

^ From my post above...

Quote :

"Again, you are assuming a portfolio of 100% equities, all of which were bought close to retirement. It is all but common knowledge that you gradually transition out of equities as you get closer to retirement. Besides, we can still have private accounts, but place limits on the asset mix once a retiree is 10 years from retirement (e.g. make retirees gradually shift into treasuries as they approach retirement). I personally think this is far, far too paternalistic, but if it means having a private account that I can call my own and an I.O.U. from the government, I would gladly take the former."

A portfolio consisting mostly of treasuries would actually appreciate in value during a recession (assuming the Fed is lowering interest rates). If we are to assume most rational retirees have mostly cash and treasuries in retirement, there is no reason they would feel compelled to decrease consumption during a recession.

This is a graph of the yield on on-the-run 10-year treasury notes. Bond prices have an inverse relationship with yields, so the decline in yields below represents a price increase.




[Edited on January 6, 2009 at 10:48 PM. Reason : .]

1/6/2009 10:40:12 PM

Quote :

"If we are to assume most rational retirees have mostly cash and treasuries in retirement, there is no reason they would feel compelled to decrease consumption during a recession."

I'd be an enormous assumption to assume most retirees have ____________ in retirement. Most people depend greatly on SS. With $300+/month natural gas in NY, my grandma would be out on the street, even with her late husband's IBM pension.

But hey screw 'em. They're not me. And they certainly don't affect me.

[Edited on January 6, 2009 at 10:55 PM. Reason : ]

1/6/2009 10:53:48 PM

Quote :

"Private accounts (income for many, therefore demand) tank when the economy tanks. Social security doesn't."

No it just forces the government into more debt. And where do you get this idea that privatization is some kind of short term selfishness. Short term selfishness is taking my money and giving it to someone else. If i could have put the money of sunk into SS into my 401k i'd actually have that money when I retire. Instead its gone and I will never ever see it again.

I think thats the part you dont get. Social Security is not sustainable.

1/6/2009 10:55:25 PM

20-something college graduates are so hilarious.

"Screw everyone else but me. Life is a zero sum game. If you're not making $75k+/year, you're lazy and stupid, and in a just world, your family would starve."

How did I make it through NCSU yet somehow miss becoming so enlightened? Maybe it was the couple of years I spent at App?

1/6/2009 10:59:40 PM

You act like it is an either / or proposition.

I accept the current reality of Social Security. I would still prefer to have a choice in how I invest my money. Either way, the system is flawed and will collapse under its own weight if some painful changes aren't made to correct it.

We've entered a period in our Nation's history where conservatives will have to learn that tax cuts don't solve everything and liberals will have to learn that there are some things we simply cannot afford.

Of course, we're likely to plow on, ignorant of this realization, until we hit a real financial crisis . . . like a truly free-falling dollar.

1/6/2009 11:18:36 PM

^^So, we're entering a recession, meaning spending is down, employment is down, wages are down and in general money flow is down. All of which means tax receipts are down. In the mean time, the number of people retiring is going up and the demand on government programs is increasing. Since social security is a pay as you go system, (as are many other government programs) how do you propose that the increased demand be met as the supply dwindles?

[Edited on January 6, 2009 at 11:19 PM. Reason : sdf ]

1/6/2009 11:19:08 PM

Quote :

"I'd be an enormous assumption to assume most retirees have ____________ in retirement. Most people depend greatly on SS."

I think you are misunderstanding the argument. SS is a form of retirement, so the line you drew above, which I assume is to represent zero, is incorrect. Privatizing social security would not change the amount that you are forced to contribute, only the legal claim to your assets. You can privatize social security and still maintain the same level of risk, if that is desired. (e.g. you could force everyone into Treasuries)

What is ironic, is that it is the less well-off that are hurt most by non-private SS. If we utilized private accounts, the less well-off would have a means to transfer their wealth accumulation to their descendants, something only the wealthy can now afford via supplementary private accounts. Under the current system, the accumulated income of workers who die before the retirement age is handed back to the government, so the descendants of the less well-off are left with nothing. With a private account, the savings would be passed on.

1/6/2009 11:26:17 PM

1. SS will have to be tweaked. We can start with ceasing payments to people who don't need it. Or just making it a flat payment that would cover a subsistence existence. I imagine that'd go a long way.

2. Even if we can't manage to balance things out through the baby-boom retirement, I assume there's no set-in-stone law preventing us from covering any SS deficits with general funds. There was certainly nothing stopping the money from going in the opposite direction all these years. Oh noes! Debt. We can't have that.

Quote :

"SS is a form of retirement"

Retirement insurance, ideally. Big difference.

Quote :

"What is ironic, is that it is the less well-off that are hurt most by non-private SS. If we utilized private accounts, the less well-off would have a means to transfer their wealth accumulation to their descendants, something only the wealthy can now afford via supplementary private accounts."

That's ludicrous. SS payout is progressive in nature. Given a set savings rate, low-income people are much better off with SS. There's no way you can tell me that the majority of poor people wouldn't out-live their private savings. Then where would they be?

[Edited on January 6, 2009 at 11:40 PM. Reason : ]

1/6/2009 11:29:50 PM

In other words, as the economy falls, SS, like any other system falls with it. Stop paying people (kind of like what happens when your 401k bottoms out), cut benefits to a minimal subsistence living (kind of like what happens when your retirement funds fall with the market) or just put ourselves into massive debt to support our retirement in hopes that the economy gets better.

So tell me again how SS is better than a private retirement account?

Incidentally, when they hike the SS taxes and cut the benefits, do you think that will help or hinder economic recovery?

[Edited on January 6, 2009 at 11:54 PM. Reason : adf]

1/6/2009 11:53:09 PM

I would immediately agree to accept no money from SS if I could stop paying SS tax. Of course, they can't do this because rather than invest the money that they took out of current retirees paychecks (or even stuff that money into a sack and let it sit somewhere) they spent it on other bullshit and they are paying those guys with the money they are currently taking from me. Very soon that system will reach critical mass, when the number of retirees substantially outweighs the number of workers they will have only 2 choices:

1 - Receive less than you paid in, in which case you would have been better off burying that money in a hole.

2 - Raise the rates on workers to such an exorbitant rate that the system gets voted out of existence.

Anyone that doesn't have their head completely up their own ass realizes that SS is a broken system. I don't think I know anyone under 30 (hell, even under 40) who expects to see a dime of what they are currently paying as SS. For people like me and you SS is essentially government mandated robbery. At least with income tax we receive some sort of service, we will get nothing from SS.

1/7/2009 1:02:13 AM

Quote :

"I accept the current reality of Social Security. I would still prefer to have a choice in how I invest my money. Either way, the system is flawed and will collapse under its own weight if some painful changes aren't made to correct it. "

absolutely. we are not talking about an all or nothing thing here. in no way would I ever suggest taking old people off the current system. however, it is not fair for me to have to sink money into something that is supposedly a 'savings' type system that I will NEVER see a dime of.

Boone, spare me with your high horse BS. people in this country are addicted to government aid in many forms. its time to ween people off the teet. we need to teach them to take care of themselves. quit making everyone a victim. we have enough of those already kkthx

1/7/2009 8:02:48 AM

Privatize Social Security how is this such a horrible idea....

I hate to sound mean but anyone that is looking to retire in the next 5 years that was still stock heavy in their investment direction deserved to lose a bunch of money anyways...

For anybody else this is a minor hiccup that will likely repair itself down the road. Even with the market tumble you will come out ahead over the likely 0% return on investment for many young people on their investment into the current social security system

1/7/2009 8:33:59 AM

but HUR we should sacrifice our money for the good of everyone else forever. you make no sense.

1/7/2009 8:37:27 AM

.

[Edited on January 7, 2009 at 9:34 AM. Reason : asdfasd]

1/7/2009 8:43:36 AM

Quote :

"but HUR we should sacrifice our money for the good of everyone else forever. you make no sense. "

sorry libbies Boone and Schmoe

I must agree with my conservative comrades on this issue.

1/7/2009 8:49:25 AM

If people are living longer, then why can't people work longer? Raise the retirement age to 70+. Wouldn't that help a lot?

1/7/2009 9:30:11 AM