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Thread: Last Hurrah for Alan Greenspan ?

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    Default Last Hurrah for Alan Greenspan ?

    After a precipitous fall during the past two weeks, it would appear that the US stock market is now about to 'rebound' to the point of making up those recent losses. Of course the fact that the Fed injected another 9 billion dollars of freshly printed money today may have something to do with that as well. At any rate, some 'insiders' are speculating that the Fed is injecting new money like crazy in order to insure that Alan Greenspan's career ends in a high note when he retires next tuesday.

    After that point, some are of the opinion that it's going to be downhill from there ...

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    Default Re: Last Hurrah for Alan Greenspan ?

    How dare you cite Forbes as a source!

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    Lightbulb Re: Last Hurrah for Alan Greenspan ?

    The financial markets always try to test an incoming Chairman. Greenspan did a great job during the early nineties by following his instincts, seeing where the indicators were headed, and made adjustments in order to avoid wide swings in the economy. His predecesor, Paul Volker, was reactionary and you all might recall the weird inflation/deflation with high interest rates during the late '70s and early 80's.

    The incoming Chairman has a reputation for acting in between Greenspan and Volker - but much closer to Greenspan in both philosophy and tea leaf reading.

    They are pumping the money supply and keeping rates lower than they would under Volker. Inflationary pressure will force them to keep steadily raising short term rates.

    The market makers always like to test Fed Chairmen - if they can get a reactionary in the post, they have the opportunity to make money off them (Volker). This means the big money investors manipulate the market in order to get the Fed to react, then take their gains and pump it back in. They tested Greenspan when he came in by pulling out of the market (Black October?). The market took it's worst beating and Alan kept cool. After the year end, the market came back without getting Alan to cut rates and pump money in. (again, see Volker)

    My unfortunate prediction is that our economy won't get into full swing until:
    1) Long Term mortgage rates rise to create more of a normal yield curve (unfortunately most likely due to an increase in defaults).
    2) Causing long term debt to rise - causing banks to loosen credit underwriting for mid-market companies allowing them to grow.
    3) We figure out some way to get around China's artificial peg on their currency which is driving all of the world's production there.

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    Default Re: Last Hurrah for Alan Greenspan ?

    1) Long Term mortgage rates rise to create more of a normal yield curve (unfortunately most likely due to an increase in defaults).
    ... which many say will never actually happen as long as pension funds are regulated into buying all of the long term debt they can lay their hands on (30 year T-Bond being reintroduced for just this purpose, supposedly)

    2) Causing long term debt to rise - causing banks to loosen credit underwriting for mid-market companies allowing them to grow.
    ... which some say is a function of US dollar exchange rate (in)stability, since something like 40% of US$ denominated long term obligations are held by 'foreigners', whereas some significant amount of long term debt owed by US companies is denominated in 'foreign' currencies.

    3) We figure out some way to get around China's artificial peg on their currency which is driving all of the world's production there.
    ... some say that's the easy part ! All that has to happen is to have foreign investors in China require an outside audit of Chinese bank debt, and publicize the fact that the Chinese gov't is spending something like 25% of their GNP to 'bail out' bad loans held by Chinese banks. This will cause foreign investors in China to run for the proverbial hills, and re-establish the true value of the Yuan at the present 'regulated' exchange rate !

    ... some say that Investing in China involves a lot more risk than is commonly acknowledged - if a few big foreign investors get 'stung' big time it won't matter how cheap Chinese labor is or how lenient Chinese environmental controls are, the investors will shy away from the risk. After that, China will have to start exchanging some of their US T Bond horde for Yuan to self-finance, which will send the Yuan into moon-shot mode and tank the US$.

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    Default Re: Last Hurrah for Alan Greenspan ?

    Vote 4 Forbes

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    Default Re: Last Hurrah for Alan Greenspan ?

    Melonie - I'm a newbie who is damnned impressed with your knowledge. Thanks for a few excellent viewpoints which I was not aware of.

    Quote Originally Posted by Melonie
    ... which many say will never actually happen as long as pension funds are regulated into buying all of the long term debt they can lay their hands on (30 year T-Bond being reintroduced for just this purpose, supposedly)
    All traders and money managers have their opinions - I hadn't heard the rumors about the 30 year T-Bond reemerging. I think this would steepen the corporate and mortgage bond yield curve by adding back the yield premiums for regulated investors. Although pension fund management is quickly evolving in light of their recent troubles. More and more pension funds are using hedge funds managers to help manage the investment spread requirements. It'll be a while before the hedge fund reporting regulation catches up. --- IMHO

    Quote Originally Posted by Melonie
    ... which some say is a function of US dollar exchange rate (in)stability, since something like 40% of US$ denominated long term obligations are held by 'foreigners', whereas some significant amount of long term debt owed by US companies is denominated in 'foreign' currencies.
    Outside my realm of expertise so I'll have to trust you on this one.


    Quote Originally Posted by Melonie
    ... some say that's the easy part ! All that has to happen is to have foreign investors in China require an outside audit of Chinese bank debt, and publicize the fact that the Chinese gov't is spending something like 25% of their GNP to 'bail out' bad loans held by Chinese banks. This will cause foreign investors in China to run for the proverbial hills, and re-establish the true value of the Yuan at the present 'regulated' exchange rate !

    ... some say that Investing in China involves a lot more risk than is commonly acknowledged - if a few big foreign investors get 'stung' big time it won't matter how cheap Chinese labor is or how lenient Chinese environmental controls are, the investors will shy away from the risk. After that, China will have to start exchanging some of their US T Bond horde for Yuan to self-finance, which will send the Yuan into moon-shot mode and tank the US$.
    This sounds like the lessens we learned with Japanese bank reporting.

    Thanks for the enlightening!

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    Default Re: Last Hurrah for Alan Greenspan ?

    well don't count it as enlightenment ... only the ravings of an amateur blonde female investor who happens to have big boobs !

    if you want true enlightenment, look no further ...



    this lets all of us 'trusting' individual investiors know that a 100 point runup in the DJIA now costs $35 billion (and who says that there's no inflation LOL). Well in truth, it only cost Alan Greenspan $1000 in blank paper and another $1000 in green ink, plus a few dollars in the utility bill to run the printing presses.

    and in regard to the long bond problem, the UK actually took the lead on this one ...



    let's see ... first the US gov't stops issuing 30 year T-bonds. Then the US gov't regulators mandate that pension funds must cover a certain percentage of their outstanding liabilities with long term gov't debt, which starts a bidding war for the old 30 year T-bonds that are still available. Bidding up bonds = lowering the effective yield a.k.a. long term interest rates. Intended consequence is that other long term interest rates i.e. conventional mortgages will stay low as well. Unintended consequence is that the yield curve inverts.
    ~
    Last edited by Melonie; 01-27-2006 at 04:53 PM.

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    Default Re: Last Hurrah for Alan Greenspan ?

    ... and in regard to new Fed chairman Ben Bernakke inspring confidence ...

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    Default Re: Last Hurrah for Alan Greenspan ?

    Melonie, it seems, never heard of the expression "pay day".
    After a precipitous fall during the past two weeks, it would appear that the US stock market is now about to 'rebound' to the point of making up those recent losses. Of course the fact that the Fed injected another 9 billion dollars of freshly printed money today may have something to do with that as well. At any rate, some 'insiders' are speculating that the Fed is injecting new money like crazy in order to insure that Alan Greenspan's career ends in a high note when he retires next tuesday.
    She is quite fond of quoting not seasonally adjust daily reserve injections without EVER noting that there are almost equal offsetting liquidations.
    Look at the NET impact over the pasy year.

    I direct your attention to the following
    http://www.federalreserve.gov/releas...urrent/h41.pdf
    look at line labelled Total Factors affecting reserves. See 1/26/06 861,857 with a net change from 1/26/05 of 31,625. DO THE MATH--that is a 3.8% percentage change from a year ago.

    NOW look at nominal GDP growth for q4/q4
    http://bea.gov/bea/newsrel/gdpnewsrelease.htm
    4.2%. Reserves have been added to the banking system in line with GDP growth, measured this way, actually less (a messy comparison because of timing). There is no conspiracy, no intrigue, nothing more than the fact that the banking system needs liquidity to cash peoples' paychecks. If the Fed did not tweak reserves to provide liquidity every damn one of them would be fired for GROSS incompetence or Federal Funds rates would explode every Friday, and tank during the week and the Fed could not run a decent monetary policy and the economy would get screwed up and people (SC customers, too BTW) would not have cash to put in dancers pockets on Saturday night.

    Melonie, would you please stop quoting these utter morons who do not know shit from shinola?

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    Default Re: Last Hurrah for Alan Greenspan ?

    I really don't want to be argumentative, but I'll be my own judge of which financial commentators are 'geniuses' versus which are 'morons' if you don't mind. If others agree that they don't want to see alternative financial opinions in DD, then I really will stop posting them. However, if like 5 years ago the opinions of the mainstream media commentators wind up resulting in major investment losses, don't blame me.

    I would like to ask one friendly question though, Monty. Why is it that in some contexts you profess the official gov't numbers to be the gospel truth (i.e. when they support your conclusion), while in other contexts you are the first to point out that the gov't numbers leave out / don't take into account significant external factors (i.e. when they don't support your conclusion) ?

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    Default Re: Last Hurrah for Alan Greenspan ?

    All the fed chairmen are pretty much going to hell


    If offered to trade my life to eliminate the Federal Reserve, I would do it gladly and never complain about it
    You can't love something you think is flawless - me


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    Default Re: Last Hurrah for Alan Greenspan ?

    Quote Originally Posted by Melonie
    I really don't want to be argumentative, but I'll be my own judge of which financial commentators are 'geniuses' versus which are 'morons' if you don't mind. If others agree that they don't want to see alternative financial opinions in DD, then I really will stop posting them. However, if like 5 years ago the opinions of the mainstream media commentators wind up resulting in major investment losses, don't blame me.

    I would like to ask one friendly question though, Monty. Why is it that in some contexts you profess the official gov't numbers to be the gospel truth (i.e. when they support your conclusion), while in other contexts you are the first to point out that the gov't numbers leave out / don't take into account significant external factors (i.e. when they don't support your conclusion) ?
    The answer to your question is quite simple Melonie. Some items can be measured precisely, such as the assets and liabilities of the Central Bank. Other items are measured by sampling, some large scale like employment. Others like GDP are measured by a combination of techniques and based on both sampling and estimates of missing data. If you follow the link to reserves you will find no estimate whatsoever for the accuracy of the data, just like you would find no margin of error if you looked at your bank statement.

    If, in contrast, you looked at the GDP release at http://bea.gov/bea/newsrel/gdpnewsrelease.htm
    (I recommend the pdf version since the html is too wide) you will find that the first taable of the release is a comparison of revision histories since the BEA KNOWS it cannot get it right with available data less than 30 days after the end of the quarter.
    From the advance estimate to the preliminary estimate (one month later), the average revision to real GDP without regard to sign is 0.5 percentage point, while from the advance estimate to the final estimate (two months later), it is 0.6 percentage point. From the advance estimate to the latest estimate, the average revision without regard to sign is 1.3 percentage points.
    It is an unbiased estimate in a statistical and political sense, but it has been wrong more than a few times, as mentiioned in the prior post. The BEA is a bunch of solid, skilled professionals but there are limitations in producing numbers in less than 30 days, given the constraint of having to accept any other agency's data as being accurate, even though it may not be accurate either and they may not think it accurate. To do otherwise would put them at risk of being accused of manipulation for nefarious purposes.

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    Default Re: Last Hurrah for Alan Greenspan ?

    Well, as a parting comment on this particular subject, all I will say is that it's highly probable that the Fed will continue to make major cash injections via open market ops through tuesday ... which coincidentally covers both Alan Greenspan's retirement and GWB's state of the union speech ... and which coincidentally will likely prevent the US stock markets from falling despite all of the bad press from Davos, Iran, Palestine etc. From wednesday forward, it's anybody's guess whether Ben Bernakke's legendary 'helicopters full of freshly printed money' will be heard over Wall St. Odds are they won't, and the US stock markets will turn downward.

    Of course, from a logical standpoint, short term variations in Fed money injection levels aren't supposed to matter, and 'conspiracy theorists' claiming that fed money is being channeled into purchases of stock index futures for the express purpose of market manipulation is 'tinfoil hat' material, so I'll probably fail the Shinola test.

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    Default Re: Last Hurrah for Alan Greenspan ?

    I question the true purpose of printing new money at this time considering it precededs the State of the Union address.

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    Default Re: Last Hurrah for Alan Greenspan ?

    Quote Originally Posted by TarynJolie
    I question the true purpose of printing new money at this time considering it precededs the State of the Union address.
    I'm glad to provide my 'tin foil hat' answer to your question. If the fed injects a large amount of repos just prior to GWB's state of the union speech, and if that newly injected money happens to find its way to US stock index futures, then the DJIA, S&P and NASDAQ are likely to take a healthy jump tomorrow ... i.e. just cracking the psychologically important DJIA=11,000 mark ... which will tend to reinforce any claims made by GWB during that speech that the US economy is doing rather well. If on the other hand the Fed were to drain funds just prior to GWB's speech, then the president's televised speech will be directly following cable news commentators discussing a 100 point drop in the DJIA, which would make any GWB claims of a healthy US economy ring hollow.

    However, if those Fed repos stop later in the week (or if the Fed drains funds later in the week) the US stock markets are likely to take a big backward slide, which could be of particular interest to any investors wishing to avoid taking a loss and who also wear 'tin foil hats' regarding the 'claimed' effect of Fed open market operations on short term US stock market price levels. Personally, my own 'tin foil hat' started sparking at me two weeks ago when the DJIA topped 11,000, and I sold off the majority of my US stocks in favor of a european and asian stock fund at that time.
    ~
    Last edited by Melonie; 01-30-2006 at 06:03 PM.

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    Default Re: Last Hurrah for Alan Greenspan ?

    Well after hearing some of the predictions on what will be said tomorrow I am now certain that the State of the Union speech has a lot to do with the printing of new money. And to borrow a wonderful word Monty used earlier it is for nefarious purposes . In other words, it is to help promote the overall false claims that will be most likely be made about the economy (which is far from healthy these days.)
    I don't think the economy will improve in any drastic fashion until 2008 and printing new money isn't going to make much difference either.
    Last edited by TarynJolie; 01-30-2006 at 08:05 PM.

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    Default Re: Last Hurrah for Alan Greenspan ?

    I don't think the economy will improve in any drastic fashion until 2008 and printing new money isn't going to make much difference either.
    Well, a faction of the 'tin foil hat' conspiracy theorists would say that printing large amounts of brand new US dollars is the only thing that will keep millions of Americans out of bankruptcy ... while 'screwing' the Chinese out of a few hundred billion dollars at the same time.

    Obviously no substantial proof can be found that the US gov't has adopted a policy of inflating the US dollar whatever it takes. However, the US gov't is now actively promoting TIPS ...


    " A tip on TIPS
    One of the US Treasury's key initiatives is the promotion of inflation indexed securities, TIPS for short, and after reading some of the details I can see why they are so inclined. I too would love to sell inflation indexed securities, assuming, of course, that I was the only one who produced the inflation index nor could that index, once published, ever be changed.

    According to the Treasury TIPS are good food...no that's a different ad....TIPS taste great, no they're less filling...er...I'll just let the Treasury tell it like they wish it was:

    Benefits to Investors of a Unique Asset Class

    Unique asset class (dollar-denominated, inflation-protected, full faith and credit of the United States).

    * Asset for investors focused on the future real purchasing power of their savings.
    * Low volatility and attractive returns.
    * Higher long-run correlation with inflation than real estate, commodities, or other real assets.
    * Deflation floor, i.e., won't receive back less than nominal principal value at maturity.
    * Potentially increases portfolio diversification.

    What makes TIPS different from normal bonds is the inflation adjusted principal upon which the coupon payments will be based. As the CPI rises, so too will the principal, although that will only be turned into hard cash at maturity. As a bonus, purchasers don't have to worry (too much) about deflation. TIPS purchaser will receive at least par value at maturity, although if the CPI starts to measure deflation than for interest calculation purposes only your principal will decline, which is what has been happening as the CPI declined the last two months.

    Of the benefits noted above I found the claims of low volatility and higher long run correlation with inflation than real estate, commodities, or other real assets difficult to swallow. Let's first touch on some of the theoretical problems and then take a look at a real world example for the empirically minded.

    The first aspect of TIPS which springs to mind is the map territory problem. Inflation, the concept, refers, in many schools of thought, to the loss of purchasing power of a currency, i.e. crudely, rising prices. Inflation, the measure, is an index, compiled, by the way, by the very people who will be paying you.

    That is to write, the security is not indexed to inflation, as experienced, but rather inflation as measured by the government. I can think of few things more volatile than what a group of vested individuals think about a phenomenon and what that phenomenon might actually be. I can imagine a world in which the prices of these securities become very volatile indeed.

    As a theoretical matter I found the claims of TIPS higher long run correlation with inflation than the elements, the price increases of which supposedly comprise the measure, to be downright silly. As a practical matter, it can be measured.

    Imagine you purchased, at auction, $100,000 of the 3-1/2% 10-Year TIPS, CUSIP #: 9128276R8, on Jan. 15, 2001. As of Feb 1, 2006, the adjusted principal amount would be $113,534 and your received coupons would total just under $19,000, the total of which is about $132,500. If you went to sell the bond the current price (thanks to a friend with a Bloomberg) is 107-10 and the auction price was 99-26 which equates to less than the inflation adjusted principal amount so to cast this in the best light let's stick with the $132,500 figure for comparison.

    Imagine instead that you had bought the imaginary average house whose price change is measured by the Office of Federal Housing Enterprise Oversight for $100,000. According to their data, through Q3 2005, your house would be worth a shade under $149,000.

    Imagine instead that you had purchased $100,000 of the Commodity Research Bureau's Commodity Index (which I chose to be fair, due to its inclusion of the grain complex). At last check your investment would be worth a bit above $155,000.

    I won't do oil or natural gas but how about Gold and Silver. $100,000 invested in Gold or Silver on January 15, 2001 would be worth roughly $207,000 or $201,000 respectively.

    In other words, the only thing that TIPS returns will have a high correlation to is the government's sense of inflation, which, thus far at least, has been much less than other "traditional" inflation hedges. But hey, I guess if you're into that kind of accuracy go ahead, buy some TIPS.

    My tip on TIPS, sell them and invest the proceeds elsewhere, apparently almost anywhere.."

    from
    Last edited by Melonie; 01-30-2006 at 09:28 PM.

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    Default Re: Last Hurrah for Alan Greenspan ?

    You do reliaze Melonie that you put your money in some of the most politicized Central Banks in the developed world. The Japanese Central Bank has lost billion sof dollars manipulating the yen and the ECB is a creature of the EU.

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    Default Re: Last Hurrah for Alan Greenspan ?

    Yes Monty I do ! I'm only following the new flow of petrodollars before they change to petroeuros. IMHO if the Oil Sheiks are already converting dollars by the billion into Yen instead of investing in the USA, and if Oil is going to start trading directly in Euros in a few weeks, the fate of the US dollar is pretty well sealed. I don't intend to see my portfolio's real value go south along with the US$'s future purchasing power.



    PS if there is a sudden turnaround, I'm prepared to bail on short notice.

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    Default Re: Last Hurrah for Alan Greenspan ?

    Sometimes it just sucks to be correct on predictions. There were so many false or bloated comments made on the economy in tonights State of the Union . I was suspecting that false claims planned to be made in the speech had more than a little to do with the printing of new money however now I positive of the connection.

    Joke of the day: How do we know when Bush II is lying ? He's lips are moving.

    Best part was the crowd reaction to his comments about Social Security ! I hope it served as a wake up call that there really is little to no support for his plan.
    Last edited by TarynJolie; 02-01-2006 at 09:40 PM. Reason: spelling

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    Default Re: Last Hurrah for Alan Greenspan ?

    Yesterdays retirement and last day on the job for Alan Greenspan also had a hidden message to anyone thinking of retiring early. The message ...don't. You see, Alan is now 79 years old. The hidden message is that all of you will be working that long also.

    When he suggested the retirement age be raised, he practiced his own advice.

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    Default Re: Last Hurrah for Alan Greenspan ?

    well, he's not alone ! 2000 economists recommend ...

    "(snip)All economists recognize that some combination of four things is necessary to make the entitlement equation balance:

    1. Cut benefits for retirees.
    2. Raise taxes on workers.
    3. Allow more young immigrants into the U.S. who will begin paying taxes into the system.
    4. Make workers so much more productive that existing tax rates will generate enough new revenue to fund the extra burden of an aging population. (This option would be great, but we have no idea how to accomplish this.)

    The Democrats are dreaming if they think it's possible to make entitlement programs solvent in the long run without cutting benefits. The logical place to start is by moving more aggressively to raise the retirement age to reflect the reality that we're all living longer.

    That's politically tough, but it pales compared to the decisions we may have to make on the Medicare side. Someone may have to tell your 98-year-old grandma that she doesn't get open heart surgery -- or at least that Medicare won't pay for it. And while we're having that discussion, we may have to broach the subject of grandpa's Viagra.

    We may need tax increases, too, which the Republicans will hear none of. The more egregious error on that side of the aisle, however, was in completely confusing the Social Security issue during the debate over privatization. Nothing is inherently wrong with private retirement accounts if the system is designed responsibly. It solves the demographic problem once and for all by having every worker fund his or her own retirement benefits.

    But privatization proponents completely papered over the enormous transition problem. If young Peter starts funding his own private retirement account rather than paying payroll taxes, then who pays old Paul's retirement benefits? Remember, it's a pyramid scheme, so someone has to keep paying the people at the top. (snip)"



    PS all of these economists and politicians know how to achieve option #4 - inflate the US dollar ASAP - they just won't talk about it !

    Also, all these economists and politicians know how to achieve option #2 - 'hedonically adjust' the CPI index which determines the rate of growth in Social Security benefits, so that 'real' benefit levels decline by 2-3% per year compared to 'real' costs of living. 20 years of 'hedonic adjustments' and what do you know, Social Security benefit checks are cut in half in 'real' terms.

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    Default Re: Last Hurrah for Alan Greenspan ?

    Melonie:

    Oh don't get me started...

    Our government is spending us into ruin. What most people don't understand is that the long term effect of deficits is devaluation of your currency and inflation. To date, we've used the build up of our incredible war machine and interventionist policies to counter-balance those devaluation effects.

    This fear of our war machine considerably inflates the dollar.

    International investors know that the current safest investment is in US mortgages. If anything out there is going to get us to crank up the ol' war machine again it would be a significant decline in our housing market. Voters will go nuts and we'll justify any type of international intervention in order to keep our right to drive a SUV by remortgaging our house.

    At the end of the day, we need to understand that absent some miracle new technology (which, by the way, could be renewable energy), our economy is peaking. We have now entered a phase where the wealthy class will need to squeeze the middle class in order to maintain their own standard of living (IMHO = power more than $$'s, the problem is, the cost of power is sky rocketing).

    We've all seen the incredible increase in turnover at various jobs. With the advent of technology and corporate executives ability to sweep problems under the rug as long as the big boys get paid, things will not get better on their own.

    The middle class needs to respond by re-thinking the organization of labor. Throw out the old ideas of unions by trade and create new ones. Establish much more influence over how corporations are governed, run, etc. by creating "mini" democracies within the corporation.

    It works, I've seen it work.

    On a lighter note, if anyone missed John Stewart's "Tribute to Alan Greenspan" - it was pretty funny and is available on the show's website:
    http://www.comedycentral.com/shows/t...ow/index.jhtml

    Melonie - you might enjoy the second piece called: "A Future without Greenspan"
    They predict that in five years, the Upper West Side of Manhattan will look like the Oklahoma dust bowl.

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    Default Re: Last Hurrah for Alan Greenspan ?

    While the arithmetic is correct that 1.02^20 would trim real benefits 50%, the simple fact is that the CPI does not overstate inflation by 2% per year, but rather by about 0.8% per year, which would trim "projected " benefits by 15% over 20 years. As it is the retirees get a double raise each year beyond just the 0.8% distortion--they also get a raise based on the scaling up of their early work years for productivity gains that give them credit for "contributions" they never made.

    Although mentioned in the text an increase in the retirement age is the other real social security saver. When the 65 age was set, life expectancy at 65 was about 5-6 years, it is now well over a decade and a half. If that discrepancy were closed by half say 65-70 and 62-67.5 a sizeable portion of the shortfall would be closed. The 1980s reform added a couple years, but retirement ages could be "indexed" to life expectancy.

    Another option would be to tie benefits to the individual workers payments with no "spousal" benefit and a spouse gets SS based on his/her own wage income without regard to the spouse. Another aspect would be to transfer the difference between a worker's calculated benefit according to the normal formula and the SS minimum to the general revenues of the feds. I am by no means suggesting eliminating a minimum, merely treating a welfare provision as a true welfare provision when it comes to paying for it, rather than raiding social security for an income supplementing aspect.

    From an implementation standpoint, a bit of all the options would be most palatable politically. As for the comment about raising productivity, their are real ways to do it. The largest factor in the above-average 1960s productivity gain was the GI bill generation reaching the main work years, and a large reduction in school dropouts. Targetting high-school dropout-prevention and insuring real education occurs rather than just baby-sitting/quasi-incarceration of those people who do not want to be there would boost productivity.

    Productivity is an item which solves most problems in time, raing incomes, improving international competitiveness, and rising revenue for all manner of government.

    As a side note, there is another "solution" (Note below is sarcasm for the tin-hat crowd) have a disease that hurts the weak and the old. Avian flu is not the right type since it (like the 1918 flu) hit mostly the active and vital (perhaps because of social interactions of that era).

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    Default Re: Last Hurrah for Alan Greenspan ?

    As a side note, there is another "solution" (Note below is sarcasm for the tin-hat crowd) have a disease that hurts the weak and the old. Avian flu is not the right type since it (like the 1918 flu) hit mostly the active and vital (perhaps because of social interactions of that era).
    Well, an anecdote included in the 200 economists link is the fact that when the Czech government was contemplating passage of a stiff new tax on cigarettes in the year 2000, and that Philip Morris Corp. presented the Czechs with an analysis showing that the passage of that new law, and the subsequent increase in the average lifespans of former smokers who would quit because of the tax, would cost the gov't FAR more in future retirement and health benefits ! Thus if US politicians are truly looking for a means to 'defuse' Social Security's demographic time bomb, they should probably begin by repealing all anti-smoking laws ! Of course, this would cause immediate problems for another lobbying group which is arguing that SSI taxes should be pro-rated for different risk groups (specifically, SSI taxes being reduced for black people) based on different projected lifespans for those different groups.

    Given that 'premature death' is the most effective means of controlling the costs of such programs, the 'kevlar helmet' consipiracy theorists are probably thinking that a nice new war with Iran, with tens or hundreds of thousands in US casualties, could solve both the Social Security problem and the Oil problem at the same time ! On the other hand, maybe the 'peace at all costs' crowd is counting on terrorists setting off a dirty bomb/nuke in a major US city with hundreds of thousands of casualties as a 'better' alternative from the SSI standpoint, since the civilian casualties would be older than the military casualties.

    PS Enough eco-politics for the moment ! Just thinking about the fact that there actually people discussing such things in the back rooms of 'think tanks' really makes me wanna puke !.
    Last edited by Melonie; 02-02-2006 at 05:20 AM.

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