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Default The G20 summit, and the results thereof

April 3rd, 2009, 21:34
It never went into a truly separate fund. The 'fund', by law, invests only in treasury securities. So essentially, they took the excess social security receipts, loaned it to the government, and the government spent it. The backing of those notes is essentially the governments ability to tax enough in order to service and retire the debt, which is a function of future economic activity, not a store of current economic value.

For social security to cash out of those they need to either find a buyer for them (private market or other country) or the government has to redeem them(which means either they refinance that debt, ie sell it to someone else, or they pay it out of tax revenues).

Greenspan said it best when he went before Congress and told them that the problem was that essentially there is no way to transfer wealth of productivity between time periods. It works on a private basis only because we have an expectation that down the line we can sell our assets (whether they be stock, bonds, gold, etc.) to someone else. However if there are no buyers, we're poor, no matter how much 'wealth' we've socked away.

This was essentially a big concern in the stock market (before the current crash), that when the baby boomers began retiring en mass, not only would they strain the SS system, additionally there would be mass withdrawals from the equity markets as they either spent their savings or shifted them into less risky assets, which would in turn drive bond prices up and yields down, creating an even more vicious cycle of funds flowing out of equity into bonds as these investors chase a target dollar income with ever diminishing fixed income yields. With the current stock market crash, this is less of concern obviously.

Anyway, the taxpayers of the time that the benefits are paid are paying those benefits whether they come in the form of direct social security taxes or indirectly through the use of federal tax receipts.

The only way you could change this is if it was invested all in corporate debt. That scares people, but you'd be shifting that cash flow burden from the taxpayer to being more directly dependent on the current economic situation, though at least it would have some hard assets backing it.

If you changed all the names of the social security program to XYZ corp, etc. and evaluated it, not knowing what it really was, you'd say that it is a ponzi scheme of unimaginable levels. It puts Madoff to shame.

Rithrandil hit on it in that longevity is certainly the driving problem, but there is a larger problem, that prevents change of the system. Americans over the past 50 years have developed a belief that they have a right to retire at some point. We don't. Retirement is a privilege (if you have the funds) or a necessity (if you are unable to continue to work). The entire point of social security was to keep people that could no longer physically work from starving in the streets. However, the past two generations have decided that, at best it is a supplement to their retirement and at worst it IS their retirement. We think that we have some God-Given right to stop working in our mid-60's and live out the next 20 to 30 years being a drain on society.

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April 3rd, 2009, 21:43
Originally Posted by blatantninja View Post
Rithrandil hit on it in that longevity is certainly the driving problem, but there is a larger problem, that prevents change of the system. Americans over the past 50 years have developed a belief that they have a right to retire at some point. We don't. Retirement is a privilege (if you have the funds) or a necessity (if you are unable to continue to work). The entire point of social security was to keep people that could no longer physically work from starving in the streets. However, the past two generations have decided that, at best it is a supplement to their retirement and at worst it IS their retirement. We think that we have some God-Given right to stop working in our mid-60's and live out the next 20 to 30 years being a drain on society.
Do you have a fan club or some sort of periodical I could subscribe too?

Yeah - that is another good point. It was originally designed as an emergency safety net but today it is considered to be something else entirely. We were able to keep that money train going for a while but due to various factors you/I have stated it's been clear that this is unsustainable for quite a while.
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April 3rd, 2009, 22:00
Thanks for the clearcut explanation, blatantninja. The system does indeed have to change to survive, and I fully believe it can, but I think you're being a little harsh on those of us who are already in line.

I'd just say that almost all societies have a way to support the members who through age or disability are no longer "productive" in terms of active physical work, whether it is through an extended family approach or something more official. I wouldn't feel "entitled" to be "a drain on society' if I hadn't spent all my productive years attempting to support myself and others then, and through a fairly stiff deduction on my earnings, now.

And most people of my generation who are retiring are still expecting to work at least part time until the Man sucks the last drop of blood out of us. I don't think it's unfair to expect something back from a lifetime of labor just because we didn't amass enough private wealth to see us completely through. If we'd never saved, never contributed, that would be different. The concept should be that each generation pays for itself, and there should be some way to make that work.

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April 3rd, 2009, 22:23
Originally Posted by magerette View Post
I'd just say that almost all societies have a way to support the members who through age or disability are no longer "productive" in terms of active physical work, whether it is through an extended family approach or something more official.
And I think we NEED to have something like that. I'm not completely heartless! It just shouldn't be a flat out everyone gets it thing regardless of need or means.

I wouldn't feel "entitled" to be "a drain on society' if I hadn't spent all my productive years attempting to support myself and others then, and through a fairly stiff deduction on my earnings, now.
But there in lies the other major impediment to change. Every living American has paid heftily into the system. So long as a majority of people have the attitude of "well I paid in, so I'm getting mine!" it will never get fixed. I'm only 33, but I've paid a lot in as well. I expect to pay for the rest of my working life, and God willing, I'll be hitting the cap every year. However, as much as I find it distasteful, I am ok with NOT getting 'mine' out if it fixes the system and ultimately reduces the burden this system is placing on our society.

And most people of my generation who are retiring are still expecting to work at least part time until the Man sucks the last drop of blood out of us. I don't think it's unfair to expect something back from a lifetime of labor just because we didn't amass enough private wealth to see us completely through.
What I presented was the way I think it SHOULD be, based up the original intent of the program. For compromise sake, I am willing to continue everyone that pays in gets something out, but it needs to be constrained by the solvency of the system. The problem with your last line is that even on a constant dollar basis, the average social security recipient receives far more during retirement than they contributed during their career. Even if you adjust it for a fairly aggressive real rate of return, they get more back. You simply cannot have that and have a solvent system.

If we'd never saved, never contributed, that would be different. The concept should be that each generation pays for itself, and there should be some way to make that work.
Unfortunately, as I explained, there really isn't a good way to transfer productivity from one time to another. That doesn't mean that the contributions of the past are irrelevant to the future, but the constraint must the ability of the current economic environment to fund the current beneficiary, not what promise was made in the past.

Ohh and just to show that I'm not a complete self-centered prick , in my revised system, my parents (whom I love dearly) would be some of the first in line to have their benefits cut, if not completely stopped, despite the effect it would have on my inheritance!

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April 3rd, 2009, 23:03
Originally Posted by Prime Junta View Post
The trillion bucks the stabilization funds got will make a significant practical difference, but IMO it's more significant that countries as diverse and (generally) as intransigent as Germany, France, the USA, the UK, and China managed to pull together on it.
Just to pop the baloon just a little bit let me remind everybody that trillion bucks in stabilisation fund were only pledged and not comitted. How much money will find its way into the kitty we just have to wait and see.
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April 4th, 2009, 02:08
First, apologies to the Prime Junta for hijacking his thread, but I have faith that someday he'll return the favor.

blatantninja wrote:
Ohh and just to show that I'm not a complete self-centered prick , in my revised system, my parents (whom I love dearly) would be some of the first in line to have their benefits cut, if not completely stopped, despite the effect it would have on my inheritance!
I wouldn't be worrying about your inheritance—I'd be getting that spare bedroom ready.

What I presented was the way I think it SHOULD be, based up the original intent of the program. For compromise sake, I am willing to continue everyone that pays in gets something out, but it needs to be constrained by the solvency of the system. The problem with your last line is that even on a constant dollar basis, the average social security recipient receives far more during retirement than they contributed during their career. Even if you adjust it for a fairly aggressive real rate of return, they get more back. You simply cannot have that and have a solvent system.
Are you also including the employer share plus a decent interest if the government were a better caretaker of the fund? I guess I really just don't understand why the system can't become solvent if properly envisioned and properly administered. For instance, it kind of shocked me during the campaign to learn that John McCain (as an example) draws a compulsory social security check(being over 70), despite having a joint income with his wife in the millions. I don't begrudge it to him; he's just as entitled to it as anyone else who's earned it, but it seems…unbalanced.

And I don't think you're a heartless or self-centered person at all, bn ( despite having the occasional Republican leaning ) but I do think you live in a different world than I do.

For people like me, the system still IS a safety net, and if it goes away, what are you going to do with everyone who then has no means of support except being a greeter at Wal-Mart?

Long story short, what does someone whose skills only earn enough of a living to provide for today do to provide for tomorrow?

I don't think you're recommending Grandpa Dte's method of draconian population control ( at least I hope not ) but I wonder, what's your take on a solution? I agree what we have now is broken.

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Last edited by magerette; April 4th, 2009 at 04:17. Reason: condensed and added link
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April 4th, 2009, 05:23
Where's the balance with assets, especially non-liquid assets. I don't receive any money from the gov't, as I have a unit we use for holidays. It doesn't generate income, and it doesn't help feed me, but as long as I own it, I'll never get any gov't assistance. Is that fair? I worked long and hard to afford the unit, but now people who didn't work hard and save get more than I do. Something seems wrong to me!!

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April 4th, 2009, 06:30
I watched something that you might find interesting. Jon Stewart talks to Peter Orszag, the Whitehouse Budget Director. It was an interesting and informative interview with what is going on with the budget. I finally know the difference between the "deficit" and "debt" People like me (and Stewart apparantly) don't really understand what the deficit is and how that is the bigger monster than just plain ol debt. http://www.thedailyshow.com/full-epi…isodeId=222770


PJ is right on the money when (at the start of this thread) he mentioned that it is normal for an industrilized nation to have a certain amount of debt. People seem to forget that we are talking about governments here not normal people. If a person was 10 trillion dollars in the hole, you would have a problem. But if it is a industrialized nation, well that just goes with the territory. It's not like the USA will have to get a second job to payoff the debt like a normal person would have to

Plus two particularly funny bits. One Stewart tears a page out of the budget for funding the commerce department saying "We don't really need that anymore do we?"

Second he seemed really happy that Rush Limbaugh was leaving New York

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April 5th, 2009, 20:55
While we're all patting ourselves on the back for the joys of international diplomacy, let's hear it for that bastion of talk, the mighty UN.

http://news.yahoo.com/s/ap/20090405/…nkorea_missile

2 years ago, the UN cracked down on North Korea with the much-feared "economic sanctions", PLUS the quaking-in-yer-boots "international grade shunning". Let us count the successes. Ummmm, yeah, well, moving on then. And y'all were going to hang success against Saddam on this craptrap? Puh-leeze.

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April 5th, 2009, 21:08
Apparently China's the big wet blanket on the sanctions front. Both South Korea and China share borders, and they seem to be more scared of what would happen if severe sanctions collapsed the cartoon government and NK becomes another failed state with a big army and a shortage of controls…at least that's what I learned on the Sunday shows today. Someone with a little more depth on the subject may want to elaborate.

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April 5th, 2009, 21:23
Originally Posted by magerette View Post
Apparently China's the big wet blanket on the sanctions front. Both South Korea and China share borders, and they seem to be more scared of what would happen if severe sanctions collapsed the cartoon government and NK becomes another failed state with a big army and a shortage of controls…at least that's what I learned on the Sunday shows today. Someone with a little more depth on the subject may want to elaborate.
That's a pretty accurate assessment. North Korea is also something of a client state for the Chinese. As long as it is stable (as stable as they get, at least) and acts crazy it'll occupy the attention of the US, South Korea, and Japan, which is a good thing for the Chinese Strategically.

China doesn't want North Korea to go crazy and attack anyone but it benefits from the status quo.
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April 6th, 2009, 01:41
China also wants staus quo since it will be China which will have to deal with consequences if NK destabilises.
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April 6th, 2009, 09:17
Another difference is that if you attempted to attack North Korea without going nuclear, you would stand a real chance of losing. They actually have a military that's capable of fighting a conventional, symmetrical war. They know it, too, which means that saber-rattling against them won't do much good either.

IOW, I think containment while holding open the possibility of engagement is the best policy with regards to them too. No nice, clean, cathartic "solution," but a messy, imperfect, but possible way to manage it.
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April 6th, 2009, 09:33
Originally Posted by Prime Junta View Post
Another difference is that if you attempted to attack North Korea without going nuclear, you would stand a real chance of losing. They actually have a military that's capable of fighting a conventional, symmetrical war. They know it, too, which means that saber-rattling against them won't do much good either.
Not sure that remains true, afterall we thought the same about Saddam for GWI and it turned out numbers (4th largest in th eworld at the time IIRC) turned out to be not so useful. I suspect in N Korea's case the technological gap is wide enough that a conventional attack would roll over the country in a couple of weeks. Which leaves three problems; cleaning up the mess, if they're got any sense and learned from Iraq I and II they'll have preapred for an asymetric conflict to follow the conventional and finally the real problem - they've got enough artillery in range of Seoul to flatten the city in the first hour which is a pretty effective deterent all on its own.
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April 6th, 2009, 09:51
North Korea is about more than numbers, though. Unlike Saddam, they're well-trained, the terrain is much better suited for defense, they have massive amounts of rockets and missiles of all types, and they have strategic weaponry capable of reaching the capital of the jump-off point country. Conversely, the USA isn't the power it was in 1991, and its forces are overstretched and dispersed all over the globe.

IOW, at the very least it would be a very risky and very costly operation.
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April 6th, 2009, 10:49
Originally Posted by Prime Junta View Post
North Korea is about more than numbers, though. Unlike Saddam, they're well-trained, the terrain is much better suited for defense, they have massive amounts of rockets and missiles of all types, and they have strategic weaponry capable of reaching the capital of the jump-off point country. Conversely, the USA isn't the power it was in 1991, and its forces are overstretched and dispersed all over the globe.

IOW, at the very least it would be a very risky and very costly operation.
Iraq had plenty of misslies and rockets too - I don't ddisagree about it being costly though - they'd have to pull out of Iraq and Afghanistan.

Edit to add, and N Korea has been pretty isolated for years, the military gets prioity but their supply situation can't be good at all.
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April 6th, 2009, 11:22
Originally Posted by V7 View Post
Iraq had plenty of misslies and rockets too - I don't ddisagree about it being costly though - they'd have to pull out of Iraq and Afghanistan.

Edit to add, and N Korea has been pretty isolated for years, the military gets prioity but their supply situation can't be good at all.
I wouldn't be so sure about that. Sure the population might be starving, but they have this "friendship" bridge that links N. Korea to China. I'm sure China has a vested interest in keeping N. Korea stable (somewhat) and that means weapons. Through this bridge China can and has supplied N. Korea with whatever they want to send them.
Picture and wiki info on the bridge: http://en.wikipedia.org/wiki/Sino-Ko…endship_Bridge

I know America is supposed to be the world governor now, but what about the governments where N. Korea is an actual threat to like Japan and S. Korea. Shouldn't they be the ones that figure out this mess since it is in their best interest to do so.

I don't see why Japan doesn't start arming or at least upgrading its Japan Self-Defense Forces. If N. Korea wants to send missles over Japan, then fine have the Japanse rearm themselves fully to tackle the situation themselves if it comes to that. Why does the US have to step into every single situation around the world?

Of course that being said, I wouldn't be over here in Taiwan under a Taiwanese Government if there wasn't a pact by the US to defend Taiwan if it is attacked. That little pact has kept the wolves at bay for many years now.

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April 6th, 2009, 13:53
Originally Posted by Prime Junta View Post
Another difference is that if you attempted to attack North Korea without going nuclear, you would stand a real chance of losing. They actually have a military that's capable of fighting a conventional, symmetrical war. They know it, too, which means that saber-rattling against them won't do much good either.

IOW, I think containment while holding open the possibility of engagement is the best policy with regards to them too. No nice, clean, cathartic "solution," but a messy, imperfect, but possible way to manage it.
Like the article states, the UN has gotten played for a decade. Sanctions haven't put a single dent in DPRK's military power and stern words haven't brought them to the table.

You've stated on many occasions that this glorious UN approach would have been sufficient to keep Saddam under wraps. I say you're wrong, and as evidence I give you the failed program with DPRK. I believe everything I predicted would happen had we followed your approach in Iraq is, in fact, happening in DPRK. Continued armament, continued aggressive behavior, continued oppression of the population, shall I go on?

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April 6th, 2009, 15:33
Originally Posted by dteowner View Post
Like the article states, the UN has gotten played for a decade. Sanctions haven't put a single dent in DPRK's military power and stern words haven't brought them to the table.
That never was the strategic objective. It would be nice, of course, but that's not what containment is about. Containment is about containment — preventing the nasty state from doing major damage beyond its borders.

You've stated on many occasions that this glorious UN approach would have been sufficient to keep Saddam under wraps. I say you're wrong, and as evidence I give you the failed program with DPRK. I believe everything I predicted would happen had we followed your approach in Iraq is, in fact, happening in DPRK. Continued armament, continued aggressive behavior, continued oppression of the population, shall I go on?
North Korea hasn't actually *attacked* anyone. If it does, then I'll concede that containment has failed, and humbly apologize to you for advocating it. (Although I would still stick to my position that containment would have continued to work with Saddam's Iraq, which was militarily much, much weaker than North Korea.)

But until North Korea actually *does* attack someone, I'll stick to my position that containment is working.

Edit: This is why we fail to see eye to eye on the question. Our success criteria are different. Your success criteria involve rendering the rogue state either incapable or unwilling to inflict damage on its neighbors, third countries, or its own population; my success criteria are much more modest — simply deterring or preventing it from inflicting damage on its neighbors or third countries, whatever it does to its own population, whatever capability it retains, and whatever lesser (and therefore manageable) mischief it may be up to.

Edit 2: Therefore, by your criteria, America's policy vis a vis the USSR was a disastrous failure, because it never managed to make a dent in the USSR's military capability nor its capability to oppress its own population, nor even the population of third countries within its sphere of influence — until it collapsed of its own accord, due to the fundamental unsustainability of its system. OTOH I consider that very same policy a roaring success, since it prevented the USSR from extending its influence further, or starting a third world war.
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April 6th, 2009, 16:57
Originally Posted by skavenhorde View Post
I wouldn't be so sure about that. Sure the population might be starving, but they have this "friendship" bridge that links N. Korea to China. I'm sure China has a vested interest in keeping N. Korea stable (somewhat) and that means weapons. Through this bridge China can and has supplied N. Korea with whatever they want to send them.
Picture and wiki info on the bridge: http://en.wikipedia.org/wiki/Sino-Ko…endship_Bridge
The whole Chinese position seems a bit murky. They say they don't want to be inundated with refugees if NK collapses, yet they continue to be the primary prop and support of a government that is obviously quite nuts enough to start a major war, nuclear or conventional, with the other area/world powers, which could easily spark a similar situation, as well as far worse things. The policy seems shortsighted at best, and deceitful at worst.

I know America is supposed to be the world governor now, but what about the governments where N. Korea is an actual threat to like Japan and S. Korea. Shouldn't they be the ones that figure out this mess since it is in their best interest to do so.

I don't see why Japan doesn't start arming or at least upgrading its Japan Self-Defense Forces. If N. Korea wants to send missles over Japan, then fine have the Japanse rearm themselves fully to tackle the situation themselves if it comes to that. Why does the US have to step into every single situation around the world?
Still, our interests also aren't served by any destabilization in NK (due to our military investment in SK—we're bound to get dragged into any hot war). Here's an article on some of the problems Japan is looking at in trying to respond:
N.Korean Rocket revives Japan pre-emptive strike talk
Talk in Japan in 2006 about acquiring an overseas strike capability infuriated South Korea, who called it "dangerous and reckless" and China, who accused Japan of "pouring oil on fire."

The Japanese public, which has exhibited a pacifist streak since the country's World War Two defeat, was unenthusiastic in 2006, with a majority saying in a media poll they did not feel Japan should be able to conduct pre-emptive attacks…
..At present, Japan lacks the necessary missiles or long-range bombers, and acquiring them would be costly.

Given the ballooning national debt and rising spending to combat Japan's worst recession since World War Two, the political momentum may be lacking to transform the armed forces.

Japanese politics has been stalemated by a divided parliament — the country has had three prime ministers in less than two years and an election is due by October.

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