[Rhodes22-list] Social Security Scams

[brad haslett]

Bill,

Just to beat a dead horse one more time, the thrust of
my paper was not that airlines could "save" money
through hedging, rather, they could protect themselves
against wild cost swings, make budget, and hit
earnings targets.  The markets like it when you make
your earnings projections.  The only people I know of
that consistantly make money through futures contracts
are 1 - those who cheat, and 2 - Hillary.

You wrote,

 "I assume you know that the "privatized" social
security proposal is exactly the same scam.  That it
can't possibly work.  That the numbers don't add.  And
that as soon as the "winners" and "losers" emerge, the
losers will outnumber the winners and they will
legislate themselves a bailout."

Bill, I couldn't possibly disagree more.  Hedging is
not a scam.  In theory there is a winner and a loser
(unless you're the broker) but in the case of airlines
versus oil companies, they both win in that both
remove some of the risk from their business model, the
only real purpose for a hedge unless you just like to
gamble.

Most US corporations are moving from defined benefit
retirement plans to defined contribution plans. 
Generally, defined contribution plans will not pay as
well as defined benefit plans, HOWEVER, under a
defined contribution plan, the money is yours, has
your name on it, can be moved to another company, and
is not at risk of your employer going out of business
or dumping the obligation through the bankruptcy
court.  It is at risk in the market so a prudent
invester would balance their investment choices with
their age and their risk tolerance.  Old or chicken,
buy treasury bills.  Young and brave, stock growth
funds.

The current SS system is much like a defined benefit
plan.  Everything is fine as long as the funds are
there to pay for it.  The real problem is not 75 years
away, or even 30 years away, its in 2018.  That is the
year that SS starts paying out more than it takes in. 
Why?, because of you, me, and all the other
baby-boomers that want our benefits.  At that point
either benefits will have to be cut or taxes raised. 
This problem will not go away through happy talk or
rhetoric.  It is simple demographics.  Allowing new
entrants into the system to put PART of their SS tax
into a private account gives them a program much like
a private defined contribution plan.  It is your
money, that you can give to your kids, that you can
invest wisely, or not. BUT!  I 
REPEAT, BUT!  It is your choice.  Every version of
every proposal to date has made participation
voluntary.  If it all sounds too risky, don't do it
and accept a lower benefit.  You will anyway, the
current system is not long term sustainable.

Scam?  Not at all Bill, the current system is a scam. 
Like all Ponzi schemes, its good if you get in early,
bad if you're late to the game.

Brad





		
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