<p>This is really stupid question, but in regards to the structural changes in the economy, what does that exactly mean? Can someone just explain and flesh out that idea? It is not that I disagree, but it seems as if the floods of applicants to law and business school will not stop anytime soon. Specifically, what are those specific areas of real skills and what programs does Cornell offer that put it in such a unique position? In addition, what will be the ramifications, if any, to ILRies in this massive economic transition?</p>
<p>^^
I think they're referring to meat-and-potato fields (no pun intended) like agricultural production, engineering, veterinary science, natural resource management, etc... that will always be there as the tides rise and fall on more glamorous / less pragmatic investment fields. A lot of these are unique in the Ivy plus schools and are really the gold standard.</p>
<p>It will be interesting to see if Cornell ever establishes a bonafide undergrad campus in NYC. There's quite a few programs there now, so they obviously are well aware of the hurdle they face by not being in the city like Columbia is and are working to build a formidable presence there. Right now it just seems like a lot of the undergrad programs are "semester away" type of programs. </p>
<p>Might be interesting if they developed an option to earn an undergrad degree in NYC that would be similar to a Columbia experience. Could either expand the Cornell experience or create a scenario where students want to emulate their favorite TV shows in the city and miss out on that incredible campus and so many unique opportunities it affords in the middle of nowhere.</p>
<p>
[quote]
...middle of nowhere.
[/quote]
</p>
<p>Nowhere, in this case, is one incredibly *gorge*ous setting! :)</p>
<p>I must say, if Cornell ever decided to offer an undergraduate degree in NYC, I would disown the University. If you don't like Ithaca, nobody is holding a gun to your head to stay.</p>
<p>As for the structural changes to the economy, I think it's become patently obvious that financial services will no longer consume 15 percent of the nation's workforce. Talk about unproductive! Pushing paper around a desk and somehow losing money in the process! Expect a lot more jobs to be created in engineering, education, and high-end manufacturing.</p>
<p>And no, they will not be compensated nearly as well. But the profits of the last decade were just fiction, and those who made money from it should give it back.</p>
<p>"*Expect a lot more jobs to be created in engineering, education, and high-end manufacturing.</p>
<p>And no, they will not be compensated nearly as well. But the profits of the last decade were just fiction,* and those who made money from it should give it back."</p>
<p>I was really really happy with everything up until that last bit...Bubbles are bubbles are bubbles - there's not a right and wrong, there's just an inefficiency reached. Also, how would you take this money "back"? It seems to me that what we're doing right now is saying "Anyone over 250,000 a year must have gotten that money unjustly!"....</p>
<p>^ sure, bubbles are bubbles are bubbles - but there IS a right or wrong. </p>
<p>bubbles are wrong when they're only formed because:
1) banks and lending companies decided to push mortgages on people they KNEW couldn't pay for them (which they were able to do because of all of the deregulation), giving them low interest rates at the beginning and then using ARMs to completely screw them over
2) those banks/lending companies bundled those mortgages together and used them as assets, knowing full well that many of those bundles might fail because people would default on their mortgage payments, selling them to other banks and corporations (those who may or may not have known about the possibility of those mortgage defaults), spreading around these toxic assets throughout the ENTIRE WORLD (and repeat this process over and over)
3) pretty much the whole world starts to play around with derivatives (and derivatives of derivatives, and so on) - aka things that they did NOT understand, but assumed that since the financial system hadn't collapsed yet, they worked so well for the last couple of years, they were fine.
4) when they're also partially fueled by Ponzi schemes (you CANNOT deny that those are just plain WRONG), especially when these Ponzi schemes could have been discovered a long time ago, if only the SEC wasn't a complete waste of space for the last 8 years. but then again, these last 8 years weren't very beneficial for the common population - just those with lots of money.
5) and finally, when they can be traced back to a certain head of the Fed (<em>coughGreenspancough</em>) and his policy of keeping the interest rates artificially low.</p>
<p>...i don't know. maybe i'm just looking at different bubbles than you are :(</p>
<p>Careful now. Not all bubbles are created equal.</p>
<p>The Internet Bubble of the late-nineties was caused by a legitimate miscalculation of the future value of a lot of dot-com companies. Same with the biotech boom of the 80s.</p>
<p>But the housing bubble of this decade was caused by a lot of cogs in the machine dishonestly shirking their fiduciary responsibility to both shareholders and clients. From the brokers to the financial companies to the regional banks to the money center banks to the insurance companies underwriting the CDS agreements to the rating agencies to the regulators -- everybody was desperately trying to look the other way because they knew what an absolute ***** storm they were creating.</p>
<p>What the hell is with the xxx thing in my post?</p>
<p>Responding to cc102:</p>
<p>That happened because the GSEs of Fanny and Freddy were so darned persistent in loaning money to people with subprime value as money borrowers.....Once Fanny and Freddie were loaning out indiscriminately, why SHOULDN'T, say, Countrywide, have said "Oh...You have ZERO equity in this house Madam? No Problem! The GE's are being more lenient than us!"
- Presumably a government sponsored loan organization should be setting the standards for underwriting...You know, because they are sponsored by tax payer dollars and guaranteed almost the entire freakin' housing market. (And as this bailout indicates, are apparently in turn guaranteed by MORE of my taxpayer dollars)</p>
<p>But, they didn't, and then when house prices plummeted as a result of so many defaults on Fanny/Freddy, all of those schmucks that went to countrywide/wa-mu/bank o'merica had Negative Equity.
The blame lies with Fanny and Freddie.</p>
<p>You don't think it does? Oh, so, what did Franklin Raines tell me?
"These assets are so riskless that their capital for holding them should be under 2%."</p>
<p>OHHHH, So we should allow you to just lever up assets to risk no matter what Mr.Raines? OKAAAAY!~</p>
<p>I am in agreement with you - derivatives markets, (and anyone that thinks the Black-Sholes partial diffEQs are static) are insanity.</p>
<p>Oh, also, you mentioned Ponzi Schemes.......I ask you, apart from agency;</p>
<p>** What is the difference in the Ponzi Scheme that is Social Security and the Ponzi Scheme that was Madoff's LLC?**</p>
<p>Ponzi Scheme : an 'investment' plan which pays returns to investors from their own money or money paid by subsequent investors rather than from profit.</p>
<p>* That is what the lie of Social Security is!*
A lie that WILL be bankrupt when the baby boomers start demanding "THEIR" benefits.</p>
<p>This housing crisis is a bubble brought on by government intervention (Fanny and Freddy's intervention, and they are gov created).....They created a bubble where house prices were doomed to fall, and fall fast. Trying to re inflate the bubble by refinancing home loans indiscriminately is trying to prop up notional wealth that has been discredited, pardon the pun.
"These assets are so riskless that their capital for holding them should be under 2%."</p>
<p>And * then*, having already perpetuated the Ponzi Scheme that is Social Security, and * then*, telling me that the government needs to refinance the GSEs they aren't bound to, on top of all that, You're also saying my family's taxes should be raised to pay for all this?</p>
<p>I wasn't a day trader, my mom wasn't a hedge fund owner, my dad wasn't playing with Vega (HELL, I WASN'T EVEN DELTA NEUTRAL!), In fact, we weren't playing with any of the Derivatives!</p>
<p>But my dad makes more than 250,000 a year, and so now, his taxes should be raised (likely an additional 10 percent) so that OTHER PEOPLE who entered into LEGAL contracts can be bailed out?</p>
<p>My dad has done nothing dishonest; intraventricular pacing, AV node ablation, cardiac bypass, pacemaker implantation......Yeah, he was just doing disservice after disservice right? 10 years in the Army, 35 years as a surgeon and EP doc.</p>
<p>What has my father done for anyone to say "You are responsible for the financial situation of others, thus, we should steal the money you worked for day in and day out , and give it to to these people over here" ?</p>
<p>''....No, says the man in Washington...it belongs to the poor!..''</p>
<p>In this discussion of "Where is Cornell Heading" we should probably realize that the metric often used "US News and World Report Rankings" will probably disappear with the rest of the weekly/monthly printed news magazine business. These advertisement driven publications are dropping like flys and US News is probably not long for this world. So our quest should factor in not only Cornell, but what features will rank colleges in the future and who will do the ranking? For Instance one day the "Bankster Hobos" sitting around a campfire in one of the many "Bernankevilles" dotting the land will look up on the hill and see orchards, and farms, and small manufacturing business's that will form the basis of the next economy that rises out of the ashes of the one trashed by Harvard, Dartmouth and Wharton Grads. They will see the red and white flags flying over the farms and workshops and travelers Inns and say " Cornell Rules" what were we thinking.</p>
<p>
[quote]
That happened because the GSEs of Fanny and Freddy were so darned persistent in loaning money to people with subprime value as money borrowers.....Once Fanny and Freddie were loaning out indiscriminately, why SHOULDN'T, say, Countrywide, have said "Oh...You have ZERO equity in this house Madam? No Problem! The GE's are being more lenient than us!"
- Presumably a government sponsored loan organization should be setting the standards for underwriting...You know, because they are sponsored by tax payer dollars and guaranteed almost the entire freakin' housing market. (And as this bailout indicates, are apparently in turn guaranteed by MORE of my taxpayer dollars)</p>
<p>But, they didn't, and then when house prices plummeted as a result of so many defaults on Fanny/Freddy, all of those schmucks that went to countrywide/wa-mu/bank o'merica had Negative Equity.
The blame lies with Fanny and Freddie.
[/quote]
</p>
<p>Your understanding of the dynamics of the house price bubble are just plain wrong. The GSEs always had much stricter underwriting standards than the non-conforming originators. That's what made them, well, non-conforming. The GSEs, while not without blame, largely got flushed out by a tidal wave of bad credit originated by the non-regulated, non-conforming segments of the market. This is why conforming loan share as a percentage of total originations declined so precipitously earlier this decade. </p>
<p>
[quote]
That is what the lie of Social Security is!
A lie that WILL be bankrupt when the baby boomers start demanding "THEIR" benefits.
[/quote]
</p>
<p>Social Security is not a lie. Current benefits have always been paid out of current contributions. That's how it was designed and there's no illusion over this fact. </p>
<p>And, no, the Social Security trust fund will not be bankrupt anytime soon, certainly not when the boomers start retiring. Current actuarial projections show that the trust fund will not be exhausted until 2042, and that's without any changes to current eligibility rules.</p>
<p>Trustees</a> Report Summary</p>
<p>
[quote]
But my dad makes more than 250,000 a year, and so now, his taxes should be raised (likely an additional 10 percent) so that OTHER PEOPLE who entered into LEGAL contracts can be bailed out?</p>
<p>My dad has done nothing dishonest; intraventricular pacing, AV node ablation, cardiac bypass, pacemaker implantation......Yeah, he was just doing disservice after disservice right? 10 years in the Army, 35 years as a surgeon and EP doc.
[/quote]
</p>
<p>Your father sounds like a very lucky, successful man. And a lot of people much farther down the income spectrum are equally as bitter about having to bail out a bunch of Wall Street greedmongers. But that's the unfortunate reality of the situation -- we need more revenue right now to help pay for the damages done to this economy by the lack of regulation, oversight, and prudent decision making over the last thirty years of Republican rule.</p>
<p>I'm certain your father did just fine in the 1990s when the marginal tax rates on his income were much higher than what they are now. And I'm certain he will do just fine under whatever tax structure he will face well into the next decade. </p>
<p>And if he doesn't like it, I'm certain he could move to Canada or Western Europe.</p>
<p>^ I don't know if you repeated that last point for emphasis....</p>
<p>The 'reality' is that citizens of a nation should not feel compelled to move to another country when their government starts infringing upon them. The government does not 'own' this country, the people do. </p>
<p>I'm not saying Social Security isn't forthright in operating like a Ponzi scheme. (I know ssa.gov well)</p>
<p>I'm saying our politicians are not forthright in admitting that SOCIAL SECURITY IS A PONZI SCHEME.</p>
<p>And you're right, eligibility WILL need to be redefined so that the Ponzi Scheme can keep running - and then what will happen to people who have still structured their lives around being paid for when they're older?</p>
<p>Are you seriously trying to tell me that Fanny and Freddy weren't the people that decided to own all the debt that they could? </p>
<p>"The GSEs always had much stricter underwriting standards than the non-conforming originators."
Absolutely untrue; Why did Fannie and Freddie even go under then? Why is any investment bank ( for example, Goldman Sachs), that got its hands dirty with these subprime loans still in existence? Because while they guaranteed loans not in keeping with their triple A standard, they didn't guarantee as much, and as rabidly as did the GSEs. </p>
<p>And then you say this:
"we need more revenue right now to help pay for the damages done to this economy by the lack of regulation, oversight, and prudent decision making over the last thirty years of Republican rule."</p>
<p>Yeah, there's the convenient demon of the 10 foot tall Republicans again....</p>
<p>Have you ever heard of Representatives Maxine Waters? Gregory Meeks? Barney Frank?</p>
<p>No? Never heard of them? </p>
<p>How about Franklin Raines? No?</p>
<p>They're all Democratic lawmakers that pushed for the continued DEREGULATION of Fannie/Freddie, Franklin Raines was the chairman of Fannie Mae.
I suggest you look at the voting records of the Democratic party from 04-05 in the House, and the Democratic Senate from 06 onwards on all bills and measures relating to the regulation or protocols of Fannie Mae/Freddie Mac - they're public record.</p>
<p>Under whose leadership in 2000-2002 did Freddie Mac misreport profits by billions? According to the SEC and Office of Federal Housing Enterprise Oversight? Rahm Emmanuel.</p>
<p>Who's he? The Chief of Staff? Naaaaaw.</p>
<p>___________<strong><em>on a personal note</em></strong>_____________________________________________________
I resent your use of the word "lucky" juxtaposed with an ambiguous determination of the present and continued success of my father. Luck had nothing to do with it. Don't be so condescending : "I'm certain your father did just fine in the 1990's.....And I'm certain he will do just fine under whatever tax structure he will face well into the next decade".</p>
<p>Did you forget to pat me on the head and hand me a lollipop?</p>
<p>It's not 'just fine' to rob Peter to pay Paul, just because Peter will be 'just fine'.
Peter's money is Peter's, not yours, much less Paul's.</p>
<p>
[quote]
I'm not saying Social Security isn't forthright in operating like a Ponzi scheme.
[/quote]
</p>
<p>Then why did you originally assert otherwise?</p>
<p>
[quote]
They're all Democratic lawmakers that pushed for the continued DEREGULATION of Fannie/Freddie, Franklin Raines was the chairman of Fannie Mae. I suggest you look at the voting records of the Democratic party from 04-05 in the House, and the Democratic Senate from 06 onwards on all bills and measures relating to the regulation or protocols of Fannie Mae/Freddie Mac - they're public record.
[/quote]
I've looked through these voting records, and know intricately about the subject, thank you very much. </p>
<p>I didn't say that the GSEs were not without fault for holding inadequate capital levels. Read what I said again -- I said that they were overtaken by the unregulated, non-conforming subprime and AltA space, and nothing they could have done could have prevented the massive losses they would suffer from a credit bubble and subsequent asset price deflation that was largely created outside of their purview. </p>
<p>
[quote]
and then what will happen to people who have still structured their lives around being paid for when they're older?
[/quote]
</p>
<p>They will be fine, and living in a hell of a lot less poverty than they would otherwise. We will always have a policy that will allow a greater number of working-aged individuals to support retirees. Perhaps you should look up the definition on ponzi-scheme. A ponzi-scheme set up would require less working-aged individuals to support retirees, which would never be allowed to happen. </p>
<p>
[quote]
Because while they guaranteed loans not in keeping with their triple A standard, they didn't guarantee as much, and as rabidly as did the GSEs.
[/quote]
</p>
<p>Goldman Sachs is in the business of guaranteeing loans against default? They may have some CDS exposure to mortgage losses, but they were never wholesale guaranteeing MBS. </p>
<p>And Goldman Sachs is an undiversified corporation that was solely working in the mortgage space? Last time I checked, GS, along with a lot of other diversified commercial banks, are still standing largely due to their diversification, but also due to the massive amount of taxpayer assistance that the last </p>
<p>So those are both new ones to me.</p>
<p>
[quote]
I resent your use of the word "lucky" juxtaposed with an ambiguous determination of the present and continued success of my father. Luck had nothing to do with it.
[/quote]
</p>
<p>Au contraire, if you don't think luck had anything to do with your father's success, you are sadly naive about the nature of life and the whims of random chance. My other point about the 90s was that people succeeded just as well under the marginally higher tax rates of the 90s, just as the will in the next decade.</p>
<p>
[quote]
The 'reality' is that citizens of a nation should not feel compelled to move to another country when their government starts infringing upon them. The government does not 'own' this country, the people do.
[/quote]
</p>
<p>Right. And the people have fairly decided on a way to allocate enough resources for their future needs, and it involves increasing taxes on some individuals.</p>
<p>Enjoy your lollipop.</p>
<p>Wow. CC is really f*ed up with the posting today. Apologies for such horrific formatting.</p>
<p>
[quote]
The government does not 'own' this country, the people do.
[/quote]
</p>
<p>The government is the people: the presiding subgroup thereof.</p>
<p>
[quote]
Social Security is a “ponzi scheme.”
[/quote]
</p>
<p>No, it is not — it is a governmental pension plan that has unfortunately become challenged for funding down the road, and in a quite open and above board fashion.</p>
<p>
[quote]
It's not 'just fine' to rob Peter to pay Paul...
[/quote]
</p>
<p>Even when if you don’t “rob,” (i.e. marginally and temporarily increase taxes), Paul to some extent his surrounding community will crumble? Do you really think that would be in Paul’s interest? He is not joking when Obama states that a few hard choices must be made during tough times such as we are experiencing. Just like soldiers must sacrifice, and those giving up time to community service must sacrifice, so must ordinary citizens — even successful ones. And to some small degree, or greater, luck always plays a roll in “success.”</p>
<p>Stop strawmanning.</p>
<p>Immediately under the sentence you quoted I qualify what I mean by 'lie'.
You'd either have to be blind, or deliberately ignoring my argument.</p>
<p>"..nothing they could have done could have prevented the massive losses they would suffer from a credit bubble...'</p>
<p>Oh, really, Nothing? Not like, I dunno, NOT GUARANTEEING those subprime loans?
Look at how much of the market they guaranteed! * They* set the 'gold standard.</p>
<p>"Perhaps you should look up the definition on ponzi-scheme."
- Don't patronize me; 'An investment swindle in which high profits are promised from fictitious sources and early investors are paid off with funds raised from later ones.'</p>
<p>Sounds incredibly similar to Social Security....</p>
<p>Also, you've completely missed the point in the anecdote of my father;</p>
<p>Why can he be taxed to pay off the excess of others? This isn't like a tax for common defense. This isn't like a tax for education. This isn't like a tax for infrastructure.</p>
<p>This is like a tax hike to pay for other people's crappy decision making.</p>
<p>You have not addressed my argument, you have only belittled it.</p>
<p>In response to me pointing out your fallacy of saying people should move if they are dissatisfied with their government, you offer this: " Right. And the people have fairly decided on a way to allocate enough resources for their future needs, and it involves increasing taxes on some individuals."</p>
<ol>
<li><p>The 'people' can be said at most to have elected Obama through an electoral college.</p></li>
<li><p>What is the difference between many people getting together and deciding the way to "Allocate resources for their future needs" is "increasing taxes on some individuals"
and many people getting together and deciding the best way to "Get cash for themselves because they screwed up" is "robbing that filthy rich guy"?</p></li>
</ol>
<p>High minded verbiage aside, this still constitutes robbing Peter to pay Paul.</p>
<p>@ Colm: Thanks for responding maturely. You're right, I'm committing a mistake by treating government and the people as completely different entities. </p>
<p>But.....Does the government consign your purchase of a home? No, that's between you and the lender/seller.
So, where do the assets of another citizen come into the picture? If they're going to be used to pay off a loan you defaulted on? </p>
<p>You give the example of the community around Paul crumbling - I delineate why this proposed tax increase is different in my response to CayugaRed.</p>
<p>Bernanke offered another analogy; that of a neighbor's home on fire.</p>
<p>In the same manner that I would absolutely want my neighbor to be saved from the fire he started by falling asleep while smoking, I would absolutely not want the Fire Department using my water to put his fire out, and to then send me a bill for it.</p>
<p>And to some small degree "luck" plays a role in success, you're right. But it's magnitude isn't enough to merit the provincial condescension that CayugaRed seems to revel in, in favor of addressing an argument.</p>
<p>Collegehopefull, there is a part of the real estate/mortgage/foreclosure situation that you seem to be glossing over. The many unscrupulous providers of the sub-prime mortgages were playing prospective new home buyers like a cheap fiddle. Do you really think that the majority of those mortgagees had the lawyerly chops to wade through the arcane mortgage verbiage in grandiose, though very fine print. No, you can't really expect that of the "average Joe," but you could have expected it of the bankers along with their legal teams. They should have known better, and most of them did probably know better. And the big underwriting outfits should have, and probably did, know better — they just couldn’t bring themselves to suspend or reform their dishonorable party.</p>
<p>So when the "average Joe" now finds himself out of a job through no fault of his/her own -- due to the economic meltdown largely attributable to unscrupulous bankers/lenders/underwriters -- then is it not justifiable that the government take measures to relieve the horrendous burden of the well meaning homeowner? And in so doing contribute to the broader common good? Will not your father have a greater likelihood of renewed profitability if the broader community has been in some small measure triaged?</p>
<p>Colm, I agree; Those predatory lenders that did certainly play a large role are at fault.</p>
<p>However - There are plenty of smokers that bring the burden of cancer on themselves and their family despite decades of a growing body of evidence linking smoking with cancer of the respiratory system (and accessory organs). Companies that produce tobacco are * knowingly* selling these people something that will kill them faster.</p>
<p>The government's responsibility is to have the surgeon general inform people of the risks involved - not to step in and say there will be no further sale of tobacco.</p>
<p>That's why I can't agree when you say "through no fault of his/her own".
I'm not saying the people borrowing money under the assumption that lenders were honest are bad people, I'm saying they were irresponsible people. Ultimately, * they* made the decision to acquire that loan. I'm not saying it's a good thing they are in danger of losing their homes, I'm saying : I had ** nothing ** to do with their actions: * leave my assets out of this*.</p>
<p>
[quote]
I had nothing to do with their actions: leave my assets out of this.
[/quote]
</p>
<p>Perhaps you weren't of voting age since the early 1980s, but anybody who has the right to vote in this country over that time certainly had something to do with the degree of deregulation allowed in the financial services industry.</p>
<p>I'll preface the rest of my response by suggesting that you have a dangerously sophomoric view of the way in which our government is constructed. Taxes implemented by elected representatives do not constitute "robbing" in any sense of the word. The republic under which we have been operating under for over 200 years is far from perfect, but it's pretty damn close to the best system of shared governance the known world has ever seen. </p>
<p>As for your specific comments:</p>
<p>
[quote]
Stop strawmanning.
[/quote]
</p>
<p>Would you care to point out the strawman arguments that I have been making? I've been specifically responding to each of your convoluted points, perhaps with a bit of a cavalier attitude, but everything has been a specific response to your own claims. </p>
<p>If anything, it is you making the ridiculous strawman arguments, producing analogies that can't stand up to the complexity of such a dynamic issue.</p>
<p>
[quote]
Oh, really, Nothing? Not like, I dunno, NOT GUARANTEEING those subprime loans? Look at how much of the market they guaranteed! They set the 'gold standard.
[/quote]
</p>
<p>I'm afraid you still haven't grasped why these were called subprime, non-conforming loans -- because the agencies largely refused to touch them, and they certainly didn't guarantee them. </p>
<p>In fact, the agencies were largely squeezed out of the growth in the market during the heyday of the bubble between 2004 and 2006. Try these graphs on for size:</p>
<p>Now, a compelling case could be made that the GSEs were allowed to hold too little regulatory capital because politicians wanted to make certain that credit was available to the housing markets over the last decade under the auspices of the "Ownership Society", but you aren't arguing that. And instead you are arguing that the GSE lending was "more lenient" than the non-agency lending, which is ridiculous to suggest, because if the GSEs were lending under looser credit standards than everybody else there never would have been a non-agency market.</p>
<p>But what's interesting is that Agency debt growth lagged far behind the growth of private-label, non-conforming, non-governmental insured (either implicitly or explicitly) asset-backed securities in the subprime, AltA, and jumbo prime space, and it was this unregulated market that caused such the huge rise in housing prices in between 2004 and 2006. And unfortunately for the agencies, their otherwise sound loans started experiencing a little bit of difficulty once housing prices started to crater back down to earth.</p>
<p>
[quote]
Immediately under the sentence you quoted I qualify what I mean by 'lie'.
You'd either have to be blind, or deliberately ignoring my argument.
[/quote]
</p>
<p>Let's see... you originally claimed the Social Security operates like a Ponzi Scheme. (Or in my parlance, that current benefits are being paid by current payments.) And then you say that Social Security is a "lie" and that the SSA is claiming that it isn't a ponzi scheme. (Or in my parlance, that current benefits are being paid by retiree's past payments.) </p>
<p>But then you say that the SSA actually does freely admit that current benefits are being paid by current payments. And come to think of it, I can't think of any substantive debate on the issue where our elected officials haven't freely admitted this fact. So one way or another, you need to get your story straight.</p>
<p>
[quote]
Don't patronize me;
[/quote]
</p>
<p>Hey. Don't look at me. I was just returning the favor of you asking me if I had ever heard of some of the elected officials in Congress. And for the record, you are the one who seems confused by the definition of ponzi scheme, as there is no structural way that the Social Security system can actually be a ponzi scheme in the way that it is set up. There will always be more payees than beneficiaries. A ponzi scheme requires the exact opposite.</p>
<p>
[quote]
Why can he be taxed to pay off the excess of others? This isn't like a tax for common defense. This isn't like a tax for education. This isn't like a tax for infrastructure.
[/quote]
</p>
<p>See my opening statement on the nature of American government. He can be taxed because we as a people have decided that it is in our collective best interest. And also see Colm's explanation. </p>
<p>Part of my tax money goes to stopping drunk drivers from hurting themeselves and others. Frankly, I find drunk driving despicable, and might see why I shouldn't be taxed for other's excesses, but then I think about all of the negative externalizes involves and upon future consideration find that my taxes are actually helping to alleviate a rather unfortunate externality.</p>
<p>Now it would be nice if people didn't drive drunk, and it would be nice if this country didn't vote in a bunch of tinfoil wearing free-market, anti-regulators thirty years ago, but that's unfortunately not the reality we are working with. And so just as we collectively agree (by virtue of the Constitution and our popularly elected representatives) to raise funds for anti-drunk driving campaigns, so too must we raise funds to get ourselves out of the mess that Wall Street created over the last decade. </p>
<p>It's not pretty, and I'm certainly not happy with the situation, especially with how Geithner, Bernake, and Summers have decided that the shareholders of failed institutions deserve to be propped up and not wiped out. But, as Winston Churchill has said democracy is the worst form of government except all the others that have been tried, and I am sure as hell happy that the folks in office today are at least willing to be able to budget for future expected outlays down the road.</p>
<p>
[quote]
And to some small degree "luck" plays a role in success, you're right. But it's magnitude isn't enough to merit the provincial condescension that CayugaRed seems to revel in, in favor of addressing an argument.
[/quote]
</p>
<p>Considering that luck includes being born into a certain family and certain genetic and nurturing endowments, and that luck decides whether or not you may be in a horrific car accident or develop cancer as a result of random environmental toxins you happened to come across, and the abillity to find yourself in the right place at the right time, I can't possibly see how luck isn't the first thing that anybody attributes to their success.</p>
<p>Good luck to you, my friend. But then again, I suppose you don't feel you need it.</p>
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I had nothing to do with their actions: leave my assets out of this.
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<p>It is understandable that you, and others, take this hardnosed position. My immediate family -- and even more so my parents -- are in a similar position of having to incur an increased burden, not the least of which is the Dow Jones average being at the lowest level in 12 years. Those stock market investors had been lured into backing the various instruments of irresponsible real estate loans. My family also owned shares in some of the banks that have gone under; very few savvy investors forsaw the potential for old established banks kicking the bucket. So, a substantial percentage of the investment community who had no direct role in the real estate financing machinations got burnt by them nonetheless, and thus ended up subsidizing the excesses of a relatively small segment of the financial community. Who is going to bail them out? Nobody is, because most of this still fortunate group of people even now have big equity in their homes, as well as 40 to 60 percent of their former assets (this assumes they steered clear of going all-in with the likes of Bernie Madoff and Allen Stanford).</p>
<p>The folks who require some measure of help are in the vast demographic of the lower-middle class, who now find themselves in deep trouble many through no fault of their own. This group is a huge portion of the market that the business community needs in terms of consumer consumption. Their solvency needs to be to some degree maintained for the economys sake as a whole, and for those who have business interests in particular.</p>
<p>Consequently, it is in the people's, and by extension in the governments, general interest to keep the bulk of the lower-middle class citizens off the soup and bread lines, lest something like the tragedy of the 1930's occur again. Something like that would not be in your interest, or mine, or the country's.</p>