Ex Dame Pansi wrote on Oct 8^th, 2010 at 6:32pm:


It would be even better, IF they actually took some real & positive action! However, I suspect the only reason it is "being looked at", is the amount of publicity involved & the practical difficulties of continuing at this point.
We await the outcome!

It_is_the_Darkness wrote on Oct 9^th, 2010 at 8:28pm:


I'm not sure that everything will be going up, you may find a split between some things goin up, whilst others may go down?

I agree with you comment on Debt, as I have put it, many times -
Good luck & watch the Debt!

Social Security Going Bust … Not on the Boomers Watch!

On Aug. 5, the Social Security Board of Trustees released its annual report on the financial health of the Social Security Trust Funds and the long-range outlook remains unchanged. The Social Security Trust Funds will be exhausted in 2037; the same as projected last year (note that in 2008 it was projected to be exhausted in 2041). The Trustees also project that program costs will exceed tax revenues in 2010 and 2011, be less than tax revenues in 2012 through 2014, and then permanently exceed tax revenues beginning 2015, one year earlier than estimated in last year’s report. The worsening of the short-range outlook for the Social Security Trust Funds is due in large part to the recent economic downturn and the fact that Social Security is funded by a payroll tax. Thus, less Americans working in turn means less revenue for Social Security.

To understand how Social Security got to this point you probably need a little history lesson on how the program began. In 1933 America was in the deepest and darkest depths of the Great Depression. Social conditions had reached an explosive point because of the unemployment of one-fourth of the labor force. Franklin D. Roosevelt (FDR) and the New Dealers were in a precarious and potentially disastrous situation with masses of angry young men demonstrating in the streets. Roosevelt had already seen where these situations could lead by the examples set in Germany and Italy. It was exactly these conditions that gave rise to both Hitler and Mussolini. The New Dealers’ plan to get young people working again was to offer a public pension so the older men would retire, hence the birth of Social Security.

FDR and the New Dealers settled on the age of 65 in 1935 to collect Social Security benefits, however keep in mind that the average life expectancy in America at that time was 63 years.

With all of this bad news, it is no wonder that Americans are beginning to feel very concerned about the solvency of the Social Security system and whether or not it will be there for them. However, it is my opinion that it will and has to be there. Consider that nine out of 10 Americans, age 65 and older receive Social Security and for 32% of these people it is 90% or more of their income. For middle class America, Social Security ends up replacing close to 40% of their pre-retirement income. I don’t believe these statistics are going to change much. Given that the median 401(k) account balance for long tenured employees (employees with over 20 years with same employer) within a salary range of $40,000 to $60,000 per year is approximately $74,000 and the fact that 48% of individuals not yet retired believe they will not have enough money to maintain their current lifestyle in retirement, how can Social Security just simply float away? Imagine the economic turmoil this would cause. Many Americans would not be able to afford the basics such as food and shelter. States would see their sales tax revenues decrease sharply as many retirees would simply be forced to limit consumption. So, how do we “fix” the System? Remember, that we have the largest generation in history just starting to become eligible for benefits.
Link -
http://insurancenewsnet.com/article.aspx?id=228132
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And, that is only part of the story!

There is also Health Services that are set to increase massively and a rapid decline in essential personnel, as massive numbers of Baby Boomers now start to retire!

muso wrote on Oct 21^st, 2010 at 8:03am:


There are plenty of games being played out!

Certainly, one rate increase isn't huge, in normal times, but these are far from normal times and markets are very flighty.

Those same markets ARE also being massages/manipulated to accentuate certain outcomes.

One of the problems being that there are different ideas on what the desired outcomes should be and the possibility of miscalculations are high.

Btw, there are suggestions that China may raise again another 4 times next year? There are also suggestions that China is angling for the Yuan to take over as the US$ exits?

Of course, it could simply be that there was a DOWn day with no apparent reason, so the media found one?

Mind you, there have been a few unexplainable market increases recently, so perhaps we were due for an unexplainable market decrease?

Why Bernanke Can't Win, But Will Kill the Dollar Trying

Fed Chairman Bernanke faces three huge deflationary forces, but he only sees part of one of them – the credit deleveraging. He doesn’t realize that there has been a generational change to the Millennials and GenXers who are averse to debt.

He doesn’t realize the deflationary impact of demographics as 71 million baby boomers retire. He doesn’t have a clue about the Moore’s Law-driven deflationary impact of technology.

He doesn’t know that neither monetary nor fiscal policy can do anything useful against these forces. And that’s why he will QE the dollar to death, never realizing that he’s trying to hold back the tide with a strainer.

The US economy is in the grip of three powerful deflationary forces
The first is deleveraging and the credit bust. Everyone sees this one, but few realize there is a powerful generational driver behind it that will not respond to fiscal stimulus, monetary expansion, cheerleading or any other of the arrows in the government's quiver.

The second powerful deflationary force is demographics – the aging and retirement of the baby boomers. For some reason, little attention is paid to this one either, even though the numbers are obvious and huge. And again, this demographic driver will not respond to government tinkering with the macro, top-down economy.

The third powerful deflationary force, which no one seems to see except me and, now, you, is the accelerating spread of technology.

So should you position yourself for a serious deflation – Great Depression II

One powerful inflationary force
We are not going into a downward spiral because these three deflationary forces are up against a far more powerful countervailing force: Fed Chairman Ben Bernanke. He is an expert on the Great Depression, he wrote his thesis on it, he taught it, and he has every intention of avoiding Great Depression II on his watch at the Fed.

But Bernanke has chosen – had to choose, given his background – the way of the oak. Stand tall, be strong, be rigid, don’t give an inch to the storm and there’s a 99% chance you’ll survive. Which leaves a 1% chance we lose the whole country.

Those are the percentages in his mind, because he only sees the credit deleveraging part of the storm. Demographics and technology have not crossed his mind, although they are up front in this book. And they make the odds of the oak still standing something closer to 70% than 99%. As Bernanke applies his powerful, inappropriate tools to avoiding Great Depression II, there is a 70% chance he is going to cause the Great Inflation.

There is a 30% chance he will make a misstep or be blindsided by demographics and technology, and cause a Hyperinflation. In a Hyperinflation, society breaks down. No one will accept the currency.

Either the Great Inflation or a Hyperinflation might be followed by Great Depression II sometime in the future, but Bernanke will be long gone from the Fed by then.
Link -
http://seekingalpha.com/article/231094-why-bernanke-can-t-win-but-will-kill-the-...
==============
As usual, I don't agree with everything in the article, but the author does make some valid points!

For starters, he does not refer to THE TWO primary macro forces, Peak Oil &/or the Global Decline in Population Growth and the eventual, actual fall in Global Population.

He also refers to 71 million Baby Boomers, whereas its closer to 80 million, just in the USA & around 1.75 Billion Globally.

And, I'm not sure about GenXers already being averse to debt, but they will learn, as time passes!

But he does make the point, that Bernanke has pre-conceptions about what the problems & solutions are, as do others and that is why Bernanke is now FED chairman.

However, if your basic perceptions are incorrect, then the chance of fixing the actual problems, is pretty zero or at a minimum, the chances of making miscalculations are high!

I suppose you have to roll with the punches to a certain extent, but I think we're a bit complacent (nay apathetic) here in Australia.

It wasn't too long ago that our dollar was under 50 cents U.S.
A bit further back, our interest rates were 18% and unemployment was very high.

I wonder how we'd handle such a situation nowadays?
It would seem that we have an almost realistically-perfect economy atm; low unemployment, low interest rates, low inflation.
The politicians and economists of yesteryear would surely see this day as an almost economic nirvana wouldn't they?

On the down side:
Fuel prices are still comparatively high vs. disposable income.  Household debt vs. disposable income is extremely high, mainly due to increased property prices.. and credit card debt also plays a smalliish role.

Food costs have also risen, so there seems to have been a bit of a "trade off" with food and shelter there...because food and shelter ain't really that important are they?

Energy prices have also risen sharply. Forego some warmth and cooling.
Most of us find it hard to make savings on energy costs nomatter how hard we try.
We switched to gas, and now gas is expensive. We fill our homes with energy saving light globes and appliances. It's still expensive, to the point that going back to the days of wasting energy would be unaffordable to an average Australian wage.

If we sway from our current economic nirvana, we may find it a bit harder to handle than we did 20 years ago. And 20yrs is really nothing to the economic plan that we must employ. Though it's a long time in a person's life.i

Nice to see your "spiritual" self Muso. so concerned about the world's wellbeing 

Amadd wrote on Nov 8^th, 2010 at 10:19am:


Oh I'm concerned about the world's wellbeing. I'm also concerned about sustained personal wealth  

The two are not necessarily at odds with each other.  

Perceptions - I agree totally with your take on shares. It's all a question of age and risk acceptance.