Third Party & Independents Archives

‘The time to reform Social Security entitlement spending is 10 years ago’.

Is this to say the elected officials who defeated G.W.Bush’s first term SS reform missed the opportunity to take a more efficient and less painfull route?

Posted by: Weary Willie at February 4, 2009 04:33 PM

WW, yes, they did. However, Bush’s approach of self-insurance was not the path to reform, but, the path to elimination of the concept of insurance against poverty. The vast majority of Americans require that S.S. reform preserve the concept of insurance against poverty brought on by no fault of their own.

Bush’s plan could have resulted in self-insurers investing retirement funds all their life only to see those funds wiped out by a faltering market just before retiring.

Bush was right to address SS reform. His reform was simply not one the majority in America viewed as a positive reform, preserving the key component and rationale d’tere of the Social Security system, insurance against poverty in retirement, caused by economic conditions out of the retiree’s control.

But, yes, his opponents failed to seize that opportunity to reform S.S. in a manner that the American people could support. And that was a Republican Congress, with Democratic support, that defeated Bush’s efforts, as Republicans controlled the legislative process.

Posted by: David R. Remer at February 4, 2009 04:57 PM

I draw no distinction between the people sitting in those hallowed chambers. They are all guilty of neglect and arrogance and partisanship.

An effort to correct the problem, was met with partisanship and not a more worthy proposal.

Posted by: Weary Willie at February 4, 2009 05:08 PM

WW said: “An effort to correct the problem, was met with partisanship and not a more worthy proposal.”

I agree, entirely! Though a few like David Walker did in fact offer up worthy proposals for consideration by lawmakers. But, lawmakers weren’t in the mood.

Posted by: David R. Remer at February 4, 2009 05:29 PM

DR
Probably right about about stocks There are some bargains out there. If one has some funds that would not be missed it is a good time to buy. If the stock market does not turn around the money won’t be worth much anyway.
The fix for Medicare has to occur during a progam for universal healthcare or it won’t happen at all. I hope BHO proceededs directly with reforms. This is especially important at this time because of the downturn. Grated the rest of the world is also in financial trouble but the US is the only Weatern industrialized country where the depression will lead to millions more people doing without healthcare. THis will turn into an even greater drag on economic recovery. The time to move is now.
As for SS I am surprised to hear you recite the “sky is falling” litany so popular on the right and with the ghouls of Wall street licking their chops at the prospect of ripping off the nations pension funds. SS IS NOT IN TROUBLE! That is a myth/lie perpetrated by opponents of the New Deal. It is fully funded and there are reserves to carry it forward till 2043 at which point,without reforms it will only be able to pay approx. %70 of benefits. Us boomers will be dieing like flies about then, relieving the burden. There is no reason to expect the Federal government to default on its bonds. Some changes around the edges could make it easier, raiseing the income cap, allowing more SS income for top brackets to be taxable, folding state workers into the system etc.
As a younger person perhaps you do not appreciate just how much SS means to the nation. Are your parents recieving SS? Without that millions of families would be saddled with the burden of their parents care. SS is also the national widows and orphans fund. Its also the nations disability fund. No private annuity could offer that kind of coverage for an affordable price. I live in a country with a weak safety net.They have a system similar to SS but mostly for government employees. For most people retirement means having large families with the hope the kids will survive and care for them when they no longer can. Most of the beggars on the street are old women.It has been that way for humanity for ages. SS is a big reason the US and Europe, with its own retirement safety net, have reached stable population levels, a first for humanity without the influence of plagues or war. Do not be too eager to cripple it. Please do not keep echoing the enemies of the people. The system is sound.

Posted by: bills at February 4, 2009 10:38 PM

bills,

I live in a country with a weak safety net.

May I ask what your country of residence is?

David R. Remer,
Your post

But, lawmakers weren’t in the mood.

begs the question, “Why?”! Why weren’t they in the mood?

And, Why didn’t the media bother to pick up on the goals of good honest representatives when they were elected into office?
Why are some refered to as “Blue Dog Democrats”?
Aren’t they worthy of being full-fledged democratics?

If you want a third party, Roy Ellis, start with the “Blue Dog Democrats”.

Posted by: Weary Willie at February 4, 2009 10:50 PM

I believe the term “Blue Dog” comes from a time when republicans were portrayed in blue on the nightly election map, and the Democratic Party was portrayed in red by the media . The red states were democrat and the blue states were republican.

I think it was around the time the Soviet Union dissolved was when the media started to portray the democrats as blue states and the republicans as red states. That’s why I think the conservative democrats (the Blue Dog Democrats) are refered to as they are!

They represent a conservative point of view much the same way President Reagan and President Bush did when the media portrayed the republicans as blue states on the election map.

Posted by: Weary Willie at February 4, 2009 11:11 PM

Buy low … sell high

Posted by: HumbleConfidence at February 4, 2009 11:40 PM

Excellent advice.

Posted by: Weary Willie at February 4, 2009 11:45 PM

I was incapacitated while the stock market took it’s generational culling. But when I was able to visit my 401k it had already lost 20% of it’s value. I reconfigured it to mirror a 5-20 year investment. It is refered to as a medium-high risk investment stratagy.

I’ve been watching the dow and my 401k and they mimic each other. My loss to date is still around 20%. I’m not worried.

I’m very interested in what Mr. Remer referred to as

consumer demand is being pent up

.

I have to ask again! Why? Why is consumer demand pent up?

Posted by: Weary Willie at February 5, 2009 12:02 AM

David,
Why I would still beware of investing in the Stock Market, I do believe with Bonds almost sold out that the Mutal Funds are the next in line if I remember the cycle correctly. However, if Congress cannot pass a stimulus bill that addresses gearing the economy toward the 21st Century and instead pass a bill that keeps the 20th Century Economy on life support than I am not sure that the interest rates on bonds will rise. Thus putting in jeopardy the chance for MFs and Stocks to become favorable again.

Posted by: Henry Schlatman at February 5, 2009 12:51 AM

Weary Willie,
Why the American Consumer has stopped wasting their money on phones, computers, and everything else as they did in the 90’s. Can you name me one new product over the last 8 years that has captured the Consumer Interest?

Now, add that pent up rage with a combination of introducing Green Products that will save them money and help them work toward Self-Sufficient. I do believe that given the money the monster “We the Corporation” has to be worried if supply can keep up with demand. For example; if the Detroit Bad Boys was to introduce an Electric/Natural Gas Car that would pay the owner to drive it how hard would it be to get one fron your local car dealership?

Posted by: Henry Schlatman at February 5, 2009 01:01 AM

Why the American Consumer has stopped wasting their money on phones, computers

Why they didn’t, Henry Schlatman.
They even haven’t.

Posted by: Weary Willie at February 5, 2009 01:09 AM

Weary Willie,
Look at the sell of cell phones in the 90’s and than follow the trend to the current date. In fact when was the last time you got a new phone because your old one did not have the latest options?

Or are people buying new computers either because their old one does not have enough storage or a slower CD. And thus lowering the demand for such products has created a slower global economy. And why many want to blame the American Consumer, I have yet seen business spend more than their fair share in the market over the last 8 years. So why should the Consumer keep wasting their money on 20th Century junk?

Posted by: Henry Schlatman at February 5, 2009 01:58 AM

I don’t know Henry. You tell me.
The reason I got a new phone was because the keypad wouldn’t work on the old one. It was a nokia.

The reason people are buying new computers is because their old ones are full of viruses and illegal adware. Microsoft doesn’t make it any easier when they make you call India everytime you reinstall their software.
Security software is as vunerable as the operating system. There’s no guaranteed security at all.

I have yet seen business spend more than their fair share in the market over the last 8 years

I’ve seen prettier words explode from the back end of my cow! I don’t know what it means beyond that.
Get over this “8 year” bullshit. If you would listen closely to what most watchbloggers have been saying, you would hear them say it takes many years for decisions made in one administration to culminate into a result.

On the other hand, this:

why should the Consumer keep wasting their money on 20th Century junk?

is a very good question!

I think it’s a very good question to ask David R. Remer. What should I invest in specifically, Mr. Remer? I’m all ears!

Posted by: Weary Willie at February 5, 2009 02:38 AM

Go on, Mr. Remer. Pretend you have an anonamous accountant you can blame.

Posted by: Weary Willie at February 5, 2009 04:07 AM

Weary Willie,
Why I understand that many of My Peers and Their Children was told by President Bush after 9/11 to go shop in order to show help America. And like good little citizens they went out and spent the equity in their home even though during the same time frame Corporate America spent nothing even though Management and Owners where given the lion share of the tax cuts.

Yes, you can scream about the last 8 years; however, the fact that Corporate and the Market have invested nothing and spent even less on upgrading their facilities or product line is a matter of record. So why personally I do believe that the CEOs and Stockholders deserve to get wiped out as a matter of Principle. Being an American first and foremost, Since they no longer have the funds or will not use their funds to win the War of Ideology and Terror. Than as a matter of Standard I do believe that “We the People” should use the Power of Government to put every American back to work.

For I do not care if they have to take a job counting blades of grass in order to get a paycheck so that they can pay their bills. Considering that some CEOs and Upper Management couldn’t count money, may be by allowing them to count grass will help them learn some lessons in life.

No, the American Consumer and Labor did not create the current economic mess; however, it seems that the Elite of Society once again has to use Their Grandchildren money to get out of the corner they painted thenselve in. For if the Republican lead Congress of 2001 would have listened to Mr. Greenspan and gave tax cuts through pay role deductions than the Retail Shops of Today would still have Consumers shopping in their stores. For as I asked than, how many TV’s can a millionarie buy before they have no more need to purchase another one?

Posted by: Henry Schlatman at February 5, 2009 07:35 AM

Dr
We moved to the Philippines about a year ago from California. They were still getting half a million dollars for a chicken coup back then. Seems we got out at the right time. This is not a bad option for adventureous retirees and ,oddly, the banks and peanut butter are safer than in the US.

WW
From the mouth of Rep. Mike Thompson, a stalwart Blue Dog of my acquaintance from Northern California, the term Blue Dog is an extension of the term Yellow Dog Democrat. The latter meaning one who supports the Democratic Party without question. Blue Dogs may swallow it but get a little sick while doing so,hence turning blue.

Posted by: bills at February 5, 2009 07:40 AM

Weary Willie,
Now compare that reality to what would have happened if President Bush would have stood on the rubble of the Twin Towers and asked Every American to buy War Bonds so that Americas’ Government could take the fight to those brought the fight to the shores of “We the People”

Care to say that America would be borrowing $11 Trillion today to clean up the mess of the last 8 years? Yes, you may have been taught that it takes several years for decisions made in one administration to culminate into a result. However, it only takes a split second to put America on or off the Right Course of Action if you are the President of the United States of America.

Posted by: Henry Schlatman at February 5, 2009 07:47 AM

The wealthiest 20% of Americans do most of the spending.
Therefore, if the other 80% double their spending, it won’t increase overall spending as much as one might think.
Besides, many Americans are deep in debt ($67 Trillion nation-wide; almost quintupled from 100% of GDP in 1956 to 483% in year 2008).
40% of Americans have (on average) zero net worth.
Half-a-million job losses per month isn’t helping, so people are now saving (which is good in one way, but not good for an economy that is 70% consumer driven).
Germany and China both have more exports than the U.S.; another sign of the decades of deterioration of manufacturing in the U.S.

I’m not getting into the market yet, because I think it is headed much lower.

At any rate, the voters have the government that the voters elect, and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful.

Posted by: d.a.n at February 5, 2009 09:10 AM

WW, in 401K’s you can’t pick stocks. You select stock groups, like the S&P 500 basket, or small and midcaps, or international. Apparently, you don’t have a 401K.

If you want to day trade individual company stocks, this article was NOT written to you. That is a whole other animal.

Like I said, if 401K investors followed my 2006 advice, their 401K are now larger than then. Those who didn’t have 401K balances between 30 to 40% lower than the end of of 2006 on average.

Re-read what I said about pent up consumer demand, WW. I referred to it as a FUTURE condition, not present. And consumer demand gets pent up by living in a culture which advertises infinite wants and so called ‘needs’ during a time when one’s income resources or prospects seriously constrain discretionary spending.

I recommend you pick up an economics 101 book and read it. It would be worth every hour spent in it, in understanding articles like this one and vast number of others.

Posted by: David R. Remer at February 5, 2009 01:33 PM

Frightening to think what the mood would be right now if Bush had gotten his way with investing some SS’s in the market. Would be about as close as we could ever come to guns and bullets. People aren’t interested in a retirement or SS that’s up and down with the markets. They are looking for big time stability, same day of the month, all the time. Me too.
bills: wasn’t sure how to answer WW as I had no idea what a blue dog was. Now that I know, ‘eating something a yellow dog threw out’, makes me not want to become one. So, there’s your answer WW.
bills, I know Subic Bay was turned into an intl seaport. I served on Clark AFB and wonder what happened to that piece of realestate.
I lost about $45k when the tech bubble burst. Since, I’ve been in tax free MUNI’s, only losing maybe 3-5% yearly. If I were a little younger, and this is my advice to my kids, I’d go with realestate and stick with it. Unless you are an insider, or at least have a nose to the window, the market is just educated gambling for the man on the street.
WW, I’m not advocating for just another Party. I’m looking for a reform Party. One that can roll back some of the socialism and democracy and restore our Republic to the extent possible. Layers and Insurance needs to be taken to the woodshed and given an attitude adjustment, etc. People need to be responsible for themselves and charitable to others. All this recovery giveaway BS is just a continuation of excreting the last vestiges of wealth from the middle class in preparation for globalization. At the same time it makes people, and businesses, dependent on big government. Everybody wants the big uncle to save them from themselves. I see where auto-parts makers are asking for $20B. Apparently the porn industry can’t afford condoms lately and they need a bailout.
I cry out for Andrew Jackson to come to our rescue once again. He whooped the British and the Spaniards and scattered the Indians. You would think we would be brave enuff to ‘buy American’. But, hey, don’t won’t to piss anybody off. Let’s just cling to the ship of state and keep bailing out. Makes one a little ashamed.

Otherwise, we have the government we deserve!

Posted by: Roy Ellis at February 5, 2009 02:40 PM

http://www.house.gov/ross/BlueDogs/10%20Years%20of%20Leadership.html
Taken from the South’s longtime description of a party loyalist as one who would vote for a yellow dog if it were on the ballot as a Democrat, the “Blue Dog” moniker was taken by members of The Coalition because their moderate-to-conservative-views had been “choked blue” by their party in the years leading up to the 1994 election.

Posted by: Weary Willie at February 5, 2009 03:31 PM

Roy said: “One that can roll back some of the socialism and democracy and restore our Republic to the extent possible.”

This is one view on which we part quite divergently. You choose a Ceasar, I choose to educate the masses. You choose government by experts, or, most qualified, I choose government answerable to the people and held accountable on election day and every day in between, by them.

A republic without democratic elections is at the very most benign, an aristocracy, and at its worst an authoritarian dictatorship.

If the people want to elect experts, fine, AS LONG AS they hold those experts for the results of their expertise on election day.

What we need is a far better educated and rational electorate. Not less democracy. We need more enlightened self-interest in all leadership roles, instead of common greed. You know, the basic principles upon which our government was founded and designed.

Republicanism may be easier to defer to and blame, but, a functioning electorate democracy is far and away the more stable and enduring form of government, in my estimation, as well as the founding fathers.

Posted by: David R. Remer at February 5, 2009 04:27 PM

Roy, the Buy American issues was raised in the wrong way. If Obama had used the bully pulpit to ask consumers to buy American, there would not have been anything close to the international uproar. Obama screwed up by advocating that the American GOVERNMENT buy American, effectively allowing the private sector to name its price, which equates to subsidies and government protectionism.

Every nation wants its people to buy products from themselves. Who can possibly make a rational argument against that? No one. But, when governments get involved procuring at protected pricing, that is a whole other animal and protectionist wars are clearly NOT what America needs at this time of enormous dependency upon foreign imports for our basic life necessities.

Obama is a smart guy on law and public matters of politics. So far, he has proved to be a real boob on economic matters, foreign and domestic.

Posted by: David R. Remer at February 5, 2009 04:32 PM

David:

http://articles.moneycentral.msn.com/Investing/SuperModels/too-late-to-avoid-a-depression.aspx?page=1

In the interim however, over the next 4 to 5 years, our economy and stocks are poised to make a strong comeback and that is a retirement investment opportunity for 401K investors.

Why did you depart from Markman? He obviously sees great risk in the short and intermediate term.

Posted by: Craig Holmes at February 5, 2009 06:03 PM

Has anyone researched whether or not the US steel proposal was in the original Whitehouse submittel? I doubt it. Sounds more to me like it was inserted by a rustbelt congressman and for good reason.

DR et al
BHO is doing exactly what he said he was going to do. He is trying to be bi-partisan.I hope this first major bill teaches him a lesson. He is dealing with people of a fundementally different and wrong view of economics and governance. To the Rep leadership tax cuts are the only response to anything and all government spending is evil(except the military of course. Anything that helps people other than the wealthy is flat out wrong. They hold these views dispite the abject failure of these policies. So BHO is negotiating with himself and including unhelpful tax cuts in the package in what appears to be a sop to the Reps in the vain hope they will cooperate. Lesson learned? He should have left out any tax cut except those promised during the election to the middle class and let the Reps fight to get them in. That would have given them something to do and crow about. Instead they are spending their time attacking parts of the plan like aid to desparate states and research.Time for hardball.

Posted by: bills at February 5, 2009 09:41 PM

BillS:

Pardon me if I have a different view. I think Democrats thought they could take advantage of the crisis and pass boiler plate democratic wish list in addition to the stimulus. Cut out all the programs you like, but are not related to stimulus, and the bill passes.

The bill does not fire soon enough and is too small to be of much help.

If you are a Democrat it does address some issues you have wanted passed for some time.

Posted by: Craig Holmes at February 5, 2009 11:19 PM

For at least the next four years, get your money offshore unless you agree that although it’s under your name, it actually belongs to Comrades Pelosi, Reid and Obama.

I’m not kidding. I’m putting as much as my assets beyond their foul clutches as possible. If you can’t hide, shelter, or find loopholes for it somewhere like the Cayman Islands, then sew it up in your mattress.

This is what’s about to happen on a grand scale during the current administration. The hostility to business on the part of the Democrats is simply going to cause a lot of business to depart from America’s fair shores.

Then, perhaps, the Democrat can realize their dreams of economic equality. Of course, we’ll be a third world country, but what does that matter as long as there’s equality and nobody around to be jealous of?

Posted by: Loyal Opposition at February 6, 2009 12:32 AM

Whoa, there really is an Easter Bunny, Santa Claus, and Chicken Little.

Posted by: ray at February 6, 2009 08:23 AM

LO
Lets see. Your guys spend us into doubleling the debt while expanding the government more than any time since ww2,presided over the biggest economic catasrophe since the depression, increased poverty and the nunber of people without healthcare………..and you are worried about the Dems? If it wasn’t for Reid,Pelosi et al you would not have the money you get from SS to move offshore. Bushco would have invested it in Enron.

Craig
A fair amount of the Dem boiler plate should have been done long ago and may well help us out in the short as well as long term. Investments in energy tech., education,research mass transit etc. have proven their worth over and over. The money for medicare will help states get back on their feet by releaving their medicare burden. Direct aid to the states will allow them to continue their own infrastructure projects , keeping people working and hopefully putting more to work. Some things stripped out of the bill, like money for family planning programs are net money savers but still should have been and will be taken care of in separate bills. What in particular do you object to?

Posted by: bills at February 6, 2009 08:48 AM

Great news! IBM is offering new jobs – in India. Wonder why they would want to hire a wimpy, sniffling, lowly educated US worker? Looks like they would want to hire a local, someone fresh out of Communist China U. who would work for a good wage. And, not ask many questions.
Ali Veseshi ? was on CNN this AM saying that globalization is the right way and that we can thrive and prosper by service sector work and importing cheap goods. I think Ali will not be holding the mic much longer. Pretty soon he will be on the line, with a tin can and a string. Pays a whole lot less. He just doesn’t know it yet.
David, on this Democracy – Republic thing. You took me back to making fire with flint. And, I want my meat cooked! I’m saying we have strayed to far from being a Republic. We have to much Democracy when:
Teachers are no longer in charge of their students.
Average malpractice lawsuit is 5 yrs.
Often takes two or three years to get divorced.
Police are emaciated
Disrespect for weak or unenforced law brings drugs and gangs to the forefront.
People on death row languish for years on the taxpayer dole.
Prisioners aren’t busting rocks, they are watching tv and pumping iron, just waiting.
Insurance Co’s overreaching as to how things are manufactured, wearing helmets, etc.

d.a.n’s 10 abuses covers must of the ground here.

These things are brought on by too much democracy. We need to get back to people being responsible for themselves and not protected in every facet of their life by big government. We are beyond democracy and into Socialist Democracy.

On the Buy American thing: Canada and the EU have their own protectionist policies. Why is it wrong for the US to have such a policy? Issue was raised in the wrong way? Are we supposed to sneak it in like the NAU thing? Congress is supposed to be the great debating body. What should we think of a government that has turned against it’s own people? Too much democracy allows the vocal minority, those wrapped in Corporate Personhood and Money is Free Speech, to control the majority. I think we have been there for about 200 years. I’m way ready for reform. (Insert my standard spiel in here – new 3rd party etc)

Otherwise, we have the government we deserve!

Posted by: Roy Ellis at February 6, 2009 10:00 AM

Loyal Opp., your comment is raving lunacy completely out of touch with reality.

The fact is, middle class middle aged current workers will not pay one dime on the principal of this new stimulus and TARP spending. Our children and grandchildren will. There are 10 Trillion dollars of national debt that comes due before ever getting around to this new Stimulus and Tarp debt being added.

So, your advice and argument are entirely wrong and illogical for investors of today. The current debt load for the U.S. is high, but, not yet close to the straw that breaks the Camel’s back. That comes with another 15 to 20 years without entitlement reform and seeing the national debt climb to 16 to 20 trillion.

Posted by: David R. Remer at February 6, 2009 11:39 AM

bills, BO is doing the OPPOSITE of what he said he was going to do, by backing a bill in which 900 million dollars is waste and pork.

He led the American voters to believe HIS agenda would dominate. Instead, he leaves the House and Senate Democrats to craft this stimulus bill without observance of the principles on which Obama ran to be president.

I hope Republicans win and defeat this Stimulus Bill, to help BO understand that he is now the President, and cannot rely on Congress to observe the campaign promises HE made to the American people. Hopefully, with the defeat of this bill, Obama will take the bull by the horns, craft a true Emergency Stimulus bill according to his campaign promises, and hand it to the Democrats in the Congress, and tell them to pass it or face the wrath of the voters in 2010. That is what a competent president of the people would do.

Posted by: David R. Remer at February 6, 2009 11:45 AM

Craig, in my article I address the fact that there is risk looming. But, that risk is small today, and grows with the convergence of current national debt and entitlement deficits as the years go by.

If Markman doesn’t understand that, then, Markman is wrong. The entire WORLD needs for the U.S. to come out of this recession, America wants to come out of this recession, and most of the right moves to get us out of this recession have been made or are underway. We will come out of this recession, and that is an opportunity for 401K investors.

The instant our government legislates reforms to Medicare/Medicaid and Soc. Sec. to reduce the unfunded liability, the long term risks of American government default on its debts are reduced significantly. And that is going to take place in the next couple years, long before our debt rises to a level threatening imminent default on our debt.

The presence of this recession actually provides Democrats with a dose of the reality to come if they DON’T reform the entitlement programs toward solvency. So, in political terms, the future is actually more promising at this moment than it has been for many years.

Posted by: David R. Remer at February 6, 2009 11:56 AM

David:

I agree with your above comments. I wish the stimulus was tied to reducing costs in the future. Borrow a trillion cut a trillion.

Now would be a great time to go to GAAP accounting. We could actually cut the GAAP debt, and increase our current debt at the same time.

I see there the CBO says that Obama’s stimulus package will hurt the economy long term:

http://www.washingtontimes.com/news/2009/feb/04/cbo-obama-stimulus-harmful-over-long-haul/

I wish you would not make predictions on the market. You will note that at the time of your 2006 predictions the S&P was in the 1200 range. Two years later in June of 2008 the s&P was over 1300. So does do we need to warn your readers that in February of 2011 the S&P may be at 700 but you still think they should buy now?

Your sell signal was off by two years. At the minimum you should warn your readers that you might be off by two years this time as well.

I think for a political writer you should stay away from market timing. I do think it’s fine to draw attention to Buffet’s chart.

Posted by: Craig Holmes at February 6, 2009 11:56 AM

>The wealthiest 20% of Americans do most of the spending.
Therefore, if the other 80% double their spending, it won’t increase overall spending as much as one might think.
Posted by: d.a.n at February 5, 2009 09:10 AM

d.a.n.,

In that case how does a company like Wal-Mart become so grand by selling to the 80% of citizens who are not important to the economy?

Posted by: Marysdude at February 6, 2009 01:25 PM

Who Pays Income Taxes? See Who Pays What http://www.ntu.org/main/page.php?PageID=6

Posted by: Rodney Brown at February 6, 2009 01:47 PM

Craig said: “I agree with your above comments. I wish the stimulus was tied to reducing costs in the future.”

Some of it is. Like you, I want to see much more in that regard.

“Now would be a great time to go to GAAP accounting. We could actually cut the GAAP debt, and increase our current debt at the same time.”

Those are just numbers, and techniques of altering the books without altering the reality of revenue, outlays, and unfunded obligations. No matter how one bookkeeps the present and future, revenues have to come up, spending has to go down, and the obligations have to be cut back.

“I see there the CBO says that Obama’s stimulus package will hurt the economy long term:”

Yep. Now, ask the CBO what the effect is if no stimulus plan is enacted? Answer: it will hurt the economy in both the short term and long term.

No stimulus equals economic harm in a big way. Stimulus adds to the debt, and to the degree that that debt incurs annual interest expense increases for tax payers, and brings the federal government closer to a downgrading of its treasury bonds, it is indeed harmful to the economy in the long run. But, you have to look at CBO’s assumptions, carefully. They have no choice but to assume the current on book unfunded entitlement liabilities are also in that long term forecast.

If, as Obama has vowed to do, the government can shrink the size of those unfunded mandates, and slow the inflation rate of health care costs which impinge directly on the size of Medicare/Medicaid future obligations, then the long term effect on the economy of stimulus today is significantly smaller and lesser.

But, there is no getting around the fact that if we enter a depression, CBO’s projections are meaningless. Ergo, the stimulus is mandatory to avert a Depression, even if the risk of Depression is only 50% as some conservative economicians have tried to claim. I personally believe the risk is higher, due to the vicious cycle of job losses and constrained consumer activity feeding back on each other, which is already in evidence. Failure to halt that cycle is a failure no one but the truest libertarians want to face, and our nation’s enemies, of course.

Posted by: David R. Remer at February 6, 2009 04:33 PM

David:

My point is that we can do both at the same time. I agree there is a need for stimulus, just not additional government long term commitments. I think it’s pretty clear democrats are using this crisis to pass some legislation that has been on their wish list.

I have seen CBO numbers without the stimulus. CBO projects we will be in recovery by the end of this current year. Of course economics goal is to make astrology look respectable.

There are some pretty big hitters saying that this stimulus package is wrong headed in that it fires to late and offers too little. Bill Gross is one that I respect. Robert Shiller is another. Robert Shiller’s point is that it’s not all about numbers, but rather about confidence. We need enough stimulus to change confidence in spending habits.

There are others on the other side of the question. Brian Westbury for instance things the stimulus is all for nothing until we change mark to market accounting rules. Pick a viewpoint, and I will find you an economist to back you up!!

Posted by: Craig Holmes at February 6, 2009 05:41 PM

Without some long term programs in the stimulus, we could end up like we did in 1937. Programs started to peter out because they had not been funded and the economy started to tank again. Short term is most important, but not ALL important.

Posted by: Marysdude at February 6, 2009 06:11 PM

Picked this up on a website: During the great depression … “Germany’s response was to use government to empower corporations and reward the society’s richest individuals, privatize much of the commons, stifle dissent, strip people of constitutional rights, and create an illusion of prosperity through continual and ever-expanding war. America passed minimum wage laws to raise the middle class, enforced anti-trust laws to diminish the power of corporations, increased taxes on corporations and the wealthiest individuals, created Social Security, and became the employer of last resort through programs to build national infrastructure, promote the arts, and replant forests.

Looks very much like a 180 this time. Gov is working to lower middle class wages, Corp’s are ‘too big to fail’ and taxpayers are being forced to carry 40M illegal aliens through the hard times. Otherwise, no CCC programs to really create jobs.

On our VISIONUSA page, which needs to be updated in lieu of the so-called recession, we propose building a fleet of high-tech merchant ships to provide a range of middle class jobs until we can re-establish some kind of manufacturing base in this country. Use high-tech and light weight, structural components, renewable energy for power. Would provide for the safety and security of US comsumers by allowing for safety and security checks while enroute at sea. Super modern laboratories, etc.

Also proposes an infrastructure building program, again outdated because of the recession. But, this would provide training for non-skilled and skilled workers for conducting bridge, highway, buildings, piping systems, etc. Now it should include upgrading the electrical grid.

But, those are things that would hold the middle class until better times arrive and also provide a useful product or outcome.

Posted by: Roy Ellis at February 6, 2009 06:21 PM

Remer writes this; “And consumer demand gets pent up by living in a culture which advertises infinite wants and so called ‘needs’ during a time when one’s income resources or prospects seriously constrain discretionary spending.”

A few changes results in another true statement…

“And government spending demand gets revved up by living in a culture in which some of the electorate demands attention to their infinite wants and so called ‘needs’ during a time when government’s income resources or prospects should seriously constrain discretionary spending.”

Posted by: Jim M at February 6, 2009 07:09 PM

Jim M, quite right. We are witnessing what you say in the Democrat’s House version of this stimulus bill, absolutely NO question about it.

If it weren’t for the absolute necessity of getting a jobs and consumer stimulus bill through as soon as possible, I would be for scrapping current efforts at compromise, and force Obama to draft his own stimulus plan according to his campaign promises, and force Democrats to support it, or bite it via his veto.

But, the vicious cycle of falling consumer demand and jobs losses do NOT afford our nation the luxury of that amount of time. The Senate version hammered out as amendment by Lieberman, Collins, Specter, and Nelson is significantly improved. Let’s go with it, hundreds of Americans are thrown into jeopardy with the passing of each second of the clock.

Posted by: David R. Remer at February 6, 2009 10:56 PM

Roy, add this:

If we are so intent on rewarding those who make contributions and expert decisions, why are we not as a society handsomely rewarding students toward the careers we find such manpower shortages in, like nursing, teaching, and engineering.

America would make the greatest investment in her future possible if she would pick up the tab for college for students who successfully graduate in these areas of national need. Because their education would be virtually free (only upon successful graduation), their initial wages upon entering the work force could be lower, giving them a real competitive edge in employment over H1B Visas seeking the same jobs.

Multiple problems solved, adequate economic labor distribution to meet current and future labor pool needs, employ more Americans and less foreign immigrants, lower the cost of health care and teaching for consumers and tax payers to a modest degree, and lessen inflationary pressure as a result, not to mention elevating the quality of these professions by adequately staffing those industries.

Posted by: David R. Remer at February 6, 2009 11:05 PM

Craig, a large number of economists at any given time can be found guilty of missing the forest for the trees.

Economics is the study of an entire society, from its fads to its funding of its future, its cultural values to its financial history.

Any economist who says this one thing, mark to market, or Jobs spending programs, will solve the current recession is missing the forest for the trees.

Any economist who says the government should just leave it alone, it will self correct, is missing the trees for the forest. You can’t dump 10 million workers onto the streets for years without employment and not expect social and political upheaval.

Economists are first and foremost mathematicians versed in probability and statistics. As such, it is easy for economist to get so focused on their numbers of this or that part of the economy that fail to take the whole into account.

Frankly, its hard to find really good economists. Ben Bernanke is well on the way to becoming a great one. Thomas Friedman is a very good one, though I disagree with him on some of his assumptions. Krugman is fair. Orzag and Voelker are both competent but, Voelker has the historical educational advantage over Orzag’s more statistical approach. Voelker, from hearing his speak, has learned a great deal since leaving the Fed Reserve position - about history, culture, values and what I call the realm of the economically possible, which takes into account the limitations imposed by the political, educational and informational, and cultural constraints imposed on a nation’s economic potential.

Orzag has had his pulse on the looming debt and entitlement crisis for more than 16 years now, and very vocal about raising awareness. That makes him one I respect to that extent.

Posted by: David R. Remer at February 6, 2009 11:19 PM

Yes, I’m torn over that very situation David. Education is necessary for the person and just as necessary for the country’s well being. This is 2009 and you would think we would be at a point where education and healthcare are non-cost entities. Yet, I was on here this morning talking about having too much democracy and yearing for the ole Republic. I’m conflicted fer shure. I believe that education has gotten out of reach for many because of stagnannt middle class wages and educational cost that has increased at around 10% yearly for about the last 30 years. At the same time our universitities are full of foreign students and all middle class professions have many new immigrants employed.
Our VISIONUSA page calls for decreasing the foreign student population by 10% and increasing the US student population by the same amount. There must be a better solution. I’m not fond of a free, social-democratic, approach as the best solution. What say ye?
And let’s no make winners and losers by favoring some professions while shutting others out. Gotta be democratic you know.

Posted by: Roy Ellis at February 6, 2009 11:54 PM

Loyal Opposition,
Why I have no problem with you disinvesting yourself from America. Having heard this argument before from Republicans it sort of reminds me of a young teenager that does not get their way.

So please give up your citizenship and take your money with you. For seeing that both Al Qaeda and the Republican Leadership do not believe the under the correct leadership Americans can build the World that has eluded every Generation since the begining of Civilization may be we can find you an island in the middle of nowhere so you can fight for the next 100 years.

And why I will admit that the Democratic Leadership has a long way to go before they straighten out the economy. Seeing that the only Cheering Section that the Children of the 21st Century has to look up to would rather leave the Country instead of helping to clean up the mess created by their Leadership oversight and spending over the last 30 years.

Seeing that this Independent Pundit for one would enjoy openly debating President Obama and the Democratic Leadership on what a real Political Party could do with an American Recovery and Reinvestment Plan held together by the Ideology that “We the People” are looking for a Viable Political Solution that makes America Energy Independent.

For with a little bit of elbow grease and a dose of the American Spirit I wonder what Usama Bin Laden an other Radicals around the World is going to do once the Common Knowledge and Common Sense Of Man proves to them that they are betting on the wrong horse to place and the wrong horse to show.

Posted by: Henry Schlatman at February 7, 2009 08:03 AM

d.a.n.,
Why I have no doubt that the numbers you quote are correct. Seeing that the Report which created those numbers follows up to a point of education that David and I was discussing. Let me question the Logic and Reason of the results that state: The wealthiest 20% of Americans do most of the spending.

For why we all can agree why that is (those that don’t understand, It is Self-Knowledge and a Personal Journey). If it was True than shouldn’t the Top 20% be 80% Wealthier? And depending on how you want to explain Walthy, having heard some of the American Stories from CEOs’ and Top Executives that lost their high paying jobs and now join the Labor Force in recieving hourly wages and benfits. I doubt if Mr. Buffet and Gates want to bet that they are the Wealthiest Men in the World.

However, seeing that if you look further into the numbers of the Report and use the Common Knowledge and Common Sense of Man that the Basic Needs of an Individual Citizen and their family can be discovered. I see the report saying that 20% of the population is holding 80% the Investments of the 20th Century.

For be it by 401ks, stocks, and even Taxpayers Dollars to the tone of Trillions invested. The average American under the Leadership of President Bush and the Republican Party now own a piece of the pie that may or may not survive in the 21st Century.

So why I hope that there is enough American Statesmen and Ladies in the Senate that know the American Recovery and Reinvestment Plan needs to go to conference. I do believe that the 80% of Americans on the Left and Right of “Change you can Believe In” needs to do some serious education and outreach to the 20% who think they are American Barons like Mr. T. Boone Pickens if America is going to come up with a Livable Policy to not only make America Energy Independent, but use the American Spirit to help Humanity do the same.

Posted by: Henry Schlatman at February 7, 2009 08:44 AM

marysdude wrote: d.a.n., In that case how does a company like Wal-Mart become so grand by selling to the 80% of citizens who are not important to the economy?

Who ever said 80% of citizens were not important?

Henry Schlatman wrote:

• d.a.n wrote: The wealthiest 20% of Americans do most of the spending.

… If it was True than shouldn’t the Top 20% be 80% Wealthier?

No. It’s not linear. It more similar to an exponential curve.

For example, 1% of the wealthiest Americans own 40% of all wealth.
The wealthiest 01% of the U.S. population has 40% of all wealth in the U.S. (up from 20% in year 1980; never worse since the Great Depression).
The wealthiest 02% of the U.S. population owns more than the remaining 98% of all Americans.
The wealthiest 05% of the U.S. population has 60% of all wealth in the U.S.
The wealthiest 10% of the U.S. population has 70% of all wealth in the U.S.
The wealthiest 20% of the U.S. population has 83% of all wealth in the U.S.
The poorest 20% of the U.S. population has negative net worth (i.e. debt).
40% of the U.S. population has (on average) essentially zero net worth.
80% of the U.S. population owns only 17% of all wealth in the U.S.

• Wealth owned by the wealthiest 1% of U.S. Population:


• 45.0% |—o——————-


• 42.5% |-o-o——————


• 40.0% |oo-o—————oo 40%


• 37.5% |—-o————-o—


• 35.0% |——o—oo——o—


• 32.5% |——o-o-o—-o—-


• 30.0% |——-oo—o—o—-


• 27.5% |————-o—o—-


• 25.0% |—————o-o—-


• 22.5% |—————o-o—-


• 20.0% |—————-o——


• 00.0% |—————+————YEAR


• ______ 1 1 1 1 1 1 1 1 2 2


• ______ 9 9 9 9 9 9 9 9 0 0


• ______ 2 3 4 5 6 7 8 9 0 0


• ______ 0 0 5 0 5 0 5 0 0 9

The wealth disparity has been growing worse since 1976.

Henry Schlatman wrote: And depending on how you want to explain Wealthy, having heard some of the American Stories from CEOs’ and Top Executives that lost their high paying jobs and now join the Labor Force in recieving hourly wages and benfits.

For this discussion, the term wealthy refers to net-worth (money, property, stocks, bonds, etc.). No doubt there are other forms of wealth (i.e. health, happiness, love, etc.).

Henry Schlatman wrote: I doubt if Mr. Buffet and Gates want to bet that they are the Wealthiest Men in the World.

In terms of net-worth (i.e. the intended definition for this discussion), Buffet and Gates are the two wealthiest persons in the U.S.

I don’t have a problem with people being wealthy, nor harbor feelings of jealousy and envy, disguised as attempts for equality.
My complaint is that money is power, power corrupts, and absolute power corrupts absolutely.
Here are 10 examples of the abuse of that power (via abuse of wealth).
For example:

• The tax system is regressive and unfair (it favors the wealthy).


• Also, 99.7% of all 200 million eligible voters are vastly out-spent by a very tiny 0.3% of the wealthiest voters who make 83% of all federal campaign donations of $200 or more.


• The greedy banks are little more than loan sharks, charing usurious rates as high as 64% (typically in the 20% to 30% range).


• Congress blatantly ignores the Constitution (e.g. Article V).


• Congress and greedy employers abuse the H-1B and H-2B Visa programs, because it’s not their jobs being outsourced.


• Congress just gave itself its 10th raise in 12 years, and another $93,000 in petty cash for each Congress person. Cha-Ching!


• Check out this welfare for the wealthy: farm.ewg.org/farm/index.php?key=27489218&message=Successfully+updated+Supporter+information


• Congress is FOR-SALE. Congress is full of puppets who merely cater to their wealthy puppeteers. Hence, the federal government is essentially a kleptocraic plutocracy.


• More: One-Simple-Idea.com/Links1.htm

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at February 7, 2009 11:14 AM

I’m not very Happy with Obama appointing GE CEO Jeffrey Immelt to his economic advisory team, and How much Money is GE Getting from this Stimulus Plan He IMHO did a horrible job of running GE. and the pay cap at 500,000 I know something needed to be done but won’t that just encourage many of the best to Leave to other countries.

Posted by: Rodney Brown at February 7, 2009 11:30 AM

> and the pay cap at 500,000 I know something needed to be done but won’t that just encourage many of the best to Leave to other countries.
Posted by: Rodney Brown at February 7, 2009 11:30 AM

Rodney Brown.

If these people are the best, wouldn’t it be smart to export them to foreign countries?

Posted by: Marysdude at February 7, 2009 11:49 AM

“”If these people are the best, wouldn’t it be smart to export them to foreign countries”” Didn’t most of the crooks already leave? Like the countrywide ceo and a whole boatload of others. There not all crooks, Many of them are honest hard working, I see the Mr Immelt made from 14,000,000 to 17,000,000. Let’s reward him.

Posted by: Rodney Brown at February 7, 2009 12:07 PM

Mr. Remer’s original post on when is the right time to get back into the market is a really tough call and not one I am capable of making.

I am in the insurance and financial marketing business and must be very careful what I say in public even though I believe my identity on watchblog is protected to some degree.

I believe it would be folly for anyone to cash in their 401K or other tax favored retirement plan unless circumstances were so dire that no other option was available.

In preparation of my own retirement (I am age 68 and still working full-time) I began, several years ago, to transfer some of my equity holdings to index annuities. Without going into great detail for those of you not familiar with index annuities, they are simply, a contract with an insurance company which provides for a safe way to accumulate retirement funds with tax advantages. Additionally, the premium paid for the annuity is not exposed to market risk. Earnings on an index annuity can rise along with the underlying index to which it is tied, but can never fall below zero. So, in a bad year there will be no earnings and in a good year the earnings can be substantial.

In this way it complies with the wonderful observation many years ago of the great American humorists…Will Rogers who proclaimed, “I am not so concerned with the return on my money, as the return of my money”.

I know many folks today who, if they had just broken even in the market would be celebrating.

That’s the beauty of index annuities, there can never be a loss of principle. And any earnings from previous good years are locked in as well.

When I retire I plan to annuitize some or all of my value into a guaranteed steady stream of income that neither me, or my wife, can outlive.

Younger workers should invest as much as they comfortably can in tax deferred or tax sheltered retirement plans and let the power of tax deferred compounding interest, and time, work its wonders.

Posted by: Jim M at February 7, 2009 04:14 PM

Jim M, you offer excellent advice. But, everyone should remember that ALL investments save for life saving essentials, are only as good as the full faith and credit of the U.S. government and the economy that keeps that government from defaulting.

If Madoff, the Savings & Loan debacle, the Great Depression, and our current flirting with another, teach anything, it is that our futures are absolutely dependent upon the future of the U.S. One can even say that for most of the people in the rest of the world, as well.

It is therefore essential that our government put away its juvenile party turf wars, its penchant to look after them and theirs, and to truly act to save our nation’s future, and by that I mean, our American population’s future. Without the people, America is just a big piece of land concreted over.

Posted by: David R. Remer at February 7, 2009 06:40 PM

Roy said: “And let’s no make winners and losers by favoring some professions while shutting others out. Gotta be democratic you know.”

Au contraire, mon ami. Let’s do make winners of those choosing a free ride in exchange for choosing a career our nation and society needs filled. This is a win win. Those who can afford to foot their own bill for college are free to choose any career they wish and are not losers for doing so. Those with the skill, talent, and drive to succeed but not the resources, are made winners by electing a career the nation needs filled in exchange of the means to get through their degree program.

There are none but winners in this approach.

Then, we as a nation need to fund Associate Degrees in the trades and crafts areas which the economy and nation depend upon and which finds short supply of labor force in. Same deal. Those with the resources are free to choose their craft or trade, those without get an assist in exchange for choosing one which the economy has need for skilled labor as measured by unfilled want ads for jobs.

This has got to be the single most valuable investment tax payers can make with their tax dollars as it will protect and enhance their own economic futures, defend and protect American economic strength, and insure the long term viability of our nation for their children and grandchildren.

As I see it, everyone wins with such approach, including the tax payers who underwrite the investment.

Posted by: David R. Remer at February 7, 2009 06:54 PM

Yeah, it sounds good. Too democratic, but it sounds good. In our VISIONUSA page we provide training for non-skilled and skilled workers. That would include tech schools, specialty schools, and community colleges. Non-serious crime prisoners would be trucked to these training facilities as well and on completion be given reduced sentences for their effort.
If they had a hard time finding work the Fed/State would hire them on a couple of big job creation programs (ships and infrastructure).

Noton the agenda, but just as important is to mandate high schools be operated as college prep schools. Also, mandate that in the math and science programs, retired folks with degrees would teach a certain number of days or share a classroom with the regular teacher for a day or two each week, etc. These folks could be paid or volunteer there services depending on the school and available funds.

To me, the most stupidist thing we do is fail to give HS students a view into the work-a-day world. Retirees should go into the schools and the students should be bused around to factories, eng. and research facilities, etc. within reason (distance x money).

I wonder if that type of teaching is done anywhere in the world.

Posted by: Roy Ellis at February 7, 2009 11:30 PM

Roy, Good ideas. The stupidest thing however is not what you say, but, a 9 month school calendar built around an agricultural/agrarian economy which no longer exists. That is the stupidest, and one major reason our K-12 students can’t compete against 23 other industrialized nations on average for amount of learning upon H.S. graduation. Hence, the argument by Bill Gates and others for H1B visas to fill jobs Americans aren’t competitively educated to fill with the same level of knowledge and competence. This is having serious negative social and economic consequences for our students and our nation’s future.

Posted by: David R. Remer at February 8, 2009 05:32 AM

d.a.n.,
Why I thank you for acknowledging the different types of Wealth, I do believe that the Democrats and Republicans sometimes forget that not every American wants to be a Millionaire and take on the responsibilites over holding Societal Wealth. However, in the same stroke they also forget to teach Their Children that as an American Citizen you do have the Duty to earn enough money to pay your Societal Bills and not be a burden to others.

Hence, why My Peers and Their Children may fight over what are the Basic Needs of a Citizen and that of Luxury of the Haves. In looking at the Data of the Reports they should also take in consideration that Every American Citizen does not have to belong to the top 20%. However, they are required to belong to the other 80% or risk losing everything their Family has built since coming to America. And sorry to say, but that is not reflected in the numbers you display.

Posted by: Henry Schlatman at February 8, 2009 05:32 AM

Jim M.,
Why I respect your honesty and now know why I have such a hard time with your personal arguments. I thank you for turning this post back to Davids’ Question. For as an American Layman Citizen who is not learned in Law or Criminal Justice under the Federal Common Sense Law of 1830/40 let me Personally Ask You based on your experience and self-knowledge in insurance and financial marketing business if I have this right about 401ks and other investments.

For having invested under $1,000.00 in a Mutal Fund before Stepember 11, 2001 and having done nothing with it since that time say my “Share” sold at the time for $100.00 because I forgot the price. Nevertheless, in todays market that same stock is now selling at $50.00 or half what it was orginally worth. Yet, provided that I do not cash the stock in or transfer the funds and by some off the wall chance that Congress is able to deliver the Mother of all Stimulus Package which see the Shares rise up to $150.00 by 2010. Doesn’t that mean that why some citizens may of lost money in the Market, for many Individuals like me that I would see a 50% job in my networth on paper? And if that is the case, wouldn’t I hope that President Obama and Congress felt the same way.

Posted by: Henry Schlatman at February 8, 2009 06:06 AM

Jim M.,
Sorry for the split post, but that is what happens when someone misses an appointment.

So, “Doesn’t that mean that why some citizens may of lost money in the Market, for many Individuals like me that I would see a 50% job in my networth on paper? ” should read:

“Doesn’t that mean while some citizens lost money in the market over the last 8-10 years because they sold their shares. For many Individuals like make me who has got Shares only though auto dividends repurchase see an increase of 50% of my paper wealth if the price went up to $150.00 per share?

Yes, David does bring up a valid point about Reinvesting in 401ks and as you point out rightfully other investment vehicles. And though I do not believe every 20th Century Corporation should be put on life support by “We the Taxpayer” I do see where President Obama and Congress in Harmony with “We the People” should have the power to (lack of a better word) pick the sectors of the economy that is in the Inherent Best Interest of the Children of the 21st Century and encourage growth. Just as the Elders and Powers-that-Be of the 70’s did for the Youth of the 60’s and Silver Spoons of the 70’s. However, even I have to draw the line at telling others were they should invest their money.

So why 401ks and other retirement accounts may be a worthy of saving through a stimulus bill. Shouldn’t any America Recovery and Reinvestment Plan include the Societal Tools to encourage the Average American to invest in something other than “Getting to Old to Enjoy It”

And if that is the case than wouldn’t you hope that President Obama and the 111th Congress fell the same way?

Posted by: Henry Schlatman at February 8, 2009 09:25 AM

Jim M.,
Sorry for the split post, but that is what happens when someone misses an appointment.

So, “Doesn’t that mean that why some citizens may of lost money in the Market, for many Individuals like me that I would see a 50% job in my networth on paper? ” should read:

“Doesn’t that mean while some citizens lost money in the market over the last 8-10 years because they sold their shares. For many Individuals like make me who has got Shares only though auto dividends repurchase see an increase of 50% of my paper wealth if the price went up to $150.00 per share?

Yes, David does bring up a valid point about Reinvesting in 401ks and as you point out rightfully other investment vehicles. And though I do not believe every 20th Century Corporation should be put on life support by “We the Taxpayer” I do see where President Obama and Congress in Harmony with “We the People” should have the power to (lack of a better word) pick the sectors of the economy that is in the Inherent Best Interest of the Children of the 21st Century and encourage growth. Just as the Elders and Powers-that-Be of the 70’s did for the Youth of the 60’s and Silver Spoons of the 70’s. However, even I have to draw the line at telling others were they should invest their money.

So why 401ks and other retirement accounts may be a worthy of saving through a stimulus bill. Shouldn’t any America Recovery and Reinvestment Plan include the Societal Tools to encourage the Average American to invest in something other than “Getting to Old to Enjoy It”

And if that is the case than wouldn’t you hope that President Obama and the 111th Congress fell the same way?

Posted by: Henry Schlatman at February 8, 2009 09:27 AM

David and Roy,
If you want an Education System that works and is affordable to all Students of All Ages than you are already using it. Yes, with a computer and the Internet every school district could claim to have the Best Teachers America has to offer. And why it would mean that the Class Room would never be the same. I imagine our Ancestors had a question or two about America moving from a one room school house to the current delivery system. However, to think that America has come from One Room Schools Houses to the Green State of the Art Learning Insitutions of today within the last 30-50 years. I can only imagine what Shop in High School will look like in the next 20 years.

So why it is good to say that we need to educate the Children of the 21st Century in math and science as well as teach them a trade. Looking at it from a very different prospective, Why?

No, with a dropout rate of over 50% in some places the American Education System needs to do more than teach the 3R’s for 12 years. And why that may ruffle a few feathers, I am sure that knowing now that a Child learns a lot between the ages of 3-5 a Tax Cut and Spending Bill that would encourage the development of Pre-School Programs geared for Home Teaching and Learning would work good in the Stimulus Bill and be a good investment for those seeking to put their money into a 401k program.

For imagine the day when every student that walks into first grade can already know how to read and write, do math, and have a Kids Imagination on how and why Science is so important to them in the Future. Because all Book Knowledge in the World does you no good unless you combine it with Life Experiences and Passion of Self-Wisdom.

And thanks to tech heads of today, going to visit anywhere in the world is only a click away!

Posted by: Henry Schlatman at February 8, 2009 10:18 AM

So much better to debate solutions rather than what the purples did wrong and why the yellows failed, etc. Breath of fresh air. Thank you watchblogers.

Henry, I can’t hang with you on the internet being the savior for education. Even as the current educational program is not sufficient as explained in a previous post. You can’t effectively educate children through people with no real work or life experience. God bless the young folks who get the teaching degree and spend their career in a classroom. But, you need to bring in real live, workaday people who can demonstrate that by applying some of what the kids are learning you can navigate your way to Mars, you can take a digital stream of information and reduce it using some algorithm, become exposed to trellis coding, worm technology, ranging and imaging technology using the radar formula and synthetic aperture radar and such things. Most folks don’t grasp the greater potential for such stuff by rote drills whether done on the Internet or in the classroom. They need exposure to what is really happening, what is really possible, etc. by putting retired folks in the classroom as a part of the educational program.
David, I can agree that flexibility offered by a 12 month program would be beneficial, I don’t see it as necessary. Just by bringing retired professionals into the classroom would give you a way big bang for the buck. Wouldn’t be any need for children to attend more than 9 months. And, children need some time to be children. Give them some time to postulate about what they have learned. Families need time to be together and children need time to develop mentally.
Another stupidest thing we are doing is failing to take advantage of the youthful mind. Young primers are taught in rote, at the same level, same speed. The young mind is capable of learning the basic skills of reading, writing, math and language at a very early age. To have children going into the first grade that can’t read, write and do basic math is just outrageously stupid. Guarantee if you expose a child to language at the age of 3 to 5 he/she will be way more likely to really develop some language skills later on. And, the way language is taught is HS’s is way way stupid. Again, bring some professionals into the classroom, or at least some natives in the language. What a waste, just sheer unadulterated waste of time, to have a person teaching a language class that is not fluent in that language, hasn’t lived in a country of that language, etc.

Way more than a bailout STIMULUS, we need a brain STIMULUS in our schools.

Flat Taxes:

Article in the Wash Post today on why we should have a flat tax. I don’t think you will find the flat tax on the agenda of the duopoly but, you can view our VISIONUSA page at www.demreps.com where we call for a flat tax. Based entirely on the flat tax d.a.n has proposed of late on watchblog.
Words in the tax code: 3.7M
Pages of tax laws and regulations: 67,500
Pages in the 1040 instruction book: 161
Number of tax code changes in 08: 500
% of taxpayers using paid preparers: 59
% of taxpayers using software: 16
% of IRS answers that are correct: 90
Number of official ‘tax expenditures’ or loopholes in the code: 161

Regarding Charlie Rangel’s rental beach house in the Dominican Rep. he stated “I never had any idea that I got any income”, etc. Estimated that there is a $350B tax gap from such antics. In 06 taxable income was just half of what the DOC reports as total personal income. While muni bond interest is untaxed, corporate equity is taxed twice, at the corporate level and again at the individual level. Former Congressman, Leon Panetta, championed the flat tax which later became a Republican cause. The writer of the Post article, Chris Edwards, writes that the flat tax would be divided into two parts, labor income and capital income, (profits, interests and rents). Capital income would be taxed at the ‘business level”. Hold on there! Don’t start trying to create winners (big biz) and losers even before we get the thing adopted. A FLAT tax! Get it?
Personally, with a flat tax I would forego taxing business. But, only after Corporate Personhood and Money is Free Speech is abolished from the law books.

Of course, one must understand that a flat tax is not change, a flat tax is reform. Therefore, you won’t be getting a flat tax through the duopoly. Only a new third party with a different political attitude can bring reform and, hence, a flat tax policy to fruition. (read in my standard spiel here)

David, why don’t we just take this Democracy thing to the Nth degree, abolish congress and have d.a.n. create some humongous data base whereby we can run the country by majority vote?

Otherwise, we have the government we deserve.

Posted by: Roy Ellis at February 8, 2009 01:12 PM

Well, Roy, there are the educational systems in other nation’s who export educated workers to the U.S. and beat ours, and then there is ours.

The obvious and logical place to look for the why theirs are quantitatively better is in the differences between our systems. The 9 month and 11 month difference is a pretty dramatic difference, and research shows, American students lose a great deal of what they learned over 2.5 to 3 month hiatus and that lack of reinforcement time for what was previously learned. This is a very basic psychologically measurably difference highly correlated with the length of the school year.

What difference if they have the elderly in their classrooms if they are forgetting up to 40% of what they learned over the summer, anyway? My daughter’s performance of B’s, C’s, and D’s turned into all A’s and B’s with one simply change in our household. We insisted and incentivized her to review her core subjects an hour a day, 6 days a week, over the summer, and we used the chapter questions to test her on her review. Enormous difference which we implemented as soon as we read the research on the negative impact of summer vacation on learning some 2 years ago.

Posted by: David R. Remer at February 8, 2009 03:44 PM

I liken learning to riding a bicycle. If you don’t ride for 3 months you might be a little rusty for about 5 minutes, etc. I believe you are correct in that children could perform better if they hit the books 12 months a year. But, I’m more interested in children becoming well rounded, well grounded adults. Education should not be a full time job for the young set. Even at the college level some time off is preferable. A matter of preference for the child and parents. Would cost more to keep schools rolling year round. Education shouldn’t be a horse race, waiting to run at every bell.

Posted by: Roy Ellis at February 8, 2009 06:10 PM

caveat emptor. “these days, everyone is an economist and investment advisor”

Posted by: gergle at February 8, 2009 09:19 PM

Roy,
Why most citiens over the age of 30 may see the internet and the capability of the computer through “Limited Sight” nevertheless, even today with the help of You-Tube and other websites you can visit almost every city in the world in real time. And why Classroom Teachers can help the children learn to understand systems and theroy, how are we going to expect the Classroom Teacher to keep up with everything going on in the world today so that they can convey that Knowledge and Wisdom to the Children of the Internet?

For if My Peers have learned only one lesson from our flawed Health Care System. It shoyld be that even with the Best Doctors and Nurses America and Humanity has to offer. Due in a large part from having access to the Internet, they are seeing more and more patiences introduce them to cutting edge technology.

In fact, would you not say that in a large part to Factcheck.org and the “Truth Meter” over the last few years has helped educate all of us about Politics in America. And that is better than any Civil Book has been able to.

So why Common Knowledge and Common Sense has to be applied by Business and Society in building a 21st Century Education System. I do believe that by expanding blogging into the classroom and allowing the Children of the 21st Century to own Virtal Reality equippment. The idea of wondering what it is like to live a day in (name the Time and Place) will do more to encourage the Children to teach Their Parents about the Reality that “We the People” live in.

And unless you want to open up some deep wounds that are Undefendable than the Federal Government and thus the Political Debate needs to stay focused on building a National Network so that every American Student can talk and teach each other about what the Teachers of America are saying about the subject. For as one who is Computer Stupid, knowing what is available today and amazed at what is available in the Pipe Line. I’m waiting for the day when some Child of the Future creates a life size hologram that can serve both as a Mentor and a Teacher. However, I doubt if that is going to happen in the next 50 years.

So, why I understand David and your point about math and science besides force. Using the American Recovery and Reinvestment Plan and the Freewill of Congress what would you say given “Unlimited Funds” should be in a basic education package for the Individual Student, their Parents, and their Democratic and Republican School Board.

For example;
By funding and setting a Mandate that every k-12 school bus be replaced with new highly safe school buses powered by an Electric/Natural Gas couldn’t we use the fuel savings to allow Teachers and other Employees of the Education Ststem get paid in order to provide extra Authority and save them money from having to drive to and from work?

Or how about building a Broadband Network that reaches every student and aids every parent and teacher in bettering the education exprience. For why both will create jobs in the short and long term. Knowing that I do not want the Federal Government to step on the Individual and States Rights. And seeing that to a degree has to be done in order to address the National Dropout Issue I’ll let you both debate over the Limited Funds held by Americas’ Democratic and Republican Civil, Political, and Religious Leaders.

Posted by: Henry Schlatman at February 9, 2009 02:24 AM

Henry, I’m with you 100% on children having accss to the internet and being encouraged and taught how to use. As far as I know there isn’t a school in this country that doesn’t have at least dial-up. However, IMO schools are for learning, developing cognitive, rational thinking. The Internet is an informational tool. Not to say that people can’t educate themselves. Many have done so through hitting the libraries and, to some extent, using the Internet. I do agree that schools should have broadband Internet and plenty of computer access but for the most part the Internet should be used at home, kind of like having the library in your on home. I do believe that, over time, teaching applications will be developed for the Internet that allows for interation, asking for help, answering questions, etc. that could be used as an effective teaching tool. Maybe already exists, I don;t know.
I do think that by adding the combination of the Internet and professionals, volunteer or paid, to the classroom would result in at least a doubling of college prepared students.

Posted by: *-Roy Ellis at February 9, 2009 12:38 PM

gergle, yes, as it should be. The Pro’s will make you money when the entire nation is making money, and lose you money when the whole nation is losing money, in their aggregate. So, why shouldn’t regular folks capable of reading a few books learn to invest themselves since their self-educated performance is not likely, in the aggregate, to be worse than the pros, and perhaps even better, because they are looking out for their own investments without ANY other distracting priorities or motives, commissions, insider trades, etc.

I love the 401K we have through USAA, during the money making times, our money is in stocks, during the non-money making times, our money is in fixed rate and bonds. We make money during good times and bad times, as long as the American government doesn’t default, an asteroid doesn’t strike our planet, or the Pakistanis decide they have had enough and launch nukes in every direction. In which cases, gold would be a very good investment either.

I never understood modern thinking about safety in gold. When gold was valued for ornament and thus universally good for barter, or could be fashioned easily into weapons, it had intrinsic value. If societies fail in a global economic collapse, what intrinsic value would gold have? In a global economic collapse, I should think bat guano would have vastly greater value than gold as a fertilizer for growing one’s own food.

Posted by: David R. Remer at February 9, 2009 05:22 PM

David,

Agreed. Unfortunately people think there is something magical about investing. I enjoy the show Mad Money and find the advice that Cramer gives very useful. I like his constant reevaluation of a porfolio status as opposed to the sageful buy and hold advice of many investment tomes.

I enjoy the economic discussions on this blog from time to time.

All that being said, each person needs to evaluate his or her own aversion to risk, and tolerance for investment research.

I’ve always said gold is good for bribing border guards to let you sneak money and yourself across a hostile border when and if it becomes time to do so. Other than that, it’s just another commodity

Posted by: gergle at February 9, 2009 06:17 PM

Mr. Remer writes; “In a global economic collapse, I should think bat guano would have vastly greater value than gold as a fertilizer for growing one’s own food.”

Tell you what Remer, when bartering becomes the substitute for money, you take the bat shit and I’ll take the gold. There are many substitutes for bat crap, but very few for gold.

Remer also writes, and expects us to believe; “I love the 401K we have through USAA, during the money making times, our money is in stocks, during the non-money making times, our money is in fixed rate and bonds. We make money during good times and bad times…”

If I read this correctly, Remer is saying that his 401K only goes up. Does any other reader of this balderdash find it believable? Only the caretakers of his 401K have perfect knowledge. Give us a break Remer, and come back down to earth!

Posted by: Jim M at February 9, 2009 06:23 PM

Jim M.

How much bat guano will you trade me for my gold? Isn’t that the crux of the issue?

My name is Madoff. I have a perfect investment for you.

Posted by: gergle at February 9, 2009 08:15 PM

Thank you Jim M, for demonstration your complete absence of knowledge about 401K funds.

Fixed rate funds pay a fixed rate REGARDLESS of what the markets do. That’s why they are called FIXED RATE. Thank you for the chuckle. I had to laugh at the ignorance contained in your last comment. And you advise people on investments, do you? I feel sorry for them. :-)

And flight to quality ordinarily means bond funds go up when stocks are going down. Which means, as I said, when the nation’s economy is going down, 401K’ers who transfer their funds in their 401K from stocks to Fixed Rate and Bonds in that interim, will continue to make money while the nation’s economy and stock funds are going down.

I do. I truly feel sorry for those who listen to you on investment advice. But, hey, P.T. Barnum was right.

Posted by: David R. Remer at February 9, 2009 10:35 PM

There’s a reason the Amish survive and thrive today much as they did 200 hundred years ago, Jim M, it is because they prize fertilizer over gold. Think about it. The Amish are best positioned for an economic collapse, not those hoarding gold. The Amish are positioned to be independently self-sufficent, while those with gold are simply made that much more dependent upon the services of those who may or may not elect gold over food for their families.

The wealthy always think they are independent. The truth has always been that the wealthy are the most dependent of all in a given society. They depend on vastly more people than a self-sufficient eco-farmer is, and that’s empirically demonstrable besides being common sensical.

Which of the Roman emperor’s was brought down by his belief that all of Rome’s wealth existed for him? Was that Caligula? I can’t remember for sure. He was hardly independent, though he acted as though he had command of the entire realm’s wealth. He died as a result of his absolute dependence upon citizenry and minions of Rome.

How independent is Bernie Madoff after commanding the wealth of 50 billion dollars of other people’s investments? Bernie Madoff is the most dependent person in the U.S. today, upon the mercy of others, to paraphrase Ms. Blanche in Streetcar Named Desire.

Posted by: David R. Remer at February 9, 2009 10:46 PM

Remer, only a huckster could convince someone that they have perfect market knowledge and perfect market timing as you suggest is present in your fund manager.

As with other posts you attempt to spin to prove you are never wrong when challenged, this is merely one more example.

Posted by: Jim M at February 10, 2009 05:14 PM

David:

I think you should research your comments a bit more. Although you are generally correct that bonds move in the opposite direction as stocks this year was different. High grade corporate bonds had significant losses. High Yield bonds had losses that approached stocks!!

This year those that moved to non us treasury bonds in their 401k’s got hammered although generally not as much as stocks. How about those who invested in USAA fannie mae’s?

Also, your market timing is far from perfect. From your 1996 call to get out of stocks was over two years early.

Posted by: Craig Holmes at February 10, 2009 09:09 PM

Craig, I think you need to read what I write more literally. I DID NOT say that Bonds rose as stocks fell THIS YEAR, nor did I even imply it. I did make the general statement that, and I quote: “And flight to quality ordinarily means bond funds go up when stocks are going down.”

I made no reference to this year at all in that regard, now, did I? My entire reference in context was a discussion of 401K strategy in general.

As for timing, If 401k’ers had begun to pull out of stocks incrementally on the stock market tops in late 2006, putting those funds into fixed rate and bonds, their balances today would be vastly greater than they are today.

If you don’t understand that 401K funds are no place to be trying to play market tops and bottoms, but economic and market trends in the long run, then you either don’t have any experience with 401K funds or you likely have mismanaged yours using a day trading strategy.

I even state this quite clearly that NO ONE can pick market bottoms and tops with any consistency or accuracy. My 401K fund is bigger than in late 2006, and given the media coverage of an average loss of over 40% in 401K’s since the markets began to tumble, the logic of my strategy and advice in 2006 and today, stands on its own.

In 2006 I wrote of a coming economic and stock market trend. I could not, and did not, give a date when the markets would begin to drop precipitously. I did correctly call the trend based on sound evidence by others like Markman that the good times would be coming to an end.

The economic trends and longer term market trends are what 401K investors should be working with in their balance distributions and allocations. Not picking dates when the market will top or bottom.

The markets could test and drop below previous lows in 2008 in the next several months. But, the 401K investor should find that information irrelevant. They are investing in a 401K for goals that should be years and or decades out. They want to avoid stocks when recessions are potential on the horizon, and they want to be in stocks when economic growth is both likely and to be sustained for a protracted period of time.

Which makes today a good time, as I said, to reallocate funds from fixed rate and bonds to stocks in increments on those days when the market takes a big tumble, like today. This insures that they are incrementally moving funds into stocks at low pricing and building stock funds incrementally in advance of higher market valuations which are very likely toward the end of this year, as the markets often go up as much as 6 months in advance of actual valuation supporting economic conditions.

Analysts and many economists are now forecasting an end to the recession and recovery taking place in 2010. One wants to be vested in stocks by the end of 2009 in a substantial way to ride that upward trend in the stock markets that will attend the evidence of a coming recovery.

So, if you mean by your comment that my market timing is far from perfect from the point of view of a day trader and stock broker, I have to agree with you because their strategy is to pick daily, weekly market bottoms and tops and trade on those range extremes.

But, from a 401K perspective, my market timing has spared 401K’ers the 40% loss in their balances which are average for all 401K accounts today. And that is optimal by any standard I know of for long term investing.

Posted by: David R. Remer at February 11, 2009 12:09 AM

Jim M, the facts are what they are. 401K’ers who followed my advice in 2006 have 40% more money in their 401K funds than the average 401K investor today.

If that makes you write jealous comments alluding to my being a huckster for being proved factually and historically right in my 2006 article, so be it. And thank you.

Posted by: David R. Remer at February 11, 2009 12:13 AM

David:

You are rewriting history just a bit here. First of all, you have changed horses away from Markman to another sourse with out explaination.

Second you are incorrect. 401k who did not “follow your advice” do not ahve 40% less in their 40kk’s.

The average 401 k investor gained 8.7% in 2007 and lost 27% in 2008.

From June 2006 until december the market was up about 11%. Discounting the return because most investors are divisified, still leaves a return of say 8%. But all this in a calulator and you get a person an average portfolio who added notbing to their investment down about 6 or 7% from their June 2006 balance.

Those who dollar cost average and left their portfolios alone will probably fare far better as they have been purchasing shares all along through this volatility.

At the end of the day 6% down is a far cry from the 40% you mention above.

Posted by: Craig Holmes at February 13, 2009 04:27 PM

Craig said: “Second you are incorrect. 401k who did not “follow your advice” do not ahve 40% less in their 40kk’s.”

Well, you can play statistical games all you want. Doesn’t change the FACT widely reported by the industry that from the HIGH water mark in 401K’s, the average 401K investor balance has seen a 40% decline. Google it.

You can make up whatever measures you wish, but, the factual data remains.

And the fact remains, that 401K investors who followed my advice would have significantly higher balances than they had at the end of 2006, whereas, those who left their balances in stocks through to today, have significantly less in their balance than they had in 2006.

Also, 401K investors, I reiterate, are not day traders, and like the advice I now give, that they should increment the transfers from bonds and fixed funds to stocks over this next 9 to 10 months using big stock market down days to increase their stock balances.

You seem to be assuming that 40K investors, following my advice in 2006, would have abruptly pulled all their money out of stocks at that time. That is not how I or most saavy 401K investors handle their balances. I transferred money from stocks to bonds and fixed incrementally from July 2006 to March 2007.

And yes, I missed out on the market run up from Mar 2007 through its first big plunge in October I think it was. But, as I have repeated many times, NO ONE can predict market tops or bottoms with any accuracy for a particular date, and 401K investors, if they are smart, will make such moves incrementally up or down, well in advance of market tops and bottoms. That is how they maximize growth over the long term.

They make adjustments on incremental bases in accordance with long term economic and market trends, not abruptly based on a days market levels. You continue assume a day trading or market bottom - top investor strategy in your comments. And it negates your commentary on 401K investing, because that is absolutely the worst strategy 401K investors can engage in. They will many more times than not, end up chasing the crowd, and anyone familiar with markets, knows that following the daily up and down investor crowd on market moves is a big fat loser in the long run.

Posted by: David R. Remer at February 13, 2009 05:26 PM

Craig, a person with 100,000 balance, using dollar cost averaging as you suggest, LOST THEIR ASS, if they left their balance in stocks.

You truly do not understand investing.

The average 401K investor invests small amounts from their paycheck into their 401K, from 1 to 8% with the national average in the lower range. From 2006 to today, they lost 40% on their 2006 balance, gained on their new contributions of several hundred to several thousand in 2007 through October, and then lost those earnings in 2008.

They net lost on their 2006 balance, and lost their dollar cost averaging gains on new contributions in 2007 in 2008. Those who followed my advice kept their entire 2006-2007 balance as they incremented out of stocks into bonds and fixed, and their new contributions should have increasingly been made to bonds and fixed as well, throughout 2007 and 2008 in observance of the coming crash I, Markman, and others wrote about.

If they started with 100,000 in 2006, and kept 80% in stocks, they lost more than $30,000, and gained nothing on new contributions in 2007 as 2008 erased those gains, and continue to lose money to this day. The stocks are near their multi-year lows. The bottom has been tested twice and survived.

401K investors who followed my advice then, would do very well to follow again now, and begin now to increment transfers of funds out of bonds and fixed and back into stocks on those days in which big stock market dips of 1.5% or more, occur. And continue this process throughout this year, ending with approximately 70 to 80% stocks, 10% fixed rate, and 10 to 20% bonds by Nov. of this year (if they 10 years or more from retirement.) They will indeed be the investor winners in the 401K realm provided an asteroid doesn’t collide with earth, Pakistan doesn’t send nukes in every direction, and Christ doesn’t return for the end of days. :-)

Posted by: David R. Remer at February 13, 2009 05:40 PM

David:

What I am reporting is simply facts. The average 401k investor did not loose 40% in their investments.

YOu are simply making assumptions.

Here is what your columnist Jon Markman is now saying:

http://articles.moneycentral.msn.com/Investing/SuperModels/too-late-to-avoid-a-depression.aspx

You are so wrong on your advice because you make assumptions that are univeral. You give no sway to a persons risk tolerance, or their years to retirement etc. You have a one size fits all approach. All ivesttors, aggressive, cautious etc, and all age investors incluting the 70 year old full time employee should not follow your advice and jump into stocks.

So what is your advice right now for a risk adverse person in their middle sixties with 2 years to retire do?

From 2006:

Smart 401K investors no better than to try to pick market bottoms and tops. Instead, when stock price growth is likely for a period of time, the smart investor moves their money into stocks in increments, taking advantage of significant dips in stock prices to add more money into stocks

Smart investors invest within their risk tolerance, and with their investment time horizon in mind. Risk adverse readers should never of had their investments in stocks in 2006 or now.

You should not be giving financial advice to readers in your column because you are not a financial advisor. You should instead simply state your opinion that you think the market is going up from here and readers should look at their own situation and make decisions accordingly because you are wrong so often.

For istance let’s say another investor was aggressive and had a two year window. Wow was your advice wrong!! You cost them a ton of money.

Let’s say your error now is the same is in 2006 and an risk adverse person follows your advice now and the market is down two years from now and because you have made yet another assumption about their risk tolerance, and assumed they have your risk tolerance, and then in two years the S&P 500 is at 650, and they sell, even though you are going to come here and tell us how right you were when the S&P500 goes to 1000, that person was harmed by your advice.

So you gave your opinion and if your opinion has the same level of error in it as in 2006 (as in off by 2 years) you could very likely harm people.

It doesn’t take a bright bulb to predict when the market is high it is going to go low and when it is low now it is going to go high. What makes a bright bulb is to put a timeline on your prediction, otherwise it is jut hot air.

So you and everyone else are saying that after the worst market since 1937 the market should go up from here eventually. that is of course equivalent to saying the sun is coming up tomorrow. Your advice could be very very wrong for some readers as it was in 2006, and you should not do it here. I think you should state your opinion in ways that does not advice readers about their individual situations of which you know nothing about.

Posted by: Craig Holmes at February 13, 2009 07:51 PM

Craig gives this sound advice to Mr. Remer;

“I think you should state your opinion in ways that does not advice readers about their individual situations of which you know nothing about.”

Well said Craig. Mr. Remer is treading on very dangerous ground here. If Remer is a licensed insurance agent or a registered rep involved in offering investment advice he would be much more cautious.

Not being a registered rep, by choice, I use life insurance and annuity strategies for my clients seeking safe retirement and estate planning. That’s not to say these are the only strategies available but certainly should be considered as part of the mix of alternatives.

For the benefit of others I will repeat the sage observation of the great American humorist, Will Rogers,

“I am not so concerned with the return on my money as the return of my money.”

Posted by: Jim M at February 14, 2009 12:51 PM

Jim M, I like the way you define ‘sound advice’ as anything that agrees with your view. Fortunately, the world does not recognize such a definition. :-)

Posted by: David R. Remer at February 14, 2009 04:17 PM

I read Remer’s bio that he provides and find he fails to mention any licensing that would indicate proficiency or expertise in financial planing. He does mention having an MBA. However, PB has that and he was considered by Mr. Remer to be dim witted.

I would ask Mr. Remer to provide his licensing authority for the financial advice he so freely dispenses. To whom is he held accountable? Does he own errors and omissions insurance?

Posted by: Jim M at February 14, 2009 05:11 PM

No, Craig. You are assuming. You are talking without even having researched the subject. AS IF you were some kind of expert which you already have demonstrated you are not.

And just because Markman was right in 2006, does not of itself make him right today. No one is right all the time, when it comes to economics and forecasting, including, and especially the markets.

Below are some factual data, the first more anecdotal, the second more comprehensive. Followed by my contribution which cannot be overlooked.

Link1

Vanderhai provides conservative estimates, stating:

By account balance. Retirement account losses in 2008 disproportionately affected wealthy savers. Those with more than $200,000 lost more than a quarter of their savings, on average, according to an Employee Benefit Research’s Institute analysis of 22 million participants in more than 55,000 employer-sponsored 401(k) plans. Investors in the $100,000 to $200,000 range suffered as well, with an average loss of 21 percent in 2008. The typical account with $50,000 to $100,000 lost 15 percent.

Then, if you remove the contributions made over the same period, you have net losses. By removing the contributions over the same period, you arrive at an approximate 40% average loss for those most heavily invested in 401K’s and nearing the end of their working lives.

Which pretty much demonstrates why Bush’s idea of investing S.S. in the stock markets could be so devastating to retirees just before retirement, btw.

Posted by: David R. Remer at February 14, 2009 05:59 PM

Jim M, when I am right, I am right. NO licensing required to be right about events in our society. It is called freedom of speech. And being demonstrably right, is called reputation. There endeth your lesson for today.

And most of the 401K’ers who followed licensed professionals advice have net losses in their accounts, whereas, those who followed my advice, still have net gains. So much for your licensing argument. That advice was to leave their money in stocks for the long haul, feathering the nests of the shareholders and execs who made out like bandits on unsuspecting 401K and other investors. The licensed professionals advice was demonstrably costly to 401K investors who followed their advice instead of mine.

Your comments do give me a chuckle from time to time. Thank you for that.

Posted by: David R. Remer at February 19, 2009 10:32 AM

David R. Remer wrote:

• d.a.n said: “It is much more often the other way around, because pain and misery is something people want to end; not increase. “

Sorry, your comment clearly indicates a lack of experience with the social state of poverty.

Not true.

The type of crimes are merely different. Different types of crimes are merely more prevalent at different levels of wealth. Some of the biggest scams and crimes are not perpetrated by the poor. Bernard Madoff and numerous wealthy CEO’s cookin’ the books have devasted many more people’s lives. And consider Bill Gates, the wealthiest person in the nation who lays-off American citizens while hiring foreign H-1B visa workers and begging Congress to increase the H-1B visa limits. How greedy is that? Why do we need to continue to import 1.5 Million foreign H-1B visa workers per year when we have 11-to-25 Million unemployed? Also, that and other types of greed and selfishness aren’t necessarily illegal, but still have huge negative impacts on society. A lot of our problems today are rooted in too many decades of excessive greed and selfishness, and I don’t think the poor are the major cause of it, nor the major cause of crime. Thus, I don’t believe pain and misery causes greed and selfishness. It is the other way around. Greed and selfishness causes pain and misery, and the poor are no more guilty than anyone else.

David R. Remer wrote: It is not much more often. Poverty breeds greed and selfishness to significant extent, which accounts for the extremely high crime rates in poverty stricken areas of other nations and in our urban and rural environments.

I completely disagree. What do you think pushes a lot of people into poverty? What are the root causes of rising unemployment today? Poverty is more often the result of greed and selfhishness by others. Right this minute, there is age discimination in which people of age 55 are losing their jobs at the highest rate (it jumped by 50% from last year).

We’ll have to agree to disagree. In my opinion, poverty is NOT the cause of greed and selfishness, but the results of greed and selfishness. I’ve taken and studied pyschology too, and while many people think poor people are poor because they are excessively lazy, corrupt, greedy, and selfish is unfair to say the least. And how about the shrinking middle-class today? They are culpable too, but that does not explain away the greed of many wealthy people who have been abusing power from wealth for decades which is widening the wealth disparity (i.e. the wealthiest 1% of people who owned 20% of all wealth now own 40% of all wealth, and 80% of all Americans now own only 17% of all wealth). Many greedy banks and many in executive management of many corporations have been screwing everyone they can. Many greedy banks bundled up toxic debt, rated it AAA, and fraudulenty peddled it to the rest of the world. Yet you say poverty breeds most of the crime? I don’t think so. The poor don’t have a monopoly on greed and selfishness as you suggest.

David R. Remer wrote: Bootlegging was the most historic example of this, born out of poverty and necessity and which still constitutes a major crime fighting focus of the ATF in backwoods of America amongst folks with limited education and other vocational means.

The poor were not the biggest offenders. Joe Kennedy was far from poor. Many in organized crime organizations were far from poor. That example doesn’t prove that the poor are any more greedy and selfish than any one else.

David R. Remer wrote: Bootlegging is motivated by little more more than money to provide for oneself and one’s family, and while such greed and selfishness for money by otherwise poor bootleggers can be justified by their poverty the lack of opportunity in their rural areas, it is greed and selfish motives, nonetheless that moves them to criminal activity. Parallels now exist in the billion dollar pot and amphetamine industries, which will now grow as unemployment and fears of poverty rise.

Sure, it was motivated by greed and selfishness, but the poor don’t have a monopoly on greed and selfishness. Poverty is not the major cause of greed and selfishness, and the poor are no more greedy and selfish than the wealthy. In fact, the magnitude of the crimes by the wealthy (such as those listed below) often dwarf the crimes by the poor.

Crooked CEOs, CFO, Presidents, VPs, etc.:
• Bernard Madoff ($50 Billion dollar Ponzi-scheme)
• Ken Lay (ENRON)
• Bernard Ebbers (WorldCOM)
• David Myers (WorldCOM)
• Dennis Kozlowski (Tyco)
• Mark H. Swartz (Tyco)
• John Rigas (Aldelphia)
• Timothy Rigas (Aldelphia)
• Scott Sullivan (WorldCOM)
• Burford Yates (WolrdCOM)
• Jeff Skilling (ENRON)
• Andrew Fastow (ENRON)
• Lea Fastow (ENRON)
• Samuel D. Waksal (ImClone Systems)
• David Duncan (Arthur Andersen)
• E. Kirk Shelton (Cendant)
• Ben Glisan Jr. (ENRON)
• Dan Boyle (ENRON)
• Weston Smith (HealthSouth)
• Aaron Beam (HealthSouth)

David R. Remer wrote: Greed and selfishness are not solely the province of the wealthy, …

Right. And neither is greed and selfishness solely the province of the poor, but that is essentially your argument above (i.e. that poverty more often breeds greed and selfishness).

Greed and Selfishness grows where there is a lack of transparency, opportunity, and accountability. That explains a LOT. That’s why Congress is so FOR-SALE, irresponsible, incompetent, and corrupt. That’s why Congress just gave itself its 10th raise in 12 years, plus another $93,000 per Congress person for petty cash and expenses (while U.S. Troops go without armor, adequate medical care, promised benefits, and have to do 2, 3, 4+ tours in Iraq and/or Afghanistan).

David R. Remer wrote: … nor is charity only to be found amongst the working poor, many of whom are the most generous people to be found.

I never said the poor aren’t charitable. However, you stated …

David R. Remer wrote: Poverty breeds greed and selfishness to significant extent, which accounts for the extremely high crime rates in poverty stricken areas of other nations and in our urban and rural environments.

Again, you make it sound as if the wealthy don’t commit as much crime. That’s highly debatable. The types of crimes (on average) may be different for people at different levels of wealth. That’s all. For example, consider what Mark Twain said about Congress:

• [The U.S.] is a nation without a distinct criminal class “with the possible exception of Congress.”

David R. Remer wrote:

• d.a.n said: “because greed and selfishness breeds more pain and misery;”

I know of some hedge fund managers who got out of the business in 2007 and 2008 who would disagree with your comment vociferously if they could be contacted in the Italian, Swiss, or Carribean Villas. :-) I am of course being facetious, and you are right, corporate greed and selfishness unchecked, unregulated, and not overseen, will lead to boom and bust cycles in which a few make out big in the boom and everyone else pays and pays back during the bust cycles.

There are exceptions. But someone else suffered for that example of greed and selfishness. Also, too many in the U.S. have spent too much time trying to make money by playing with money. As a result, many greedy banks and many on Wall Street bundled up toxic debt, rated it AAA, and fraudulently peddled it to the rest of the world. That greed and selfishness has definitely has led to more pain and misery. Not the other way around.

David R. Remer wrote: And Bust cycles will be accompanied by increases in violent crime, theft, robberies, and embezzlement, and a dramatic growth in the illegal drug and pleasure industries, motivated by greed and selfishness of the other end of the wealth ladder, the newly unemployed, and newly poverty stricken or, about to be.

True, but pain and misery isn’t the cause of it. Greed and selfishness creates pain and misery. And the poor are also NOT the root of more pain, misery, crime, and societal chaos. The poor don’t have that much power for the most part (most of the time). Money is power, and power often corrupts. The poor don’t have the money or power much of the time. Thus, their crimes are often dwarfed by the scale of crimes by the wealthy and powerful.

David R. Remer wrote: There is an ethical difference however to be made between those who selfishness leads to theft in order to feed their children, and those whose selfishness motivates them to amass wealth as a measure of their ego and greed at great cost to others (Bernie Madoff being and extreme example).

I agree completely. There are degrees of everything.

I’m not saying all wealthy people are excessively greedy and selfish. I’m merely saying that wealth is power, and power often corrupts. Especially when it is accompanied with a lack of transparency (or complexity to help obfuscate and reduce transparency), opportunity (such as in our FOR-SALE Congress), and a lack of accountability (such as 85%-to-90% re-election rates for a FOR-SALE, irresponsible, incompetent, and corrupt Congress; for which the majority of voters are culpable too).

David R. Remer wrote: In my court the former would be set free and given an opportunity to work. The latter would would be found guilty of fraud and theft for each person they stole from, and each count would require its own non-concurrent prison sentence under law. Having been so lavishly rewarded for so long, the Bernie Madoff’s are unlikely to ever to be trusted with freedom to govern their own actions in society again.

I agree completely. The scale, ramifications, and motivation for the crimes are completely different. Yet, Bernie Madoff is still hangin’ out in his multi-million dollar pent-house/apartment.

Where we disagree is the source of pain and misery.
I say pain and misery is a result of excessive greed and selfishness.
You say it is most often the other way around, and try to portray the poor as more greedy and selfish.

David R. Remer wrote: Poverty breeds greed and selfishness to significant extent, which accounts for the extremely high crime rates in poverty stricken areas of other nations and in our urban and rural environments.

I strongly disagree. We’ll have to agree to disagree.

David R. Remer wrote: Just as the execs of the Citibanks and BofA’s are not to be trusted now, or ever again, with the financial management of a pay toilet, let alone corporations too big to allow to fail, IMO. If Obama allows these execs to remain heads of these corporations, even as he authorizes tax payer TARP funds to those companies, he is himself breaching the trust the American people placed in him in Nov. of 2008.

Obama will allow it. One or two may be cut down for appearances, but wealth is power, and power corrupts, and the majority of CEOs and cheats will get away with it to a large degree.

David R. Remer wrote: d.a.n, you can’t make an argument for a bill proposal that never saw the light of day as law. Citing condoms and other items which only proposed but never made it to the bill Obama signed, taints the power of your argument with fallacious data. There are no millions for condoms. That was one of the first things to be cut from the bill proposed by the House.

Condoms did not make it to the final BILL? OK, if true, Good. But what about all of the other pork-barrel?

David R. Remer wrote: The House you must remember is filled with representatives representing a vast array of special interests and constituencies. They can propose wants, but, the Senate being the more deliberative body representing vastly larger constituencies and even whole States, also get a say, and the the Conference Committee gets its say, and then the President gets their say.

So what about the other pork-barrel and waste in that BILL ?

David R. Remer wrote: Usually, the really ludicrous gets eliminated by this process, though one must hasten to add, not always.

It appears that a lot of the ludicrous still made it into the final BILL. What about:

• $650 million for digital-TV coupons; $90 million to educate “vulnerable populations”;
• $50 million for the National Endowment for the Arts;
• $150 million for the Smithsonian;
• $34 million to renovate the Department of Commerce headquarters; is this the department that wants to end e-Verify?
• $44 million for repairs to Department of Agriculture headquarters;;
• $350 million for Agriculture Department computers;
• $1 billion for the Census Bureau; will that include 12-to-20+ illegal aliens?
• $850 million for Amtrak, the federal railroad that hasn’t turned a profit in 40 years;
• $1.7 billion for the National Park System;
• $55 million for Historic Preservation Fund;
• $7.6 billion for “rural community advancement programs”;
• $150 million for agricultural-commodity purchases;
• $400 million for hybrid cars for state and local governments;
• $8 billion for innovative-technology loan-guarantee program;
• $2.4 billion for carbon-capture demonstration projects;
• $54 Billion for federal programs that the Office of Management and Budget or the Government Accountability Office have already criticized as “ineffective” or unable to pass basic financial audits (e.g. the Economic Development Administration, the Small Business Administration, the 10 federal job training programs, and many more).
• $87 million for a polar icebreaking ship;

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful). Posted by: d.a.n at February 23, 2009 11:19 AM