100 trillion in aggregate unfunded liabilities. This is a con that would make Bernie Madoff blush. And the real losers will be the tens of millions of Americans being sold false promises because our elected officials lack the courage to state the obvious. We cannot afford this level of service without a massive tax increase or a significant cut in benefits.

I am dismayed by the attitude of Congress on the issue of the national debt in this period of recovery from the longest recession since the great depression.  What sense is it to cut spending when that is precisely what is needed to stimulate the economy?  And to extend tax cuts for the wealthy while cutting benefits for the needy makes no sense at all.  It represents a view that is both selfish and shortsighted - an attitude so prevalent among our policymakers today.  To put the blame for our improvident spending on Social Security and Medicare only begs the question of our priorities. What else is the purpose of government but to provide for such things?  To cut spending on these seems unworthy of the greatest nation of the world.

Whenever I find myself looking narrowly at some social welfare program, I think of the Preamble to the Constitution, which always puts my views in proper perspective.  It is "We the People" - not me, me, me. Need must it be so, for the true greatness of a nation, and its moral progress, is not measured by its wealth or power, but by the manner in which it provides for the welfare of its people.

Quote from: Graham R.A. Garner on December 23, 2013, 07:29:13 AM
Whenever I find myself looking narrowly at some social welfare program, I think of the Preamble to the Constitution, which always puts my views in proper perspective.  It is "We the People" - not me, me, me. Need must it be so, for the true greatness of a nation, and its moral progress, is not measured by its wealth or power, but by the manner in which it provides for the welfare of its people.

That's an excellent point:  of course the phrase "promote the general welfare" is absolutely dissimilar to the phrase "provide the individual welfare."  But as long as you redefine all the words, everything means anything you claim it does.

And, while government-enforced wealth redistribution makes "we the you" feel more important, without having to actually do anything, it has never caused any country to recover from a depression.  And there is no rational reason to believe that it ever will.

Quote from: Graham R.A. Garner on December 23, 2013, 07:29:13 AM
I am dismayed by the attitude of Congress on the issue of the national debt in this period of recovery from the longest recession since the great depression.  What sense is it to cut spending when that is precisely what is needed to stimulate the economy?  And to extend tax cuts for the wealthy while cutting benefits for the needy makes no sense at all.  It represents a view that is both selfish and shortsighted - an attitude so prevalent among our policymakers today.  To put the blame for our improvident spending on Social Security and Medicare only begs the question of our priorities. What else is the purpose of government but to provide for such things?  To cut spending on these seems unworthy of the greatest nation of the world.

Whenever I find myself looking narrowly at some social welfare program, I think of the Preamble to the Constitution, which always puts my views in proper perspective.  It is "We the People" - not me, me, me. Need must it be so, for the true greatness of a nation, and its moral progress, is not measured by its wealth or power, but by the manner in which it provides for the welfare of its people.

Thank you for the latest essay from those little strips of paper in your lib/prog fortune cookie factory. What a load of bad cheese.

Since you're so familiar with our Constitution (or so you say), perhaps you could point out the specific language that clearly and unequivocally authorizes the Congress to confiscate wealth from me and give it to someone considered (by Congress, not by me) to be more "deserving."

Honestly, your posts reflect an absolute void when it comes to understanding how the United States was designed to work.

In a few years, entitlements like your beloved SS and Medicare will completely consume every dime the federal government collects. Would it be OK with you if, at that point in time, we maybe turn our attention to these things as possible drivers of the nation's out of control spending?

Oh, and if you're going to go all classic on us with little splotches of Dickensian verbiage, the correct form is "needs must," though "must needs" was more common. The greatness of a nation, incidentally, is NOT measured by how much and how often the government of that nation forces its citizens to surrender their wealth on behalf of those who contribute little or nothing to the greatness of that nation.

Congress has the power to lay taxes and provide for  the general welfare of the United States under Article I, Section 8 of the Constitution.  In this regard, Congress established the Social Security Administration, a governmental unit under the Department of Health and Human Services of the United States. Social Security (and also Medicare to a limited extent) is required by law to be self-funded; and not a drain on the national debt. Any shortfall in Social Security benefits can readily be made up by simply raising the "cap" on employment taxes; however this is not politically acceptable to certain elements of American society that are hellbent on doing away with all government entitlement programs no matter what the cost.  The proposed voucher system for Medicare is a government scam. (I am reminded of the scene in Joseph Heller's novel Catch-22 when Yossarian checks his parachute and finds it replaced with a share of stock in M&M Enterprises.) Indeed, if certain people in Congress have their way, your Social Security and Medicare benefits will end up being a lottery ticket and the number for Dial-A-Prayer.

Quote from: Graham R.A. Garner on December 23, 2013, 09:04:21 AM

QuoteThat's an excellent point:  of course the phrase "promote the general welfare" is absolutely dissimilar to the phrase "provide the individual welfare."  But as long as you redefine all the words, everything means anything you claim it does.

Congress has the power to lay taxes and provide for  the general welfare of the United States under Article I, Section 8 of the Constitution.  In this regard, Congress established the Social Security Administration, a governmental unit under the Department of Health and Human Services of the United States.

Once again, that would be identical, if it were not the exact opposite.

QuoteSocial Security (and also Medicare to a limited extent) is required by law to be self-funded; and not a drain on the national debt. Any shortfall in Social Security benefits can readily be made up by simply raising the "cap" on employment taxes; however this is not politically acceptable to certain elements of American society that are hellbent on doing away with all government entitlement programs no matter what the cost. 

How can one even BEGIN to sort through the multiple layers of convoluted idiocy here?

Charles Ponzi's signature scheme -- the one that made him famous and put the phrase "Ponzi scheme" into the lexicon -- rose and fell in 1920. Ponzi did a couple years federal time, then a stretch in a Massachusetts state prison. He was released in 1934. Social Security, a fundamentally and irrevocably unsound system that Ponzi himself might have designed, was passed in 1935.

The historical proximity of these occurrences is compelling, I think. 

Quote from: TboneAgain on December 23, 2013, 09:39:24 AM
Charles Ponzi's signature scheme -- the one that made him famous and put the phrase "Ponzi scheme" into the lexicon -- rose and fell in 1920. Ponzi did a couple years federal time, then a stretch in a Massachusetts state prison. He was released in 1934. Social Security, a fundamentally and irrevocably unsound system that Ponzi himself might have designed, was passed in 1935.

The historical proximity of these occurrences is compelling, I think. 

SS took several years, and a few go-rounds, before it got passed.  It started out as a much smaller Railroad Retirement Act.  Then it was reborn as a more general, but still relatively small, program.  The Supreme Court declared it "Constitutional" as an emergency response to the First Great Depression and, like all Socialist programs, that period of martial law became perpetual.  If it'd been kept to its original scope the bubble might never have burst.  But it's grown and morphed, through good times and bad, like a tumor completely out of control.

As for the timing, there's a much closer correlation between Milliken's junk bond scheme and the housing collapse.  It seems that Congress started work on the legislation the day the verdict was handed down, to do let a select few campaign contributors do the same thing Milliken did, except all the crimes were perfectly "legal" this time around.

Quote from: Graham R.A. Garner on December 23, 2013, 07:29:13 AM
I am dismayed by the attitude of Congress on the issue of the national debt in this period of recovery from the longest recession since the great depression.  What sense is it to cut spending when that is precisely what is needed to stimulate the economy?  And to extend tax cuts for the wealthy while cutting benefits for the needy makes no sense at all.  It represents a view that is both selfish and shortsighted - an attitude so prevalent among our policymakers today.  To put the blame for our improvident spending on Social Security and Medicare only begs the question of our priorities. What else is the purpose of government but to provide for such things?  To cut spending on these seems unworthy of the greatest nation of the world.

Whenever I find myself looking narrowly at some social welfare program, I think of the Preamble to the Constitution, which always puts my views in proper perspective.  It is "We the People" - not me, me, me. Need must it be so, for the true greatness of a nation, and its moral progress, is not measured by its wealth or power, but by the manner in which it provides for the welfare of its people.

Oh great! Another Keynsian who thinks we can borrow and spend our way into some secular progressive nirvana. Lol!

We are not in the midst of a recovery. We are simply masking the illness with mountains of easy money being printed by the fed. Sorry you can't seem to tell the difference.

Quote from: kopema on December 23, 2013, 08:49:22 AM
That's an excellent point:  of course the phrase "promote the general welfare" is absolutely dissimilar to the phrase "provide the individual welfare."  But as long as you redefine all the words, everything means anything you claim it does.

And, while government-enforced wealth redistribution makes "we the you" feel more important, without having to actually do anything, it has never caused any country to recover from a depression.  And there is no rational reason to believe that it ever will.

Giving away what others have earned (ie wealth redistribution) isn't generosity. It's something entirely different.   

Quote from: Graham R.A. Garner on December 23, 2013, 09:04:21 AM
Congress has the power to lay taxes and provide for  the general welfare of the United States under Article I, Section 8 of the Constitution.  In this regard, Congress established the Social Security Administration, a governmental unit under the Department of Health and Human Services of the United States. Social Security (and also Medicare to a limited extent) is required by law to be self-funded; and not a drain on the national debt. Any shortfall in Social Security benefits can readily be made up by simply raising the "cap" on employment taxes; however this is not politically acceptable to certain elements of American society that are hellbent on doing away with all government entitlement programs no matter what the cost.  The proposed voucher system for Medicare is a government scam. (I am reminded of the scene in Joseph Heller's novel Catch-22 when Yossarian checks his parachute and finds it replaced with a share of stock in M&M Enterprises.) Indeed, if certain people in Congress have their way, your Social Security and Medicare benefits will end up being a lottery ticket and the number for Dial-A-Prayer.

Whose to say the general welfare isn't being promoted by trying to live within our means and keeping the country on a fiscally sustainable path?

As for Medicare, the entire thing is a scam because we cannot pay for the promises we are making and we would bankrupt this country if we tried to do it. How can it be right when leftists do it and wrong when Bernie Madoff does it?

Quote from: kopema on December 23, 2013, 11:02:15 AM
SS took several years, and a few go-rounds, before it got passed.  It started out as a much smaller Railroad Retirement Act.  Then it was reborn as a more general, but still relatively small, program.  The Supreme Court declared it "Constitutional" as an emergency response to the First Great Depression and, like all Socialist programs, that period of martial law became perpetual.  If it'd been kept to its original scope the bubble might never have burst.  But it's grown and morphed, through good times and bad, like a tumor completely out of control.

As for the timing, there's a much closer correlation between Milliken's junk bond scheme and the housing collapse.  It seems that Congress started work on the legislation the day the verdict was handed down, to do let a select few campaign contributors do the same thing Milliken did, except all the crimes were perfectly "legal" this time around.

There is absolutely no correlation between Milken and the housing market collapse. The housing market collapsed for the same reason the current economy is not really in recovery. Massive distortion due to mountains of easy money.

Read my earlier posts in the financial section regarding asset backed securities and then let me know if you have any questions. I will be happy to explain how the explosive growth of securitizations led to a dangerously loosening of the mortgage underwriting criteria that eventually proved to be unsustainable.

Quote from: Dan on December 23, 2013, 04:43:03 PM
There is absolutely no correlation between Milken and the housing market collapse. The housing market collapsed for the same reason the current economy is not really in recovery. Massive distortion due to mountains of easy money.

That's exactly what happened in the junk bond market.

Sub-A bonds were individually risky investments; but collectively, even after the defaults, they had a higher-than market return.  So Milliken started bundling them and selling shares.

The problem was that the REASON junk bonds were good investments in the first place is because the people investing in them watched them like hawks.  But once the money started gushing in indiscriminately, the people issuing the bonds (of course) got more and more lax, and so (of course) the bonds started defaulting far more often.  The only illegal things Milliken did were near the end, when he interfered with investor's ability to examine the underlying securities.

That's precisely what Congress did with home loans -- except that they added FDIC insurance for a while, then they quietly pulled the rug out from under it; and they didn't merely obscure the details of the mortgages, they made it illegal to NOT blind-bundle them.  So (of course) the banks soon started giving mortgages to wildly unqualified applicants, because they made their money on the back end from selling the mortgage securities.

The fact that work on all this legislation started so soon after Milliken went to jail makes the connection seem pretty darned obvious to me.

That's not what happened. I worked in the capital markets group for two different issuers of mortgage and asset backed securities back in the mid 90s to early 00s.

I am restating stuff I wrote in earlier threads and asked you to look up, but since you didn't here are the highlights.

Before securitizations, fannie mae set the underwriting box. LTV not greater than 80. DTI in the mid 30s. FICO at 680 or above. Yada, yada, yada. Sure a few loans were done outside of this box, but the volume was greatly constrained by a lack of liquidity. Pre securitization fannie mae was the only game in town regarding a secondary market for mortgages and most banks didn't want to be in the business of holding an asset with a 30 year term.

In the early 90s, securitizations were used primarily for subprime auto loans. Look up Mercury Finance. There was another one of similar size but I don't remember it's name right now. Then around 94 or so it started becoming more common for mortgage companies to do it. First the subprimes got into the game. Think of companies like Saxon mortgage. Then the nonconforming (A credit, looser underwriting standards) got into the game. Think FIRSTPLUS or Amigo. The nonconforming lenders were everything from high LTV (125%) to Jumbos, to mixed use to rural property loans. For a while this stuff was fine. Yes there were some crap loans in the deals, but there was enough credit support in place that nothing was going to blow up and the only one who would get hurt would be the issuer of the securities as their residual asset withered away to nothing.

These deals were loaded with credit support. Usually there was an initial overcollateralization (more mortgages than bonds), plus any excess interest would be deferred to accelerated bond principal payments until a higher overcollateralization rate was hit and any losses would be covered with future deferrals of excess interest. Additionally there was a MBIA insurance wrap around the A bonds as well. Remember this because it is a very important part of the equation as this whole thing unraveled.

So basically a securitization could have 25% or more of the loans go bad and still not even hurt the B class bondholders. To hurt the triple As you would be looking at loss rates of 50% or more. Completely unheard of loss rates so the short answer is to say the triple As were very safe.

I'll continue this conversation if you like, but please look up the following terms before we continue. Congress didn't do this to us. This thing blew up because of a lack of competent oversight or even basic understanding by multiple administrations and then fed, and the fact that issuers, like children, will push and push and push until they break something.

Overcollateralization
Excess Interest
Loss Severity
Gain on Sale Accounting
Mark to Market Accounting
MBIA Insurance Wrap
Underwriting Fees (as they related to publicly traded asset backed securities)

Have a great day and merry Christmas.