Social security is not socialism but it needs to be privatized

The financial sector is full of sociopathic predators who indeed are restricted only by the law. If they didn't have banks and other financial institutions, and the stock market and other markets to play around with, they would probably be in outright organized crime.

 

Privatize Social Security? Worse. Idea. Ever. Why do you people hate the American way of life so much?

 

Yes, of course. And then another 2009 comes around and...

How many people lost most of their retirement income in 2009? Refresh our memories please?

 

There is plenty of blame to throw around, and rightly so, both gubt and private. The collateralized mortgage swaps of the 2000's and bogus mortgage ratings of subprime lending crashed and burned our economy. I recommend a great flick for those interested in this. Watch The Big Short. Crazy stuff.

 

How many people went to prison over the economic collapse? Get us a quick count on that please.

 

You can't put people in prison who follow bad laws and bad political policies. Since few have been prosecuted, that should tell you that.

Steve

 

That is because it would be illegal. S.S. operates within the law. It is an old, effective, legal system.

How many years do we have to fix it again?

 

And the proof of this statement is in history. I'm just amazed at how ignorant some people are, truly. These people were predatory with people who had no business getting loans, and then slapped them with absurd interest rates. Look at credit cards, preying on desperate people and slapping them with absurd rates as high as 25% so they never get out. Bundling and selling bad loans that caused a huge problem during the Bush era. Every time they are deregulated, they find ways to screw over people.

 

No. Not hardly. What the banksters actually did has been identified, and lawyers have stated that laws were broken and that led to the crash. The choice on the part of politicians to not prosecute those who have power and who in some cases contributed to their campaigns, doesn't indicate what they did was legal.

 

You really need to upgrade your news sources. I don't waste my time arguing with people that are blatantly brainwashed.

Steve

 

People didn't follow the laws. The packaging of bad loans on one side of the office and the "promise" that these package loans were "safe investments" coming from the other side of the office was purely fraud. Some banks are still paying but no one went to prison.

Now, since then we passed laws to criminalize this behavior. Laws the new administration wants to ignore or repeal. Now who does that protect? Certainly not investors.

 

A related and incredibly serious crime is that we're doing nothing to prevent a repeat performance.

The Rs have pushed hard to prevent regulation.

Perhaps most recently we have Trump with his selection of Mnuchin as Treasury - another Goldman Sachs alumnus.

One of his distinctive contributions was perfecting foreclosure methodology during the housing crash, taking the homes of middle America (and especially of retirees!) over late payments that were even less than one dollar. He's known to have foreclosed on 16,000 homes that had reverse mortgages guaranteed by the government.

http://money.cnn.com/2016/12/15/news/companies/mnuchin-reverse-mortgage-foreclosure/

 

This is VERY OLD NEWS. There is nothing preventing anyone from suing people that broke the law. There was nothing preventing banks from packaging the loans, and the ratings services from rating them as safe, and therefore no laws were broken. Bad political policies from as far back as the Clinton admin were the primary cause.

Steve

 

Ok, call it any name you want, but personally I will call it greed & I will never forget that Greed caused the crash of 2007--I'm in the head set that you learn from your mistakes & call it like it is---
I would rather we have an Independent over-sight than the Government overseeing themselves--It has been "proven" we can't trust them overseeing themselves---We also know that people don't put money away for retirement,which is why we now have Social Security--perhaps there is a better program, lets work on a better program before throwing the baby out with the bathwater---

 

And, of course, the Fiduciary Rule.

What's that? Just a rule that requires professionals providing investment advice for retirement plans serve the customer's interests rather than their own. Made it hard to sell those annuities with questionable investments that provided those big up front commissions. Made it easier to trust the motives of investment bankers.

Gone now.

Let's see how ethically they behave without the stick.

 

Oh yeah. Speaking of credit cards, I had an offer for one with a miniscule credit line and a hidden fee. They'll give you a tiny credit line and, the moment you activate the thing, charge you $75 or so for the privilege of being given that oh so generous credit line

Anything they can get away with legally...

 

I'm glad to hear that you are both grateful and generous; however, it seems as though you are conflating public social safety nets with private charity. This is a fallacious basis for your argument.

By your logic, am I obliged to help the poor or sick merely because of the fact that I may possibly be destitute or unhealthy in the future? To be clear, I am not disputing the fact that your heart is in the right place, but your suggestion that Social Security is inherently necessary doesn't hold much water when we start delving into the financial ramifications of the program.

And I didn't even mention the plain reality that it is unconstitutional.

 

If SS funds were carefully spent on well vetted projects that were proven to be economic stimulus that would in turn bolster the economy and increase employment thus in the long term add to the SS fund I would agree. Unfortunately the government is nowhere near that efficient and the money is just plain spent.

 

16th Amendment of the US Constitution
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.

 

The ratings people knew the loans were bad. Gave them high ratings anyway.

Dodd-Frank addressed that. That's why TrumpCo wants it gone.

http://www.forbes.com/sites/stevedenning/2011/11/22/5086/#64f3cce85b56


In 1998, banks got the green light to gamble: The Glass-Steagall legislation, which separated regular banks and investment banks was repealed in 1998. This allowed banks, whose deposits were guaranteed by the FDIC, i.e. the government, to engage in highly risky business.

Low interest rates fueled an apparent boom: Following the dot-com bust in 2000, the Federal Reserve dropped rates to 1 percent and kept them there for an extended period. This caused a spiral in anything priced in dollars (i.e., oil, gold) or credit (i.e., housing) or liquidity driven (i.e., stocks).

Asset managers sought new ways to make money: (*)Low rates meant asset managers could no longer get decent yields from municipal bonds or Treasurys. Instead, they turned to high-yield mortgage-backed securities.

The credit rating agencies gave their blessing: The credit ratings agencies — Moody’s, S&P and Fitch had placed an AAA rating on these junk securities, claiming they were as safe as U.S. Treasurys.

Fund managers didn’t do their homework: Fund managers relied on the ratings of the credit rating agencies and failed to do adequate due diligence before buying them and did not understand these instruments or the risk involved.

Derivatives were unregulated: Derivatives had become a uniquely unregulated financial instrument. They are exempt from all oversight, counter-party disclosure, exchange listing requirements, state insurance supervision and, most important, reserve requirements. This allowed AIG to write $3 trillion in derivatives while reserving precisely zero dollars against future claims.

The SEC loosened capital requirements: In 2004, the Securities and Exchange Commission changed the leverage rules for just five Wall Street banks. This exemption replaced the 1977 net capitalization rule’s 12-to-1 leverage limit. This allowed unlimited leverage for Goldman Sachs [GS], Morgan Stanley, Merrill Lynch (now part of Bank of America [BAC]), Lehman Brothers (now defunct) and Bear Stearns (now part of JPMorganChase--[JPM]). These banks ramped leverage to 20-, 30-, even 40-to-1. Extreme leverage left little room for error. (*)By 2008, only two of the five banks had survived, and those two did so with the help of the bailout.

The federal government overrode anti-predatory state laws. In 2004, the Office of the Comptroller of the Currency federally preempted state laws regulating mortgage credit and national banks, including anti-predatory lending laws on their books (along with lower defaults and foreclosure rates). Following this change, national lenders sold increasingly risky loan products in those states. Shortly after, their default and foreclosure rates increased markedly.

Compensation schemes encouraged gambling: Wall Street’s compensation system was—and still is—based on short-term performance, all upside and no downside. This creates incentives to take excessive risks. The bonuses are extraordinarily large and they continue--$135 billion in 2010 for the 25 largest institutions and that is after the meltdown.

Wall Street became “creative”: The demand for higher-yielding paper led Wall Street to begin bundling mortgages. The highest yielding were subprime mortgages. This market was dominated by non-bank originators exempt from most regulations.

Private sector lenders fed the demand: These mortgage originators’ lend-to-sell-to-securitizers model had them holding mortgages for a very short period. This allowed them to relax underwriting standards, abdicating traditional lending metrics such as income, credit rating, debt-service history and loan-to-value.

Financial gadgets milked the market: “Innovative” mortgage products were developed to reach more subprime borrowers. These include 2/28 adjustable-rate mortgages, interest-only loans, piggy-bank mortgages (simultaneous underlying mortgage and home-equity lines) and the notorious negative amortization loans (borrower’s indebtedness goes up each month). These mortgages defaulted in vastly disproportionate numbers to traditional 30-year fixed mortgages.

Commercial banks jumped in: To keep up with these newfangled originators, traditional banks jumped into the game. Employees were compensated on the basis loan volume, not quality.

Derivatives exploded uncontrollably: CDOs provided the first “infinite market”; at height of crash, derivatives accounted for 3 times global economy.
The boom and bust went global. Proponents of the Big Lie ignore the worldwide nature of the housing boom and bust. A McKinsey Global Institute report noted “from 2000 through 2007, a remarkable run-up in global home prices occurred.”

Fannie and Freddie jumped in the game late to protect their profits: Nonbank mortgage underwriting exploded from 2001 to 2007, along with the private label securitization market, which eclipsed Fannie and Freddie during the boom. The vast majority of subprime mortgages — the loans at the heart of the global crisis — were underwritten by unregulated private firms. These were lenders who sold the bulk of their mortgages to Wall Street, not to
Fannie or Freddie. Indeed, these firms had no deposits, so they were not under the jurisdiction of the Federal Deposit Insurance Corp or the Office of Thrift Supervision.

Fannie Mae and Freddie Mac market share declined. The relative market share of Fannie Mae and Freddie Mac dropped from a high of 57 percent of all new mortgage originations in 2003, down to 37 percent as the bubble was developing in 2005-06. More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions. The government-sponsored enterprises were concerned with the loss of market share to these private lenders — Fannie and Freddie were chasing profits, not trying to meet low-income lending goals.

It was primarily private lenders who relaxed standards: Private lenders not subject to congressional regulations collapsed lending standards. the GSEs. Conforming mortgages had rules that were less profitable than the newfangled loans. Private securitizers — competitors of Fannie and Freddie — grew from 10 percent of the market in 2002 to nearly 40 percent in 2006. As a percentage of all mortgage-backed securities, private securitization grew from 23 percent in 2003 to 56 percent in 2006.

 

You missed the point. Conservatives are all for capitalism ("free enterprise") and so much so that they want to eliminate most regulations. As you know, SS is not a "free enterprise" but it is a socialist-type system. So conservatives who receive SS benefits are participating in a socialist-type system. Their hatred of socialism has its limits.

We should do healthcare that way!

No. A deferred annuity is your money. You own it. You can cancel the annuity according to contractual provisions. Not true of SS.

You should never annuitize an annuity! That way you maintain control and can pass on the remainder to others..... that is, unless you think you will live longer than mortality tables and you would like to get something for nothing.

Suppose you invest in T-bills. Pensions do. Rich folks do. If you say "government spends your money instead of investing it" regarding SS Trust Fund, you have to say that about those T-bills too. It's the same thing. But if you mean your payroll taxes are spent to meet current obligations, then maybe you should say that and be clearer.

Well, I could argue that SS was, for a long time, a system that used current revenue to pay current obligations and only later established a Trust Fund to accumulate assets in anticipation of increasing expenses, but instead I'll just say this is not evidence of a "Ponzi scheme" but rather of a socialist-type system.

 

The creation of income tax has nothing to do with the constitutionality of the existence of Social Security.

But, for the record, a progressive income tax shouldn't exist either.

 

Extremely long post that I won't respond to point by point but I never said SS should be invested solely in stocks by the government. Stocks could be a part of an overall portfolio though that would in turn stimulate economic growth. Some could sit in the bank and earn interest which at times has been near 10%. Some could've invested in public work projects that would employ people and enhance a transportation and or power structure that was proven in turn to stimulate economic growth etc etc. Unfortunately government is incapable of this but private industry is capable. If SS was taken out of your check and invested wisely by a variety of different annuity based firms SS would be in the black with funds available and on the books instead of vanished into thin air and nothing to show but a mountain of worthless IOUs. Without an ever growing source of new SS enrollment there are no funds to pay investors which is a textbook Ponzi scheme.

 

That implies that SS is responsible for some national spending and/or national debt. The overwhelming majority if not the entirety of the national debt is due to outstanding Treasury securities including those in the SS Trust Fund. But those Trust Fund Treasury securities have all been fully paid for. So when the federal bean counters identify allocation of the debt, they say that so much of the debt is owed to the SSA (Trust Fund). But in fact SS has never actually added one penny to the national debt. Never.

 

You are responding to a quote with my name on it but it's not my quote.