Are we headed for a world wide meltdown?

[LexusLover]

Originally Posted by dilbert firestorm

dubya proposed privatizing SS.

Actually, it was Senator Patrick Moynihan who initially suggested "privatizing" Social Security .... (some always want a link!) ....

https://www.washingtonpost.com/wp-sr.../oss032498.htm

Sen. Daniel Patrick Moynihan (D-N.Y.) last week announced a plan to change Social Security for the better by cutting the payroll tax and letting Americans use the money for private retirement accounts – or for whatever else they want.

A "problem" with that is our tax paid representatives wouldn't be able to borrow any of the money if individuals had theirs in separate accounts that the government couldn't touch ....

.... which is more than likely why our taxpaid elected officials are interested in passing such a thing ... as individuals handling their own money....and they are convinced most people can't handle their own money.

[The_Waco_Kid]

Originally Posted by LexusLover

Actually, it was Senator Patrick Moynihan who initially suggested "privatizing" Social Security .... (some always want a link!) ....

https://www.washingtonpost.com/wp-sr.../oss032498.htm



A "problem" with that is our tax paid representatives wouldn't be able to borrow any of the money if individuals had theirs in separate accounts that the government couldn't touch ....

.... which is more than likely why our taxpaid elected officials are interested in passing such a thing ... as individuals handling their own money....and they are convinced most people can't handle their own money.

and G Bushy II a republican wanted to implement it. and it went nowhere. i recall this when it was proposed by G Bushy II. i was chomping at the bit. federal employees btw can opt out of social security.



20 years later how much better off from an investment point of view as a top 5+ percent contributor does anyone here think i'd be if i simply put the exact same social security withholdings into the S&P 500?


i'd be a millionaire on that alone.

[The_Waco_Kid]

Originally Posted by The_Waco_Kid

and G Bushy II a republican wanted to implement it. and it went nowhere. i recall this when it was proposed by G Bushy II. i was chomping at the bit. federal employees btw can opt out of social security.



20 years later how much better off from an investment point of view as a top 5+ percent contributor does anyone here think i'd be if i simply put the exact same social security withholdings into the S&P 500?


i'd be a millionaire on that alone.

ok. instead of editing my post i'll just quote it and "downgrade" that estimate to a mere $750k.


bahahahhaaaaaaaaa

[Chung Tran]

There are around 25% fewer Companies listed on the exchanges, than there was 25 years ago. Put Social Security money in the Market, and a huge bubble would arise. Even today, after virtually no Market gain the past year, PE multiples are in the high range, historically.

I think Social Security should stick to what it was designed to be, when initiated. SECURE.

[Texas Contrarian]

This thread's opening post contains a piece by B-Dud (former NY Fed prez) opining that a recession is now pretty much baked into the pie.

Just a few days ago (April 6th) he followed up with a Bloomberg opinion piece saying that if stock prices don't significantly decline, the Fed needs to hammer away until they do.

https://www.bloomberg.com/opinion/ar...?sref=ZMFHsM5Z

Thanks a lot, B-Dud! Hey, while you guys are at it, why not make sure you whack a dozen or so percentage points off housing values as well?

(That ought to make middle-class America very happy, don't you think?)

In case the link doesn't work for you (the article may be paywalled), here's a cut & paste:

bloomberg.com
If Stocks Don’t Fall, the Fed Needs to Force Them
Bill Dudley
4-5 minutes

It’s hard to know how much the U.S. Federal Reserve will need to do to get inflation under control. But one thing is certain: To be effective, it’ll have to inflict more losses on stock and bond investors than it has so far.

Market participants’ heads are already spinning from the rapid change in the outlook for the Fed’s interest-rate policy. As recently as a year ago, they expected no rate increases in 2022. Now, they foresee the federal funds rate reaching about 2.5% by the end of this year and peaking at more than 3% in 2023.

Whether that proves right will depend on a number of hard-to-predict developments. How quickly will inflation come down? Where will it bottom out as the economy reopens, demand shifts from goods to services, and supply-chain disruptions ease? What will happen in the labor market, where annual wage inflation is running at more than 5% and the unemployment rate is on track to reach its lowest level since the early 1950s within a few months? Will more people come off the sidelines, boosting the labor supply? Together with moderating inflation, this could allow the Fed to stop raising rates at a neutral level of about 2.5%. Or a tightening labor market and stubborn inflation could force the Fed to be a lot more aggressive.

Among the biggest uncertainties: How will the Fed’s tightening affect financial conditions, and how will those conditions affect economic activity? This is central to Fed Chair Jerome Powell’s thinking about the transmission of monetary policy. As he put it in his March press conference: “Policy works through financial conditions. That’s how it reaches the real economy.”

He’s right. In contrast to many other countries, the U.S. economy doesn’t respond directly to the level of short-term interest rates. Most home borrowers aren’t affected, because they have long-term, fixed-rate mortgages. And, again in contrast to many other countries, many U.S. households do hold a significant amount of their wealth in equities. As a result, they’re sensitive to financial conditions: Equity prices influence how wealthy they feel, and how willing they are to spend rather than save.

So far, the Fed’s removal of stimulus hasn’t had much effect on financial conditions. The S&P 500 index is down only about 4% from its peak in early January, and still up a lot from its pre-pandemic level. Similarly, the yield on the 10-year Treasury note stands at 2.5%, up just 0.75 percentage point from a year ago and still way below the inflation rate. This is happening because market participants expect higher short-term rates to undermine economic growth and force the Fed to reverse course in 2024 and 2025 — but these very expectations are preventing the tightening of financial conditions that would make such an outcome more likely.

Investors should pay closer attention to what Powell has said: Financial conditions need to tighten. If this doesn’t happen on its own (which seems unlikely), the Fed will have to shock markets to achieve the desired response. This would mean hiking the federal funds rate considerably higher than currently anticipated. One way or another, to get inflation under control, the Fed will need to push bond yields higher and stock prices lower.

.

[Texas Contrarian]

Cullen Roche (the "pragcap guy") often has a good take on issues. By the way, he's written some good stuff over the years on things such as how the fractional reserve system works, money supply issues, etc. (and they're written in such fashion that investment fund clients who aren't finance professionals can easily understand them).

https://www.pragcap.com/the-fed-is-a...-policy-error/

Here he suggests that the economy is "drunk."

Key excerpt:

Unfortunately, the subjective nature of discretionary interest rate policy has left them doing what they typically do – looking at 12 month trailing data in a reactive manner and then responding after the fact when it becomes clear that the economy is drunk. The Fed now wants to swipe a punch bowl that they should have been watering down long ago. The problem now is they’re on the verge of swapping the punch bowl with sleeping pills as parts of the economy look increasingly fragile and the Fed is at risk of tightening into an economic slowdown.

(End of excerpt.)

This reminds me of a statement the late Milton Friedman made in an interview during the last year or two of his life.

He said the FOMC often acted like a drunk in the shower, reacting and then overreacting to the perceived water temperature. When the water felt too cold at first, he'd turn it most of the way toward "hot," startle himself, turn it down too much, and keep repeating the cycle.

We saw stark evidence of that in 2018-19 when the Fed started a tightening cycle and then scrambled to reverse course, as by midyear 2019 it became apparent that the economy was markedly slowing down.

During that cycle, the effective Fed funds rate peaked at about 2.4%.

Commentators often speak of the fabled "soft landing," where policymakers are able to remove the froth from bubbles or ease inflationary pressures without tanking the economy.

But sticking the landing without serious damage this time will surely require piloting skills comparable to those demonstrated by Captain Sullenberger back in 2009.

Does it strike you that any of these people remotely possess the skill or cool competence "Sully" showed that day?

.

[dilbert firestorm]

CM, whats the lead time when the FED have to respond?

[WTF]

Originally Posted by The_Waco_Kid

and G Bushy II a republican wanted to implement it. and it went nowhere. i recall this when it was proposed by G Bushy II. i was chomping at the bit. federal employees btw can opt out of social security.



20 years later how much better off from an investment point of view as a top 5+ percent contributor does anyone here think i'd be if i simply put the exact same social security withholdings into the S&P 500?


i'd be a millionaire on that alone.

Have you ever thought what you medical insurance would cost after 65 if there wasn't Medicare?

So there are a couple of things to consider...would you have truly invested your SS/Medicare savings? Probably not. Would you then be willing to get health insurance from a private company? Probably 2-3k a month. No subsidies.

[WTF]

Originally Posted by Chung Tran

There are around 25% fewer Companies listed on the exchanges, than there was 25 years ago. Put Social Security money in the Market, and a huge bubble would arise. Even today, after virtually no Market gain the past year, PE multiples are in the high range, historically.

I think Social Security should stick to what it was designed to be, when initiated. SECURE.

If Wacko thinks Fannie and Freddy are irresponsible....just wait and see what he'd say about the Department in charge of investing our SS and Medicare premiums.

Plus he does not seem to understand how insurance works.

Folks that live past a certain age get way more in return than they put in both Medicare and SS.

[Why_Yes_I_Do]

Originally Posted by CaptainMidnight

This thread's opening post contains a piece by B-Dud (former NY Fed prez) opining that a recession is now pretty much baked into the pie....

Old Cabbage Head said it was transitory, which apparently actualy means there aint a damned thing he can do to stop it. I'm sure they will get the dictionary updated shortly. Probably already fixed in Wikipedia.

[WTF]

Originally Posted by Why_Yes_I_Do

Old Cabbage Head said it was transitory, which apparently actualy means there aint a damned thing he can do to stop it. I'm sure they will get the dictionary updated shortly. Probably already fixed in Wikipedia.

WYID have you see that cargo shipping is on the way back down?

Prepandimic was around 3k...all the way up to 15k....backing down to presently 8k. That is off the top of my head maybe an expert can provide details.

But yes that is transitory in the scheme of things...unfortunately for some they really do not see the bigger picture.

[The_Waco_Kid]

Originally Posted by WTF

If Wacko thinks Fannie and Freddy are irresponsible....just wait and see what he'd say about the Department in charge of investing our SS and Medicare premiums.

Plus he does not seem to understand how insurance works.

Folks that live past a certain age get way more in return than they put in both Medicare and SS.

sure if you live to 120

as usual the professor has his facts wrong.


Monthly Social Security benefits Retirement age Break-even age
$2,102 62 vs. 66 Between 77 and 78
$2,806 62 vs. 70 Between 80 and 81
$3,721 66 vs. 70 Between 82 and 83

note the above is break even on retirement age early vs. ideal. it's not about when you actually start to get "way more" than you put in.

for that you'd have to live to be over 100.


what's the average life expectancy in the US?

United States/Life expectancy

78.79 years (2019)


another "poofout" by the professor.

[WTF]

Originally Posted by The_Waco_Kid

sure if you live to 120

as usual the professor has his facts wrong.


Monthly Social Security benefits Retirement age Break-even age
$2,102 62 vs. 66 Between 77 and 78
$2,806 62 vs. 70 Between 80 and 81
$3,721 66 vs. 70 Between 82 and 83

note the above is break even on retirement age early vs. ideal. it's not about when you actually start to get "way more" than you put in.

for that you'd have to live to be over 100.


what's the average life expectancy in the US?

United States/Life expectancy

78.79 years (2019)


another "poofout" by the professor.

Did you include Medicare in those calculations?

[Tiny]

Originally Posted by WTF

WYID have you see that cargo shipping is on the way back down?

Prepandimic was around 3k...all the way up to 15k....backing down to presently 8k. That is off the top of my head maybe an expert can provide details.

But yes that is transitory in the scheme of things...unfortunately for some they really do not see the bigger picture.

I don't know shit about container and tanker shipping. But smaller and medium sized dry bulk vessels are still charging high rates -- they're down a little from recent levels but otherwise the highest in about 12 years. And if you own the boats the outlook is good, because the order book for new vessels is small compared to to historical levels. It could be years before dry bulk shipping rates for the smaller and medium sized Panamax and Supramax vessels get back to reasonable levels.

On the other hand rates for the largest capesize vessels have come down significantly, although they're still relatively high by the standards of the last decade. But unless you're shipping iron ore from Australia (i.e. huge cargos) they're not so relevant.

Consider also the huge tariffs we levy on products from China, the formal embargoes on coal from Russia and oil from Iran and Venezuela, the informal embargoes on other Russian exports including oil, and the effect of COVID on shipment of products to and from China.

Then there's the turn away from globalization. We've been doing our best to bust up supply chains in China for products like consumer electronics and textiles. But the production capacity in places like Vietnam, Mexico and the USA to replace what we're jerking from China doesn't exist yet.

The Chinese won't buy coal from Australia because of political reasons, and Europe won't buy coal from Russia for political reasons, so now Australia ships some of its coal halfway around the world to Europe instead of to nearby China. This increases demand for dry bulk vessels, and, again, they're not building many new ones.

In other words, some of the "transitory" hold ups in supply chains and production of commodities may not be so transitory. We're looking at time periods from years to never for some of these constraints to straighten out.

[Tiny]

Originally Posted by WTF

WYID have you see that cargo shipping is on the way back down?

Prepandimic was around 3k...all the way up to 15k....backing down to presently 8k. That is off the top of my head maybe an expert can provide details.

But yes that is transitory in the scheme of things...unfortunately for some they really do not see the bigger picture.

Sorry WTF, I accidentally double posted and it's too late to delete the other one. This post has a couple of edits that the earlier one didn't.

How long is transitory? If you mean "several years" or "until the next recession," yeah, I think I agree. But the bigger picture perhaps isn't as rosy as you think.

As to your question, I don't know shit about container and tanker shipping. But smaller and medium sized dry bulk vessels are still charging high rates -- they're down a little from recent levels but otherwise the highest in about 12 years. And if you own the boats the outlook is good, because the order book for new vessels is small compared to to historical levels. It could be years before dry bulk shipping rates for the smaller and medium sized Panamax and Supramax vessels get back to reasonable levels.

On the other hand rates for the largest capesize vessels have come down significantly, although they're still relatively high by the standards of the last decade. But unless you're shipping iron ore from Australia (i.e. huge cargos) they're not so relevant.

So the increase in dry bulk shipping rates may last for years.

Consider also the formal embargoes on coal from Russia and oil from Iran and Venezuela, the informal embargoes on other Russian exports including oil, and the loss of production of exports of grains and steel and the like from Ukraine.

And then there's COVID in China. As long as the government continues its zero tolerance policy and relies on its shitty ass, domestic vaccines, there will be more quarantines. Production will be affected, as well as the logistics of shipping products to and from China.

Then there's the turn away from globalization. We've placed huge tariffs on products from China. And we've been doing our best to bust up supply chains in China for products like consumer electronics and textiles. But the production capacity in places like Vietnam, Mexico and the USA to replace what we're jerking from China doesn't exist yet.

The Chinese won't buy coal from Australia because of political reasons, and Europe won't buy coal from Russia for political reasons, so now Australia ships some of its coal halfway around the world to Europe instead of to nearby China. This increases demand for dry bulk vessels, and, again, they're not building many new ones.

In other words, some of the "transitory" hold ups in supply chains and production of commodities may not be so transitory. We're looking at time periods from years to never for some of these constraints to straighten out.