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Mrs TWC is off for a week in San Antonio where she is ensconced in what she called the noisiest hotel ever. I ain't buying because we once stayed at the former rice paper walled Flamingo Hilton in Laughlin Nevada where we could actually hear the guy in next room, who apparently drank a suitcase of Bud the night before, fire-hosing the toilet at zero dark thirty. OK, maybe Mr Ed was staying next door, but it was loud.
She says that there is a Gamestop manager's convention in San Antonio with
hundreds of people walking around the Riverwalk that look like Comic Book Guy.
This persistent rumor has again triggered a flurry of rank hyperbole in emails, Facebook posts, and blog posts circulating around teh intertubes claiming that President Obama and/or Those Good-For-Nothing Democrats plan to nationalize your private retirement plan in order to shore up the failing socialist security system.
To bolster the charge, critics point at Argentina, where the citizenry was apparently too preoccupied with Malbec to notice that the government nationalized their private retirement plans in late 2008. They'll need that wine now.
BUT! And this is an important difference: The Argentinian private retirement plans were not the equivalent of IRA's or 401(k) plans. Argentina experimented with a plan allowing workers to choose between the government equivalent of America's Social Security system or a privately administered retirement program. Workers either paid into the tax-supported government system as we Americans pay into social security, or, they could opt out of the government system for a mandatory private system. Argentina simply ended the mandatory, private retirement program and moved those assets to the government system.
Critics (including moi) pointed out that this move was a cash grab by Cristina Kirchner's Peronista government that swapped immediate cash for the promise of government guaranteed retirement benefits to be paid later.
The origins of the story come from the testimony of Teresa Ghilarducci, professor of economic
policy analysis at the New School for Social Research in New York, in hearings
Oct. 7, 2007. Testifying before the House Committee
on Education and Labor, Ghilarducci
proposed that the government eliminate tax breaks for 401(k) and similar
retirement accounts, such as IRAs, confiscate workers’ retirement plan
accounts, and convert them to universal Guaranteed Retirement Accounts (GRAs)
managed by the Social Security Administration.
Is there cause for alarm? To be sure, it's troubling that Ms Ghilarducci, who advocates nationalizing all private retirement plans, was invited by several key Democrats to testify at the hearing back in 2007. However, representatives from Heritage Foundation, a strong free market advocate and proponent of private retirement plans, also testified (along with a broad spectrum of other analysts).
Going forward, if the US becomes Argentina, then maybe
you have something to worry about. However, I would submit that you’d already
be in a world of financial hurt long before a Peronista-inspired seizure of your IRA took place.
What may very well happen is point nine in my Election Day
Forecast here. Incidentally, eight out of nine musings from TWC's crystal ball were on the money. The final prediction, that social security will become a means tested welfare program for old people, will come to pass as well. Just not for a while.
The primary reason that the federales won't nationalize your retirement plan is that it will be
much easier to sell the public on Social Security retirement as a social
welfare program for the elderly indigent. You keep your 401(k) but you don't get Social Security benefits.
The secondary reason that the federales won't nationalize your retirement plan is that it would
be politically difficult to seize retirement plans. It might be easier
than sending troops door to door to confiscate guns and ammunition, but it would create every bit as much
The current administration actually proposed mandatory retirement accounts for those whose employers don't offer them. These accounts would presumably be administered by the Social Security Administration. They would purportedly remove all risk from investing for the future in the same way that Social Security does. Rick Henderson explains reality for us.....
There is, of course, no real economic relationship between the (Social Security) taxes working people pay and the benefits they collect as retirees. Both are simply set politically, giving all retirees a vested interest in the welfare state
Further, even considering the financial uncertainty of markets (including the recent meltdown), Social Security offers a very poor return on investment. In some cases, less than one percent. Calculate your own Social Security ROI here. There is every reason to believe that the proposed government-provided retirement program will provide similar results over time.
Economic reality dictates that Social Security isn't sustainable. If it does not become a means tested program, benefits will be cut dramatically and taxes to support the program will be increased just as dramatically. If you have other retirement income, your benefits will be reduced according to some arbitrary formula and the wealthy
will be out of luck entirely. They don’t need it anyway (there’s your easy
In the end, imposing means testing for social security benefits accomplishes the same end as nationalizing 401(k) plans, without the nasty political blowback that would result from the seizure of
We Report. You Decipher.
Portions of this post appeared in early November of 2008. It has been edited and updated.
We're going to talk a little about financial planning this morning. We'll begin with a little parable.....
Dan was young, single, and living at home with his father. He worked in the family business with his aged and ailing father. As his father's health grew worse, he came to the realization that he would soon inherit a fortune when his bedridden father died. It also occurred to him that his social life was lagging and he decided he needed a wife with which to share his fortune.
One evening at an investment seminar he spotted the most stunningly gorgeous woman he had ever seen. Her natural beauty took his breath away. He summoned the courage to approach her and then asked her if she'd care to join him later for a drink. She hesitated for a moment before answering and he gushed.....
I may look like just an ordinary man, but in just a few years, my father will die, and I'll inherit $200 million.
Obviously impressed, the woman obtained his business card and three days later, became his stepmother.
Women are *so* much better at financial planning than men.
Another important facet of financial planning is evaluating the long term costs.
Gorgeous day here today with a moderate offshore Santa Ana condition that keeps the smog back in LA where it belongs and gives us warm temps, low humidity, clear skies, and some stunning views.
The Sabbath also marks a turned page for moi as well. Manual Labor. For you East Coasters, that's not a guy I picked up for the day from the Home Depot parking lot. It is the first time in several weeks that TWC has summoned the energy to perform any sort of manual labor lasting more than a few minutes.
Not sure I am completely out of the woods yet. But we're moving the right direction and a little physical exertion in the hot sun feels right. The Boy lent a hand, which is always appreciated.
Who knows. Maybe a walk out to the ridge is coming next week. The dogs miss that.
I picked up that Ryobi chainsaw in the clearance bin for fifty bucks (marked down from a buck and a quarter). It takes the same batteries as my mini Ryobi skillsaw (using the term generically in violation of trademark law) and the Ryobi 18v drill. The chainsaw isn't quite as sweet as the saw and the drill, but it works very well for light jobs where the loppers won't cut it and a real chainsaw is overkill. It's light, easy to handle, fairly safe as chainsaws go, and The Boy can manage it without me freaking out that he might cut his hand off. Sure, this baby chainsaw could do some damage, but not the kind a gas powered saw could inflict in a heartbeat.
This guy is only about two inches in length. It is probably a very young Orange Throated Whiptail, although it could be a barfly or a skink. I assume he has recently hatched as it appears that the eyes are not yet open. He currently resides in a crevice in the granite behind the flower garden.
The only downside of having vermin killing barn cats is that they make no distinction between lizards and rats. Our once-thriving, culturally diverse lizard population around the house has been decimated. The survivors have relocated down the hill where it is a bit safer.
Cruising Wilshire Blvd from the museum to downtown to catch the former Pasadena Freeway was a real treat. There are third world countries with better roads than Wilshire Boulevard through what used to be called the Miracle Mile.
The Pasadena Freeway, which grew out of the Arroyo Seco Parkway is
considered to be the very first freeway in the world. It is a beautiful
and remarkable engineering feat that provided a quick commute
from downtown Los Angeles to Pasadena, the first suburb in America.
LA came of age during the height of the car culture, but Mayor Villa la Grossa and the city council seem more concerned with what Arizona is up to than with providing the most basic of services that all Americans agree city government should provide.
Fifty years ago California roads were the envy of the entire world. Today, California is one of the highest taxed states in the US and our highways are among the very worst in the country. The Pennsylvania Turnpike has less potholes than Wilshire Boulevard. This isn't rank hyperbole, TWC has driven both.
Uncle Rick pushed another year behind him on Saturday. He's got a tricked out three car garage and is up to a three-Harley-a-week habit.
Uncle Rick and The Boy
At our wedding reception, we hired Uncle Rick to serve the champagne punch so as
to keep things classy and to keep the Demon Rum away from the
youngsters. His method was simple. A glass for you. A glass for him. You can see how the geometric progression would work. Fifty guests. One Uncle Rick. He was diligent, too, absolutely refused to serve champagne punch to anyone shorter than four
feet tall. I'm pretty sure that Aunt Linda lied about her age.
He married my sister, Mo, back when Studio 54 was the rage, so me and him go back a fair piece. It's a little unsettling when you realize how long you've known some people.
Rick's a man of few words, preferring to shut up and just get-R-done. He's a stand up guy and no man could ask for a better brother-in-Law.
Just trying to find some balance in world gone totally insane.....