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The 7 - Current Events & Politics - Warren Buffett on Tax Cuts
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Grimis
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#21 Posted on 6.5.03 0618.25
Reposted on: 6.5.10 0625.51

    Originally posted by Nate The Snake
    doesn't all our carping about "making the world safe for democracy" and all that ring sort of hollow?

Yeah I suppose so. Of course you could replace "democracy" with "freedom" or "liberty" and get the same effect.


    Originally posted by eviljonhunt81
    The term "democracy" has come to mean "constitutional republic" in political science for some time now.

I didn't get that memo when I got my political science degrees. Plus just because it has come to mean something doesn't mean that it's right.
Gavintzu
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#22 Posted on 6.5.03 0903.45
Reposted on: 6.5.10 0904.28
Michrome sez:

    Or, you could let people direct their own retirement accounts and eliminate dependency on paltry monthly checks.

That sounds good in theory, but unfortunately history shows that will not work. Many, if not most, people simply can't be trusted to handle their own money.

Why did the telecommunications and dot-com bubbles grow so large? Insider corruption at the investment houses and the companies themselves explain a lot, but that is only the first step -- they created the hype for the "new economic paradigm". The small investor buying stocks and directing his/her RSP portfolios bought into the hype, and they are the ones who took it on the chin.

When Nortel went pop, the papers here in Canada were filled for a couple of weeks with human interest stories about people whose retirement funds (or whose children's education funds) simply disappeared. Gone. Kaput. The same stories appeared all over North America when the dot-com bubble burst two years later.

Many people are smart enough to diversify. But when the hype of free money in the markets starts, lots of silly people put all their money into it, hoping to catch a lift on the next Microsoft Money Train. And when those markets crash (as they almost inevitably do), the retirement funds are gone. Who takes care of those silly investors if they happen to be 59 when they invest, and we have eliminated Social Security? Let them beg on the street?

And to tie my whooooole post back up to the original topic of the thread ... Warren Buffett is a champ. If investors (and the government regulators) had listened to him back in the late '90s, the bubbles would not have nearly been so devastating. But that damn allure of free money is so enticing for so many people.


RYDER FAKIN
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#23 Posted on 6.5.03 2240.24
Reposted on: 6.5.10 2240.44
Not to bust on the philanthropic Warren Buffett, but the dude lost FIVE BILLION DOLLARS in the last year. If you can even say "I lost FIVE BILLION DOLLARS LAST YEAR" and not choke on your own blood, the last thing you should, or would be worried about is the poor. And I have a feeling, he ain't.

FLEA
Michrome
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#24 Posted on 7.5.03 0009.41
Reposted on: 7.5.10 0011.04


    That sounds good in theory, but unfortunately history shows that will not work. Many, if not most, people simply can't be trusted to handle their own money.
    Why did the telecommunications and dot-com bubbles grow so large? Insider corruption at the investment houses and the companies themselves explain a lot, but that is only the first step -- they created the hype for the "new economic paradigm". The small investor buying stocks and directing his/her RSP portfolios bought into the hype, and they are the ones who took it on the chin.
    When Nortel went pop, the papers here in Canada were filled for a couple of weeks with human interest stories about people whose retirement funds (or whose children's education funds) simply disappeared. Gone. Kaput. The same stories appeared all over North America when the dot-com bubble burst two years later.
    Many people are smart enough to diversify. But when the hype of free money in the markets starts, lots of silly people put all their money into it, hoping to catch a lift on the next Microsoft Money Train. And when those markets crash (as they almost inevitably do), the retirement funds are gone. Who takes care of those silly investors if they happen to be 59 when they invest, and we have eliminated Social Security? Let them beg on the street?



Err, sorry, but it is a fantastic success in Chile. Let me describe the Chilean system for you...
1) You get a choice on whether you want to stay in the current system or use your own account.
2) The money put into the account is untouchable until you retire.
3) You are not allowed to spend more than 3% of the money you get per year for the account in one stock. In other words, you are forced to diversify.
4) Even with choice, over 95% of Chileans now use the private accounts.
5) The average Chilean puts 30% in stocks, 70% in bonds. Are Americans stupider than Chileans? (No cheap shots allowed here)
Furthermore, if you just invested the money in bonds ad other non-risk entities, you would get a better rate of return than you do now.

Now, the biggest problem with your statement is the principle. Those people that feel uncomfortable with the risk will have the choice of staying in the current system. Gallup polls show most Americans want choice...I thought liberals were pro-choice. Just because a few people would feel uncomfortable with the risk, it doesn't mean that the rest of us would suffer. Over at socialsecurity.org, there is a calculator that shows how much you would have in savings if things were private. You enter the % you have put in bonds and stocks, the year you started, your income...and you get a number. Most Americans turning 65 today entered the workforce around age 20, so they started in 1963. Sure, the DJIA is down from its peak a few years back, but in the long run, it is WAY up. It is always way up in the longterm in America. Even a dolt that puts 100% of the money in stocks would probably end up being a millionaire given the growth of the market over the last 45 years. It's all about long-term savings, not a 2-3 year growth spurt or recession. As you can see, since the money is untouchable, it isn't *really* private. However, it's sure a good step that would end the process of seniors waiting for paltry checks so they can choose between heat and food for the summer. Social Security is going to go bankrupt when the baby boomers retire, and I can't see why people want to put off changing it until it goes bankrupt. With a system that would result in so much growth, the % of income required to go into the system would be substantially less than FICA tax rates are today. Americans would get immediate raises, and would have a long-term investment that is almost a sure-fire winning strategy.
Grimis
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#25 Posted on 7.5.03 0617.33
Reposted on: 7.5.10 0623.52

    Originally posted by Gavintzu
    Many, if not most, people simply can't be trusted to handle their own money.

I guess under that logic government HAS?!?!


    Originally posted by Gavintzu
    But when the hype of free money in the markets starts, lots of silly people put all their money into it, hoping to catch a lift on the next Microsoft Money Train.

And why should that be my problem if people make poor decisions.

Let's face the facts; Social Security is likely insolvent now,and will certainly be insolvent by the time all of the Baby Boomers retire. It'll only get worse; remember the words of Alexander Tytler:

"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the treasury. From that moment on, the majority always votes for candidates promising the most benefits from the public treasury, with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.

The Baby Boomers are likely to be hte majority; they are likely to vote themselves more and more money until the country is completely bankrupt.



    Originally posted by Michrome

    ...I thought liberals were pro-choice

Only when it suits the agenda; i.e. you can feel free to choose to kill your unborn child, but you do not have the choice to defend yourself, handle your own retirement fund, smoke, etc.
MoeGates
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#26 Posted on 7.5.03 1054.46
Reposted on: 7.5.10 1059.06
Furthermore, if you just invested the money in bonds ad other non-risk entities, you would get a better rate of return than you do now.

SSI stands for Social Security Insurance, not Social Security investment. It is not a retirement fund, nor was it designed to be. And the fact that your average person makes ANY return on an insurance policy is a miracle. If you and your spouce end up dying before you retire, you lose all the money you put in. If you end up disabled at 23, however, you get a ton more money than you put in. If you live to be 120 you're ahead of the game, while if you live to be 67, you're behind. It's insurance.

There are a LOT of incentives to also invest in retirement accounts. 401K's, Roth IRA'a, all that stuff.

This country needs both. It needs a Social Security-type universal disability/retirement/health insurance program. It needs to be set up better and a lot more progressively than it is now. It also needs incentives (better than the ones we have now even) to invest in private retirement accounts. That two are not mutually exclusive.

Only when it suits the agenda; i.e. you can feel free to choose to kill your unborn child, but you do not have the choice to defend yourself, handle your own retirement fund, smoke, etc.

First, a Republican Mayor banned smoking in this town, over the wishes of a largely Democratic city. Smoking bans are a cultural thing, not a political thing. I don't think it's going to work in this town like it works in California simply because we have a very different culture here, even though we're probably equally as Democratic. Second, "controlling your own retirement account" generally means being able to pull your money out of company stock while it's in free fall, something Enron and its GOP buddies don't seem to think is so important.
Michrome
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#27 Posted on 8.5.03 0022.42
Reposted on: 8.5.10 0028.31
I can't wait till he earns a slick media nickname for such a P.C. move. "Maverick" is already taken. Maybe it will be "lone ranger". Anyways, Republicans have a double standard when it comes to keeping smoking unregulated while being drug-war zealots.

Anyways, Moegates, it seems like you would agree with the Chilean plan. It allows people to stay in the current system if they'd like, but they can also move to the private one. Faced with choice, over 95% of Chileans choose the private system. The same thing would happen here.
Gavintzu
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#28 Posted on 8.5.03 0028.23
Reposted on: 8.5.10 0029.03
Ryderfakin sez:

    Not to bust on the philanthropic Warren Buffett, but the dude lost FIVE BILLION DOLLARS in the last year. If you can even say "I lost FIVE BILLION DOLLARS LAST YEAR" and not choke on your own blood, the last thing you should, or would be worried about is the poor. And I have a feeling, he ain't.

I really don't think Warren Buffett is "worrying about the poor" lately ... I think he is worried about the effect the last few years will have on American society as a whole. During the late '90s, a few hundred corporate insiders at major American companies cashed in literally hundreds of billions of dollars worth of stock options which should really have been worthless. When the bubble burst they didn't lose anything they could afford to lose. Middle America, the majority of whom got in late and didn't get out at all, on the other hand ...

We can laugh at the looting that occurred in Iraq, but the looting that occurred in our own countries dwarfed that. Buffett may be extremely rich, but he knows if the Western corporate elite keep up the good work of the last five years, it could have disastrous implications for our economies and societies. Whew.

Michrome sez:

    Even a dolt that puts 100% of the money in stocks would probably end up being a millionaire given the growth of the market over the last 45 years. It's all about long-term savings, not a 2-3 year growth spurt or recession.

Yeah, the dolt would be a millionaire ... if he was smart enough to diversify stocks and bonds. But in the late '90s, bonds were paying low single digit returns, while the NASDAQ was paying double digit returns every year. How many people would, and did, say "screw these bonds, let's pour our money into Enron and Worldcom -- I will retire in three years!"?

Talking about returns over 45 years really fudges the issue. Yes, the markets will turn around in the next few years and the losses will be made up eventually. But what about the unlucky millions who should be retiring now, but because of the crash they simply can't afford to?

In my city, I'm amazed at the number of older people working these days. I'm getting greeted by pensioners at department stores, getting served by pensioners at Wendy's, and some pensioners are carrying my groceries out at my grocery store. Is this a coincidence? Are they simply bored with retired life? I don't think so.

Grimis sez:

    And why should that be my problem if people make poor decisions.

Because we as a society have decided that old people who have worked for decades deserve to kick back and take some time off to relax before they die. We don't want eighty-year-olds begging on the street or having to work at Walmart to put food on the table. If you are going to begrudge our parents and grandparents their retirements, more power to you. I don't agree.


Grimis
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#29 Posted on 8.5.03 0607.06
Reposted on: 8.5.10 0609.51

    Originally posted by Gavintzu
    Because we as a society have decided that old people who have worked for decades deserve to kick back and take some time off to relax before they die.

That's fine; nobody decided that they were bequeathed the right to do it on the backs of the young. When all of the Baby Boomers retired, who is going to pay for it? Because the younger workforce is going to be taxed to death paying for this garbage.


    Originally posted by Gavintzu
    We don't want eighty-year-olds begging on the street or having to work at Walmart to put food on the table. If you are going to begrudge our parents and grandparents their retirements, more power to you. I don't agree.

I don't begrduge them their retirements. I would rather see my grandparents retired with more money than they have, which is why I wished they had the opportunity to invest their money as opposed to being financially dependent (a virtual slave) to the government.
Michrome
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#30 Posted on 8.5.03 1617.01
Reposted on: 8.5.10 1617.02


    But what about the unlucky millions who should be retiring now, but because of the crash they simply can't afford to?


Those retiring now got into the workforce around 1960, and under a system that forces them to diversify, they would still all have loads of money regardless of this crash. When you can only put 3% in one stock, it saves you from disaster.



    Because we as a society have decided that old people who have worked for decades deserve to kick back and take some time off to relax before they die. We don't want eighty-year-olds begging on the street or having to work at Walmart to put food on the table. If you are going to begrudge our parents and grandparents their retirements, more power to you. I don't agree.


The society you speak of also overwhelmingly wants choice in Social Security according to all polls. Once again, this can be done by private donations and charities instead of being done through a watered down, inefficient redistribution system. Those who do not want to take a risk can stay in the system.
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