[OT]America. The land of the not-so-free (economy)

[Fred]

On Fri, 2005-01-07 at 10:12 -0500, James A. Kuzdrall wrote:
> On Friday 07 January 2005 07:59 am, Will Johnson wrote:
> > > I can hardly think that people controlling their own money, and
> > > getting a decent rate of return on it, is a bad thing.
> 
>     This discussion looks at Social Security from what appears to be the 
> inexperience and optimism of youth.  Lets try a different perspective.
> 
>     First, if I understand it right, Medicare is breaking the budget.  
> The portion paid for SS is solvent.
> 
> 1. The Social Security system is insurance, not a savings account.  It 
> spreads the risk of uncertain health and longevity over the population.

I suppose you could look at it that way.

>    a) How much money will you set aside for medical care?  My wife had a 
> $300K heart valve replacement.  I had a $250K operation.  Bad luck, to 
> be sure, but it could be yours.

Well, I would never criticise *individuals* on their health, of course,
but I will speak in generalities.

Considering the average USian diet in this country, there does not seem
to be a strong desire to eat healthy and to keep oneself fit. Can it not
be said that the more healthy one eats, the less invasive procedures
would be needed? And how many engage in poor dietary choices because of
the *assumption* that government or insurance will take care of it?

>    b) Private insurance?  I am in my early sixties and I pay $20K per 
> year for a $2000 deductible for the two of us.  That is the going rate, 
> and it has nothing to do with past expenses.  Are you aware that your 
> employer must pay that for age 55+ employees?  With no medicare...

The healthcare costs in this country are so enormously high. And I fear
that part of the reason is due to the prevalence and deep pockets of
insurance. 

>    c) How long do you plan to live?  With bad luck you will live past 
> your savings.

The idea is to build cash flow, thus you do not deplete your savings
over time, but build them up. How to do this is an exercise for the
student. :-)

>    d) It is recommended that you have a minimum net worth of $300K per 
> person plus own your house outright to get through retirement with SS 
> as it is.  How many of you wise investors are on track to have that 
> money tucked away?  Going to make it all in the last few years?

If you have not planned ahead *early*, no, you won't have it. But no one
plans ahead because they have this dim expectation that the government
will be their for them when they need it. That assumption causes laxity
of thought which leads to poor lifestyle and financial choices.

Then you are down to the last few years, start sweating, and scream for
mommy government to come along and bail you out.

How do people in other countries handle this? And must it all be based
on money?

> 2. What is stopping us from putting 7% of our income in the stock market 
> right now?

The stock market is a zero-sum game. Unless one understands *fully* what
that means, one should *not* be putting retirement money in the market.

> 3. Capitalism depends on growing markets or increased consumption to 
> give an investor dividend.  What happens when the population saturates 
> and the natural resources wane?  Might that not happen in your time?  

I think about that all the time. My "greater fools" theory states that
in any zero-sum or near-zero-sum situation you *will* run out of
"greater fools" to take the market higher. For every dollar you gain,
someone *somewhere*  or at *sometime* must also loose that dollar. Since
the supply of fools is finite, you *must* run out someday.

> The stock market will likely have a zero sum capital growth in the near 
> future.

Since it is a zero-sum game, that's a given.

>   Also, America is rapidly losing its once large share of 
> markets and companies.  Will we be allowed to invest in China, India, 
> of Europe under Bush's plan?
> 
>     A few things to think about.  

Yes indeed.

I'd say ditch Bush's plan and create your own. Will Bush still be around
when his "plan" matures? Does he really care? Would you give your life
for him?

Something to think about indeed.

SS will always be a divisive issue, because those who rely on it *now*
have few alternatives to turn to if it were to go away today. The
politics of *now* always wins over the politics of the *future*. This is
a bad thing, of course, because it means future problems cannot ever be
solved unless there is also something in that solution for the people
living *today*. So the disaster is inevitable; it's just a matter of
when.

What a wonderful world we live in.

-Fred

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