Social Security: We Can Solve This

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1) raise the retirement age for today's teens and toddlers up to 69. Longevity is increasing at such a rate that it will still be a great deal for them. 2) raise the income ceiling, the amount of income to which social security taxes are applied. I don't favor removing the ceiling altogether because it violates my sense of fairness. This fundraising is not for the national defense but to cushion the later years. There should be a limit as to how much someone is asked to subsidize other people's retirements. 3) Trim the increase that Social Security recipients receive each year. Currently they get the COLA adjustment, but they got an extra dollop last year because the inflation rate was too low. An index that trails inflation by a fraction would minimize the impact but could save substantial sums over time. Of course, if the Medicare costs for Part B and D go way up as they are supposed to that would be an unfair double whammy on the elderly. This would need to be part of the calculus on any COLA fix.

The ideas above all make sense, but they make even better sense when combined for the simple reason that it becomes shared sacrifice: the younger generations see a delayed retirement age, the middle generations see a slightly higher tax on wages and the older generation sees some limits on the rate of increase in payments. If everyone takes a piece of this responsibility it becomes less of a burden on everyone.

Read more: http://curiouscapitalist.blogs.time.com/2010/03/26/social-security-we-can-solve-this/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+timeblogs%2Fcurious_capitalist+%28TIME%3A+The+Curious+Capitalist%29&utm_content=Google+Reader#ixzz0jQcQrMXt

Social Security: We Can Solve This

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AIG might pay back $170 billion of its $182 billion bailout.

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Here is a great article from Slate written by Daniel Gross, a writer from Newsweek. Definitely worth a read.

A quick except:

"When you look at the financial markets as a whole, the post-crisis bailout efforts have worked out better than expected. Many of the financial market guarantees were lifted without having been used, and the Treasury is turning a profit on the central component of the TARP. But AIG has so far loomed as a gigantic rebuttal to the optimists, a symbol of everything that went wrong.

But it turns out that the efforts to prop up AIG are also working out much better than expected. AIG still owes the Fed and the Treasury a combined $127 billion. But—surprise!—AIG is paying a lot of its debts back. And there's a not too far-fetched scenario in which we come close to breaking on our reluctant investment in the company."

Want to know how? Read the full article here: Here's a surprise: AIG might pay back $170 billion of its $182 billion bailout.

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Jeremy Siegel on 2010: Good for Stocks, Bad for Bonds -- and Why Interest Rates Will Go Up - Knowledge@Wharton

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Understanding the rules for 2010. Interview by Knowledge@Wharton of Wharton Professor Jeremy Siegel.

Jeremy Siegel on 2010: Good for Stocks, Bad for Bonds -- and Why Interest Rates Will Go Up - Knowledge@Wharton


Knowledge@Wharton: What is inflation going to do?

Siegel: Inflation is going to be under control this year and probably into 2011. However, we will have an upward tilt to inflation, which means the longer-run trends point to a 2%-to-4% range of inflation rather than zero to two, which unofficially is what most central banks and the Fed have targeted.

The scaremongers, who worry that the ton of money the Fed created to fight off the crisis is going to fuel the next [period of] inflation, are wrong.

Knowledge@Wharton: But the 2%-to-4% range is standard over the long run, right?

Siegel: It's not. I remember when I was studying economics, we talked about what a victory it would be if we could get down to between 2% and 4%. We've been spoiled with very low rates. Most central banks use zero to two. They come closer to two.

We'll move closer to between 2% and 4%, particularly in the United States, given the large deficits that we have and the liquidity that was created. But just as Bernanke acted very responsibly in providing the liquidity necessary to prevent [a repeat of] the Great Depression, he is also an excellent enough economist to know that money is what fuels inflation. The Fed is really solely responsible for inflation. He will not let it go above five, and probably not even four. He will raise interest rates to whatever level is necessary if inflation starts running into the mid-single digits or higher.

Knowledge@Wharton: When we talk about inflation, we also often talk about commodities. There has been a pretty good run in some commodities, especially gold. What do you see happening there?

Siegel: The commodities cycle has followed the world economy. It had hit its low very close to the same time the stock market did. Now that the world markets have recovered, we see oil has recovered. I would love to see it in the 70-to-80 range.

Commodities are fully priced. Gold ... is priced for an inflationary scenario that is much worse than will be realized. Gold is a risky investment now.... That is not going to be a good investment throughout 2010 and the longer term.

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The Indian Economy in the Next Decade: Déjà Vu with a Difference - Knowledge@Wharton

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What should India expect next year and what should we expect of Indi?. Some different viewpoints set forth in an interesting Knowledge @ Wharton article.

The Indian Economy in the Next Decade: Déjà Vu with a Difference - Knowledge@Wharton

"In 2010, governments will face the very difficult task of trying to restore fiscal discipline while also ensuring that withdrawals of stimulus measures do not kill off nascent economic recoveries," says the Economist Intelligence Unit (EIU). It estimates India's GDP growth at 6.5%, the ninth-fastest growing country. China, at 8.7%, is ahead, but others leading the pack are small economies like Qatar (24.5%).