Thank you for being a valued part of the CNET community. As of December 1, 2020, the forums are in read-only format. In early 2021, CNET Forums will no longer be available. We are grateful for the participation and advice you have provided to one another over the years.

Thanks,

CNET Support

General discussion

Greenspan urges SS cuts. He's got to go !! NOW!!!

Feb 25, 2004 12:47AM PST

Discussion is locked

- Collapse -
Yeah, that's the answer to the deficit problem
Feb 25, 2004 12:54AM PST

Cut benefits to people who can barely get by on what they get now -- on money they put into the system in the first place!

I bet Greenspan's salary could go a short way to easing the financial crunch too. And AIR the President's salary was doubled from $200k to $400k in 2000, and just in time too. I hear Bush was nearly destitute. Geez.

- Collapse -
Re:Yeah, that's the answer to the deficit problem
Feb 25, 2004 1:55AM PST

It is more important to look at who is responsible for running the coffers dry and do something about that. Like using your vote in 2004 to dump the current deficit crazed administration!

- Collapse -
I have an idea
Feb 25, 2004 2:23AM PST

Instead of spending the multiple millions of dollars collected from special interest groups on campaign ads to get or keep a $400K per year job why not donate all of it to the SS fund. Save enough for one commercial saying 'Look what I did'. That would get my vote. Happy

- Collapse -
I love it!
Feb 25, 2004 2:32AM PST

And there will be enough hot air blown over the next few months to power a small city for a year, reducing our need for foreign oil.

Wink

- Collapse -
Re:Wow, Patrick, what a good idea.
Feb 25, 2004 2:36AM PST

Get the petition going. Happy

- Collapse -
Here's a starter idea...
Feb 25, 2004 4:11AM PST

Here's an idea for a starter, how about a 50% surtax on TV political ads, paid into the SS fund? (joke, gang)

- Collapse -
(NT)How about a 50% surtax on Congressional salaries and benefits just for SS
Feb 25, 2004 4:17AM PST

.

- Collapse -
That would be a great political move! (nt)
Feb 26, 2004 1:16AM PST

.

- Collapse -
Federal Reserve sets 45 year low interest record.
Feb 28, 2004 10:30AM PST
http://www.newsmax.com/archives/articles/2004/1/28/150954.shtml

The Federal Reserve, not wanting to upset the
economic recovery, held a main short-term interest rate at a 45-year low
Wednesday.

Wrapping up a two-day meeting, the first regularly scheduled session of
the year, Fed Chairman Alan Greenspan and his colleagues left the
federal funds rate unchanged at 1 percent. The funds rate, the interest
that banks charge each other on overnight loans, is the Fed's primary
tool for influencing the economy. The Fed lowered the funds rate to 1
percent in June, and the rate hasn't budged since then...

The Fed's decision to leave the funds rate alone means commercial
banks' prime lending rate for many short-term consumer and business
loans remains at 4 percent, the lowest level in more than four decades.

An environment of super-low short-term borrowing costs could give
consumers and businesses an incentive to spend and invest more,
boosting economic growth.
(more at news article)

Article below mentions the relationship between the Federal Reserve's setting of prime lending rates and the interest banks charge on loans, which of course affects the market rate offered on CD's.

Banks lower prime lending rate

Bank of Hawaii and First Hawaiian Bank have lowered their prime lending rate from 4.25 percent to 4 percent, effective Friday.

The banks' move follows the rate decrease of one-quarter percentage point announced by the Federal Reserve on Wednesday.

The prime rate is a benchmark for interest rates on many types of loans.
- Collapse -
I'd be happy if they just donate their few thousands in salary and benefits
Feb 26, 2004 6:48AM PST

of most of Congress as well as President. I suspect most if not all could do just find without out it.

A great thing for SS (if it was separate, which it's not) would be to do away with retirement for Congress critters and put all those hundreds of thousands in SS.

- Collapse -
Re:Yeah, that's the answer to the deficit problem
Feb 25, 2004 9:19PM PST

From the article:

Greenspan, who turns 78 next week, said that the benefits now received by current retirees should not be touched but he suggested trimming benefits for future retirees and doing it soon enough so that they could begin making adjustments to their own finances to better prepare for retirement.

Greenspan did not rule out using tax increases to deal with the looming crisis in Social Security, but he said that tax hikes should only be considered after every effort had been made to trim benefits.


It does nobody any good to argue on emotion a la starving the old and children when that's not even remotely close to what Greenspan is saying. Everyone knows that something needs to be done. It should have been done years ago. He is urging it get done sooner rather than later so younger workers can plan accordingly.

Evie Happy

- Collapse -
Greenspan Bio at Federal Reserve site.
Feb 27, 2004 5:42AM PST
http://www.federalreserve.gov/bios/greenspan.htm

Alan Greenspan took office June
20, 2000, as Chairman of the Board
of Governors of the Federal
Reserve System for a fourth
four-year term ending June 20,
2004. Dr. Greenspan also serves as
Chairman of the Federal Open
Market Committee, the System's
principal monetary policymaking
body. He originally took office as
Chairman and to fill an unexpired
term as a member of the Board on
August 11, 1987. Dr. Greenspan
was reappointed to the Board to a
full 14-year term, which began
February 1, 1992. He has been
designated Chairman by Presidents
Reagan, Bush, and Clinton. (more at link)
- Collapse -
It's his war on interest rates too.
Feb 26, 2004 1:13AM PST

The highest interest rate you can currently get on a Jumbo CD ($100,000) is about 2.8%, which means a retiree wanting security of his money will need at least a million dollars set aside in various CD's. The yeild for a million dollars at those rates would be about 30K per year income. Most retirees have nothing near that, some may have 2-300,000 from savings and home sale, moving into an retirement apartment to lower living costs and maintenance. Retirees should be able to get at least 5% return on their cash. Meanwhile the banks are rolling in cash due to Greenspan, they are making high profits because it's being robbed from the retirees by Greenspan's obsession in lowering interest rates more than they should have been.

- Collapse -
A big AMEN over here!! -nt
Feb 26, 2004 2:08AM PST

.

- Collapse -
Thank you. Too many seniors have been hurt for too long.
Feb 26, 2004 6:27AM PST

It's then infuriating to hear the man responsible for a lot of that hurt then get before Congress, blame it on everything else, then tell them seniors may need to be hurt more.

- Collapse -
Re: Thank you. Too many seniors have been hurt for too long.
Feb 26, 2004 10:22PM PST

Hi, James.

It's not just seniors. I still think he orchestrated the recent stock market upset because he feared all the wealth in the hands of "little people" would be inflationary. of course, most of that money wasn't "current," that would be spent and have inflationary effects, but rather now-lost funds for future retirement. And now he wants to knock another leg out from under the future retiree's stool.

-- Dave K, Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

- Collapse -
Dave, you need to call home.
Feb 26, 2004 11:10PM PST

You're losing touch with reality. You think Greenspan caused the stock market decline that began early in 2000? How did he do that?

Don't get me wrong Dave. I'm close to collecting benefits, so I don't want them reduced. What is your expert opinion on the subject? How can a declining base of workers pay the benefits for a rapidly expanding base of retirees? Rescind the President Bush tax cuts right? Plunge the economy back into recession right before the election. Right? Come on, surprise me. Show me some original thinking instead of regurgitating the party line.

Is Greenspan's real sin the insistence that taxes should not be increased? That spending should be reduced?

- Collapse -
You tossed a lot of things in there he didn't say, at least this time. (nt)
Feb 27, 2004 1:04AM PST

Unlike Dave I do believe the stock market benefitted from Greenspan's policies, but unlike Greenspan I don't consider the stock market as the endall indicator for the economy.

- Collapse -
Just trying to cut to the chase without going through the repetitive layers. (NT)
Feb 27, 2004 2:12AM PST

.

- Collapse -
Re: Dave, you need to call home.
Feb 27, 2004 2:45AM PST

Hi, KP.

The answer is real investment, not a Ponzi scheme. But let me ask you a question. Before the advent of 401ks (which are mainly a way for corporations to cut costs and shed responsibility for investments), how did most pensions work? How do most state pension plans work now? Did/do they leave it to each employee to manage his/her retirement funds, and thus future, when most lack either the time, talent or inclination to do so? (one of the three, not all three at once.) What is wrong with the government either managing a large investment fund, or at least making sure that only well qualified professionals handle folks' personal accounts, and that the suckers are given an even break for once? Except for those who favor a Darwinian social order and don't much care if the less fit don't survive, there should be nothing wrong with that approach. But the conservatives all reject those rational approaches out of hand because they see government as part of the problem, where liberals see it as being at least part of a potential solution.

As for Greenspan causing the crash, the Fed drained liquidity from the markets after the Y2k deadline had past, and that was the impetus for the plunge. And if you think my characterization of his views on what he saw as "irrational exuberence" are off the mark, I suggest you plow your way through some of his testimony to Congress in 1998 and 1999, intended to slow or reverse a bull market he saw as dangerous not only becuase of overextension, but specifically because of the "excess buying power" (translation: money) it put in the hands of the average American. Well, with the stock market crash (it was worse than Black Monday 1987, it just took a lot longer), outsourcing, and the loss of three million jobs, no need to worry about that "problem!"

-- Dave K.
Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

- Collapse -
Re:Re: Dave, you need to call home.
Feb 27, 2004 3:09AM PST

Can you be realistic for a moment Dave? We just aren't living in the same world as in the days when Dad worked his whole life for one company while Mom raised the kids and then retired to a pension. There are not a whole lot of companies with pension plans any more. Ya know, I am qualified to receive some pension from the pharm company I worked for. No clue what it would be, and not likely to be more than a few dollars a month I would say, but I have had several employers during my life and the concept of a pension is just foreign to me. Speaking of having several employers, shas my husband, so have my brother and sister, their spouses, and a hefty majority of my friends that are my age +/- 10 yrs. While my hubby pretty much could retire from his current company, he will look for another company to work for if a current situation does not turn out to his satisfaction. Ya know, as positive as those pensions seem to be, the 401K is actually MUCH better for the worker because we own its contents. We don't have to consider how it will effect his pension if my hubby is unhappy and changes jobs. After 10 years he won't feel stuck into staying and he can take his savings with him when he goes.

I believe that's the way it should be for medical insurance too. Why give the company the tax break? Give it to the person. When the pool of individuals purchasing insurance increases, rates will come in line with those charged to large companies, everyone could choose the insurance THEY want, and they wouldn't have to stay in unsatisfying jobs for those bennies either (and believe me that's the ONLY reason my brother still works where he does!).

BTW, some of the government run pension plans haven't done too well lately either. Corruption or ineptitude are not limited to the corporate world. Those know-nothings you speak so highly of can still opt for a federal run fund if you want one, but don't force anyone to participate!

Evie Happy

- Collapse -
Re:Re:Re: Dave, you need to call home.
Feb 27, 2004 5:24AM PST

Hi, Evie.

Of course we aren't living in the same world. But the point is that investing is best done by PROFESSIONALS, not by folks who lack the time or in some cases knowledge to do a good job of it. The only reason you don't want the government to do it is that Republicans now hate government (a far cry from the days of Lincoln...) As for why the big-wigs in the Party don't want to do it, I honestly believe it's because they know if it's a catch-as-catch can, a lot of the "investment" money will go to their friend the brokerage houses and other investment companies as exorbitant fees and commissions.

-- Dave K.
Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

- Collapse -
And again ...
Feb 27, 2004 7:08AM PST

... even with the low interest rates on CD's and such accounts, even putting all one's money in them exceeds the rate of return if the current system were an investment scheme.

So let's make sure we all understand what you are saying. You are all for allowing the individual to invest part of the money for themselves as long as they invest it in an account the government dictates and manages (or regulates to death so as to have the same effect). Better than the current system where there is no money sitting anywhere earmarked for Evie, just a promise of what my bennies will be if I retire at X age. That letter I get in the mail is meaningless, because there is no guarantee of COLA adjustments, no guarantee that the benefits might not be voted reduced several times over by that time, no guarantee that they won't be taken away entirely from those that "don't need it", and no guarantee that they might not be taxed to death anyway.

Evie Happy

- Collapse -
Re:And again ...
Feb 28, 2004 12:59AM PST

Hi, Evie.

I just got done listening to "Lou Rukeyser's Wall Street" on tape (just part of the 5-6 hours I put in each week managing my investments -- lots of busy folks with families, especially if working two jobs to keep afloat, simply don't have even that much time available). The guest was Jeff Auxier, portfolio manager of the Morningstar five star-rated Auxier Focus fund. A couple of his introductory comments about what it takes to be a successful investor are well worth mentioning in this context: "It is just so critical to do the day-to-day work of getting all the facts about every company you own." And "the right temperment is a big part of successful investing." He was asked why he sold Enron at 80, shortly before the blow-up, and he said something like "Every brokerage house on Wall Street had a strong buy out on the stock. But we dug deep into their financial statements and 10k filings and discovered that they were actually very highly leveraged." Now do those sound like qualities and abilities typical of the average McDonald's worker? Heck, *I* don't have that kind of time, which is why I let pros do most of my investing through mutual funds (although my best percentage profits have come through my own ideas). What you see as "as long as they invest it in an account the government dictates and manages (or regulates to death so as to have the same effect)" I see as protecting naive investors from being fleeced by brokers and investment companies whose axioms are "a fool and his money are soon parted" and "never give a sucker an even break."

-- Dave K, Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

- Collapse -
There are some points you are missing or ignoring Dave.
Feb 27, 2004 4:17AM PST

First, pensions. Before the advent of 401Ks, pension funds were managed by whoever the responsible organization chose to manage them. They were not managed by individual workers, but they also were not funded by payroll deductions. The company paid for them, and tried to maximize the return they earned so as to minimize the company's cost. Workers were not paid less if there was a pension, so it was truly employer funded. That is not what SS is.

Second, would you want the Post Office to manage your investments? Government employees do not seem to be highly motivated to deliver good customer service, or high performance. So, no, I wouldn't want the gov't managing my funds. Should the gov't regulate it? Perhaps it should, as long as it keeps its hands off the money, and doesn't try to mandate what investments can be made. It wouldn't hurt to have a regulator keeping people honest.

As far as Greenspan and the markets were concerned. It was a speculative bubble Dave just like the one that nailed the Japanese several years ago. Price/earnings ratios were at incredible, and unsustainable levels. They were far higher than they had been in 1929. People were saying you didn't need to earn a profit any more, and that the Dow was going to 36,000. The pros I know were expecting the collapse, but didn't know exactly when it would come. They had pulled their money out, and many others had as well. I recall Greenspan 'jawboning' the market, but I don't recall the Fed 'draining liquidity'. In fact, I've never before heard that cited as a cause for the market collapse. Again, where are the facts (links) which will add credibility to your charge.

- Collapse -
I'm glad to see we agree on this. Maybe because it
Feb 27, 2004 1:00AM PST

should be obvious to many what has happened especially during the last 10 years, the effect the policies of the Federal Reserve has had. Some parts of the economy have greatly benefitted, but since it is unbalanced too much one way, others have suffered and now are being blamed as if they are at fault.

- Collapse -
Actually James, the banks are not making high profits on loans.
Feb 26, 2004 6:28AM PST

The rates they are receiving are as low as everyone else's. However, I do agree that some of the economic stimulus is coming at the expense of retirees and other small account holders.

- Collapse -
20 years ago
Feb 26, 2004 6:42AM PST

the spread between the rate banks paid individuals and what a 30 year fixed mortgage cost was a bit less than 2% (as I recall) and now it's over 3% someplaces aproaching 4%. There is a bigger margin there for profits than in the past and more banks are being built all over the place. Now to some extent that is good, but even with more banks the services seem to have suffered other than the newer ATM access we now have. An ATM machine is cheaper than an employee so further savings are available there, but in spite of that a penalty charge is assessed (they don't call it that) for using this method cheaper for them to get your own money. My bank does provide free ATM if you get it at one of their ATM machines using a debit card, they charge if you use a credit card, even if the card is from them. Of course I use the debit card.

I don't mind Greenspan putting more money into the economy as needed, but it wasn't necessary I believe to be as aggressive as he was, and it wasn't needed to push interest earned on money this low. The average citizen willing to loan money to banks cannot compete against a Federal Reserve that lowers the prime lending rate too much.

Unfortunately this has encouraged many seniors to seek higher return elsewhere, which is more risky. This is why many of them were hurt in stock market reverses further losing them money that they already desperately needed. All of these causes are directly related to Greenspan's Federal Reserve policies, therefore it is outrageous for him to get in front of Congress and lay the blame elsewhere. He's the one that has helped to break the seniors and now he wants to make them cut back more.

- Collapse -
James, no banker worth his salt has funded mortgages with
Feb 26, 2004 1:06PM PST

short term deposits (most individual accounts) for, probably, 20 years. The Savings & Loans were the last ones to fall into that trap, and you remember what happened to them. These days mortgages are funded by longer term funds which are considerably more expensive than demand deposit, savings, or short term CD accounts. This means they are not as profitable as you imagine. In fact, my employer, a large bank and trust company, has just sold its mortgage business. It simply was not sufficiently profitable. Unfortunately, all the staff was laid off when this happened.

I think the problem with the seniors is that they're trying to fund a long term situation with short term funds. That doesn't work. They need to increase the maturity on their loans to get long term rates.

I agree about the ATMs. They were originally brought in to reduce teller costs. Now that they've done this, banks are using them as a revenue source for non customers. Actually, I can see why they do that. The thing that puzzles me is places like Sam's Club which installs ATMs with these ridiculous fees. It seems they should want their customers to have ready access to cash so that it can be spent. I won't pay ATM fees unless it is an absolute last resort.

- Collapse -
ATM penalties
Feb 26, 2004 11:02PM PST

The Wawa convenience store agreed to install ATMs but only on the condition that there were none of the penalties assessed. They get alot of traffic in the stores from this!

Dan