In legal terms, the program is funded not just by today’s payroll taxes, but by accumulated past surpluses — the trust fund. If there’s a year when payroll receipts fall short of benefits, but there are still trillions of dollars in the trust fund, what happens is, precisely, nothing — the program has the funds it needs to operate, without need for any Congressional action.
Alternatively, you can think about Social Security as just part of the federal budget. But in that case, it’s just part of the federal budget; it doesn’t have either surpluses or deficits, no more than the defense budget.
" Imagine that in 1990 bank CEO pay had been indexed to bank ROE. By 2007, CEO compensation would have reached $26 million. That is precisely in line with their actual payouts. If you believed ROE were a reliable performance metric, US bank CEOs would have had a watertight defence back in 2007. Instead, of course, we had ludicrously leveraged banks that were too big to fail and brought the economy down with them. [...] Imagine if the CEOs of the seven largest US banks had in 1989 agreed to index their salaries not to ROE, but to ROA. By 2007, their compensation would not have grown tenfold. Instead, it would have risen from $2.8 million to $3.4 million. Rather than rising to 500 times median household income, it would have fallen to around 68 times."
Apparently Beranke has learned nothing, despite what he says in his speech yesterday in Boston. This is moral hazard at the highest level. ML is moving risk from an uninsured entity to an insured one, after the fact. Who will lose? You guessed it, you, not the ML traders or BAC bondholders.
Listen, my wife is a very good cook. And we have a housekeeper, who is an even better cook. It’s a weird situation, but I think my housekeeper is a better cook than any restaurant in Washington. She is a simple woman with no education, from Chile, and she just happens to have a superhuman talent. She being such a good cook, she achieves wonderful effects with very strange ingredients, and strange combinations of ingredients. Israel’s success as a state has been made possible by Arab threats of different kinds. Arab violence or threats of violence are part of the Israeli soup. There are certain levels of violence that are so high that they’re damaging, and there are also levels that are so low they are damaging. There is an optimum level of the Arab threat. I would say for about nine days of the 1973 war, the level of violence was much too high. Even when Israelis were successful, the level of violence was destroying the tissue of the state. Most of the time, the violence is positive.
Five agencies have to weigh in on the Volker rule. This is part of the problem. There are too many agencies regulating financial transactions. Too much room for regulatory arbitrage. Lobbyists for the banksters know how to divide and conquer.
Currency devaluation is an easy political call and the evidence for it seems strong. However:
"I wonder if we’ll ever learn. We kept pressuring countries like Japan, Germany and Switzerland to appreciate their currencies. And then their currencies do appreciate very sharply. But the current account surpluses remain very large, because currency appreciation doesn’t address the root cause of those surpluses. Now we are engaged in the same fruitless quest with China. What a waste of time."
The problem is demand, not regulatory or tax uncertainty. The argument matters because of the policy implications. If the demand problem is not acknowledged then all the Republicans try to do is reduce taxes and do away with regulations.
This has become a very partisan argument. Republicans blame the GSE's and CRA for the sub-prime disaster and the liberal Democrats feel obliged to defend them. The defense is weak. Even though they were late to the game, the GSEs certainly poured oil on the sub-prime fire and made a bad situation much worse. Much more than any Wall Street bank, the GSEs are an example of privatization of profits and the socialization of risk. How much of their bonuses have Johnson and Raines returned?
How tax havens work: UK edition. All but two of 100 companies have tax haven subs. The tax (avoidance) department of most multinationals is seen as a revenue center. Providing tax avoidance products is also a large part of the product line of investment banks.
Obama was wrong. There were many illegal acts by banks and bank executives during the crisis. The charges have just not been filed. This is the first charge that I have seen.
“Today’s charges reflect an all too familiar pattern – corporate executives once seen as rising stars embrace deception to avoid losses and conceal negative news, with investors and the FDIC insurance fund left to pick up the pieces,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “But accountability for these executives begins today.”
But when will John Mack of Morgan Stanley or Dick Fuld of Lehman be charged?
"Now notice: doing what you love, and never settling until you find it, is a costly signal of your career prospects. Since following this advice tends to go better for really capable people, they pay a smaller price for following it. So endorsing this strategy in a way that makes you more likely to follow it is a way to signal your status."
"Reconcile yourself to the limits of your talent and temperament and find the most satisfactory compromise between what you love to do and what you need to do feed your children" is rather less stirring, "
And from the comments: "The advice is more traditionally given in relation to marriage. If you go into a relationship thinking that you’re settling, you’ve undermined it from the start. Of course you’re settling and making compromises – but the brain has a wonderful capacity to ignore this fact if you let it. Some people honestly believe they have the perfect partner,
And I think there’s an analogy here to be drawn with careers."