Comments for Phillip Longman Tries to Explain in Retrospect What the Rest of Us Warned About Years Ago at http://www.cepr.net , comment 1 to 15 out of 15 comments http://www.cepr.net Tue, 21 May 2013 20:23:10 +0100 FeedCreator 1.7.3 http://www.cepr.net/index.php/blogs/beat-the-press/phillip-longman-tries-to-explain-in-retrospect-what-the-rest-of-us-warned-about-years-ago#comment-18641 Jack wrote, "with the median family income hovering around $30,000" Actually, the median household income is about $50,000, not great, but a lot better than $30,000. http://en.wikipedia.org/wiki/File:Distribution_of_Annual_Household_Income_in_the_United_States.png - AlanInAZ Wed, 05 Sep 2012 10:01:52 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/phillip-longman-tries-to-explain-in-retrospect-what-the-rest-of-us-warned-about-years-ago#comment-18640 To suggest that some have no retirement funds "because they never contributed to their own 401(k) to begin with. Yes, the financial sector rips off these plans, dragging performance. Yes the stock market has gone nowhere in a dozen years." tew. It sounds as though those with no 401K made a conscious decision to spend now and remorse later. The sun will shine forever. So tell me tew, with the median family income hovering around $30,000 what might be left over for saving in a 401k plan? It has been noted repeatedly by journalists and the economists that they report on that workers income hasn't kept pace with time and productivity. What can a family save when they have less then $600 in weekly income before taxes are taken out. Not much tax, granted, but not much income either. - Jack Wed, 05 Sep 2012 09:48:06 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/phillip-longman-tries-to-explain-in-retrospect-what-the-rest-of-us-warned-about-years-ago#comment-18619 tew - I am a baby boomer and I saved as much as I could. I'd just like to point out when I first got offered a 401k I was already 40 years old, and it had a very low maximum, only a few thousand dollars a year. One of the stupid things about the 401k law is the way the investment choices you have and the amounts you can contribute are tied to your employer; why weren't IRAs simply expanded so that people could create their own accounts anywhere, with everyone able to contribute up to the limit? I was 50 before I was able to contribute the maximum allowed by law. At 58 I lost my job due to health problems. I only had a few years in which I could put substantial amounts of money away. - denise Tue, 04 Sep 2012 14:30:43 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/phillip-longman-tries-to-explain-in-retrospect-what-the-rest-of-us-warned-about-years-ago#comment-18614 "(an assumption that was explicit in all the privatization proposals put forward in the 90s, including Clinton's plan to put Social Security money in the stock market)," is not true. For it to be a good idea to put social security money in the stock market it is not at all necessary for the market to go up and up. The SSA has a very long planning horizon. What should matter to it is the long run. Even if the stock market crashes from time to time, it remains true that it has beaten T-bonds over every 30 year period (including the one that started just before the crash in 1929). One way to understand how massively wrong your criticism of Clinton is is to beat the Press -- the WaPo editorial board in particular. They decided to claim that state and local public pension funds were grossly underfunded. They must have noted that they have smaller balances of trust funds compared to future liabilities than the SSA. They claim that this plain fact was hidden, because the liars claimed they could get 7% real over the long term investing in stock. They noted that over the period they chose the market was up at an annual rate of 4% real. Someone had to point out that stocks may dividends. Notably the dividend yield is vastly higher than the return the SSA is getting on its portfolio of treasuries. They would gain by shifting to stock if the stock market didn't go up at all (nominal). The SSA investing in stock is very different from you or I investing in stock. We won't live forever and will want to cash in when we retire. THe SSA will live forever and won't have to cash in. Now it is true that if the SSA invested in stock then the stock market boom of the 90s and the boom compared to reality of the 00s would not have caused such an increase in consumption (as it would have been hidden from Ricardian not at all equivalant real world people). Nor would the crash have caused such a drop. The risk born (really hidden) by the Federal Government is an automatic stabilizer. It is better for the country for the Federal Government to bear (really hide) that risk than to get the same expected return without risk. Of course there just must be some reason the SSA shouldn't invest in stock. The problem is that no one has come up with the shadow of a hint of a possible simulacrum of an argument to that effect. Your plainly false assertion is utter nonsense and par for the course. - Robert Waldmann Tue, 04 Sep 2012 10:55:42 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/phillip-longman-tries-to-explain-in-retrospect-what-the-rest-of-us-warned-about-years-ago#comment-18612 Blanche Davidian wrote "someone who got a 401(k) contributed regularly, and the thing is essentially worthless now. " As someone who has contributed regularly to a 401k or IRA for 30 years I can say that it is not worthless. The growth has been excellent despite some bumps in the last decade. True, if you have been investing only in the stock market for the last 10 years then your growth has not been great but it is not worthless. Of course, you should be more diversified than 100% in the stock market. I have never been in the 1% but I can say that my savings are now providing a significant income and cushion for my retirement. - AlanInAZ Tue, 04 Sep 2012 08:40:42 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/phillip-longman-tries-to-explain-in-retrospect-what-the-rest-of-us-warned-about-years-ago#comment-18611 So, you have the situation where someone never got a 401(k) and never saved a penny, and someone who got a 401(k) contributed regularly, and the thing is essentially worthless now. The person who never saved, for whatever reason, but had the full benefit of his money, looks a lot brighter in hindsight than the worker bee who contributed mightily to a savings plan that went mainly to the enrichment of the one percent. Give the guy with the 401(k) a gold star for thrift, but that looks like mighty cold comfort to me. - Blanche Davidian Tue, 04 Sep 2012 08:06:17 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/phillip-longman-tries-to-explain-in-retrospect-what-the-rest-of-us-warned-about-years-ago#comment-18608 Based on my own life experience and others I know of a similar age (66), I cannot fully agree with Dean's reasons for lack of savings for those reaching retirement age. All the blame should not fall on public policy. I know its a cliché but I do think the mindset for those born in the U.S. after World War II was conspicuous consumption. With such a mindset it is easy to succumb to the siren call of a rising stock market or housing bubble to fuel excessive consumption. Yes, there are many with special circumstances that made savings impossible, but I do not believe they are a majority. The situation today is different than when I was working as there are challenges in the labor market today I did not face. My comments relate only to typical households of my generation. I should also say that the stock market crashes did not wipe out my savings accumulated over several decades. All the stock market loses have been recovered. - AlanInAZ Tue, 04 Sep 2012 06:52:21 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/phillip-longman-tries-to-explain-in-retrospect-what-the-rest-of-us-warned-about-years-ago#comment-18607 Fine enough, but let's be clear: the reason many boomers have no retirement savings is because they never contributed to their own 401(k) to begin with. Yes, the financial sector rips off these plans, dragging performance. Yes the stock market has gone nowhere in a dozen years. Yes, a minority sold plan assets to pay mortgage payments. But the simple truth is that the large majority of those with no retirement savings never saved at all, ever. We can discuss the reasons for this, but it's the truth. - tew Tue, 04 Sep 2012 06:43:05 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/phillip-longman-tries-to-explain-in-retrospect-what-the-rest-of-us-warned-about-years-ago#comment-18604 [b]skeptonomist[/b] wrote, [quote]What is required is institutions and laws that regulate automatically without requiring superhuman discretion from individuals, and make it difficult or impossible for bubbles to form.[/quote] Right. In particular, it's crucial to design regulatory regimes that are relatively robust to regulator capture and corruption. - liberal Tue, 04 Sep 2012 05:49:19 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/phillip-longman-tries-to-explain-in-retrospect-what-the-rest-of-us-warned-about-years-ago#comment-18599 [b]skeptonomist[/b] wrote, [quote]He was always an advocate of increased leverage in banking and finance, which was a major reason for the destructive extent of this bubble (there have always been housing bubbles). [/quote] I agree with that, and I think Greenspan is the best candidate for "which leader is more responsible than any other for the bubble?" But the blame for Greenspan isn't just a matter of leverage, but also this idiotic claim that financial institutions and markets can regulate themselves. IMHO that was actually more damaging than the increase in leverage. - liberal Tue, 04 Sep 2012 04:19:30 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/phillip-longman-tries-to-explain-in-retrospect-what-the-rest-of-us-warned-about-years-ago#comment-18594 The damage that Greenspan did was not confined to advising everyone that house prices would go up forever and trying to get out of the 2001 recession with a housing boom, or even failing to recognize the bubble and take action against it. He was always an advocate of increased leverage in banking and finance, which was a major reason for the destructive extent of this bubble (there have always been housing bubbles). Many economists encouraged the idea that the Fed could take care of any problems that arose; Bernanke endorsed this in his famous "apology to Milton and Anna" speech. The idea that the slightest word of a Fed chairman has tremendous consequences for the economy is greatly exaggerated; but even if it were true there is no reason to think that those words will always be constructive, given the nature of the Fed and the way the Chairman is selected. The way to avoid more bubbles and busts is not to expect more from Fed chairmen and trust them less, it is to recognize that monetary policy and its Maestros can't control the economy even if they know what they're doing. What is required is institutions and laws that regulate automatically without requiring superhuman discretion from individuals, and make it difficult or impossible for bubbles to form. The perspective from a position of authority, by the way, is very different from that of a private economist. There is a lot of responsibility in calling bubbles and taking action which surely hurts some powerful interests, whether or not a bubble is successfully deflated. - skeptonomist Tue, 04 Sep 2012 03:24:38 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/phillip-longman-tries-to-explain-in-retrospect-what-the-rest-of-us-warned-about-years-ago#comment-18593 Phillip Longman absolutely deserves credit for that one -- but it also leads me to expect better than this Washington Monthly piece. - Dean Tue, 04 Sep 2012 03:09:13 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/phillip-longman-tries-to-explain-in-retrospect-what-the-rest-of-us-warned-about-years-ago#comment-18592 Cut him some slack. He wrote an awesome article awhile back entitled "The Best Care Anywhere," celebrating the VA model for health care. - liberal Tue, 04 Sep 2012 02:45:40 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/phillip-longman-tries-to-explain-in-retrospect-what-the-rest-of-us-warned-about-years-ago#comment-18588 [quote]Okay, Phillip Longman tells us he doeesn't know any answers. That is perhaps not surprising since he apparently never saw any of these problems coming, but that really should not bother the rest of us.[/quote] Americans sharply disagree even on what the present state of economic conditions are, and moreso on (whatever) historical precedent brought them about. Baker raises the bar further and expects them to predict outcomes as well, like the housing bubble. Many Americans have been reduced to living in the very short run, predicting a few days ahead at a time as necessary to put one foot in front of the other. Are most Americans helpless faultless cogs caught in an economic wheel that is grinding them to dust? Or did they do this to themselves? If even Phillip Longman doesn't know what happened, much less have any answers, what does Baker expect? Exceptions to the Zen principle which now guides the financial and health care industry for example?: Those who know don't say, and those who say don't know. - Last Mover Tue, 04 Sep 2012 01:31:04 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/phillip-longman-tries-to-explain-in-retrospect-what-the-rest-of-us-warned-about-years-ago#comment-18587 If higher population growth leads to more traffic, greenhouse gases, crowding, and lower wages, as Dean says, then the logical policy is to STOP IMMIGRATION. - Jack Tue, 04 Sep 2012 01:22:27 +0100