Thursday, September 29, 2011

Social Security, Oil, Jon Stewart

 (In a DC enclave sometime before 2008)

"We are going to privatize Social Security."
"C’mon." 
"Well the public swallowed giving the surplus to only our people, didn't they?. And we killed the death tax changes didn't we?. I think we can do whatever we want.
"Don’t exaggerate."  
"Exaggerate??  
"Yes."
"With so many radio stations repeating our sound bites, controlling media is a cinch. Do you watchJon Stewart?"


Jon, "you missed it."
"Yeah, I hate to admit it, But, he is clever and funny."
"Right, well he had the head of an oil company on and never asked him the key question."
"Which was?"
"Well they were talking about how oil companies had just earned their highest annual profits, ever.  I kept expecting him to ask,  'How much profit would your company have earned if the price of gas never rose over $2.00  or $3.00 a gallon'?  Gas was close to $4.00 at the time. That he didn’t ask that question doesn’t mean he is stupid.  Well, that includes the public.  If someone is not fully grounded in a subject its easy for them to miss key questions.  But as Republicans we need to anticipate what's in the voter's mind and sound bite to their prejudices, hatred and fears.  Over, and over, and over. You know how we do.   And also, before we do anything that is questionable to the public, we have to first say that the Democrats are doing it.  Look, we have the whole country thinking the smartest people in the country, including scientists and professors, only say  things that are factual because they are liberal.  But, back to the point. If we could privatize Social Security the profits would be enormous.  I mean its so much money its ridiculous.  We could even put it where it is now.  Oh. man, the commissions would be really enormous.  But we would have to guard against the public realization that, .Social Security is already ‘effectively’ privatized. 
"Hey Soose!!  You’re right.  So how would we handle it?   How could we do it?   Wow, its so much money..  Trillions. You're right."
"The reason Social Security is such  a good deal, when compared to private insurance pensions, is that there is no cost added for administering, and no commissions charged and the funds are government securities for safety..
Yep, and, far as I know, nobody is overseeing whether or not the money in the Social Security fund, is receiving maximum interest and getting compounded correctly."
"Wait a minute, what?" 
"Well there are government bonds and there are government bonds. And they all don’t pay the same rate of interest.  So maybe we do and we are maximizing the SS fund. And then again, 'maybe not'."
"Ok, the hell with that, get back to what we were talking about. What was your idea?"
"Well, the only people, like financial experts, who wrote abut it, buried it in statistics and then never verbalized that SS is effectively privatized. But our sound bites have people talking as if they know something bad.  You know like young voters.  We have them thinking the money they pay in is used in real time, for current Social Security payments..  In a way it is but actually there is a separate accounting before it goes into the general fund.   Social Security, is just like any other pension, like what you get from any pension fund or buy from an insurance company.   And one of its real strengths is, it starts when people are young, and would  rather spend money without  thinking of the future.  A natural for our sound bites.”
”So what's wrong with it.”
”Social Security?  Are you kidding, nothing.  But it started in 1932 and rates were based on the mortality and cost of living at that time.  At the time individual mortality was around
age 65.,  Now most smokers have quit smoking and we are living longer.  If it started today, the rates would be based on the correct mortality for today and few people would say anything.   You can't get 10-20 year ago annuity rates from private companies.   Yes, it has to be tweaked every 20  years or so and it has been, almost routinely, to take into account our new longevity.  Especially for young people just coming in..  We did just that in the past and we will have to keep doing it in the future.  But we can use that as a tactic against the Democrats.  What the young don't realize is, their money is for themselves.  They will get the payments for a  longer time and they also will need to receive higher amounts than what is paid out today.  What they pay in, has to match the present mortality rate.  This will enable Social Security to continue to be actuarially sound.  The problem is for the today's young the future seniors, who will live longer and need higher benefits, its not for the present seniors.  The money they have paid and don't forget the money their employers paid-in,  has guaranteed their Social Security payments.   You don't hear any seniors of today, who are getting social security payments, complaining about how the money was taken out of their paychecks when they were younger do you?  Well they were not any more eager to pay in at that time than the youngsters of today.  But the sound bites are great and it motivates them, and some seniors too, to vote against their interests..  Can you believe how many seniors vote our way?.”
"What do you mean by that?" 
"See, its even hard for you to understand,  Now, my idea.  Regulations require some pension funds to only invest in triple A ('AAA') bonds.  Like government pensions, its required." 
"What was that crap you were telling me the last time we spoke?" 
"Well, now that we have removed regulations preventing it, we are allowing banks and investment firms to be under the same corporate umbrella.  With that help bankers are making obscene amounts of money on mortgages.  Mostly because home buyers are not complaining about extra points and other stuff being added on to their mortgages.  And that's because property values are going up so fast.  So here it is, . What if we could make an investment instrument that could buy mortgages from the banks, meaning instant profits for them and freeing them from any chance of loss.  We get the money to do it by selling creative instruments, such as say bonds or derivatives, to investors."
"Stop.  You cant do that.  The bond rating would be too low." 
"Suppose we could raise the rating."
"How could we do that?" 
"Well I know some guys at Moodys and they were talking about raising money by taking in investors."
Is the bird sick, Jon?
"From where?  Aint that a sick bird?"
"Sick bird?"
"You know, 'ill eagle'."
"Stop being cute will ya,   Sure, but now we have so much control, we can change that rule or work a go around." 
"C’mon, its  a conflict of interest." 
"Do me a favor, start thinking of what we have already done, and use your imagination."  
"Sorry"
"If we can eliminate the regulations that keep Moodys from  having investors, they
might cooperate with the ratings on  the mortgage bonds."
"Holy shit I’m drooling.  I’m already thinking about a new page in the tax code. .I’m calling my lobbyists as soon as I get back to my office.
"
(And so the bubble grew)


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