Dave,

Here goes "Old Remember When" again.

I do believe that Roll Your Own was called a Target. They became popular
during WW2 when we were in the Armed Services. We could buy a pack of
Cig. for 5c. The tobacco companies weren't ready for that. The Civilian
supply became real short.

The story we got, when they upped production they couldn't get the
green paper because of all the "olive drab the military was using. We
all believed it was a cost cutting move to use white paper. Anyway, they
came out with a slogan; "Lucky Strike Green has gone to War" How could
we call them cheap after that?

Ah yes, I remember.

Ole Thom

"Dave" wrote in message
...
On Mon, 21 Mar 2005 08:14:41 -0500, "Vito" said:

Yup. Good old RR, king of the neocons, ran up huge deficites and threw a
party, just like GWB is doing right now. They call it prosperity.
Conservatives call it madness. Democrats under Clinton tried to fix the
mess

Sorry, Vito, but SS's problems antedate RR by quite some time. They're
inherent in the system's Ponzi scheme structure. Last time the Dems "tried
to fix the mess" was 1983, when they applied the usual Dem remedy of
raising
taxes.

I'm addressing deficit problems not SS problems, Dave. The SS Trust is just
one place RR and now Bush borrowed trillions. In about 10 years, the SS
Admin will have to begin recalling those bonds and taxpayers will have to
begin repaying those deficits. I'll prolly be dead. So I'll say thanks to
all you younger taxpayers who must now finance RR's "prosperity" - it was
quite a party! The Iraqis should thank you for financing their Iran-style
"democracy" too, but they prolly send suicide bombers instead.

I certainly don't know all the convoultions of SEC rules, but advising
other people to buy Enron stock when he himself was borrowing money from
Enron to buy optioned stock and immediately selling it, strikes me as
extremely fraudulent.


Dave wrote:
Depends entirely on how much he knew of the fraudulent accounting.


Well, by the letter of the law, you're right, but golly gee didn't he
ever scan a statement of cash flows? Here he was borrowing money from a
company that was sinking... no, plummeting... so he could buy
underpriced stock to sell... while requiring his employees to buy it...
and publicly urging everyone else to buy also.

It may be that my "fraud-o-meter" is a bit too sensitive, but if I were
fool enough to have been burned by his shenanigans, I'd be thinking
about vigilante justice.


Some fault lies also in the U.S. accounting system that relies on rigid
rules to determine who is "at risk" for an asset, and the way those rules
are applied, rather than relying on the auditors to step back make some
judgment calls.

Sure, but that's why a lot of audit companies also have management
consulting contracts (a conflict of interest in many cases).

... Many of the problems would have occurred even if Enron's
partnership transactions had complied fully with the rules, because Enron's
"investment" in the Enron partnerships consisted entirely of Enron's own
stock.

Yep. I spotted that even before the crash, a friend of mine was riding
that train and thanks to my advice he didn't get burned as badly as he
might have.

... If the auditors had taken a big picture look at the entire structure
instead of focusing on technical rules, they should have concluded that the
structure was unsound.


Of course not... instead they were busy helping Enron flout the rules,
up to & including shredding documents after the crash finally came.

IMHO the accounting profession has to tighten things up quite a lot,
preferably within the context of professional behavior rather than laws.

DSK

"Scott Vernon" said:
that wasn't for tobacco, Dave.


Dave wrote:
Back then it was, Scotty.

Gee Dave, you think nobody smoked marijuana before 1965?

It was legal up until the 1930s, and commonly used by women for
menstrual cramps. AFAIK they didn't use bongs though.

Growing hemp was also a defense industry... ropes for the Navy... in the
1800s there was a hemp plantation near New Bern. My my how times have
changed!

DSK

Multiple companies, of course... but how is this relevant? For one
thing, no private company can print it's own money; for another, if
Uncle Sam defaults on our debt we will have a full-blown world-wide
economic crisis to worry about; for a third, Uncle Sam is already the
guarantor of all companies private pension plans already... in fact this
is another impending blow-up...


Dave wrote:
Very basic principle called diversification.

Sure... if we were talking about something other than a gov't program
holding excess funds in anticipation of disbursement, I'd agree. It
would even make sense to hold some percent in equities... if we were
talking about something else...

... One country can default. (Some
Latin American countries seem to do it regularly.) Chances of several
defaulting is much less.

As to the private pension situation, I'm not sure Javits got it right with
ERISA in setting up the guvmint insurance scheme, encouraging unions to
negotiate unsustainable defined benefit pension levels. Long-term, however,
it seems to be moving in the right direction by shrinking the defined
benefit universe and increasing the defined contribution universe.


Yep, but the bail-out... and the crash of some pension programs... is
going to hurt a lot of people. The political fall-out could be huge...
of course it could amount to nothing, also.


IMHO you're the one who has it backwards... why would the Japanese,
Chinese, French, Swiss, etc etc pay private US citizens retirement
benefits when they could default at no risk?


If our SS fund were holding their bonds, they would pay those bonds for the
same reason any country pays its bonds. If they don't, their borrowing
ability going forward is severely limited, whether that borrowing is from
our SS trustees or somebody else..

Except that we don't live in Japan. If Japan defaults, the Japanese
nation as a whole would suffer economic reverses. If Japan defaults
owing you or me money, we also suffer a loss.

It may be stated that holding solely US bonds in the SS Trust Fund is a
lack of diversification... but this ignores the point that SS is *not*
an investment. Advocates of President Bush's plan often overlook this
point... IMHO deliberately, in the same way they use derogatory phrases
like "empty promises" and "IOUs".

It also could be said that since US Treasuries are the safest & most
secure investment available, why would you want anything else in the SS
Trust Fund? The name is "security" not Social High Risk / High Return.
In fact (to repeat a point) Social Security doesn't *have* any "return."
And unlike Japan, Switzerland, etc etc, the US can always print money
and hand it out to beneficiaries if default looms. You'd look very cute
asking retirees to take part of their income in francs, part in yen, etc
etc.



The way the current system is set up, default is *very* risky to the
borrower. This should give a great deal of reassurance to those
dependent on the proceeds of that debt.


The question, of course, is whether you want to have one borrower that could
default, or several, none of whom represents the whole ball of wax.


We agree that diversification... as a general principle... is a very
good idea. This is a special case IMHO. A corollary BTW is that one
should always invest in the stock of a monopoly one is forced to do
business with.

DSK

Doug,

Around 1942 I played Clarinet and doubled on Sax. With all the musicians
drafted we could pick up a couple of bucks playing gigs with the
traveling bands passing thru.

After one job I went to a party in the wee hours of the morning. After a
few drinks, the hostess brought out a silver tray of "Rolled Weed" I
was so sure the Cops would be crashing thru the door any minute. I
couldn't make my good byes fast enough. I was just a boy of 16 and sure
I was hooked after the first drag.

As Clinton said later, I didn't inhale

Ole Thom

Gee Dave, you think nobody smoked marijuana before 1965?


Dave wrote:
I'm pretty damn sure it was extremely rare in the rural Midwest in 1940-45.


Rare? Yes. Nonexistent? No. Extremely rare? I guess that depends.

DSK

Did you get the reffer madness?

Joe

Dave wrote:
Doug, Nobody's holding any "excess funds."

Really?


... The money is collected from
workers and immediately goes out. Some pays benefits, and the rest is
"borrowed" by the outfit that's promising to pay future benefits in exchange
for its IOU, and is immediately spent.


And you're talking about accounting in another thread? Hoo boy.

You get things all backwards, and want to denigrate both the Treasury
(specifically) and the U.S. gov't (generally).

Nothing is "borrowed" from Social Security. Money collected from SS
taxes is either spent or invested in US treasury bonds... the most
secure investment possible. Maybe after I tell you this 15 times it will
begin to sink in.

That makes Social Security a lender, not a borrower.

This kind of repetitive & misleading crapola is why I am extremely
dubious about Bush's SS plan. Anything that relies on deceit & ignorance
to gain approval is *not* likely to be a good fiscal policy.

It doesn't matter to me personally, I am very unlikely to rely on Social
Security for more than a miniscule portion of my retirement income. But
it's reassuring to see the poll numbers for Bush's plan dropping...
maybe this is the one time he won't be able to fool a slim majority.


Yep, but the bail-out... and the crash of some pension programs... is
going to hurt a lot of people. The political fall-out could be huge...
of course it could amount to nothing, also.


To some extent it may.

One thing I meant is that this may be another item that President Bush
will shed some of his teflon coating.

... Most people don't understand that the full amount of
their accrued pension is not covered by the insurance. The problem is
declining, however, as more and more companies go to plans in which
employees have their own accounts.

Yep. If the problem holds off long enough, it will go away. But right
now it appears we haven't seen the peak yet.

... Of course they also take more market risk
in these accounts. Those kinds of plans are not covered by the guvmint
insurance.


You mean like individual 401Ks


... If Japan defaults, the Japanese
nation as a whole would suffer economic reverses. If Japan defaults
owing you or me money, we also suffer a loss.


Whoever lent the Japanese government money, whether Japanese of not, would
suffer. In fact, just substitute the U.S. for Japan in the above and you see
just what I mean.


Yep. Except that Japan's economy is not as big as ours, and if Japan
defaulted it would not cause as much of a world wide crisis (more below).



It may be stated that holding solely US bonds in the SS Trust Fund is a
lack of diversification... but this ignores the point that SS is *not*
an investment. Advocates of President Bush's plan often overlook this
point... IMHO deliberately, in the same way they use derogatory phrases
like "empty promises" and "IOUs".


Taxpayers are parting with money today in the form of SS taxes, and
expecting to get something back in the future. Labeling it as an investment
or something else doesn't advance the analysis.


It also can be misrepresented that the individual paying SS taxes is
making an investment... which is absolutely not the case. SS is more
like an insurance plan... and guess what, insurance companies invest in
all kinds of things, including US bonds...


It also could be said that since US Treasuries are the safest & most
secure investment available, why would you want anything else in the SS
Trust Fund?


Ever hear of German gold bonds? I know where you can get a bunch of them.


You keep harping on this as though it wasn't your team that's running
the deficit up like a rocket. If the US gov't defaults, which I (and
99.9% of the sane world) consider extremely unlikely, then it will be
largely because of Bush & Cheney's deficits.

And (maybe after 15 times this will sink in too) if the US defaults,
then we will have a world crisis that will rival the Great Depression &
WW2 rolled into one.



And unlike Japan, Switzerland, etc etc, the US can always print money
and hand it out to beneficiaries if default looms. You'd look very cute
asking retirees to take part of their income in francs, part in yen, etc
etc.


If the US tries to solve the problem by simply printing money, I'd prefer
the francs, yen, etc.


If you'd swapped for Euros about 6 months ago, you'd be doing great.
However, if you hold US bonds and we decide to print our way out of
debt, you get cash. If your holding somebody elses bonds and they decide
to, you probably get nothing since you have to return the bonds to the
central bank of the country that issued them.

Bond history is interesting... at one point, a person I know acquired
some old Russian (by "old" I mean Tsarist) bonds... which he thought
were worthless. They were issued in face values of British pounds. But
the amount was large enough to be worth checking out, and glory be! He
got quite a nice payday because the Russian gov't at that time (just
after the Yeltsin takeover) was *very* interested in preserving it's
credit rating. Of course, not many years later, Russia played a con game
of forcing foreign holders of businesses in Russia to buy a new bond
issue, and then defaulted on them.


This is a special case IMHO.


"Special case" is the term one uses when he can't accept the proposition
that the rules governing all other cases suggest a different answer.


Except that I'm not the one trying to misrepresent Social Security, US
Treasury bonds, and the likelihood of US default.

DSK

Thom Stewart wrote:
Doug,
Around 1942 I played Clarinet and doubled on Sax. With all the musicians
drafted we could pick up a couple of bucks playing gigs with the
traveling bands passing thru.

After one job I went to a party in the wee hours of the morning. After a
few drinks, the hostess brought out a silver tray of "Rolled Weed" I
was so sure the Cops would be crashing thru the door any minute. I
couldn't make my good byes fast enough. I was just a boy of 16 and sure
I was hooked after the first drag.

As Clinton said later, I didn't inhale

Ole Thom


Cool story. My nephew is playing the saxophone and getting into old jazz
& big band music. I hope he's also being smart like you.

Regards
Doug King