From a 1936 Social Security pamphlet (thanks to Walter Williams):
"After the first 3 years - that is to say, beginning in 1940 - you will pay, and your employer will pay, 1.5 cents for each dollar you earn up to $3000 a year ... beginning in 1943, you will pay 2 cents, and so will your employer, for every dollar you earn for the next 3 years...And finally, beginning in 1949, twelve years from now, you and your employer will each pay 3 cents on each dollar you earn, up to $3000 a year. That is the most you will ever pay."
Funny how it goes isn't it?
Subscribe to:
Post Comments (Atom)
7 comments:
In the lack of Friday Video blog, two things to send your way and see what you think:
For serious comment, I wonder what do you think about the Depression talk becoming a bit more real:
http://www.bloomberg.com/apps/news?pid=20601068&sid=aIGfhz6uFJcg&refer=home
For fun stuff, I found this BBC take on bailouts, financial system, and even Formula One: listen at 7min, I think it is brilliant, enjoy.
http://downloads.bbc.co.uk/podcasts/radio4/fricomedy/fricomedy_20090306-1830b.mp3
(show website: http://www.bbc.co.uk/radio/podcasts/fricomedy/)
What do you think of recapitalizing banks by eliminating mark to market and implementing marked to Bell? For example
Value mortgage holdings in some form of bell curve
10% at Market
20% @5yrs
20%@10yrs
20%@15yrs
20%@20yrs
10@maturity
Derek: NO! Something is worth what someone will give you for it. NO! Let's clear the balance sheets and move on.
How much is your house worth if you had to sell it tomorrow?
Many of the assets being valued at market are not even for sale.
So make up numbers and go with those then eh? No zombie banks. No Candyland numbers. The Hamburglar is dead. Mark to market and let's move on. NOW!
From what I have read mark-to-market is a killer for many financial institutions because especially in the case of housing, nobody sells a house in a day, and therefore the spot price, or even the most recent sale price of similar unit, is difficult to use in any calculation. It seems that the value of the house is a bit like the stock market which reflects the future returns (assuming housing is an investment), and therefore day-to-day prices are less informative.
That being said, if there is no market at all, there are no prices to speak of, and therefore it seems like mark-to-market has to be at least a start. In that case housing prices are less of a problem relative to mortgage based securities which are almost non-tradable now. In other words, it is hard to apply any model or formula if there is no prior data to base it on!
My personal take is that the government needs to setup a system for investors to buy these assets (I mean mortgage-based securities) so that they can wait till maturity in "strong hands", because banks have a hard time to do it at the moment. Of course, if that was easy it would have been done already but I think this is why we (academics) are here - I believe this is the time where the government should setup something like "Manhattan project" and use the brainpower of this country's universities to come up with workable solution. Isn't it the exact time where US should draw upon years of investing in attracting the best Economic talent?
Dr Parker, out of curiosity, have you been approached by any government official since last October about any recommendation?
Dr. Grodner: Like Alan Meltzer once told me "I never discuss the policy advice I have given to government officials. You will have to ask them."
Post a Comment