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Option Armageddon



March 05, 2008 – Comments (5)

As I stated in an earlier post David Walker heading up a billion dollar foundation set on fixing American government spending is the best news for Americans in years.

Today I saw a blog I hadn't seen before called Option Armageddon.

I would just like to make a couple of points on the post "A Great Society No Longer?"

"Medicare and Social Security are funded, not by trust funds, but by transfers from workers to retirees. Right now, there are more than enough workers to fund retiree benefits. But as the baby boomers age and as health care costs inflate, America's future obligations will increase substantially"

I disagree with this statement.  Right now the government spends more than it takes in in taxes.  Maybe technically it is being "funded" because of how they do the break down in how they take taxes, but with $9.3 trillion dollar deficit I would suggest that until such time as the US is paying all of its bills and paying debt back it simply isn't true.

I have no disagreement with the doom and gloom in the article.  It is simply part of the reason I am so bearish on the market.

Moody's is already a dork in the ratings game.  The US should be on negative watch for a downgrade in its credit rating today.  There is simply no choice but to make changes and the rating ought to suggest that change must be made now.

I hope the following as well: 

"Hopefully, the foundation's first proposal will be to reduce promised benefits. The alternative, raising taxes, makes no sense with the economy headed for a protracted recession. New taxes to pay growing entitlement benefits will only exacerbate the economy's problems by discouraging job growth and investment."

I don't know what the US's highest awards are, but that Pete Peterson guy should be nominated for it.  

In Canada we have the Order of Canada and it has three different levels.


5 Comments – Post Your Own

#1) On March 05, 2008 at 8:31 PM, dwot (28.81) wrote:

Hedge funds imploding...

I have no idea what these hedge funds are holding or how they can affect the market.  But, seeing $800 million disappear in a month from just one of about 500 that are expected to collapse, well, peek-a-boo.  I'm hiding... 

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#2) On March 05, 2008 at 9:15 PM, CycleFreak7 (< 20) wrote:

Hedge funds imploding

Good! As far as I'm concerned, Hedge Funds are a pox on the markets and everyone should celebrate their demise.


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#3) On March 05, 2008 at 10:33 PM, abitare (29.51) wrote:


"I'll tell you what I think of hedge funds. Hedge funds are a huge fad. You can pick any ten hedge funds and I'll bet that on average they will underperform the S&P over the next ten years. You can't create more money out of American business than the business itself creates; so most of these hedge funds will not be able to justify their outlandish fees over the long-term and they will disappear. On Wall Street, there are innovators, imitators, and total incompetents. I'm afraid that the majority of hedge funds around the globe now are run by the latter two categories of people."

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#4) On March 05, 2008 at 10:34 PM, dude59 (26.55) wrote:

Next year when T-bills are costing the US Government twice as much due to your current concerns, there will be a much larger problem, as there will be NO discretionary items in the budget.

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