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  • 'The U.S. Is Broke' [View article]
    While the trust fund obligations are not marketable, that doesn't change the fact that the trust fund is the owner of US debt obligations.
    The thing I found interesting is that, since the debt to the trust fund is counted in the overall 18T debt, the overall debt will not go up or down as the trust fund is repaid. The US debt obligation will be transferred from the trust fund to public debt-the total will be unchanged. It is highly unlikely that the debt will be repaid with tax dollars.
    Mar 18, 2015. 10:34 PM | 2 Likes Like |Link to Comment
  • 'The U.S. Is Broke' [View article]
    somehow I'm not terrified- the SS system was designed as a "pay as you go system", so the intent was to NOT create a fund for future obligations. The point the doomsayers miss is that the US economy is not going to stop, but will reasonably be able to keep paying the SS obligations forever. This is notably different than individuals, who must stop working, or corporations, which are killed off at the convenience of their owners (to eliminate long-term obligations). Since the government agreed to pick up the pension obligations of corporations, it has required those entities to prefund their obligations- otherwise corporations, like the federal government, could pay out of cashflow forever.
    There are mismatches which create problems- the SS trust fund was expanded because of the baby boomers (not sure if rates were raised to create a surplus or just more workers) but the trust fund will be used to help with the boomers SS payments, but should not be needed in the long run. Also, the boomers create a problem with the smaller generation coming behind- the pay as you go will ultimately only cover 80% of payments. This will be resolved by some combination of smaller payments or higher taxes- but the payments will definitely not go to zero, and the system will not go bankrupt.
    Mar 18, 2015. 10:10 PM | 4 Likes Like |Link to Comment
  • Maybe You Should Be In 100% Cash [View article]
    Although the author discusses the extreme example of living with the consequences of all-cash investment returns, it would be beneficial for all retirees to look at a detailed tradeoff of retirement lifestyle versus investment risk.
    As an example, my wife and I decided to retire early because of health issues. I analyzed our living expenses and prepared a retirement budget which provided a comfortable lifestyle but required an income about half of what we were making. Part of this was caused by eliminating savings for retirement and payroll taxes, and partly by shaving unnecessary expenditures. This income objective, along with Social Security and pensions allowed me to prepare a 40-year investment plan which was low risk and relied heavily on cash investments. After 11 years we are right on track with our plan, and have slept well at night.
    Seeking Alpha has been very helpful in broadening my investment perspectives, but a key building block in our retirement plan was to define our lifestyle to allow a low-risk portfolio.

    Jan 13, 2015. 10:52 PM | 1 Like Like |Link to Comment
  • Silly Rabbit, Dividends Do Matter In Retirement [View article]
    Like Berkshire Hathaway?
    Jul 21, 2014. 10:59 AM | 2 Likes Like |Link to Comment
  • Dumb Investment Of The Week: Public Non-Traded REITs [View article]
    Yeah- I got into one of these in 2008- 8% return plus potential capital gains. I read the prospectus and recognized the fees imposed, but with real estate going up 20% per year it seemed like a no-lose proposition. what could go wrong?
    Still waiting to reach a "liquidity event" and find out if I will break even.
    Jan 20, 2014. 09:35 PM | Likes Like |Link to Comment
  • Fonzie Or Ponzi? One Theory On The Limits To Government Debt [View article]
    No real need to pay it back- The SS debt can be repaid just like the debt owed to China et. al.- by issuing new debt. While in theory we could sacrifice and repay debt, that hasn't happened to any significant degree since before WWII, and it hasn't resulted in a significant problem.
    Oct 23, 2013. 08:27 PM | Likes Like |Link to Comment
  • A New Approach To Deposit Insurance [View article]
    I'm afraid you've missed the essence of deposit insurance. It was created to alleviate the bank panics which were common prior to 1930. The insurance benefits the banking industry by damping runs on banks, particularly those who are innocent bystanders in a financial crisis, but does not protect banks.
    In the US, the Federal Deposit Insurance corp "bails out" only the depositors. If a bank gets into trouble, the FDIC will close it down and sell or liquidate it. The officers and stockholders are not protected. Thus there is no moral hazard except perhaps the fact that an insured bank has an easier time attracting deposits.
    I also don't see much point to offering an opt-out for depositors. They always have the option of a money market fund if they don't need/want an insured account. Right now, my money market account is paying 0.0% and my insured account is paying slightly more than that, so the incentives are reversed for now.
    Aug 26, 2013. 05:26 PM | 7 Likes Like |Link to Comment
  • Why The Shrinking U.S. Deficit Matters To Your Portfolio More Than You Think [View article]
    Nonsense. Military spending is still at least TWICE what is was in 2000. We used to wind down spending as we would down wars, but not now. And the wars have left a legacy of costs for disabled and retired vets which will last for decades.
    Aug 23, 2013. 04:03 PM | Likes Like |Link to Comment
  • Annaly And mREIT Investors: Don't Fight The Fed [View article]
    Because we're exporting 3 mil barrels per day. The difference between oil and gas is that there is no way to export the excess gas, unlike refined oil products.
    Jun 20, 2013. 10:59 PM | 1 Like Like |Link to Comment
  • Will Repatriating The $1.5 Trillion U.S. Corporate Cash Hoard Boost The Dollar And The Economy? [View article]
    I wonder what is the correct tax rate. If we lower the 35% rate across the board, we lose a lot of tax revenue from domestic corporations, with perhaps some marginal pickup from the multinationals. Why should Apple trade in a 2% tax rate for 15-20%? And, of course, a zero-tax repatriation deal will just encourage more avoidance in the future.
    A suggestion I have seen which makes some sense is to abandon the income tax and institute a sales tax on imports of domestic corporations. Probably in violation of trade agreements however.
    Jun 2, 2013. 09:14 PM | Likes Like |Link to Comment
  • Retirement In A World Without Social Security [View article]
    One other issue with projecting dividend stocks over 30 years is the need to try and avoid failures of dividend payers. If I looked back to the start of my career I might have invested in blue chip stocks like GM, Pan Am, US Steel, Kodak, Xerox, etc. The hard part is deciding when to bail out.
    One note on SS: One of the significant benefits of the SS arrangement is the survivor bias. It requires much less investment to cover a group if each person does not need to fund a worst-case retirement to age 95, but only to an average lifetime of 78 or so. While Wall Street loves individual retirement accounts because it maximizes investment assets, it puts a strain on the participants who need to allocate much more of their income to savings.
    As noted, the availability of SS in the future will be determined politically, not by the financials.
    Apr 20, 2013. 08:59 PM | 1 Like Like |Link to Comment
  • Has Premier Exhibitions' Titanic Sale Sunk? [View article]
    "A nonbinding letter of intent" just sounds so-- nonbinding. My experience with this sort of thing is that it opens the negotiation and allows due diligence to proceed.
    Apr 5, 2013. 10:47 PM | 3 Likes Like |Link to Comment
  • Trends In The Cost Of Energy [View article]
    Interesting article. I think installation costs should be assumed to be nearly constant as the price of PV cells decrease. Except for large industrial installations, local /residential installations will not benefit much from higher volume.
    While many have argued that higher costs for oil and gas will (and have) opened up new sources, it certainly has been at higher and higher prices. This will naturally make other sources like PV more cost effective.
    I wonder if a significant part of the storage problem could be solved by recharging EVs while the sun shines. There would stilll have to be a significant source of base load, either natural gas, coal or nuclear.
    Apr 5, 2013. 10:20 PM | 3 Likes Like |Link to Comment
  • Are EV Dreams Going Up In Smoke? [View article]
    Yeah, I remember the furor a few years ago about the laptops catching fire. The world of computers was going to end... Funny, I don't hear about much these days except the millions of Li battery-powered computers being sold every day.
    As an old engineer, I'm well familiar with problems in new technology- when confronted with a design problem, the first thing I always had to do was to stop everyone from running around crying "the sky is falling!". Then, take the time to understand the problem and come up with a solution. It takes some time, but there's usually a fix. I'm astounded at all the fuss over the Boeing batteries- you'd think they were going to fall out of the sky if the battery went dead. With all the new technology in the 787 I'm amazed it's gone as well as it has. And I'm sure that they'll get the problem fixed.
    I haven't looked at the statistics, but I'd bet you're a lot more likely to get killed by a lightning strike than a lithium battery fire.
    Mar 28, 2013. 10:22 PM | 2 Likes Like |Link to Comment
  • It Can Happen Here: The Confiscation Scheme Planned For U.S. And U.K. Depositors [View article]
    CDs are just another form of deposit. They are insured by the FDIC up to the limit, just like any other savings account. And not insured, just like any other account, if over the FDIC limit. We've found that by using several Credit Unions and differing types of bank accounts you can insure a million or so.
    Mar 28, 2013. 09:28 PM | 1 Like Like |Link to Comment