Markets Don’t Close 4/20 On A High

The weekly Market Update is posted at Alpha Baskets and includes the following;

Barron’s devoted a lot of pixels to the latest goings on with the slope of the yield curve. Earlier in the week the 2-10 treasury spread got close to 40 basis points before widening out to 49 basis points at the end of the week. This is something we have been closely following here for months. It is important to understand at a basic level why yield curve dynamics are so important. When the curve is positively sloped, which is the normal relationship, then access to capital is easier from the standpoint that lending money is a profitable endeavor for the banks. Accessing capital is crucial for growth, plant expansion, capacity expansion and so on. When the yield curve inverts, borrowing money as a means of accessing capital becomes harder to do thus it can be contractionary for the economy.

And from my page at TheMaven;

Can means testing fix Social Security?

Why I volunteer.

Retirees who regret retiring.

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2 Comments

  1. Roger, I will just make this comment about means testing SS. Right now, SS and Medicare are the 2 most popular programs the federal government has, and they are NOT truly “entitlements” because people pay into them before they start collecting (granted, we can argue about the value of what we contribute vs what we collect). The reason they are popular is that they are fair, in that EVERYBODY who paid in is “entitled” to the benefit. If they have to reduce the benefit to match the current amounts coming in, fine, but the only way to do that fairly is via a percentage cut across the board; and I hope that’s what they will do. If they start means testing SS (and they may), it is the slippery slope that will turn it into welfare over time and destroy the program’s popularity (and probably a few career politicians their careers) as more and more are eliminated from receiving the benefits (“entitlement”) they paid into all their working lives (and yes; I call that government stealing, punishing success and doing what’s right in terms of preparing for one’s retirement, and rewarding failure because it is all of those things [and I think you agree]). You stated in your article that we might be surprised how far down the wealth scale they go with the means testing, which is probably true; and once it starts–like the VAT in Europe–it’s always easy to adjust it down (in terms of who benefits and up for those paying in) another 1% or so, and again, and again, etc. It will become just another government welfare program.

    Reply
    • Thanks for commenting. Clearly, means testing would be a desperate act. There is bound to be problems with any action. I wonder if letting people (likely the VERY wealthy) opt our for some sort of tax credit could be an answer.

      Reply

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