Larry Kotlikoff’s Commentaries
Kotlikoff: How Social Security is Conning Seniors
Social Security has a policy of calling people close to 70 and making them an “offer” to start their benefits retroactively. Doing so saves Social Security money but hurts the recipients, who lose thousands of dollars of life time benefits. The bribe comes packaged with suggestions that if they die they won’t get their checks, so why not grab six months of benefits for sure.
Kotlikoff: we need group testing, every day
With group testing, you take samples, say, from 20 people and test them all at once. If the result is negative, those 20 are free to go to work. If the test is positive, you divide the group into two and test 10 at a time. Using this method, you greatly reduce the number of tests needed to separate those who have the virus from those who do not. And we should do this every day.
Market Tailspin: How Bad Could Things get?
Are we going to have another Great Depression? Hard to see why not. According to the BLS, roughly a quarter of US workers work at home each day. If that could be doubled, a big if, and if no one could otherwise work, we’re still talking a reduction in output of 50%. Yes, all kinds of remote-working adjustments will be made, so maybe 50% turns into 25%, i.e. the Great Depression.
Will the Stock Market Drop by Half?
Let me give you my partial list of the businesses that I think will go under. I think restaurants will fail. I think coffee shops will fail. I think dry cleaners will fail. I think airlines will fail. I think cruise boat companies will fail. I think hotels will fail. I think department and boutique clothing and other retail stores will fail. I think travel agencies will fail. I think movie theaters will fail. I think universities and colleges will fail. I think theaters will fail. I think theme parks will fail. I think spas will fail. I think resorts will fail. I think convention centers will fail. I think malls will fail. I think gyms will fail. I think orchestras will fail. I think hair salons will fail. I think nail salons will fail. I think barber shops will fail. I think bars will fail. I think every business that’s not online and involves customers will fail.
Can we Stop the coronavirus from Creating a financial Crisis?
I believe the only answer is to follow a more focused version of Italy’s hard-nosed policy: put the country into a nationwide monthlong quarantine, requisition labs and build new ones and use the month to produce hundreds of millions of virus test kits and millions of ventilators. When people leave their homes, they’ll need to be tested every few days and then every week for months to ensure there are no further outbreaks.
Will the Coronavirus Kill the global Economy?
Well, consider how passengers on the Diamond Princess cruise liner fared. On February 1, just one passenger had clear signs of coronavirus. Thanks to their on-board, two-week quarantine, 691 passengers are now infected for an infection rate of one in five. If the virus can reach so many so quickly, what can it do over time?
Kotlikoff on the Coronavirus
I predict a massive drop in global stock markets in coming days with no rebound until what is now being called a pandemic is brought under control. Such a drop in the market will exacerbate the pessimism, which will slowly but surely engulf global business leaders and consumers and wreak havoc on the world economy. We have something very real to fear, which is producing real-time economic reactions, like the closing off of China, that are truly beyond belief. These reactions are fully capable of panicking billions of investors and consumers in our highly interconnected and mutually dependent global economy.
Kotlikoff: Why We’re Going Broke
The US has spent the entire post-war period running a massive and ever-growing Ponzi scheme that takes from the young and gives to the old. … The scheme has been and is being run by expanding take-as-you-go-financed Social Security, Medicare, and Medicaid systems, by running huge official deficits, and by imposing a larger share of taxes on the young and a smaller share on the old. [It has] reduced the US’s national saving rate from 13% in the 1950s and 1960s to 3% in the last two decades. This underlies, in large part, a commensurate drop in the domestic investment rate, which was also 13% between 1950 and 1969 and is now running at 4%. The textbook predicted consequence? Lower median labor productivity and median real wage growth.
Costly Surprises are Hidden in Medicare’s Rules
You can’t trust that you are getting the real story from Social Security and Medicare websites. Medicare tells seniors they don’t have to sign up for Part B and Part D coverage if the gap between jobs is 8 months or less. The surprise: it counts the gap between ever job change and life time penalties can be a 20% increase in premiums or more. It also doesn’t warn seniors that taking capital gain can double or triple their Medicare premiums.
Social Security Cheated 11,000 Widows Out of $130 Million
That’s the estimate of the Office of Inspector General and it averages $10,000 a piece. Social Security personnel have been signing up widows for widow’s benefits and retirement benefits at the same time – thereby robbing them of much high retirement benefits they would have later qualified for if the paperwork had been done correctly.