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Daily Speculations The Web Site of Victor Niederhoffer & Laurel Kenner Dedicated to the scientific method, free markets, deflating ballyhoo, creating value, and laughter; a forum for us to use our meager abilities to make the world of specinvestments a better place. |
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1/25/2005
Steely-Eyed Famous Economist Proves Reality Is Wrong,
by George Zachar
One standard humorous definition of an economist is someone who condemns something that is real, because it won't work in theory.
Well, one of our favorite broken-clock gloomsters, Stephen Roach, has become that economist.
"Under the general rubric of the so-called ownership society -- privatization of social security, healthcare saving accounts, lifetime retirement accounts, private pension revamping, and tax reform -- a major reworking of economic policy is being proposed. My concerns are not about the philosophical and political merits of this debate. It's hard to quibble with the noble objectives of ownership -- asking individuals to take on greater responsibility for their own economic destiny. Instead, my concerns are those of the steely-eyed national income accountant. What worries me as I put on my green eyeshade are the impacts of shifting ownership on national saving. In my view, these proposals do basically nothing to address America s biggest problem -- an unprecedented shortfall of national saving.
At its best, the ownership society is saving-neutral -- it merely rearranges the deckchairs by shifting the mix of national saving from one segment of the economy to the other. The risk, however, is that the ownership-society policy agenda entails transitional costs that could exert a significant near-term drain on aggregate saving for an already saving short US economy...." Read more
George Zachar is principal of Greensward Capital, a money management and trading firm in New York. He focuses on U.S. and European debt futures and options thereon. "I try to integrate market directional and volatility trades, with "living to fight another day" my central guiding philosophy," Zachar says. "When I was a child, I remember watching a cheesy spy movie, where one spook says to his opposite number, "The object of the game is to stay in the game."