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America's pensions can't beat Vanguard but they can close a hospital

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Re: America's pensions can't beat Vanguard but they can close a hospital

#191

Post by crazygringo »

terminalshort wrote: post #47
epistasis wrote: post #24

> Larry Summers warned against “moral hazard lectures” and demanded SVB depositors be made whole immediately in 2023, months after calling student loan relief inflationary and unfair. Moral hazard for borrowers, bailouts for banks. Not lost on the public. I can't believe I'm about to say something that could be construed as a defense of Larry Summers, but here goes: bank depositors are not engaging in risky behavior,…

> bank depositors are not engaging in risky behavior, they are putting cash in a bank That is risky behavior. You can't earn interest without taking a risk.

I've never had a checking account at a bank that paid interest. What interest are you talking about?

Re: America's pensions can't beat Vanguard but they can close a hospital

#192

Post by thatcat »

codexb wrote: post #68
jazz9k wrote: post #45

Earlier quoted context omitted.

I disagree about student loans. The entire system needs to be dismantled. Universities don't care if their majors will result in a job and the student loans are a source of risk-free money. They need to start taking on the risk of all student loan, not me, the tax payer.

Ok, but forgiving student loans doesn't do that. It signals to borrowers that they don't have to repay high loans if their career can't support it. It tells borrowers that they can make risky loans without a chance of default. It tells universities that they can keep charging exorbitant tuitions because kids can still get loans to pay them. The solution is to allow judges the discretion to default them in bankruptcy…

so take the money back from the universities in all cases where they negligently misrepresented the future job market of the field of study to the borrowers or what?

Re: America's pensions can't beat Vanguard but they can close a hospital

#193

Post by epistasis »

triceratops wrote: post #55
epistasis wrote: post #37

Earlier quoted context omitted.

The point is that the ETF tracks its index, so what does it even mean to say ETF crash? Isn't that just the tracked stocks crashing? The ETF has little to do with it. But if there is some other risk that's warrants the ETF label, that's very very interesting and should be discussed! It would be little known or novel ETF mechanics.

> so what does it even mean to say ETF crash ? Isn't that just the tracked stocks crashing? Yes. I've learned to differentiate between the words people use and what they actually mean, rather than being literal. Since index ETFs make up a large portion of people's investments they fear the value of those ETFs tanking. Obviously this is due to the underlying stocks' prices dropping This has happened many times in the…

Well that's the crux of it, isn't it? How do you know what they really mean, if not through the words? You have to impose a mental model on the speaker, which we of course do anyways.

Saying ETF crash specifically sounds like there is an idea there, and lots of people talk about thinking that ETFs specifically have problems that owning stocks directly would not have, so in my mind the model is that the speaker has an idea about how ETFs cause the crash through hidden risk. And since hidden risk is behind most crashes, it's definitely an interesting direction to ask about.

Re: America's pensions can't beat Vanguard but they can close a hospital

#194

Post by advisedwang »

I'd like to see more public banks. Municipalities, and even states, are holding balances in commercial banks but there's nothing stopping them holding this in their own bank to direct capital for public benefit. California has a law allowing it, although despite a campaign in LA I don't know if it's been used. North Dakota has a state-wide public bank. It works!

Re: America's pensions can't beat Vanguard but they can close a hospital

#195

Post by etchalon »

sejje wrote: post #87
etchalon wrote: post #70

Earlier quoted context omitted.

So you believe universities have taken advantage of students by crafting, encouraging and financing education programs with an understanding that those programs would not result in jobs which would be sufficient to repay the debt needed to complete them, but you think the 18 year olds who were taken advantage of should be forced to suffer for their failure to make perfect decisions at 18. Cool. Cool.

So you believe uninvolved taxpayers should be on the hook when the 18 year olds make bad decisions. Cool cool.

Federal spending is not derived from revenue and it's weird people keep thinking it is.

Re: America's pensions can't beat Vanguard but they can close a hospital

#196

Post by WalterBright »

dbspin wrote: post #78
jazz9k wrote: post #45

Earlier quoted context omitted.

I disagree about student loans. The entire system needs to be dismantled. Universities don't care if their majors will result in a job and the student loans are a source of risk-free money. They need to start taking on the risk of all student loan, not me, the tax payer.

Great example of narrow rationality. Huge amount of Americas current problems can be traced back to a poorly educated population. Universal access to third level education, combined with a school system designed to educate - in direct opposition to current goal of producing labour units for corporate; would massively improve pretty much ever aspect of American life. The market lens is myopic, the market cannot be exp…

> in direct opposition to current goal of producing labour units for corporate

I never understood this characterization. How do the schools implement a goal for producing labor units?

> education itself of course should be free

People don't value what they get for free. If you sign up for a course in welding, are you going to be more or less diligent in learning it if you have to pay the tuition?

Re: America's pensions can't beat Vanguard but they can close a hospital

#197

Post by etchalon »

AlexandrB wrote: post #145
jahsome wrote: post #106

Earlier quoted context omitted.

Do I believe in community, empathy, kindness toward my fellow human beings? Why, yes. Yes I do. Am I willing to pay a few bucks to put my money where my mouth yes. Why yes, yes I am.

What if someone else thinks that there are better (more kind, empathetic) uses of that money than funding someone's college? Why is "free college" the most kind and empathetic thing we can do with this money?

Than that person should learn we can do multiple things at once.

Re: America's pensions can't beat Vanguard but they can close a hospital

#198

Post by zeroonetwothree »

MontyCarloHall wrote: post #128

Isn't the main problem with pensions today the dramatic increase in life expectancy post-retirement? They were never intended to support decades of retirement: in the old days, you retired at 65 and there was a good chance you'd be dead by 70, at most 75. (When Social Security was established in the 1930s, life expectancy was only 61.) Nowadays, there's a good chance you'll live beyond 90, with expenses increasing di…

At age 65 life expectancy hasn’t gone up as much, only around 6 years more today vs 1930. So it’s still a factor but not as dramatic as you make it seem.

Re: America's pensions can't beat Vanguard but they can close a hospital

#199

Post by irishcoffee »

TimorousBestie wrote: post #148
Aurornis wrote: post #123

Earlier quoted context omitted.

I’m always surprised that student loan forgiveness appeals to anyone who should otherwise be able to think about all of the bad second order effects. The more we inject money into the education system, the higher prices go. Setting a precedent that the government will just pay off your loans if you don’t pay them off only encourages more people to take out loans without thinking about paying them back. There are so m…

What are the second-order effects of a subclass of citizens permanently encumbered by debt that (with rare exceptions) cannot be discharged through bankruptcy? Perhaps your analysis of second-order effects is not thorough and complete? Have you really considered all of them?

> What are the second-order effects of a subclass of citizens permanently encumbered by debt that (with rare exceptions) cannot be discharged through bankruptcy?

A harsh lesson in personal responsibility. If you went to an out-of-state school to major in criminology hoping to be the next CSI, and you borrowed 180k to do it, you've learned a valuable lesson.

Don't give me "they're only kids, they aren't able to make these decisions!"

Re: America's pensions can't beat Vanguard but they can close a hospital

#200

Post by lenerdenator »

> There is roughly $6 trillion of it, sitting in American public pension funds, currently being allocated in a way that serves nobody.

Yeah. That's what pension funds do. They accumulate money and hand it out to people who think they damn well better be able to withdraw upon it.

In 1960, the birth rate in the US started to decline. It hasn't had a meaningful rise since. [0]

Markets can experience natural growth - typically through birth rates, sometimes through immigration - or they can begin to more thoroughly monetize capital as to create growth from fewer people.

The Baby Boomers thoroughly broke the ability to grow through natural means, and it's been that way for 25-30 years.

This is a problem, because you need that natural growth to fund the retirements that the Boomers planned on having, along with the entitlement state in the US, which focuses almost exclusively on people over the age of 65 with OASDI and Medicare.

So how do you solve this problem?

If you're investing the hospital business, for example, you can no longer expect the same sort of growth that you used to if your plan is to have a current customer birth their 2.1 kids in your maternity ward. You now need to do other things to monetize the current customer, like charging him more for his next procedure, or - even better - looking to developing markets like India (or China 25 years ago) and focus your investment there. It's a lot easier to bring a rural clinic "up to spec" in China than it is in the US, because one started out with far cheaper needs to meet. X-ray machines are easy to install; cancer centers with advanced imaging machines and academic medicine practitioners are expensive.

And that's what the investors do. They find ways to get in on deals that aren't in the US. It's not just medicine, either. That capital that built Shenzhen into a tech mecca came from the US.

In the meantime, they need to find ways to exist in the American market, so they do what I mentioned earlier: they monetize the hell out of customers they already have. If that means closing a hospital and making the "customer" (read: guy having a heart attack) go to one twenty miles further away that has a better business value, then they do exactly that.

Or, they find ways to monetize the younger generations more, since they're not drawing on pensions and IRAs yet. Otherwise they risk gobbling up the returns they handed back to their members with increased costs.

[0]https://www.macrotrends.net/global-metrics/countries/usa/uni...

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