Dogs: Making Money With Options

He and several other high-ranking officials in the organization, including GM Jeff Ireland, seemingly traveled cross country because they felt a sense of urgency with talks between Harbaugh and the 49ers becoming serious.

The Dolphins are going to be a tough franchise to battle for the 49ers. They have some of the deepest pockets in the league. People can say whatever they want about the character of a man or what they might do. It's a lot different when a team is offering you more money than most see in a lifetime.

Even if the 49ers can compete with the Dolphins' offer, which was something to the tune of $7 million, Jed York can't compete in a bidding war with Ross, who is in the top 70 richest people in the world.

The 49ers could give Harbaugh the keys to the franchise. They can remind him he is a superstar in the Bay Area. They can feed him lines about the new stadium, where the franchise is headed, the talent, how much they need him, but he's likely to go with whoever pays him.

The sense of urgency has already allowed Harbaugh to see a salary he might not have even dreamed would come his way. Why wouldn't he just sit back and watch the price tag go up. His best bargaining chip right now is that he is a hot commodity.

Forcing teams to feel like they have to give more and more to reel him in is making them do just that. Nobody is backing off yet, and until teams stop throwing incentives at Harbaugh, he should make everyone believe he is highly interested in everyone.

Until teams start to pull back the reigns, the ball is 100 percent in Harbaugh's court. This will be a fun week for Harbaugh, and he shouldn't cut it short by prematurely signing any deals. The Dolphins looked past the fact they have yet to fire head coach Tony Sparano and throwing record money at him before he coaches one professional game. Other teams may come knocking, and even if they don't, Harbaugh is going to be living comfortably, as one of the league's wealthiest and most powerful coaches.

The privatization argument reveals one problem: even though it would pretty well fix the current SS system, you’d still be left with an unconstitutional mandatory savings program. Even if it were something you could opt out from, it would still be something the federal government shouldn’t administer.

theperfecteconomist on January 11, 2011 at 3:47 PM

Is it really “constitutional” to force taxes on the young to pay retirement benefits to the elderly? Apparently, that question was already answered “yes” in 1935, so there shouldn’t be a constitutional problem. There are also Federal limits on how much a person can deduct from taxable income for investment in an IRA or 401k, and penalties for early withdrawal. The Government regulations incentivize saving for retirement, without actually mandating it.

Payroll taxes for Social Security are already mandatory, so that allowing a person to divert some of the money into a personal account regulated but not managed by the Federal Government would actually increase people’s freedom to choose their retirement.

If there is some concern over the Government’s ability to pay current and near-future retirees, the program could have a limit on the fraction of payroll taxes the person could divert to private accounts, with the limit being higher for younger workers than older workers. This would allow a “phased-in” privatization that would keep current retirees funded, while incentivizing private saving for younger workers. Although this might not seem “fair” favoring the young over the old, this problem has been 75 years in the making, and needs to be phased out gradually in order to avoid hurting any one age group too harshly.

There would be no “mandate” to save, but a CHOICE–where the person could choose how much tax money to invest in private accounts (up to the limit mentioned above) and how much to keep in the Government system. This is a CHOICE not currently available to low-income workers who can’t afford to contribute their own money to IRA’s and 401k’s.

Of course, there needs to be a downside risk: the person’s eventual benefits from the Government program are proportional to the amount of money contributed to it, so that the person forgoes some Government benefits by contributing to the private account, but the person might come out ahead by investing wisely and getting a better return on investment than the Government, with the risk of losing part of the private account if it is invested unwisely.

If enough young workers “opt out” of the Social Security system for private accounts, the eventual debts of the system will be lessened, while billions of new dollars pour into the stock market, thereby stimulating the economy and creating new jobs, with more people financing their own retirement. Over the course of decades, most workers would probably prefer the private accounts, and the mandatory contribution to the Government program could be gradually reduced to only cover those retirees without private savings.

Yeah, this does sound like what Bush wanted to do in 2005, and Democrats “saved” Social Security by doing nothing. Or did they?

Hey America, do you miss Bush yet? The ol’ dumb oil-gushin’ cowboy did have a few good ideas under his Stetson, didn’t he?

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Thursday, January 13, 2011

Making Money With Options

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