Blahous and Greenstein favor different strategies to close the gap, but they agree on the reality of the problem and on the desirability of acting soon to fix it. Acting soon would yield several benefits, according to the authors:

Reductions in scheduled benefits and/or tax increases can be phased in gradually. The longer a solution is postponed, the more difficult it will be to restore solvency without imposing large, sudden reductions in benefits or increases in taxes.

More options will be available. Delaying action forecloses some options for restoring solvency and can produce less attractive distributional outcomes. For example, if Social Security tax increases were phased in soon, some or all current workers could contribute to restoring solvency. But if payroll tax increases are not implemented until 2037, the additional tax burden would fall entirely on younger workers still in the labor force after that date.

Beneficiaries and taxpayers will have more advance notice of changes and will be able to adjust their work, saving and retirement plans accordingly. For example, if scheduled Social Security benefits are to be reduced, people should receive ample warning so they can compensate by saving more or delaying their planned retirement.

Confidence in Social Security will be strengthened. If people do not believe that they can count on Social Security, the program will not be fully effective in serving as a basis for their retirement planning.
Strengthening Social Security’s finances could provide a modest early step toward closing the federal government’s long-run fiscal gap. Even if the changes were not scheduled to be fully effective for many years, their enactment would cause an immediate improvement in the long-run budget outlook.

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Interesting white paper...

The Pew Charitable Trusts - Social Security Shortfall Warrants Action Soon

Mortgage rates fell ahead of the Federal Reserve’s announcement last week that it would start buying $600 billion in government bonds to stimulate the economy over the coming months. But could mortgage rates go even lower, now that more is known about the scope of the Fed’s plan?

With the possibility of lower rates, it may be tempting for people who can refinance to hold off and wait for mortgage rates to drop some more.

But be careful: Betting on the direction of rates right now is difficult, and it might not make sense to hold out for another drop, gambling that mortgage-market prognosticators will be dead-on with their projections, Springer said.

And if you have a lot to gain from a refinance now, it could be in your best interest to make a move — even if rates do end up dropping after your loan originates. If home prices slide more, for example, a borrower who could refinance today might have a tougher time in the future if he doesn’t have enough equity to make the deal work.

What Fed’s bond buy means for mortgage rates

“Is gold worth $1,400? We think so,” UBS precious metals analyst Edel Tully wrote in a recent research report. “We like gold, and expect it to continue climbing given the current macro and sentiment backdrop.” Tully predicted that gold likely will zigzag its way above $1,500 an ounce next year, and “behave more like a currency than a commodity for the foreseeable future.”

At Goldman Sachs, meanwhile, analyst David Greely in mid-October raised his 12-month target for gold to $1,650 an ounce from $1,365, saying that the Fed’s monetary easing policy will keep interest rates low and spur gold purchases.

Why gold is a bad investment

For 10 long years, market rallies have ended badly for investors. Now, with stocks up 15.6% in four months, strategists are beginning to suggest that ordinary investors start dialing back on risk.

That doesn't mean dumping shares willy-nilly. With the Federal Reserve committed to flooding markets with liquidity, it still makes sense to be in equities. But "if you've ridden the market up, you might want to do some trimming," says Steven Shueh, managing partner at Roundview Capital.

How to Play a Market Rally

Has there ever been a major economic summit where a U.S. President and his Treasury Secretary were as thoroughly rebuffed as they were at this week's G-20 meeting in Seoul? We can't think of one. President Obama failed to achieve any of his main goals while getting pounded by other world leaders for failing U.S. policies and lagging growth.

The root of this embarrassment is political and intellectual: Rather than leading the world from a position of strength, Mr. Obama and Treasury Secretary Timothy Geithner came to Seoul blaming the rest of the world for U.S. economic weakness. America's problem, in their view, is the export and exchange rate policies of the Germans, Chinese or Brazilians. And the U.S. solution is to have the Fed print enough money to devalue the dollar so America can grow by stealing demand from the rest of the world.

Embarrassment in Seoul: The world won't follow slow-growth, weak-dollar America

A publicity-minded Chinese rating agency has added its two renminbi to the cacophonous debate over the Fed's latest tilt at money-printing. The state-backed Dagong Global Credit Rating Co. on Tuesday downgraded its rating on the United States to A-plus from double-A, maintaining its negative outlook.

"The new round of quantitative easing monetary policy adopted by the Federal Reserve has brought about an obvious trend of depreciation of the U.S. dollar, and the continuation and deepening of credit crisis in the U.S.," Dagong writes in its latest report on its U.S. rating. "Such a move entirely encroaches on the interests of the creditors, indicating the decline of the U.S. government's intention of debt repayment."

But Dagong is willing to go where many observers have been unwilling to tread, contending that the collapse of the dollar is near. "Analysis shows that the crisis confronting the U.S. cannot be ultimately resolved through currency depreciation," it writes. "On the contrary, it is likely that an overall crisis might be triggered by the U.S. government's policy to continuously depreciate the U.S. dollar against the will of creditors."

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Time to buy up some Loonies.

China downgrades U.S. debt

SAN LUIS OBISPO, Calif. (MarketWatch) — “American capitalism is broken,” warns economist Peter Morici. Worse, American government is broken with “two bankrupt political parties bankrupting the country,” warns Stanford political scientist Larry Diamond. Why? Because Wall Street is broken: Our engine of capitalism is broken.

Morici warns that Wall Street’s insatiable gluttony is strangling America’s 8,000 regional banks: “About 3,000 regional banks face extinction, and ordinary Americans can only borrow money at government run Fannie Mae and Freddie Mac or at extortionist rates on big-bank-controlled credit cards.” Time to counterattack, or the clock runs out.

The plan? Hackers are America’s “Hail Mary pass” against Wall Street’s power play to rule America. In fact, hackers may be the only solution left, our last line of defense in this economic class war to save America. Hackers can operate like secret CIA special ops commandos to help take America back from the Wall Street Conspiracy of super-rich.

Yes, only solution. Why? Two bankrupt political parties. Forget gridlock, it’s worse. The GOP will restore Reaganomics for the rich. The Dems are proven gutless fighters. And an activist Supreme Court unleashed the floodgates for billionaires, foreign corporations and the U.S. Chamber of Commerce lobby to gain absolute control of Washington.

How hackers can help us defeat Wall Street - Commentary: They’ll be the heroes of the Second American Revolution

It wasn't too long ago that General Motors was fending off a heap of public ire over the company's use of private planes. Now it looks like The General is back to eschewing commercial flight in favor of taking to the wild-blue yonder in chartered craft. According to The Detroit News, GM has been sending executives to Europe, Canada and various locations within the U.S. in order to promote the company's stock for an upcoming IPO. In most cases, the workers have travelled by private aircraft.

GM says that under the expense policy approved by the federal government, the company is allowed to charter planes when there's a business case for doing so. Additionally, the automaker says that the tour to drum up investors warrants such flights because of the tight time table involved. With GM doing its best to make sure that it will be able to buy back enough of its stock to take a controlling interest in the company away from the federal government, chances are we won't hear too many Congressmen complain about the private flights this time around

GM using private planes again for IPO roadshow

JUSTICE KAGAN: Suppose a new study suggested that movies were just as violent. Then presumably, California could regulate movies just as it could regulate video games?

MR. MORAZZINI: Well, Your Honor, there is scientific literature out there regarding the impact of violent media on children. In fact, for decades, the President, Congress, the FTC, parenting groups, have been uniquely concerned with the level of violent media available to minors that they have ready access to.

JUSTICE SOTOMAYOR: I don't think; is that answering Justice Kagan's question? One of the studies, the Anderson study, says that the effect of violence is the same for a Bugs Bunny episode as it is for a violent video. So can the legislature now, because it has that study, say we can outlaw Bugs Bunny?

MR. MORAZZINI: No -

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Do not take away our Bugs Bunny v. Daffy Duck.

Schwarzenegger v. Entertainment Merchants Assn.

After all, you have China, which is engaged in currency manipulation on a scale unprecedented in world history — and hurting the rest of the world by doing so — attacking America for trying to put its own house in order. You have Germany, whose economy is kept afloat by a huge trade surplus, criticizing America for running trade deficits — then lashing out at a policy that might, by weakening the dollar, actually do something to reduce those deficits.

As a practical matter, however, this foreign criticism doesn’t matter much. The real damage is being done by our domestic inflationistas — the people who have spent every step of our march toward Japan-style deflation warning about runaway inflation just around the corner. They’re doing it again — and they may already have succeeded in emasculating the Fed’s new policy.

For the big concern about quantitative easing isn’t that it will do too much; it is that it will accomplish too little. Reasonable estimates suggest that the Fed’s new policy is unlikely to reduce interest rates enough to make more than a modest dent in unemployment. The only way the Fed might accomplish more is by changing expectations — specifically, by leading people to believe that we will have somewhat above-normal inflation over the next few years, which would reduce the incentive to sit on cash.

Doing It Again by Paul Krugman