wilmott.com

interested as always in the collective wisdom of the forum. is there a useful econ derivative contract that contemplates the future privatisation of social security? people have suggested a simple yes/no with yearly expirations, i.e. will s.s. in some way be privatised, but is there something more substantial and with a definitive settlement event? the question is intentionally left vague as i'm more interested in wilder ideas... thnks in advance for any feedback.

That's a tough one. I would think you would have to have a day when a query to a database using a person's social-security number, would return a unique dollar amount.You might say that amount could not be computed in any way using his age, or past tax returns with the name blacked out, but only by knowing the exact individual you are referring to.So I guess you're talking about "a new retirement account, that is popularly understood to fulfill the role of social security, or is lumped together in a social security reconciliation bill."So even if they called the account a "402k" or an "IRB," you would say "this account is social security." Additional tipoffs might be a miniumum required contribution, and a guarantee of a certain size or government contribution even absent contributions from the individual.This would also have to be distinguished from Harold Ford's plan to give every newborn baby a $100 stock-trading account or something.

QuoteCongressman Harold Ford Jr. favors private savings accounts, but not the ones President George W. Bush is proposing in his overhaul of Social Security. "I don't agree with the president's idea and I'm not alone as several Republicans in Congress also disagree with what the president is proposing," Ford said Saturday. "In fairness to the president you can't really call it a plan because he hasn't proposed a plan yet, but he's campaigning around the country for private accounts as part of Social Security." Ford, D-Memphis, was in Dyersburg to speak at Dyersburg State Community College's Incentive Scholarship Banquet. He said he favors private accounts in addition to Social Security. "I favor private accounts if the U.S. government offers incentives to encourage savings," Ford said. "President Bush wants to borrow $2 trillion to allow people to invest a portion of their Social Security payroll taxes in private accounts, but I think it would be better to encourage savings." Ford said he favors a plan similar to the Social Security Plus program proposed by President Bill Clinton. "For those earning less than $50,000 a year, including the majority of Tennesseans, I think the government should offer incentives by matching dollars saved with $1 or $1.25," he said. "And we could make it progressive by incentivizing those with higher incomes at 75 cents on the dollar.

gdepetris-Tradesports asks for suggestions for contracts, so long as they are well defined. There is a difference between full privatization and allowing only 2% of the payroll tax to go into personal accounts. If the progam is pared down, allowing people to save more on their own, I would consider this a benefit for privatization, but many would not.I think this difficulty of definition of terms, in addition to the lack of natural buyers, would mean that the CBOT probably won't be listing these futures anytime soon.

How about "government contributes to accounts, or requires individuals contribute to accounts, in individual's name."That would all be new, right?