February 07, 2010 | Ronda Jambe

Onward Capitalist Soldiers!

Lots of people I know are either still pouring their money into super or leaving it for another few years until it recovers the losses of the past year or so. One friend told me just the other day that this was her strategy, in preference to paying off a mortgage.
Now the markets have taken another tumble, and I feel like calling to suggest that waiting for super to recover is like waiting for your body to grow an amputated limb.
In one day (must have been Friday in the northern markets) Australian super holdings lost $15 billion. That’s a lot of paydays. Household wealth in Australia is now down to $1.006 trillion, whereas it was $1.235 trillion in October 2007. Those figures come from a tabloid in a coffee shop, so they must be accurate.
Any financial advisor will tell you I am hysterical. They assure me that for a mere 1% of my total wealth per year they could easily oversight further losses. No promises of course: if your money grows, they will take credit. But if it tanks, problem belong you.
Within the space of one week last year, sort of coincidentally, the very firm spruiked by one advisor (if you come across a financial advisor that is truly not connected to a big investment firm, please let me know) was bagged by another advisor who described them as compromised.
Thomas Friedman’s phrase (unless he borrowed it from someone else) is ‘the electronic herd’. They just stampede.
My preferred metaphor is footsoldiers for free enterprise, capitalist soldiers marching in formation, without questioning their leaders. And doomed to be the front runners when the machine guns start firing.
Like the worst of wars, the generals just keep pouring more cannon fodder into the fray. There is no reconsideration of strategy, tactics, or fundamental assumptions. Growth will come, it must come, because we have no Plan B.
The dangerous situation in the economies of Spain, Greece, Portugal and Ireland are just hints. Iceland is a more full-blown example, but there are just a few of them. Sovreign debt is not an endless capacity, no more than consumption. What is worse, huge debt mirrors even deeper problems, where the nexus between eco-nomics and eco-logy becomes cristal clear.
Climate change sceptics, please look a bit into the crisis unfolding in the Nile Delta, where sea level rises are already driving farmers off the land, endangering food security, and threatening to put 7 million people out of a livlihood. Multiply that by all the coastal growing fields on river deltas and see how many frost free fridges that sells.
That doesn’t mean I am happy about the feds having 150 employees sitting waiting to run their emissions trading scheme before it goes through Parliament. I’m with Abbott on that one, but the Canberra economy is based on bureaucratic featherbedding and I could almost vote Liberal just to dare him to try to prune it back.
CODA: Which super fund dipped into my pocket to extract an extra $900 over just 6 months for ‘income protection insurance’ which is not obligatory and I didn’t ask for? Why the one the government runs. Complaint now pending, but rather than having a simple ‘opt in’ approach with a box I could decline to tick, apparently I was meant to read page 43 of their product disclosure statement. Cute, eh?

Posted by Ronda Jambe at 6:34 am | Comments Off on Onward Capitalist Soldiers! |
Filed under: Economics

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