I raised this some time ago in respect of a defined programme to offset the costs of contributing toward principal reduction for underwater mortgagees (to keep them off the street and contributing what they can to principal payments). Maybe Obama heard me (and probably not) but he started his programme some months later. The trouble is that the lenders have to contribute by taking a haircut and marking their balance sheets to market so they have been "losing" the applications. And yes it is coming to a CBA branch near you and we have to pay for it without having a govt able to launch programmes generated by issuance in the world's reserve currency. Like Dan said the other day the AOFM can only sell debt to a limited market and its quality and hence ability to generate demand is determined by how the market views them balancing their budget ... that will be a negative view when the Australian mortgage bubble pops.

although I hear that in Germany the children can sue their parents if the parents are not 'looking' after their assets properly - that is if the parents start to squander their hard earnt wealth the children can seek legal restraints to stop them - now that is real scarey

oh well - I think I will buy a block of land, set up a huge solar panel and wind turbine - sell the stuff back to the grid and create retirement income - if the canberra model is adopted in NSW then it has legs...get something from the State than what usually happens

But even if that is incorrect, I think we'll see a huge amount of wealth dissipation. As opposed to direct wealth distribution from parents to children. Some examples:

Old people are typically retired a long time. And they typically put their money in lower risk and return assets - So inflation eats it. Ken Henry specifically wants that to be the plan for a portion of their super - Force the oldies to buy annuities. But annuities don't give anything back to the heirs as I understand it?

They often buy properties in fun in the sun lifestyle locations – Not much use to heirs who may well want to stay where they are. Except to sell – And if we see too much of that, the bottom falls out of the fun in the sun lifestyle property market. Which isn't great for the heirs.

And they sometimes treat themselves to a nice holiday or two and buy camper vans and eventually fancy motorised wheel chairs and other stuff that there is ultimately not much resale value on. Some of them will maybe even use credit early in retirement? And dissipate some wealth that way while they are learning to change the habits of a lifetime.

And I suspect that many of them will find that they haven't structured their assets very wisely for retirement. So assets will get eaten up by financial advice and legal fees and capital gains tax as they rearrange things.

Then there are the reverse mortgages that the banks make available to ensure that when the oldies croak, the bank owns the house - Rather than the heirs. And the medical profession is on a huge winner in keeping all the old fogies alive for many happy years - Over which time they can progressively remove more of their body parts, and money, from them. As for the possibility that a “wealthy” person (or at least a home owner) might need aged care??? While I really know nothing about it, I did get a large number of results when I googled “aged care accommodation bond sell house”.

I think that on balance the concern is that as the oldies head into retirement, they won't have enough to see them through. So if they really are going to be starting off from behind the eight ball in that regard, it probably isn't too realistic to think that after 20 years or more of happy and fulfilled retirement plus a protracted illness or two minimum, that they'll leave a lot to the heirs? Some truly wealthy ones could - If they choose to do it. But even the comfortably well off stand a very good chance of just seeing their assets dissipate over time.

and of course each and every one of us has different opportunities givn parents wealth but there will be a distribution [less so now].

I think we could have some fun managing an abolute return and protection (paraodox intended) fund if friends with a few hundred mil would give us the job!

Cheers