Will she or won’t she? If so, when might she raise rates?
This is how patently ridiculous it’s all become. World markets come to a grinding halt over a decision on a measly 0.25% interest rate movement. What about the 1980s, when rates jumped a whole 1.00%? There was no gnashing of teeth and sweating of brow. You just got on with it.
Ah, but this is the world of manipulation we live in today.
The Dow is down 86 points, and gold has fallen to US$1,215…all because of what Janet may or may not do in a couple of weeks’ time.
Personally, I don’t think she’ll move the interest rate dial…especially while the Brexit issue is still in play.
Everyone is following the central bankers. Hanging off their every word. But these people are not leaders, they are followers of a doctrine of debt, and they are taking the sheep to slaughter.
As I see it (as a slightly grumpy older man), that’s the problem with the world — we have no real leadership.
There are plenty of people masquerading as leaders. But we instinctively know they’re not what they pretend to be. They are schooled in the craft of soundbites…and in saying nothing meaningful.
They are the boring, cookie cutter people who squabble among themselves about how best to shape our world with their not-so-grand vision. They offer false promises of jobs and growth; they tell us everything is fully funded (which in itself is complete nonsense when you have a budget deficit); and they tell us what we want to hear…more goodies for nothing.
Personally, I’d like to think the world is crying — make that screaming — out for leadership. However, the realist within tells me this is wishful thinking.
Socialism has created a leadership-free zone.
But we live in a capitalist society? Dream on.
We delude ourselves that ours is a capitalist society.
The stifling bureaucracy, the growing dependency on the state, and a ‘tax the rich’ policy cure-all for a lack of political willpower to address spiralling public sector, health and welfare costs are all signs of socialism writ large.
The lack of leadership-itis is not a disease confined to Australia. It’s infected every developed country.
We, as a society, are both the problem and the solution. As more people accept the 20 pieces of government silver, the risk of the disease spreading becomes greater. That’s the problem.
A protest movement demanding responsible government…one that gives it to us warts and all. We’re not stupid. There are enough people who still appreciate the lessons taught to them by their Depression-era parents.
We know rights come with responsibilities.
We know money doesn’t grow on trees.
We know you cannot tax the productive to the point of disincentive, in order to pay to the unproductive.
We know that talking about ‘living within our means’ is not the same as actually living within our means. We know that work comes before reward.
Society should be about lifting people higher, not dragging them lower.
What was once considered welfare or assistance is now an entitlement.
The problem with a socialist system is that, once a benefit, subsidy, assistance package, public sector job or freebie is given, it’s nigh on impossible to remove…people feel they are entitled to this money. The longer this delusion continues, the greater the ranks of those who think governments are an endless pot of benefits. Keep asking — no, make that demanding — and you will be surprised what you can get money for. Want $50,000 to see if Adam really did play fullback for Jerusalem? You’ll probably find some left-wing artsy department in Canberra that’ll give you the dough.
Financially, as a nation, we are going from bad to worse. Our spineless politicians show no interest in avoiding this outcome. They are content with kicking that can down the road for another government — and generation — to deal with.
Socialism is a fantasy created by elites and bureaucrats. It’s a legalised Ponzi scheme.
No country is seriously addressing the debt, deficit and demographic time bomb.
The Australian federal government’s forward estimates — with figures plucked from some Happy Valley fantasy — relegate the budget papers to pride of place in the children’s section of the library.
Mushroom treatment is what passes for economic leadership these days. Keep the masses dumbed down. Feed us BS numbers and keep bribing the masses with more borrowed money.
However, this delusion is not confined to Canberra.
The recently released NSW Intergenerational Report warned that, without corrective action, the cost pressures of ageing boomers on the NSW health system, over the next 40 years, would create a debt that’s 75 times greater than what it is today. 75 times greater!
Clearly this is unsustainable. Or at least it should be to any rational person. But what are they going to do about it? Raise taxes? Make the health system more of a ‘user pays’ system? My money is on increased land taxes, levies, stamp duties, registration fees and paying token attention to the expenditure ‘sacred cow’ in the room. Health is both a contentious political issue and a massive bureaucratic employer; therefore any real leadership on addressing cost blowouts will be put in the ‘too hard’ basket.
In my home state of Queensland, the government — with a serious spending problem — is planning to raid the Government Employees Defined Benefit Super Fund.
For the uninitiated, a Defined Benefit Fund pays its members a guaranteed multiple (based on years of service) of their final average (last three years) salary (FAS). Let’s say a member with 40 years’ service is paid a multiple of 10 times their FAS of $100,000.
The government must guarantee the $1 million is there to pay them. That example is simple enough. Now add into the mix thousands of employees of different ages, with varying lengths of service and differing salaries. How do you ensure each member’s entitlement is properly accounted for?
Enter the actuaries…the number crunchers. They put all the variables into their models — including a guesstimate on future earnings — and tell the government whether the fund needs to tip money into the fund or not.
The Queensland government has identified an apparent surplus of $11 billion in the Government Employees fund…which, under law, they are entitled to withdraw from the fund. How convenient for a government with a spending problem. The debate rages over whether the surplus is real or not…
Well, the answer to that depends on whether the actuaries dial the future performance numbers up or down.
If the actuaries plug an earning rate of 7% per annum into their forecasting model, then there’s $11 billion ripe for picking.
However, if you adopt a more conservative 3% per annum return (which is probably more in line with the low growth, low return environment that Future Fund Chairman Peter Costello warned about recently), then there’s not a brass razoo to spare. No money is available to be withdrawn.
Call me silly, but I’m thinking our Treasurer, Curtis (Money) Pitt will opt to go with the 7% rate, netting him a big fat cheque for $11 billion.
Guess what’s going to happen in a few years’ time?
OK, you guessed it.
The Courier Mail (the local rag in Brisbane) headline is going to be ‘Government Define Benefit fund in the red’. Queenslanders will be forced to pony up more money (via increased taxes of course) to make up the shortfall.
No crystal ball needed for making this prediction. It is a sad repeat of what politicians all around the world are doing.
They are perennial over-promisers, under deliverers, and raiders of any money box, drawer or pantry to compensate for their profligate ways.
It saddens me that, as a society, we do not possess foresight that extends beyond the next offering of political silver pieces.
While I lament a lack of leadership in the political realm, it’s also a sad reflection on our community. We have allowed ourselves, within the space of one generation, to become increasingly more dependent on a socialist model that’s destined to bankrupt; one that will leave our children, and their children, with a legacy none of us can be proud of.
My legacy to our children will be to teach them the basics of financial management. To have them question what, these days, passes as orthodox economic and financial thinking.
Maybe, just maybe, by showing individual leadership, we can provide our children with a stark contrast to the appalling scarcity of leadership from our elected officials.
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