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Monday Message Board

July 9th, 2012

It’s time for another Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language. Lengthy side discussions to the sandpits, please.

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  1. Freelander
    July 9th, 2012 at 18:53 | #1

    This is an interesting blog post about Hayek’s love affair with Pinochet’s Chile :

    coreyrobin.com/2012/07/08/hayek-von-pinochet/

  2. July 10th, 2012 at 00:37 | #2

    At a party on the weekend, cornered by a guy talking about the illuminati etc…, I was trying to remember a film screened last year at the old Dendy, now “Tribal”, cinema in George street.

    I remembered it was a long film (even had an old-fashioned interval) and that it started off rather interestingly and, I thought, uncontroversially as a critique of where we are and how we got here.

    Unfortunately it wandered off into a very unconvincing technotopian direction at the end. After a bit of internet searching I remembered it was the “Zeitgeist” film.

    The funny thing was that, according to Wikipedia, some of the criticism of the film included:

    “Zeitgeist: The Movie is a 2007 documentary film by Peter Joseph. It asserts a number of conspiracy theory-based ideas, including … that bankers manipulate the international monetary system and the media in order to consolidate power.”

    It’s interesting how, in light of LIBOR for example, there isn’t a bit of pause for a more critical analysis of some of the other things previously labelled “loopy”.

  3. Freelander
    July 10th, 2012 at 03:40 | #3

    There are a lot of crazy people spout conspiracy theories in our free society, and I’ve come to think that that provides perfect cover for the conspiracy stories which are true.

    If you want to hide a tree where better than in a forest? If you don’t have a forest grow one around the tree. What is particularly effectively is that the crazies sometimes mention groups that are involved in conspiracies but mix the mention in with a lot of nonsense. Consequently when someone who is not nuts mentions a real conspiracy involving the group they are dismissed without further thought as a conspiracy nut.

    Brilliant really! Totalitarian countries should look at free countries if they really want to know how to supress the rabble!

  4. Freelander
    July 10th, 2012 at 03:43 | #4

    Hell! You can even give the fools the vote. All the better to complete the illusion.

  5. Bring back Birdy at Catallaxy
    July 10th, 2012 at 06:14 | #5

    In this morning’s Australian, NSW Labor Right apparatchik Cassandra Wilkinson gives the game away about the current jihad against the Greens. It’s not really just about the Greens, it’s also about purging Labor of any semblence of social democratic and pro-environment ideas (and members) and adopting the sort of retro agenda advocated by grumpy old men such as Peter Walsh, Michael Thompson and The New City. See also:

    http://johnquiggin.com/2005/06/27/labor-roots/

  6. Ikonoclast
    July 10th, 2012 at 08:25 | #6

    The Greens are the only electorally significant party in Australia which recognises that humans and the human economy are 100% dependent on a healthy environment, a stable climate and a necessary transition into renewable resources. Hence they are the ONLY rational, logical party basing their policies on physical empirical realities and constraints.

    Liberal and Labor by contrast are irrational, unscientific, unempirical, loopy, intransigent, immature, incapable, inflexibile, opportunistic, unprincipled, disingenous, ideological dinosaurs. I feel nothing but total contempt for the entire professional political class of the Liberal and Labor parties.

  7. Troy Prideaux
    July 10th, 2012 at 08:50 | #7

    @Ikonoclast
    Whilst most people generally tend to agree with you about the negatives, I think it’s a bit unfair to categorise the 2 major parties as monolithic entities aspiring to such attributes, however I think it’s pretty clear the leaders of both are:(

  8. Julie Thomas
    July 10th, 2012 at 09:27 | #8

    Did I really hear TA saying this morning on RN, excusing his policy toward asylum seekers for not being a ‘Christian’, saying that the asylum seekers weren’t behaving in a Christian way?

    Is he really unenlightened – or stupid – enough to be able to say this without knowing what a hypocrite he is and what a massive ‘FAIL’ he is as a real Christian? Will any real Christians speak up and show us how their wonderful religion has anything useful to offer? I think not.

  9. Julie Thomas
    July 10th, 2012 at 09:29 | #9

    bugger, my ‘fail’ at editing – that ‘a Christian’ should be ‘Christian’.

  10. Tom
    July 10th, 2012 at 09:54 | #10

    @Julie Thomas

    You are right, I found it on

    http://www.abc.net.au/radionational/programs/breakfast/are-asylum-seekers-un-christian/4120288

    I’m not sure whether I should laugh or cry, considering TA is the supposed future PM of the country according to polls.

  11. Troy Prideaux
    July 10th, 2012 at 09:56 | #11

    Julie Thomas :
    bugger, my ‘fail’ at editing – that ‘a Christian’ should be ‘Christian’.

    Just as well I can both write and read fluent typo as I didn’t even notice :)

  12. Katz
    July 10th, 2012 at 10:24 | #12

    Did I really hear TA saying this morning on RN, excusing his policy toward asylum seekers for not being a ‘Christian’, saying that the asylum seekers weren’t behaving in a Christian way?

    The Gospel of Matthew alleges that Christ and his parents sought political asylum in Egypt when King Herod adopted robust means to preserve orderly succession of his monarchy.

    Clearly, the Holy Family weren’t acting in a Christian way because, self-evidently, Christianity hadn’t been invented yet.

    And moreover, no other evangelist even mentioned this blatant act of illegal migration. Tony Abbott is quite correct to promulgate policy as if this alleged incident never really happened.

  13. Bring back Birdy at Catallaxy
    July 10th, 2012 at 14:57 | #13

    I’ve just found this gem of a quote from 2004 which may well turn out to ve ery prescient in the light of the current Labor-Greens spat:

    “The Greens (Brown) are to the ALP what the Browns (Hanson) are to the L/NP: spiritual soul-mates but political rivals.
    “I would not be surprised to see the ALP machine men co-operating with the L/NP apparatchiks in sticking the knife into the Greens.
    “Both major parties are pretty much indistinguishable in terms of policy. Their difference arise in the squabble over the division of political spoils.
    “The Greens, like One Nation, offer a genuine choice – albeit an extremist one in certain respects. They upset the settled duopolisitic Australian political market.”

    http://johnquiggin.com/2004/09/02/sheridan-on-the-greens/#comment-42183

  14. Freelander
    July 10th, 2012 at 14:59 | #14

    If the major parties don’t want to abide by the treaty relating to refuges that Australia signed then they should unsign it and be done with it. The refuges currently have the right to turn up and claim asylum. There is no smuggling going on. The only reason they are on leaky boats is because the government confiscates the boats. The government is fully responsible for all the deaths at sea. Both sides have blood on there hands.

  15. Troy Prideaux
    July 10th, 2012 at 15:50 | #15

    @Freelander
    Totally agree.
    I suppose if there’s any justification to maintain ourselves as signatories with the current policy direction is that we signed up in circumstances of large scale genocide and to offer protection from such circumstances in particular. Yeah, it’s pretty weak justification.

  16. Alan
    July 10th, 2012 at 16:05 | #16

    No doubt the holy, devout and caring Abbot was applying the well-known Gospel injunction to turn the other cheek except when you are fear-mongering.

  17. July 10th, 2012 at 17:10 | #17

    Megan @ 2wrote:

    [Zeitgeist] asserts a number of conspiracy theory-based ideas, …

    I don’t recall any explicit reference to the “illuminati” in Zeitgeist. I recall that Zeitgeist was quite a good movie.

    If you want to see a debate between Official 9/11 Conspiracy Theorists and their detractors, please visit thispage.

  18. Freelander
    July 10th, 2012 at 19:11 | #18

    @Troy Prideaux

    I think we signed up at the time because we envisaged that it could happen to people like us. Nowadays we don’t think it could happen to people like us, and many don’t think of these people as people like us, so despite having signed the treaty, the two parties have no intention of honouring it.

  19. Ernestine Gross
    July 10th, 2012 at 21:54 | #19

    Has anybody else observed a pattern in the ASX share price index (All Ord) where the index moves within a range of about [4100, 4300]? While I haven’t taken records to establish the beginning of this pattern, I am pretty sure it is quite marked. I tend to read the smh’s comments (‘explanations’) on why there is an up and why there is a down. One day its worries about Greece, another day it is worries about China that ‘explain’ the drop, and the rises are ‘explained’ by similar stories. But why would these external events follow such a neat pattern?

    Suppose someone (‘big’) somewhere in the international financial system (not excluding Sydney or Melbourne) knows that Aussie superfunds invest a certain percentage of the new contributions in the ASX-traded shares. With a bit of ‘competitive intelligence’ work, good estimates can be obtained on how much money comes in and when. Speaking hypothetically, of course, wouldn’t it be possible to have a profitable trading strategy based on this information that would leave a rather regular pattern in the index?

  20. Freelander
    July 10th, 2012 at 22:43 | #20

    The smh’s experts remain experts due to their remarkably consistent record is being able to predict the past. There ability to predict the past underscored by their detailed explanations of the reasons why. Of course, if they could turn that ability toward the future they wouldn’t need to be journalists.

    Assuming the excess volatility research is correct, there is plenty of evidence that the market is not efficient even in the short run. Of course, collapses that regularly happen when the majority recognises ‘the emperor has no clothes’, that is, the market crashes not really precipitated by new information but by rather delayed proper evaluation of old information, are also regular proofs that the market is not efficient. That said, consistently making money from market inefficiencies is another thing. As many have said, the market can remain wrong longer than you can remain solvent.

  21. Ernestine Gross
    July 10th, 2012 at 22:51 | #21

    So, why are the superfund returns so poor?

  22. Freelander
    July 10th, 2012 at 23:43 | #22

    Because those running them are often there due to who they know not what they know and governance is shockingly weak and because it’s other people’s money.

    Superfunds look after the super money of people who have no say about who manages the funds, or effectively no say.

    With modern corporations dominated by institutional investors, governance there is also. In the director executive club there self-serving focus is not on shareholders’ value or protecting shareholder assets from risk. Instead the focus is on extraction and plunder for their own benefit which has been helped enormously by the bonus, free shares and options culture. As a class they promote this culture because it rewards them enormously. No longer is their fate linked to the companies fate. If and when the company goes belly up they are either long gone or so rich it doesn’t matter.

    This phenomenon is worst in Finance.

  23. July 11th, 2012 at 02:02 | #23

    Qldrs probably heard about the ban on TV cameras in the state parliament after a breach of rules.

    Of course, the media wasn’t “banned” from parliament, and there is always the livestreamed footage if you are desperate for images of puppets saying scripted things.

    Popped in there for a few hours late today. At no time was there a single person in the “press gallery”. Boycott? Or simply BAU in a mono-media/unicameral state?

    Anyway, they passed the “2 strikes” mandatory sentencing law tonight (along with a few other fairly spooky pieces of fine-tuning to the laws the ALP already had/was intending to pass).

    I know I’m not a “real” journalist or anything, but I thought I should report it before you see the front page of Rupert’s rag tomorrow and get the impression that they actually had anyone there or something….

  24. Freelander
    July 11th, 2012 at 02:29 | #24

    Good to see freedom reigns supreme in our free country …

  25. paul walter
    July 11th, 2012 at 05:17 | #25

    Not for long, I suspect.

  26. paul walter
    July 11th, 2012 at 05:39 | #26

    Thank you to Bring back Birdy at Cattallaxy for two most relevant comments.
    Yesterday, I heard two things that set me back for an entire day.
    The first was Abbott’s Himmler- like call to bear up and get ruthless with the grisly work to do with the asylum seeker boats (Godwinned).
    The second was a pitiful effort from Stephen Smith. Smith, trying to get his boots in the bovvering of the Greens proclaimed, almost as a virtue, that Labor wasn’t an activist party, which must have had six generations of ghosts dating back to the Tree of Knowledge a hundred and twenty years ago and Eureka, if you like also, turning in their graves.
    Then he committed a Freudian gaffe of truly monumental proportions in claiming that Labor “agreed passionately” with the Greens on many issues. Because he actually meant “disagreed” (to his eternal shame), a gleeful reporter immediately picked up on it and loudly spruiked it to the rafters.
    Not quite in the same league as the Kennett letter Ralph Willis was duped into releasing to drive the final nail into Labor’s election coffin in ’96, but I don’t think Smith is the next PM.

  27. Freelander
    July 11th, 2012 at 05:50 | #27

    Good if they boot Smith. Wasn’t he behind the great firewall they wanted to create around Australia, or was that KRudd’s idea?
    As for Abbott, just showing the benefits of a seminary education. Suppose lesson one keep your back against the wall. Probably good advice for a budding politician in either major party.

  28. Katz
    July 11th, 2012 at 08:52 | #28

    Ernestine Gross :
    So, why are the superfund returns so poor?

    Mostly because members of the funds choose the wrong investment options, of which most funds provide many.

    For example, in the past year Australian bonds have enjoyed a return approaching 15%. If members continue to opt for investment mixes that are heavy in equities, is this the fault of the Super schemes?

  29. Ernestine Gross
    July 11th, 2012 at 09:50 | #29

    Yes, Freelander and Katz, I am familiar with these points. Of course if all compulsory superfund members would opt for Aussie bonds, the yields would be lower.

    The pattern of the ASX index remains interesting and unexplained.

  30. Freelander
    July 11th, 2012 at 10:08 | #30

    The yields would be lower and the justification for their salaries and bonuses even more microscopic. In fact harder to find than the higgs boson.

  31. Katz
    July 11th, 2012 at 10:11 | #31

    As every schoolboy ought to know, in the pricing of bonds, if the yields are lower then, everything else being equal, the prices will be higher.

    Rather than “yield”, EG, you mean “return on investment”.

    Return on investment includes both interest paid and the exchange value of the bond on the secondary market. During 2011-2012, yields on Australian bonds fell sharply, stimulating a rapid rise in the price of previously issued bonds. Most super funds are holders of those previously issued bonds. Hence the high return on investment.

  32. Bring back Birdy at Catallaxy
    July 11th, 2012 at 10:20 | #32

    David Spratt offers a sober assessment of the state of climate politics, and politics generally, in Australia.
    http://www.climatecodered.org/2012/07/sober-assessment-of-our-situation-1.html

  33. Katz
    July 11th, 2012 at 10:25 | #33

    Moreover, if all members of Australian super funds opted for bonds, before there was any observable change in the bond market, the Australian equity markets would collapse, providing once in a millennium buying opportunities.

  34. Bring back Birdy at Catallaxy
    July 11th, 2012 at 11:03 | #34
  35. Freelander
    July 11th, 2012 at 11:41 | #35

    Don’t worry. Tony Abbott said climate change is cr*p?!

  36. Ernestine Gross
    July 11th, 2012 at 13:03 | #36

    Katz, of course every schoolboy knows the comparative static result of the relationship between bond prices and yield and rate of return. Some or even many super members may also have observed the 15% return (or something higher than their return) for Aussie bonds. But this is with the benefit of hindsight. They can observe directly and in advance the mortgage rate they have to pay. They can read the fees they have to pay. The description of the content of portfolio options even in ‘good’ superfunds is useless for readers who have an idea as to what the words might mean. Compulsory super without guarantees is not quite satisfactory. It is like tax money fed into the financial system. And there is a constant flow (albeit with small variations) into this system. And housing affordability is a constant problem.

    It seems to me I haven’t managed to convey what I wanted to say in my initial post, namely a pattern in the All Ord index which is raises questions in my mind. I suppose I have to do a bit of work to present the pattern and then try again.

  37. Hermit
    July 11th, 2012 at 13:12 | #37

    @Bring back Birdy at Catallaxy
    Sober assessment or shame? Giving every encouragement to increased coal and LNG exports makes the domestic carbon tax look silly and pathetic. Remember in absolute terms we are meant to cut emissions by a piddling 5% between 2000 and 2020. The article in Climate Code Red shows that each of several export coal projects will erase that many times over.

    When asbestos was declared a harmful product its sale was banned. In contrast our politicians lavish praise on new coal export proposals. Steel and aluminium are not complaining because they get 94.5% free permits. It’s up to you and me to leap out of our comfortable chairs to turn off light switches the other side of the room. Just don’t think about the coal ships and it will seem like the right thing to do.

  38. Daniel
    July 11th, 2012 at 13:23 | #38

    Does anyone else believe that part of the Carbon Tax or a future scheme in the same vein, should have the government buying back all utilities. They could sell it by saying something on the lines of: if the government owns the utilities it would be easier to implement new greener technologies, as they won’t be tied to certain companies and their processes, therefore resulting in Australia further reducing its greenhouse gas emissions. Also the citizens would save money on their power bills, partly due to the use of efficient energies and partly because the utilities wouldn’t be privatised anymore.

  39. Tom
    July 11th, 2012 at 13:32 | #39

    @Daniel

    Do you think it is possible under Australia’s current political environment and public opinion?

  40. Freelander
    July 11th, 2012 at 13:45 | #40

    @Ernestine Gross

    Some people do do modeling looking at the flow of funds into the stock market. A point though,is that the flow of funds in buying shares has to equal the flow out to those who sell and the companies that issue shares. Similar to the quantity theory of money., except confined to stocks,there would be pressure on the price level until exchanges are happening at a high enough level for the velocity of money through the market to reach an equilibrium speed. So the enforced diversion of funds from super plays a role. Others have thought of it, so finding some references shouldn’t be too difficult. Switches in flows of funds can explain., for example, why after a boom and crash in the share market there often follows a boom and crash in the property market.

  41. Freelander
    July 11th, 2012 at 13:54 | #41

    @Daniel

    The government should build excess capacity in for example., the electricity market and ruthlessly bankrupt the incumbents, as any unfettered capitalist would, and then pick the bankrupted entities up for s song. They would also get a dance with the bankrupted owners squealing about fairness. Whatever that word means, nowadays.

  42. Ernestine Gross
    July 11th, 2012 at 14:40 | #42

    @Freelander
    Your post @40 is closer to the mechanics I have in mind. I am familiar with some flow of funds studies from the UK. They use broad aggregates and the interplay of derivatives and the prices of underlying securities isn’t, to the best of my knowledge, captured (problem of our inadequate balance sheet based notion of money). Completely agree with the interrelatedness of market. But none of this explains the pattern of up and down in the All Ord in the range I have indicated. The pattern looks like new funds flowing into the equity market are being syphoned off. But what looks like something isn’t necessarily what actually happens. You probably can guess what I am driving at.

  43. Freelander
    July 11th, 2012 at 15:28 | #43

    There would also be a lot of short term buying and selling and rebalancing portfolios, with the same money recirculating through the market with fees and commissions siphon off. That sort of activity could be part of it. The data on all the different sorts of activities, and traders probably impossible to get. But analyzing massive data sets is the hot topic, although usually to help business better harvest revenue from customers. Which is the reason Google and others are grabbing ad much private information as they can. There motto was “Don’t be evil” but some suspect they’ve shortened it.

  44. Bring back Birdy at Catallaxy
    July 11th, 2012 at 16:30 | #44

    Freelander @3:

    “There are a lot of crazy people spout conspiracy theories in our free society, and I’ve come to think that that provides perfect cover for the conspiracy stories which are true.”

    David Brin put forward this concept in his entertaining 1989 novel, Earth.

  45. Katz
    July 11th, 2012 at 16:36 | #45

    If you are confident you have identified a pattern of stock market prices, then you may have the key to riches beyond the dreams of avarice.

    Good luck with that.

  46. Freelander
    July 11th, 2012 at 17:14 | #46

    @Bring back Birdy at Catallaxy
    I hadn’t heard of the book or author. That’s for the reference. I’ll look it up. This more subtle control is in some ways more dangerous, and certainly more successful than the heavy handed approach we have no difficulties identifying.

  47. Freelander
    July 11th, 2012 at 17:21 | #47

    Thanks for the reference, it was meant to read!

  48. Ernestine Gross
    July 11th, 2012 at 21:24 | #48

    Katz, pattern in share price index series are not only of interest for making money.

  49. Freelander
    July 11th, 2012 at 21:39 | #49

    Indeed, the work on excess volatility concluded that the volatility in the share market is too great, and inconsistent with an efficient market,but did not provide a method to exploit that inefficiency.

  50. paul walter
    July 12th, 2012 at 02:08 | #50

    The David Spratt article was a bit depressing, please some body just tell me its all a bad dream.
    Why do we keep retreating to the dark ages in the face of complexity? Is it the Hobbesian capitalism of the1%, now behind the walls of a figurative castle keep and how can we dance while our beds are burning, particular when we discover that a Kardashian has just had a baby.
    It’s a shame that the Greens seem to have allowed the system to get away with the decoupling of climate change from the context of ecology, it’s not something unrelated to say, the ruining of the Mekong, but another form of that, driven by a vicious tendency somehow privileged by a global system to drive it at the expense of rationality, for nothing better than the soothing of the nerves of irascible Koch, Rinehart, Adelson etc types and facilitate the endless game playing of the Goldman Sachs Wall St/ City of London etc zombies.
    It’s done on the promise of economics as a solution for the monstrosity of global poverty (of which refugees are but one component) when, without any vision and resulting program, the pomo churn described by Spratt is dominant, as people fighting for different causes are played off against each other by the oligarchs and zombies.

  51. Katz
    July 12th, 2012 at 07:53 | #51

    Ernestine Gross :
    Compulsory super without guarantees is not quite satisfactory. It is like tax money fed into the financial system.

    In the days of defined benefits the employers carried the risk. It is true that with the advent of accumulation schemes investors of those funds exchanged clients with some expertise and realistic expectations for millions of rank amateurs who were neither expert or realistic. Inevitably, some fund operators attempted to profit from this state of affairs by hyping their ability to maximise returns. The heavy weighting of equities in the default option is one consequence of this hyping.

  52. Daniel
    July 12th, 2012 at 11:43 | #52

    Tom @39 – with this government no, a Rudd government possibly. However, currently it would be a great time to try an re-nationalize the utilities or at least sell the idea.

    Freelander @41 – a tit for tat plan would be easy to sell, just gaining the funds would be quite tricky with the Australian people so focused on returning to surplus. Not sure people would like to spend.

  53. Freelander
    July 12th, 2012 at 12:18 | #53

    Are Australians really focused on returning to surplus? Personally, I couldn’t care less. Stupid politicians have been rabbeting on about it as though it is somehow important, and the ignoratti will probably pick up on that.As for average Australians I doubt they care, but on both sides, given that their leaders are giving it undue emphasis, followers will barrack and the issue will become important and unimportant for one side and the other depending on the outcome.

  54. Troy Prideaux
    July 12th, 2012 at 13:21 | #54

    @Freelander
    No idea what the electorate thinks about a surplus at the moment, but household savings levels are supposed to be atypically high at the moment (as of recently anyway), so the general sentiment might be there to tighten up at all levels. Of the 3 things our Prime Minister appears to care about (literacy, numeracy and the economy) , she appears convinced that delivering a surplus will provide the ALP with bundles of economic cred.

  55. Katz
    July 12th, 2012 at 13:46 | #55

    The Labor government is flailing about in search of something — anything — to headline its forlorn effort to avoid electoral annihilation.

    Drowning man, meet straw.

  56. Ernestine Gross
    July 12th, 2012 at 14:51 | #56

    @Katz

    The idea of securing income after retirement via the financial markets needs re-examining.

    Obviously, a necessary condition for any portfolio of financial securities to serve as a means of transferring wealth in a meaningful way over time depends on the monetary payoff of the financial securities in relation to the monetary cost of consumables at that time (eg in retirement). This necessary condition depends on what the young generation is doing when those who hold their savings in the form of financial securities retire. Alternatively put, the crucial factor is an intergenerational dependency.

    The question now arises: Why bother going via the financial market instead of finding a taxation system which achieves intergenerational wealth transfers, excludes the examples of rent seeking, exploitation of information asymmetries and worse, you have mentioned, and allows young people to start their working life without debt incurred while studying?

  57. Katz
    July 12th, 2012 at 15:41 | #57

    Ernestine Gross :
    @Katz
    The idea of securing income after retirement via the financial markets needs re-examining.
    The question now arises: Why bother going via the financial market instead of finding a taxation system which achieves intergenerational wealth transfers, excludes the examples of rent seeking, exploitation of information asymmetries and worse, you have mentioned, and allows young people to start their working life without debt incurred while studying?

    Interesting question, EG. It strikes at the heart of the nature of our civil society.

    The social democratic ideal of cradle to grave became the aspiational model in the era after WWII. Evidently, even in the most enthusiastic social democratic societies, the model was only ever partially enacted. Moreover, since the 1970s, this model has come under attack, first in the wake of the collapse of the Bretton Woods system and then by virtue of voters turning against parties that adhered to the social democratic consensus. Chasing votes, these social democratic parties have changed their tune. This is the politico-cultural setting in which the current superannuation system worldwide arose.

    Now let us look at preferred options from the point of view of citizens. They ask themselves, “How do I fund my retirement?” If I pay taxes now, will a viable and sympathetic state still exist when I come to withdraw a pension? Or are the financial markets a more secure repository of my post-retirement hopes? If you were a German, you might answer one way. If you were a Greek you might answer in another way. Australia inhabits the space between Germany and Greece. How trustworthy are Australian social security institutions? Are they more or less dependable than global financial markets? The answer is not clear and any answer is debatable.

  58. Ikonoclast
    July 13th, 2012 at 10:51 | #58

    Essentially, I agree with Ernestine’s final position re securing income after retirement. I am not sure I agree with all her reasoning on the way through but I agree with the destination. The idea of securing income after retirement via the financial markets does need re-examining. Clearly the push to financialise, marketise and privatise retirement income was a neoliberal, neoconservative push to effect a wealth transfer from social or common wealth to private wealth. This push was and is entirely consistent with the general neolib program (as per the Adam Smith Institute’s original Omega Project) to minimise the legitimate area of operation of the state and remove obstacles to the transfer of most wealth to a tiny plutocratic minority (the so-called 1%).

    Simple, straightforward social transfers were eschewed in favour of creating a plunder-able sytem open to manipulation and rent seeking. Before the GFC, the world system was awash with excess monies available for loan. The creation of pension funds must have played a role in the explosions of these monies if it was a global phenomenon and not just an Australian phenomenon at that time. The overall funds available seemed to exceed the amount necessary for genuine productive investment and/or to be channeled for various reasons into speculation, bubbles, derivatives, junk etc. The GFC is the empirical proof of that the pudding, far from being magical and nourishing was in fact ponzi-like and toxic.

    Of couse, the neolib, zombie ideology which still holds sway and power exhibits the standard quality of continuing to be “right” even when it is wrong. This will persist until a final crisis occurs too severe to be papered over and denied. At this point the oppressed majority will see the obvious truth and begin protests, rebellions and possibly even revolutions.

    We have two key alternatives. To change course and re-socialise and re-democtratise our culture back to a better mixed-economy compromise or to persist with extreme free market policies, increasing wealth inequalities and austerity for the already impoverished until an unpredictable and very possibly violent crisis point is reached. The first course is far more preferrable IMO.

  59. Troy Prideaux
    July 13th, 2012 at 11:59 | #59

    @Ikonoclast
    I also agree we need to re-examine the idea of investing retirement savings in the casino…ah hm…[cough]… financial markets; at least while financial innovation, speculation and sentiment trumps fundamentals and asset quality. Problem is, this ponzi process has derailed en-route to the conservative tram stop, stuck in new territory where the hunger for financial innovation is still strong.
    I’m not sure fully socializing retirement is possible in Australia anymore with living standard expectations, aging population increases and the requirement to stay internationally competitive.

  60. BilB
    July 13th, 2012 at 12:12 | #60

    “the world system was awash with excess monies available for loan”

    This was largely driven by the steady increase in the price of oil from the mid nineties onwards ( that increase caused a ballon of surplus capital), buttressed by the other feature of institutional acruals hunting for investment opportunities. The Oil Drum had an interesting article on this issue a month or two back.

    It is an interesting debate to be had. Is the public approach with lower returns better than the private approach with its volatility and risk of misappropriation and mismanagement? I favour as I have pointed out many times the self investment approach (superannution accruals funding personal property pay down), plus a mixture of public and private involvement for the balance (once the primary property is freehold).

    My Mom always said, “don’t put all of your eggs in the one basket”.

  61. Katz
    July 13th, 2012 at 13:39 | #61

    Ernestine Gross :

    “The idea of securing income after retirement via the financial markets needs re-examining.
    The question now arises: Why bother going via the financial market instead of finding a taxation system which achieves intergenerational wealth transfers, excludes the examples of rent seeking, exploitation of information asymmetries and worse, you have mentioned, and allows young people to start their working life without debt incurred while studying?”

    Interesting question, EG. It strikes at the heart of the nature of our civil society.
    The social democratic ideal of cradle to grave became the aspiational model in the era after WWII. Evidently, even in the most enthusiastic social democratic societies, the model was only ever partially enacted. Moreover, since the 1970s, this model has come under attack, first in the wake of the collapse of the Bretton Woods system and then by virtue of voters turning against parties that adhered to the social democratic consensus. Chasing votes, these social democratic parties have changed their tune. This is the politico-cultural setting in which the current superannuation system worldwide arose.
    Now let us look at preferred options from the point of view of citizens. They ask themselves, “How do I fund my retirement?” If I pay taxes now, will a viable and sympathetic state still exist when I come to withdraw a pension? Or are the financial markets a more secure repository of my post-retirement hopes? If you were a German, you might answer one way. If you were a Greek you might answer in another way. Australia inhabits the space between Germany and Greece. How trustworthy are Australian social security institutions? Are they more or less dependable than global financial markets? The answer is not clear and any answer is debatable.

  62. Bring back Birdy at Catallaxy
    July 13th, 2012 at 14:20 | #62

    The Republican Party contains dinosaurs and funds schools which teach that the same is true of Loch Ness.
    http://www.washingtonpost.com/blogs/answer-sheet/post/loch-ness-monster-real-in-biology-textbook/2012/06/26/gJQAPhwr4V_blog.html

  63. Troy Prideaux
    July 13th, 2012 at 14:52 | #63

    @Bring back Birdy at Catallaxy
    Paleontologists are still debating if there’s an ancestral relationship to the Rinehartosaurus.

  64. Ernestine Gross
    July 13th, 2012 at 21:25 | #64

    Katz, in reply to your 2 posts.

    Quite right, there is no easy answer to the question but it invites debate. There are only two related little points I’d like to mention.

    There is a fundamental difference between a social democratic system and a financial market system. The former runs on the principle of 1 head 1 vote, the latter runs on the principle of 1 Dollar 1 vote. [FN1] A related difference is that in the former a change in policy (‘rules of the game’) is brought about through political processes (debate and voting) while in the latter people have to wait untill the proverbial last financial institution is broke (I am being strict here regarding ‘free markets’.)

    I realise we don’t live in this black and white world of characterisations of social systems. Sometimes, I feel, it is useful to take the step to the most simple characterisation..

    [FN1] Regarding Germany I’d say it depends which era is considered. About 80 years ago social democracy[FN2] wasn’t in place and the change had to be brought about via military means. Regarding Greece, the troubles, not identical though, lasted even longer. Your suggestion that Australia is in some sense between these countries (presumably in their current state) would, IMO, call for a treatment that could fill a book.

    [FN2] I don’t know whether there is or is thought to be a ‘pure form of social democracy’. To me the notion of social democracy has a weak exclusion criterion, namely nutters who confuse wishful thinking with theoretical knowledge and they carry on regardless of observables.

  65. July 13th, 2012 at 23:22 | #65

    I’m not having much luck posting this link about a certain middle eastern country in the news a lot lately. Guessing that it may have been the inclusion of the link from the place I saw it, or maybe the name of the country.

    Anyway, I thought they deserved the kudos for bringing it to my attention. But I’ll try again (using the ‘MSM’ source):

    http://www.guardian.co.uk/commentisfree/2012/jul/12/syrian-opposition-doing-the-talking

    I urge everyone with an interest or opinion on current events to read the piece. Truly astonishing the names, think tanks, corporations, banks, agencies and other countries involved in our latest exercise.

  66. Katz
    July 15th, 2012 at 17:26 | #66

    EG, I’d simply observe that:

    1. a social democratic system is not the only one that operates on the basis of one head, one vote.

    2. social democratic systems have always arisen out of market capitalist systems, and only market capitalist systems. And they have arisen out of the ballot box. Thus they are the product of popular opinion, which is subject to change by persuasion. The Reagan and Thatcher “revolutions” were vouchsafed by the ballot box but were conditioned by the observed failure of social democratic institutions as they laboured against the pressures of globalisation of finance.

    Social democrats worldwide are still trying to come to terms with the financial revolution of the 1970s.

  67. Mel
    July 17th, 2012 at 02:01 | #67

    test

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