IN 1904 THE NOBEL PRIZE in Physiology and Medicine was awarded to Ivan Petrovich Pavlov. You will probably think of him as ‘Pavlov’… as in ‘Pavlov’s dogs’. His research centred on temperament, conditioning and involuntary reflex actions. If Ivan were alive today, he would command significant fees as a consultant.
Superannuation. See quickly you have become conditioned to salivate at the mere mention of the word.
Superannuation.
Superannuation.
After all, the promise of a plush, comfortable and lengthy retirement is enough to make the most hardened sceptic blush. ‘Early retirement’ from your ‘job for life’ at ‘age 55’ with relative luxury, primarily on interest payments and franked dividends, whilst keeping a nice lump of capital ‘working for you’ is an attractive option. And all your friends are doing it too. If this sounds too good to be true, that’s because it is. Ivan would be impressed. Proof to support the theory. Superannuation – see, you’re salivating.
What actually happened is that we were enlisted. Yes, all of us (pretty much). Australia is a world leader in superannuation policy. We started early and have put plenty in. Why wouldn’t we? The government held our hand all the way with very generous incentives.
COMPULSORY SUPERANNUATION LEGISLATION will go down is history as one of the most brilliantly manipulative tools of the modern economic era. From the day the Superannuation Act was passed by the Keating ALP government in 1993, just about every working Australian has been investing in the Australian Stock Exchange (ASX). Whatever kept share value rising was good for us all. Any fall in the Stock Market was bad for our future … our retirement … our net worth. The fact that our investment grows every day means that we are constantly extending and expanding the breadth and depth of this relationship. In Lorax speak – ‘biggering’.
The majority of the general public have come to the conclusion that our best interests are now served by the yield of record profits. Higher share value and bigger dividends which means we are all richer and can all afford a better, easier and more luxurious retirement. These record profits are fuelled by growth and economic expansion. This in turn means higher share value and bigger dividends, which of course means we are richer and can afford a better, easier and more luxurious retirement. It all sounds like a grand plan. Those of us less interested in burying our heads in Noosa Beach can only slowly shake our heads – in shame and embarrassment. Shame that we are a part of this equation. Embarrassment that friends and family are so blinded by greed and complicity that they cannot even begin to conceive of what’s actually going on here. And that’s just the shame and embarrassment that surfaces before you get down to the business of considering the massive environmental, ecological and social fallout. In essence, our Pavlovian response has Dostoevskian consequences
Through this participation, aided and abetted by the media with constant updates of the ASX, our loyalties have been unwillingly hoodwinked and hijacked. Instead of supporting the aspirational ideals of health and happiness, family and community, environment and sustainability, we follow the ASX and cheer for everything that adds a cent to the closing price. With NO regard for the consequences. Hold on, it’s worse than that! We so desperately want an easy retirement we applaud destruction and pollution, so long as the ASX is heading ‘North’. We actually forfeit our future for a better future. Try making sense of that!
If you want to continue to believe this as a reasonable and rational path stop reading now. If I am not mistaken, Part C of the plan is coming soon to a stock market near you.
What happened to Parts A and B of this plan?
I can explain.
PART A WAS OUR SUBSCRIPTION to the concept of Superannuation and Stock ownership.
Superannuation is a compulsory condition for all working Australians. Sold as being of benefit to us all. In theory it seemed at the time to be a reasonable and rational position. An ALP government with an arguably pseudo-socialist agenda. The common good being served. Business whinged a bit about having to contribute. This is generally a sign that there is something in the deal for the average citizen.
The stock market is where the majority of Superannuation funds are invested. This fact has created an industry unto itself. Fund managers with reserves so vast that they can manipulate prices through selective trading (an avenue previously only available to the very few mega-rich). And they do. Don’t just believe me, go and search the internet for the many examples documented therein. Faith in a regulator is misplaced – the ASX is listed on the ASX. If I can use a contemporary metaphor instead of relying on the fox and hen-house, it’s like putting Eddie Maguire in charge of the AFL Draw. Destined to be skewed. As an aside, Australia has policies of self regulation in the media, and self regulation in the Advertising Industry. The spin surrounding the justification of this is as follows: The aim of self regulation is to maintain high advertising standards and ensure consumer trust and protection for the benefit of all of the community (from http://www.adstandards.com.au).The media trots out pretty much the same spin. Can someone please tell the ‘shock-jocks’ that there exists a concept such as ‘standards’. The Levenson Enquiry currently active in the UK makes a mockery of the self regulation argument. It’s about Standard & Poor’s. Not standards. And certainly not the poor!
PART B WAS THE SERIES of ‘stock market corrections’ known as Global Financial Crisis (GFC) 1 and 2. Our collective investment value was pretty much halved between late 2007 and mid 2008 during the period now referred to as GFC 1. It is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s. Unlike October 1929, this time around (GFC 1) the government produced policy to reduce the pain, slow the fall in stock value, in an attempt to stabilise the market.
In October 2008 the Rudd government announced that it would guarantee bank deposits. With the economy facing a recession, an economic stimulus package worth $10.4 billion was announced. This included payments to seniors, carers and families. The payment were made in December 2008, just in time for Christmas spending, and retailers predominantly reported strong sales. Gerry Harvey predictably bemoaned the fact that for some strange reason, people seemed to be buying stuff online for half the price he was charging. According to Gerry, this is un-Australian. Additional measures included doubling the first home buyer’s grant to $14,000 for existing homes, and tripling to $21,000 for new homes.
These measures were initiated to stimulate spending. This amounts to additional profits for retailers. The economic ‘churn’ and ‘trickle-down’ effects mean greater corporate profits, fewer reductions to the labour force, which means stronger share prices, and of course, more employees contributing to their Superannuation fund (which also adds some stability to the ASX).
The point is this. Taxpayer money is being used to prop up private enterprise and the stock exchange. Lots of taxpayer money. And if you strip away the spin, this is more laundering of money from the public purse, into private concerns. With our praise, our blessing and our thanks! Little wonder benevolent global organisations like the IMF and the World Bank extolled the Australian government for such actions. In fact, Australia was held up by these organisations as an example of good financial management. Being lauded by Dominique Strauss-Kahn does not appear to me to be a particularly desirable position (if you will pardon the pun). If you want to know what’s the difference between the World Bank and the IMF you need look no further than here: http://www.imf.org/external/pubs/ft/exrp/differ/differ.htm . This is a page on the IMF website. It does nothing to hide the agenda of the forces behind these organisations. Their confidence in the guiding principles is enough to cause a great deal of concern in the least paranoid reader. However, the pretence that Governments run these organisations for the benefit of the population is offensive. It is a challenge to find one example of a contemporary first world western government representing the interests of their citizens. The interests of the corporations that control these governments, and the election cycle ensures that we ‘the people’, are off the agenda. We are so dishearteningly under-represented, most of us simply flick on the television and cocoon ourselves in the opiate of the age – mass media. Shhhh … (click) … Ahhhh.
The second Economic Stimulus Package was announced by the Australian Government in February 2009. $47 billion more was allocated to help boost the economy. Money for schools, roads, small business tax concessions, new homes and insulation, plus a $950 cash payment for all Australians earning under $80K pa.
Apart from some pseudo ‘public works’ (private contractors supposedly improving mostly public facilities – which whilst not brilliant, is certainly better than what was managed in the USA where billions were laundered directly from taxpayers to listed corporations as ‘bailouts’) the balance went as one-off payments and business stimulation grants.
The reaction by the Australian Government was roundly applauded by the World Bank and the IMF as being timely, well directed and an entirely appropriate response. Plan B so easily swallowed (no DSK pun intended) that when Plan C comes along many Australians will willingly take the lure: yippee, another ‘free’ night of beer and pokies.
So what is Part C?
We know what Plart C looks like because the USA had no Part B. They don’t much like public works in the States (as evidence I offer those groping poor people expecting assistance that made Mitt’s stomach churn on 19/9) and consequently went straight from Part A to Part C.
PART C IS WHERE MONEY IS LAUNDERED from the public (read taxpayer) to private institutions to support, stabilise and strengthen failing companies. It doesn’t matter that these companies have been reporting false figures and breaking the rules of the ASX forever (in the case of the USA, NYSE rules). The last thing the ASX wants to do is damage its stock price. Yes, that I correct. Unbelievably, the ASX is listed on the ASX. How that is not a conflict of interest? The other thing the ASX does not want to do is be the cause of any doubts about the market. It is contrary to their interests to follow up on any unseemly activities of listed companies. Bizarre isn’t it. There it is again. Self regulation failing. Despite the efforts undertaken to convince us that this is an effective, efficient and realistic market tool, is amounts to nothing more than a sick joke. Greed and self interest always win the day. And if we are the beneficiaries of a rise in a stock price due to improprieties, what do we care? All the evidence suggests that cheating is fine so long as you are a shareholder deriving benefit. And not caught. However unlikely.
Why do we support so poorly disguised perversions? Well, we have been investing in the ASX for years. Our comfortable retirement depends on the value of these companies. Why would we not agree to stabilise at any cost rather than watch our future sucked down the drain? Is it better to have your future laundered to corporations through government ‘incentives’ and ‘stimulation packages’ than watch it fall in value to the point where it will reflect real market value? The myth that the market will find true value is busted. It is a furphy.
I’m not pretending that Part B wasn’t money laundering from the taxpayer to business in an attempt to falsely disguise and inflate the overall value of the ASX – but at least it had the good manners to do it in a way where there is arguably, some benefit to the contributing taxpayers.
In the USA, the laundering was much more contrived – Banks being propped up with billions of $ with few (if any) strings attached. CEO’s and Board Members continued to reward themselves with pay rises and performance bonuses despite gross financial mismanagement. Improprieties were ignored. No payback required. No consequences for the broken promises, the broken laws and the ‘forgotten’ regulations – the very mechanisms put in place to give the whole charade an air of respectability. The board felt that the ‘offer was too good to refuse’.
It’s starting to look as though we have been stumping-up for market profiteers. Not quite the way we planned to spend our retirement – bailing out multi-nationals and rogue traders. CEO’s getting platinum handshakes. Governments propping mismanaged companies and saving their shareholders from losing a bomb (hang on, that’s us!). All the while defrauding the public of their tax dollars. Cutting spending on health and education. Along with our Imperial Master the USA, in all probability we are one of the guinea-pig states for world best practise money laundering.
Aussie, Aussie, Aussie, Oi, Oi, Oi.
That’s right, world leaders.
Lucky us.
So as the tide goes out on our investments and our Superannuation disappears over the horizon (appropriately like a Western Australian sunset), we will be called upon to save ourselves by propping up businesses that are crucial to the ASX maintaining value. And when the money has been stripped from the small independent investors, the Superannuation Funds will follow. As was the case in the 1930’s, whilst the public sinks into a quagmire of debt, gloom and depression, the manipulators will pick the last scraps of flesh from the bones, and buy everything at ‘pennies in the dollar’. Don’t expect any thanks for your contribution. As Shakespeare said: ‘He who sups with the devil has need of a long spoon’. No, that spoon wont be long enough. Bad luck. Suckers.
If you love a literal metaphor you can’t go past the closing bell of a stock market. Just like Pavlov’s dog, the mearest hint and we start to salivate.
Post Script.
History repeats.
If what I have been saying seems eerily familiar, that’s because it is. (Like something you have been scraping together in the ashes of you mind … that place where reality and perception ignite, leaving you with a photo-negative shadow of what you think you might have understood for a second … was that a revelation … then you blink a couple of times and it’s gone).
Seems to me that people are starting to realise. There are too many gaps in the story for us to continue to believe. The party line does not stand up to scrutiny. Little inconsistencies. Continuity issues. Over-acting. It’s all so tawdry and B-Grade that unless you are a huge follower of – Soap, Social Networking, Mainstream Media sad experiments in “reality” television … choose your poison – then it appears almost surreal. And people actually believe it!!
We need to start asking questions. We need to start seeking representation. We should hold to account those that allegedly operate on our behalf. Do not allow yourself to be mis-represented. Not socially. Not politically. Not financially.
The die is cast and we are in for an interesting journey. We have been betting the farm on this system for almost 20 years.
Have you ever wondered why there are incentives to add wealth to SuperFunds? Call me a cynic, but I hardly imaging that it’s for our own good. The government long ago abandoned any pretence of governing for the people. Whoever governs, does so for Big Business and the media (which is Big Business).
Perhaps we can send a message of ‘unsubscribe’ and make a point through non-compliance – in so far as we are able. Divert Superannuation investment away from shares. Try to investment where there is open and transparent political, social and environmental consequences. This will be no easy task – upsetting the status quo is viewed suspiciously, conscientiousness objection frowned upon, non-compliance harassed, and revolution quickly crushed. The laws surrounding Superannuation investment – AKA ‘your retirement fund’ – are as much about choice as being in a dressing room with a couple of one-size-fits-all snuggies – both in black.
A considerable investment has been made in our acquiescence – dollar for dollar incentives in SuperSchemes matched by governments, tax exemptions, benefits, bonus schemes: all to get us cheering for the ASX. The concept has been marketed and executed brilliantly – simply put, just like the Boards and CEO’s of a multitude of organisations, we could not get enough.
A friend of mine has the mantra: ‘A mattress stuffed with cash is the solution …’ to which she adds “… a nice firm bed helps me sleep at night … no pun intended”.
I don’t believe her … that pun is quite clearly intended.