Howard’s battlers
Economics - - Posted on October, 27 at 9:28 pm by Ken L
Bernard Keane expresses my sentiments eloquently in Crikey today. The current financial crisis is really bringing out the entitlement mentality that so many middle class Australians seem to share, whether it’s an entitlement to taxpayer-subsidised private schooling, or private health care, or private aged care, or in this instance, a taxpayer guarantee that your investments can only ever go up and never down.
Milne wrote a tendentious piece yesterday, bemoaning the horrible unfairness of investors not getting the same government protection that bank depositors got. In typical tabloid journalism style the story was based on the (alleged) facts of one individual’s circumstances: Greg Russell - a bloke who seems to have been singularly inept in managing his financial affairs if the information in the story is correct.
But the way these roosters try to have it both ways was glaringly apparent in this bloke’s absurd response to suggestions that he apply for assistance from Centrelink:
“It’s a complete joke,” Mr Russell said. “Imagine how the staff at Centrelink are going to cope with my circumstances.
“Wayne Swan is clutching at straws. There’s pride involved here, as well.
“Self-funded retirees don’t want to be lining up at Centrelink. He’s run out of ideas. They don’t know what’s going on.
Heaven forfend that a small businesman who can’t manage his money should have to demean himself by entering a Centrelink office, just like a common welfare cheat. And Greg your outrage would invite more sympathy if you could explain why you had apparently invested the whole of your savings in an account with a single firm, East Coast Mortgage Company - an organisation which explains clearly enough that ‘Your investment is not guaranteed and neither is the distribution of income or the rate of distribution.’
Which bit of that was hard to understand, Greg? Did you never pause to wonder why such statements are placed prominently on investment vehicles but not on bank deposit accounts?
As Keane asks, ‘Why don’t we guarantee all listed companies while we’re at it?’ I would go further; many people have entered into financial commitments on the assumption that their investment properties would keep appreciating. It would be completely unfair if the government didn’t now extend a guarantee to all owners of real estate that they will be protected against any fall in value.
The very expression ’self-funded retiree’ is objectionable. Its implicit message is that the person being labelled is of a superior quality, someone who’s conscientiously relieved the community of the cost of paying for their retirement. Once upon a time everyone was expected to take responsibility for their own lives and we had a safety net of welfare payments to support the minority who couldn’t manage to do it. Now this has been turned on its head and people who aren’t eligible for welfare claim some sort of exceptional standing in society - while they shamelessly hold their hands out for as many gifts from the government as they can wangle.
There was another one on the 7.30 Report tonight: Eleonore Henry, being interviewed in an apartment that looked a bloody sight nicer than anything I’ve ever lived in (or wanted to). She was described as having ‘a self-managed superannuation portfolio that pays her a self-funded pension’ … as if she had selflessly set out to relieve the poor old taxpayer of this burden. And what thanks had she got? SFA.
She complained that ‘the Prime Minister promised to help the banks, but he hasn’t promised to help all the other financial businesses’. I’m sure only her breeding prevented her telling us what she really thought of Kevin Rudd and Wayne Swan for acting so unfairly. Clearly she had no conception whatsoever that returns were in any way related to something called ‘risk’. For many, risk seems to be an abstract notion that could never be expected to raise its ugly head in real life. For Eleonore, government is just a magic pudding that endlessly helps people by giving them money, and none are so deserving of help as the misleadingly-named self-funded retirees.
As Keane observes when asking why these people still have all their money in mortgage-linked investments:
Or did they just not like the idea of taking a lower return on a safer investment? One imagines that if these people received supernormal returns on their investments, they wouldn’t be offering the excess to the taxpayer. But they expect the taxpayer to come to their aid when they have to deal with consequences of their own financial decision-making.
Someone should tell Eleonore and Greg that bank deposits are not investments. They don’t appreciate in value. Indeed many of them pay a pathetic rate of interest or none at all. Many smart operators over the last 10 years would roar with laughter or stare open-mouthed at the news that an acquaintance would be so foolish as to have money in an ordinary savings bank account.
They get bugger-all return because they are supposed to be secure. Wayne Swan started to get the message across in the news tonight and I hope he and everyone else in the government does a lot more explanation of basic financial concepts in the coming months. We can’t expect idiots like Milne to understand them but if a few members of the middle class understand that they have to weigh the current problems against the bounty of the last 10 years, we might start to get a more balanced perspective on the present drama.
UPDATE: more on similar lines from Mark at LP.
Posted in Economics |
October 27th, 2008 at 11:59 pm
There are so many people who simply have had faith in the money system,including the reverse mortgage thing that a lot of elder Australians took up,that,its almost impossible to think they can work themselves out of any of this.But at the same time,is Rudd still financing the present working public servants their superannuation,which was disregarded for some years by government!?All these failures have further repercussions like ill health.The mortgage finance people,aught to see if they can use their locked monies to find some way of investing in things that may still be considered by those who are opting out.Like the vibrational exercisers machines from the U.S.A. that you just stand on them fora small time and muscle tone is improved,a work out that isnt.Nexus Magazine has for years been promoting an Australian Zen Chi exerciser,where you lie down on your back and it kicks your legs around for about ten minutes.Reluctantly for a couple of years I didn’t use it and my well being went down quick.I am sure if these were available,the American jobs at chemists,and everywhere else for a quick tone,the general health of Australian would improve.As someone who accepts welfare,I think some of these people you refer to,are full of TV shit really.Centrelink as staff are pretty well qualified,being poor is a survival mode reality that comes with many surprises,not often bad.The problem maybe,that the present welfare system could become overloaded,which probably means criticising these people,is both ineffectual,and not really creative.They will probably have time to agree,and their senses of superiority,maybe ,based on not wanting centrelink assistance.This country has seen that before.They must forge links with people like themselves,and as groups of people locally and national,maybe able to survive well,if Centrelink is also working those processes.In fact,even today,they may have assets,that they dont need to give away,or to be valued as a further penalty.Attitude locations and willingness ,may get them out of the rut.Multiple what advantages they still may have now extending to others,in a careful and government oversighted way,seems like the only way to go.The staff of these financiers should meet regularly with their clients in these circumstances,to thrash out matters amongst themselves,and possibly still try to enjoy what they normally would,but in a larger number better organized,out of necessity.
October 28th, 2008 at 12:20 am
Slightly off-topic, but the mention of “risk” got me thinking…
I see the same overwrought, incredulous reaction from the meeja when one of our soldiers dies in battle. Those dickheads did bugger-all to encourage open debate about our commitment. But that doesn’t soften their outrage when a digger falls. How DARE someone shoot back!
War is risky. Moreso for civilians.
October 28th, 2008 at 9:43 am
It’s not really off topic Mars. Howard worked as hard on the glorification of fallen soldiers and Anzac Day as he did on the glorification of the self funded retiree, the stay at home mum, the private school student, the private health insurance holder and the resident of Cronulla.
Watching the woman on the 7.30 Report with her young relative and their ham salad sandwiches I wondered if the younger woman was one of the 42% of the upstanding, model citizen, middle class who effectively pay no tax.
We’ve had a lot of our ‘values’ recrafted for us.
October 28th, 2008 at 12:21 pm
It’s bloody hard being middle-class and white. EVERYONE is out to get you!
October 28th, 2008 at 1:03 pm
You wonder why people have their money in sophisticated instruments like mortgage funds until you realise that retirees are advised to put their savings in these instruments so they can access old age pensions or part pensions.
So once again we see the hand of the financial industry getting government legislation changed to force people to use their products. How I wish Howard really was all for competition and really against government subsidies for deserving industry.
Of course those people with deposits of more than $1 million would not be able to access Centrelink pensions anyway.
I met a white faced woman at the Transurban shareholders meeting who is wondering how her mother’s shares will generate enough income to pay her nursing home fees.
I remember the financial pain that was felt in the Geelong region for upto a decade after the collapse of Pyramid Building Society. I feel no sympathy for the small business man who parked his money in a mortgage fund for so long in these economic conditions.
October 28th, 2008 at 2:21 pm
And not just the glorification of the chosen, Lyn, but also the demonisation of \\\’others\\\’. I can remember when the unemployed were regarded with sympathy and compassion. I\\\’m sure that another term of Howard would have seen \\\’unfunded\\\’ pensioners receive the same treatment that was handed out to the unemployed, refugees, single mums, unionists and everyone else on Howard\\\’s black list. We would have been made to feel like we were an unmitigated bludging drain on the public purse if we dared to send our children to public schools.
October 28th, 2008 at 2:52 pm
“until you realise that retirees are advised to put their savings in these instruments so they can access old age pensions or part pensions”
that’s what they get for listening to “cash for comment” radio jocks & financial advisers w/ moolah & yachts on their minds.
To get a sense of how class-ridden and “race to the top at all costs” Australia has become under the rule of the corporate aristocracy, you only had to listen to those prissy, anxiety-ridden Mums on ABC TV the other night -those willing to make life changing changes…like downsizing their mansions & giving up the extra cars…all to keep their PRECIOUS kids in “corridor to upper echelon world” private schools.
The impression I got was they would even sell some of the family silver in order to keep their “well bred” ones as far as possible away from the plague-ridden, vermin dominated, “run on the smell of an oily rag” State schools.
Brings back memories of some of the trosh/trash (take your pick)I’d hear from the desperate to “be something” in the UK. “Must speak a certain way”, “Must send the youngsters to certain schools”, “Must shop at the blaaah, blaah”…
yep, control freaks & insecure bigots w/ “Hyacinth Bucket Syndrome”…wasting valuable years “keeping up appearances”…& demanding that governments fulfil their DESIRES at the expense of THE MANY.
Excellent piece Ken.
N’
October 28th, 2008 at 5:01 pm
All those investors will never get a balanced perspective on the present drama because they expected and now demand their blue-ribbon investments to be ‘no risk.’
As Ken says, I’ve heard many a wise-arse chortling over recent years “You’d have to be nuts to put your savings in a frigging bank!”
They still don’t see why those ‘nuts’ parked their money in banks: security.
October 28th, 2008 at 7:04 pm
“When I use a word, it means whatever I want it to mean.”
Free enterprise? Market forces?
“One can’t believe impossible things.”
“I daresay you haven’t had much practice,” said the Queen. “When I was your age, I always did it for half-an-hour a day. Why, sometimes I’ve believed as many as six impossible things before breakfast.”
Quick, easy money. And safe. Investors prefer to believe in the fantasy. Politicians want them to. Harsh reality will be kept at arm’s length for as long as possible.
October 28th, 2008 at 11:24 pm
The so called self funded retirees are often really taxpayer funded retirees who had sufficient disposable income and wealth to take advantage of the outrageously generous tax concession available to people putting money into superannuation. Their retirement has been funded by avoiding paying their fair share of tax. That they are so ready to ride on the coat tails of genuinely needy pensioners to justify increases in concessions to themselves when they can have assets exceeding $800000 ( plus the family home ) shows their true colors.
November 2nd, 2008 at 9:58 am
The housing bubble was the Prime Miniature’s friend. It promoted the illusion of “growth and prosperity” in the suburbs.
But it wasn’t hard to see that the magic pudding was a myth… if you could be bothered tuning away from the new plasma to look.
Still we’re not in as big a hole (numerically) as the US:
One in Five Homeowners with Mortgages Under Water
Fri Oct 31, 2008
By Jonathan Stempel
NEW YORK (Reuters) - Nearly one in five U.S. mortgage borrowers owe more to lenders than their homes are worth, and the rate may soon approach one in four as housing prices fall and the economy weakens, a report on Friday shows.
About 7.63 million properties, or 18 percent, had negative equity in September, and another 2.1 million will follow if home prices fall another 5 percent…
But straaaya sort-of, kinda, almost, probably immune, right Kevin?