By now you should have worked out that your editor is not a fan of government. Regardless of the colour and political persuasion, all government parties and government opposition parties are corrupt.
You can see that by the horseplay at the federal level and in New South Wales in recent weeks. Their only concern is to gain power so they can grab taxpayer money to spend on their own favourite projects.
However, there is one policy that we would like a government to implement – right before government itself is abolished – and that is for all actuaries to be made illegal.
I’ll explain why in a moment. But before I do, a quick note on the debacle in Copenhagen, which ties in to today’s Money Morning.
If you’ve visited the Money Morning website you’ll have seen our band of bloggers have been quite active on the subject. Your editor writes about crazy Keynesian economists, so the bloggers make comments about Climate Change.
Your editor writes about ratings agencies which causes the bloggers to make comments about Climate Change. But that’s alright, we don’t mind at all. In fact we’ve even acquired our own unofficial ‘Climate Change Correspondent’ who goes under the name of ‘cb’.
It seems ‘cb’ has posted a number of comments and even links to other websites. We haven’t had the time to look at all of them yet, but what we have read so far makes for pretty revealing reading.
If you’d like to leave your own comments feel free to do so. The more the merrier. Even if you disagree with your editor that shouldn’t stop you from making a comment. There are quite a number of posts which “dare” us to post their comment, so we do. But don’t worry, even if you don’t “dare” us, we’ll still post it.
In fact, providing you keep the language clean we don’t censor any comments.
But aside from that, you may have heard about the stink caused by a secret drafting of an agreement that is to be put to delegates at Copenhagen. You can download the full document here.
Naturally enough, the fuss has been because developing and island nations don’t believe they’re getting enough money. Which says it all really. They didn’t protest in the streets because of rising sea levels or warmer temperatures.
They protested in the streets because they don’t believe USD$10 billion per year is enough cash.
They shouldn’t worry though, because if Copenhagen only costs taxpayers USD$10 billion per year then you can count that as a victory. Because if you look at points 20, 21 and 22 in the document you’ll soon figure out the number is going to be much, much higher:
“International public finance support to developing countries [should/shall] reach the order of [X] billion USD in 2020 on the basis of appropriate increases in mitigation and adaptation efforts by developing countries.”
Obviously they’re still filling in the gaps. Any guesses on what the ‘X’ billion will be?
It’ll be a lot more than USD$10 billion, we know that for sure.
And whatever number they come up with it’ll only get more expensive for taxpayers as time goes on:
“The Parties commit to regularly review appropriateness of contributions and the circle of contributors against indicators of fairness based on GDP and emissions levels and taking into account the level of development as set forth in Attachment C.”
In other words, once this document is signed, future governments are locked in to paying out more and more cash each year. And no country is going to fight to reduce their contribution are they?
Not on something as important as Climate Change.
Then point 22 reveals that a Climate Fund will be established with:
“Parties commit to allocate an initial amount of [$x] to the Fund as part of their international public climate support.”
Again, we’re not talking chicken feed here. They’ve backed taxpayers and themselves into a corner.
You can’t go on about sea levels rising by six metres and Antarctic ice shelves collapsing causing ice bergs to hurtle towards Western Australia, only to donate a second hand totem tennis set and a $50 Myer gift voucher.
The biggest ever fear campaign – bigger than SARS, AIDS, Y2K, Swine Flu, and even bigger than the fear of Mark Latham becoming PM – must be accompanied by the biggest ever funding promise.
How big? No idea. But surely the benchmark is the $43 billion the Australian government has pledged for the funding of the national broadband network (NBN). How can the government logically spend any less?
Think about it, if the Australian government offers to contribute less than $43 billion to the UN programme then it’s admitting that combating alleged Climate Change is less important than you being able to download the latest Miley Cyrus hit in three seconds.
That’s the thing with spending by the coercive (public) sector. Its only benchmark is spending. It can’t or won’t measure the return because that’ll only highlight how inefficient and pathetic the coercive sector is.
So each bold new plan has to be more expensive than the previous one. And in the case of Climate Change the spending will have to be the biggest ever.
But how on earth will the government pay for it? Raising taxes perhaps? Not yet it seems. Or, not direct taxes anyway.
I’ve shown you the table from the Department of Climate Change. That shows the ‘generosity’ of the government in that it will take with one hand – higher bills – but then give some of it back with the other – government benefit payments.
And that brings us back to the abolition of actuaries. You know what they are, they’re the boffins who crunch the numbers for insurance companies, working out how much a premium should be based on the likelihood of an event happening.
Anyway, two actuarial boffins, Professor Michael Sherris and Associate Professor John Evans (remember that ‘Professor’ is a job title not a qualification) have concluded that:
“It is difficult o see how the private sector could develop efficiently priced annuities that would be attractive to retirees… a public sector solution is likely to be the most efficient, provided the annuitisation is compulsory.”
Money Morning reader Robert drew our attention to the comments. The comments were in a report commissioned by Australia’s most dangerous and powerful man – treasury secretary Emperor Ken Henry.
You can download the full document here.
You know what they say about commissioning reports, “don’t do it unless you know the outcome.“
Is it really possible that Ken Henry and his cronies would commission a report on compulsory annuities unless it was high up on the list of priorities?
Of course not.
But let’s take a step back. What is this whole thing about?
Well, if you’ve read Money Morning for a while you’ll be aware that earlier this year I warned you the government had a secret plan to “steal your super.” Of course we were told that would never happen, people would never stand for it.
Wrong, we declared. Not only will the government do it, but they’ll do it soon.
Our rationale is that with $1 trillion tucked away in superannuation funds, it was inconceivable that the government wouldn’t want to get its dirty paws on it.
When stimulus programmes, and ‘shovel ready’ building projects are all the rage, getting access to a pot of cash to fund those programmes would be like finding the pot of gold at the end of the rainbow.
After all, why commit electoral suicide by raising taxes when the government can just use a clever ruse to ‘encourage’ individuals to hand over their superannuation funds instead.
And if the Emperor Ken Henry accepts and recommends the submission from the two professors, that’s exactly what will happen. Except they won’t need to encourage people. Oh no, when you’re in government you can go much further than that…
The most distasteful part of it is the final comment from the submission:
“The estimated premiums clearly show that greatest efficiency is achieved through the compulsory conversion of superannuation benefits to annuities through a public sector arrangement.”
Got that, “compulsory.” The 9% that comes out of your pay every year and which goes into the super fund which you think is yours, will – under this proposal – be compulsorily acquired by the government as soon as you retire.
Imagine the uproar if the government proposed compulsorily acquiring your house on retirement. But instead of giving you the proceeds it kept it but then paid the rent for you to live in a rundown block of flats.
Would you agree to that?
Because that’s the exact comparison. We’re not sure what planet these two actuarial profs are living on, but it isn’t this one. Because in this world the government is the least efficient entity there is.
The private sector may not be perfect – although in a free market it would be because success and failure would be determined by the market not by government – but even the manipulated market system we have now is better than anything a monopoly government system could come up with.
We wonder if these profs are familiar with the current Aged Pension system. They can’t be. Because if they were they would see just how efficient the government is at managing a retirement programme.
It’s astounding that in their 40-page report they don’t make a single reference to the existing “annuity” modeled Aged Pension. How could they miss that out of their analysis?
Think about what the Aged Pension is. You pay ‘yer’ taxes for most of your life and then at the end of it the government pays you an income. Not that dissimilar to an annuity.
Well how successful has that been? It hasn’t, it’s rubbish. And now Emperor Henry is considering Aged Pension II – The Emperor Strikes Back!
As I mentioned, we warned you about this months ago. And now it looks as though it’s happening. And that in a roundabout way answers our question from earlier – how will the government pay for its Climate Change commitments?
It’s pretty simple when you’ve got access to $1 trillion worth of savings. There’s bound to be a few bob left over after building new roads, bridges, hospital wings and school gymnasiums.
There is absolutely no doubt whatsoever, that your superannuation funds, after being compulsorily acquired by the government on your retirement, will be ‘invested’ in Climate Change programmes too.
Whether the ‘investments’ will be overt or covert is irrelevant. Overt investments will be in subsidizing uneconomical ‘green’ technologies. And covert ‘investments’ will… well, they won’t be investments at all.
They’ll be contributions to Climate Change slush funds. And just like every other government programme they won’t return a single dollar of profit. That means your super fund money will have disappeared into a big black hole, never to return.
The embezzlement of your retirement savings will result in the government having to reduce your benefits which it will do through inflation, slowly eroding the value of your dollar so that like Aged Pension I you’ll be forced to live out your autumn years eating tinned hot dogs and stale bread.
If the Stable Climate Deniers still think that Copenhagen and Climate Change policies are all about saving the planet then they’re sorely mistaken, and perhaps they’re living on the same planet as the two learned profs.
Because it’s about nothing more than lining the pockets of the politician’s favoured special interest groups and ensuring that they can climb to ever higher levels of power.
Cheers.
Kris.
60-Second Market Round Up
by Shae Smith
The S&P/ASX200 finished down yesterday to 4,637.90, down by 32 points. The index has opened down this morning.
The Dow Jones Industrial Average gained 51 points last night, closing to 10,337.05. A board member of Goldman Sachs Group Inc [NYSE: GS] has announced that the firm is taking a ‘very hard look’ at the bonus structure. Funnily enough, public outrage is the reason why they are reviewing this.
The FTSE didn’t know which direction to take overnight, but ended up closing to 5,203.89, lower by 19 points. Despite the news of the one-off bonus tax being announced yesterday, most of the major banks ended higher.
The Nikkei was down was down yesterday by 135 points to 10,004.72. The Japanese Prime Minister, Yukio Hatoyama believes the 7.2 trillion yen (AUD$89 billion) stimulus package will help the country avoid recession next year. Read more here.
Gold was lower again overnight, but many have attributed the decline to profit taking and closing out trades preparing for the end of 2009.
The price of spot gold in Australian dollars is trading at $1,240.87, while in US Dollars it is trading at $1,128.45. The price of silver in Aussie dollars is $19.12 and in US Dollars it is $17.39.
The Aussie dollar versus the US dollar is trading at USD$0.9098, and against the Japanese Yen JPY79.97
Overnight, Crude oil was down again, closing at USD$70.67.
For the biggest movers on the market yesterday click here…
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As a managing director of a company in Australia there are heavy penalties for trading while insolvent.
So how come the resident geniuses in Canberra can run up a huge future debt, with more to come, and keep on trading?
Hi cb. – You see I didn’t think it at all cryptic.
I have largely stayed out of the climate change debate here and on other blogs, partly because I don’t know 100% either way, but I suspect that Sayce and others here are really in the same boat but would rather not admit that.
I do have some faith in the climate change science, but I also know that many will be trying to build their empire on the theory. That always happens.
The catch for me is that I would rather be wrong and take some action against pollution, than be wrong by NOT taking action. If the theory is correct the downside will be catastrophic. A human starts experiencing organ failure at 45 degrees centrigade, if he/she can’t cool their body with the evaporation of perspiration, cooling breezes etc. Summer temperatures in Melbourne and Adelaide are close to that at peak now, not to mention many inland centres, so a few degrees extra will kill people in our communities. Humans are not machines.
It will also reduce food production significantly, at a time when we are ever more dependant on that for a growing global population.
No food = war.
Hence my Easter Island quip. Although the islanders were wiped out by smallpox in the end, that just sped up the process, it didn’t change the outcome.
If the worst case scenario means that the world spends large sums of money on cleaner air, then I’m ok with that as long as each country spends an equitable amount. As with any new concept, I really expect them to get the initial strategies wrong, and then fine tune them later. I think that phase is unavoidable.
cb I know that you and the others have an entirely different view, but that is mine. Best of Luck……
Fair points, PF, and I would agree with everything you have said about cleaning up our air, water and soil of known and proven pollutants, but this is not what they are proposing to do. Instead, they are focusing their efforts on an inert gas, CO2, which according to all the available evidence is not harmful, but beneficial to plant and animal life on the planet. Plus, there is no reason to believe that higher concentrations of this gas in the atmosphere causes any noticeable or measurable change in global temperatures, full stop. If science proceeded by head count, which it does not, then the vast majority of scientists around the globe hold this view, in opposition to the warm-mongering alarmist minority. That much is clear. If science supported the warm-mongers’s allegations, they would not have had to fudge, hide, lie about the data and threaten and intimidate dissenters.
Besides, the proposal is clearly not designed to ensure reduced emissions and pollution we shoud clean up, but collect big money for the privilege to pollute. There is a difference. A big difference.
And, finally, the argument that we should be willing to do something if everybody else will agree to do the same thing is hardly the most appropriate way to arrive at our own decision. Just because some crackpot sells enough purists on the virtues of being teetotallers,
and then seeks to enforce a general prohibition on all alcohol, it does not mean that it would be a sensible thing to agree to a prohibition. And, that, even in a case where science is pretty much uncontroversial about the pros and cons of the effects of drinking on health.
And, PF, the problem is not just the science and the cheating that has been exposed there through Climategate. An equally big problem is the lack of consultation and the political propaganda and hidden agendas that are slowly coming to light about the whole affair. Our fair democracy has been whittled down to a sorry state where our leaders are hiding, fudging, and lying to the people about all manner of things with regard to what they are doing and planning for us, in our name, and allegedly all for our own good.
Quite apart from the offensive paternalism being implied by what the govt is doing at the moment, you have to start worrying about what is up their sleeves. As an indication, I will paste in here the latest post on this by Bolt, but if you click on the link, it will give you more links and references that you can check up on.
http://blogs.news.com.au/heraldsun/andrewbolt/index.php/heraldsun/comments/this_reckless_spending_must_stop1/
“This reckless spending must stop
Andrew Bolt – Sunday, December 13, 09 (09:05 am)
Exactly how much of our money is Kevin Rudd shipping off to the United Nations, to pass on as a bribe to countries such as China?
Answer? He won’t tell you:
AUSTRALIA faces having to make a hefty payout to help developing countries such as China and India cope with climate change in order to clinch a deal in Copenhagen. ..
“There are a range of figures flying around,” Senator Wong said. “(British Prime Minister) Gordon Brown has proposed a $100 billion mix of public and private money. We have not indicated a figure but we have indicated we’re prepared to do our fair share.”
Same story two weeks ago at the Commonwealth Heads of Government Meeting, where Rudd also promised away our cash for support for his global warming plans:
The Commonwealth plan for the so-called “Fast Start” fund calls for developed countries in the 53-nation group to spend $10 billion a year until at least 2012.
And again Rudd wouldn’t come clean on what he’d given away:
He decline(d) to put a figure on the funding, saying it was still to be determined.
And, wait, there’s more:
Prime Minister Kevin Rudd has previously backed a separate $US10 billion climate fund in talks with US President Barack Obama and Mr Brown.
How many billions of your money will be sent overseas by Kevin Rudd in his crazed crusade to “stop” a warming that seems to have stopped already? “
cb – fair enough, I don’t want to argue as everyone is entitled to their view on this, but I won’t be getting my scientific information from either Andrew Bolt or Kris Sayce. I will consult someone who knows more than them, and look for some substantive research.
At this point I am ok with being wrong on the issue. The alternative is too terrible to contemplate.
I think that we have to allow the world’s leaders to formulate a plan. I have read the other posters here who feel that the leaders can’t get that done, but that excessively negative point of view will never achieve anything. It is far too defeatist for my liking.
Take care..
Sure, I think the world’s leaders were allowed to formulate and carry out their plans, pretty much through history. Not a very encouraging record, I must say, and we probably have an equally rough road ahead of ut, I suspect. But, as you probably would agree, we should keep good cheer, life will go on regardless.
we could literally have a free energy world ..but @ the end of day its not about FORWARDING ,ADVANCING ALL PEOPLE ON THIS WORLD
its about growing people as “sheeple” & then just fleecing them
& in saying so
i see this as a NEW TAX ,REVENUE to pay for the countries DEFECIETS
like the gst ,speed cameras ,parking fines ,wat-have-you
ITS JUST ANOTHER COST>>TAX
WAKE UP!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
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