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The demise of Ponzi democracy
Posted: 19 Mar 2014, 20:16
by UndercoverElephant
http://www.theautomaticearth.com/debt-r ... democracy/
Another superb article from the AE
Britain’s Institute of Economic Affairs (IEA) recently issued a report on the future of pensions and healthcare that reads as one big warning sign. But the chances that the warning will be heeded are slim to none, simply because the task is too daunting for both politicians and their voters to even begin to contemplate.
No politician who tells the truth about the report’s contents has a chance in frozen over hell of being elected, and thus the issues, which have been many decades in the making, will simply continue to be ignored by everyone. Until the dam breaks and perhaps the first shot is fired. But then it will be way too late. Not that it isn’t already. It’ll be interesting to see how people across the board claim ignorance and innocence, but it will of course do nothing to even come close to solving anything at all.
And frankly speaking, there are no solutions available within the present political system that could be executed and still let people get away relatively unscathed. We seem to have reached an inherent and built-in boundary and limitation of the democratic system, an event horizon of which we are bound to see a lot more going forward. What some 20 years ago Jay Hanson phrased as
“Democracy only works until people realize they can vote themselves an ever bigger piece of the pie”
Even without Peak Oil, the demographics are taking us over a cliff. The system was unsustainable anyway. Peak Oil is just the cherry on top.
Posted: 19 Mar 2014, 20:40
by biffvernon
Today's Budget included some significant changes to pension arrangements, followed by significant share price falls in the biggest pension providing insurance companies. Is there a connection?
Posted: 20 Mar 2014, 06:51
by AndySir
More apocalyptic language from the Institute for Economic Affairs - one might almost think they have an agenda that's been bought and paid for. It does seem that democracy is handling the demographic changes reasonably well. Not without pain and noise, but it certainly doesn't appear to spell the end of democracy and changes to pension rules which reference exactly this don't seem to make our politicians unelectable.
Posted: 20 Mar 2014, 08:08
by biffvernon
The pension annuities system was already damaged goods but Osborne seems to have taken the opportunity to all but kill it off. Are they dismantling the financial system ahead of its inevitable collapse?
Posted: 20 Mar 2014, 13:47
by UndercoverElephant
biffvernon wrote:The pension annuities system was already damaged goods but Osborne seems to have taken the opportunity to all but kill it off. Are they dismantling the financial system ahead of its inevitable collapse?
They are certainly dismantling a doomed pension system before its inevitable collapse.
Posted: 20 Mar 2014, 19:04
by raspberry-blower
On the Public Finance blog James Lloyd isn't overly impressed:
Osborne's pensions catastrophe
In one swoop, Budget 2014 destroyed UK pension policy. The chancellor’s announcement that individuals will no longer have to buy annuities is possibly the most catastrophically bad policy decision made by this government. It will almost certainly have to be reversed, if it can be.
Having worked in this sector this does smack of rats abandoning ship.
The pensions "industry" has been hit by years of under investment, bad management and, more recently, the financial crash and zero/minimal interest rates. Notwithstanding all this, given
a) the increased longevity of the UK population
b) the increase in the numbers of pensioners in the UK
c) the lack of replacement workers paying into the pension pot due to a variety of reasons
d) the economic slowdown as the effects LTG starts to make itself apparent
then a collapse in the pensions industry and in the standard of living for future pensioners is inevitable.
Posted: 20 Mar 2014, 19:29
by boisdevie
I'm in France. I'm 50 and never expect to get a pension. The maths just don't add up. Not only do we have a demographics timebomb with regards to pensions but also to the health service. At the moment we can afford to employ people on the minimum wage to wipe the arses of old people. When I"m old I don't think I'll be able to rely on anyone to do it.
My solution is easy. Once I"m feeling frail I'll do a bank robbery and end up in a nice cosy cell on three squares a day.
Posted: 20 Mar 2014, 21:19
by raspberry-blower
boisdevie wrote:I'm in France. I'm 50 and never expect to get a pension. The maths just don't add up. Not only do we have a demographics timebomb with regards to pensions but also to the health service. At the moment we can afford to employ people on the minimum wage to wipe the arses of old people. When I"m old I don't think I'll be able to rely on anyone to do it.
My solution is easy. Once I"m feeling frail I'll do a bank robbery and end up in a nice cosy cell on three squares a day.
The other alternative is to become a CEO of a big bank - you'll end up getting the keys to the BoE's printing press* when your felony comes to light
On a more serious note, there are a lot of people who will be seriously cheesed off when they discover that their pensions won't be anything like the amounts promised to them all those years ago when we had the opt-outs and suchlike.
Our financial service sector excels at foisting worthless products onto an unsuspecting public
* Actually all the coins and notes are nowadays printed by De La Rue although 97% of all money in circulation is electronically created by "private" banks
Posted: 20 Mar 2014, 22:20
by Catweazle
I see the pensions reforms as a short term attempt to get more money into the economy and sod the future. It's going to be really messy.
Posted: 21 Mar 2014, 10:11
by emordnilap
We've been aware of the pensions impossibility for some time now; what form the changes were going to take, we couldn't guess. But there's no surprises.
Two generations, or three at most, of a handful of people enjoyed the apogee of the fossil fuels bonanza, having all the toys and being able to retire early in relative good health. How pathetic an achievement for such a clever animal.
Posted: 21 Mar 2014, 13:44
by SleeperService
Catweazle wrote:I see the pensions reforms as a short term attempt to get more money into the economy and sod the future. It's going to be really messy.
I'd agree with that.
Annuities are unusual in that they pay a rate for the life of the policy. They are the investment instruments that allowed Final Salary pensions to happen (for some, for a while).
emordnilap just about sums up my feelings too.
Posted: 21 Mar 2014, 15:03
by Atman
What are the chances or people aged 20, 30, 40, 50 receiving their pensions? People I know speak as if BAU will proceed until 2050 onwards and the money they contribute will be locked safe away for them to spend during retirement.
Posted: 21 Mar 2014, 19:46
by UndercoverElephant
Atman wrote:What are the chances or people aged 20, 30, 40, 50 receiving their pensions?
The younger they are, the less their pension will actually be worth. They will get pensions, but they will fall well short of what is required to live on. The age of retirement is also likely to rise well above 70.
Posted: 21 Mar 2014, 20:07
by Atman
UndercoverElephant wrote:Atman wrote:What are the chances or people aged 20, 30, 40, 50 receiving their pensions?
The younger they are, the less their pension will actually be worth. They will get pensions, but they will fall well short of what is required to live on. The age of retirement is also likely to rise well above 70.
As retirement ages increase and if life expectancies decrease, it could be a nice earner for the government to not have to pay out pensions. If I'm George Osbourne I'd be making sure that worker's die younger from quick deaths that don't drain the NHS, so that I can keep the pension money to plug holes in the budget. Now the war on drugs and legality of tobacco and alcohol all makes sense.
Posted: 21 Mar 2014, 20:43
by SleeperService
Atman wrote:What are the chances or people aged 20, 30, 40, 50 receiving their pensions? People I know speak as if BAU will proceed until 2050 onwards and the money they contribute will be locked safe away for them to spend during retirement.
Those at 50 will see some pension benefit but it will taper away until those aged less than 30 will see nothing. Why? You may ask well...
HM Govt seems determined to remove as much wealth from the general population as possible. Pensions could be reassessed based on current life expectancy, earnings and the higher retirement age. But this hasn't happened for 95+% of the population.
Those in retirement now or entering it in the next (very) few years will take their money while the black holes in most pension schemes get larger until there is nothing left. The best hope for many is that the funds will be rationed to spread the burden but I doubt this will happen.
So, no new entrants to schemes plus companies reducing contributions plus lower than hoped for returns on investment mean a shortfall that there isn't enough money in the country to cover.
I can honestly see no way out. I wish I could. Sorry.