Links 5 February 2013

Here’s a list of things Reynard read over the weekend.

Global Macro/Markets:

  • Why do CFDs baffle the cops? – FT Alphaville
  • Securitization is basically the idea that introducing moral hazard can improve allocation of capital – Economist’s View
  • Shadow boxing with a very real (and large) system – FT Alphaville
  • No there probably isnt a bond bubble – Washington Post
  • Current Account: Currency War Will End in Apocalypse or Redemption – Wall Street Journal
  • Michael Lewis: The Trouble with Wall Street – New Republic
  • Markets might yet feel wrath of the central banking Gods – Euromoney
  • Too-Big-to-Fail Too Hard to Fix Amid Calls to Curb Banks – Bloomberg
  • Is this a good time to buy stocks? – Econbrowser

North America:

Europe:

Asia:

  • China’s politics of pollution: Oil giants take a choke hold on power – Reuters
  • China’s steel industry is in trouble – Xinhua
  • Great, and not so great, inflation expectations in Japan – FT Alphaville

Local:

  • Moodys downgrades Genworth & QBE LMI – The AFR
  • Negative gearing must go: Catherine Cashmore – Property Observor [Must read article]
  • Interest rates could be on the rise in 2013 – The Conversation
  • Property spruikers in the cross-hairs – Tasmanian Real Estate Trouble
  • Rate cut unlikely despite soft data – The Australian
  • Double blow to superannuation in just one week – The Australian
  • Better ways to build the nation – The Australian
  • Vic economy at standstill as major projects wind-up – The Age

Other:

Comments

  1. The party of the working man –

    “Before they introduce an unfair tax on people struggling to fund their own retirement via superannuation, Prime Minister Julia Gillard and Treasurer Wayne Swan should study the lessons of history…

    Treasury and the politicians are canvassing the taxing of those with superannuation fund balances of over $1 million, forgetting that the $1 million, if invested in bank deposits, would yield only $38,000 in income.

    Retiring Attorney General Nicola Roxon’s parliamentary superannuation is worth at least $10 million but she would not be taxed under the proposal being canvassed because her pension (like that of senior public servants) is virtually free so it is not declared ‘middle class welfare’.

    To tax unfortunates who receive no ‘free’ money but set hard earned cash aside to fund their retirement via superannuation, but are now struggling, is simply grossly unfair.”

    http://www.businessspectator.com.au/bs.nsf/Article/super-superannuation-Gillard-Swan-tax-cuts-pd20130205-4LSK2?OpenDocument&src=mp

    • I’m not going to defend politician superannuation payouts, but if you have a million bucks in super, you’re not, in any way, “struggling”.

      It’s also kind of hard to take anyone seriously that writes this (I can’t read the article so I’m relying on your quote):

      “Treasury and the politicians are canvassing the taxing of those with superannuation fund balances of over $1 million, forgetting that the $1 million, if invested in bank deposits, would yield only $38,000 in income.”

      As if you only live off the yield of your superannuation savings, rather than drawing down the principal as well.

      • If you start eating into the principal right from the start, you run a real risk of ending up with no capital at all long before death. The usual practice is to use up less than the yield in the early years, to allow capital to build up a bit more, then gradually increase the drawdown as you get older. Mind you, anyone with their superannuation solely in bank accounts has rocks in their head.

        You need to take into account the effect of inflation when assessing how long a superannuation lump sum will last. A million dollars might seem like a very substantial amount of super now, but will it still provide a decent income in 20 or 25 years time? Probably not.

        • A million dollars might seem like a very substantial amount of super now, but will it still provide a decent income in 20 or 25 years time? Probably not.

          Let’s not beat around the bush here. A nest egg of a million dollars in today’s money *IS* a very substantial amount of money and far more than the vast majority of people will ever have. To have accumulated that sort of super balance you’d have to have been earning in the top 5-10% for your entire life.

          Suffice to say that if you retired today at 65 and expected to make it to 90, you could draw down quite a bit more than $38k for the rest of your life. The argument the originally quoted article is making is a load of bollocks that doesn’t even stand up to a cursory examination.

          • Can’t disagree with anything there, smithy.

            But even “quite a bit more than $38k” is not exactly living high on the hog. Especially if it has to support two people. Also, it may have to last quite a bit longer than you suggest. Take a male turning 65. Wife is 58. She may easily live to more than 90, so the money may need to last more than 32 years.

            The problem is not that $1m is a lot to retire on, the problem is that few people have anything like this amount.

            As a result, almost all retirees depend to some extent on the government.

          • PS, fully agree that the BS article was, indeed, BS. The article originally referred to CGT as having been introduced in 1983, until I (and maybe many others) pointed out it was introduced in September 1985.

            Anyone who can’t get such basic facts right is not to be trusted on anything else.

        • From memory, the average super balance of the retiring baby boomer (male) is around $60K – havent got the latest APRA stats on me to verify..

          Most of the super clients I saw back when I was a FP had around $200-400K, only a very few had $1 million or more

          True, today’s Gen Y/X should aim for $1-2 million (nominal) amount by retirement, but most BB’s have got buckleys of having that much now or in the next 5-10 years, particularly if they held on to their shares during the GFC (massive opportunity cost).

          • The point is Chris, politicians of all bents generally preach to the false perception of their wanting a society of free, independent individuals who are financially self-reliant in retirement. But hey presto, no sooner is the government’s fiscal policies in difficulty, and we’re off to the races of many and varied ways for the politicians to get their hands back in your retirement savings pocket, essentially reversing their previous “encouragement” of said self-reliant, look-after-yourself-and-don’t-be-a-drain-on-the-taxpayer credo. And in the meantime, the hypocritical ****s waltz off into retirement in the lap of luxury, rolling in it, and all on the taxpayer’s purse, conveniently exempted from the very same “dip-our-hands-in-your-pockets” disguised thievery that applies to everyone else.

            Personally, I’ve less than 6 figures in super. Largely because I believe they’ll find ways to steal the lot long before I ever reach retirement. The issue at hand here is not who is wealthy and who isn’t, but the vile, disgusting, 100% self-serving hypocrisy of the entire political class.