Category Archives: Finance

July 19, 2013 · 15:44

The Setting of strategies

The danger of any person trying to look through the mud that we know as political strategies related to ‘what is real’ and ‘what is unlikely’. There is no ‘non-reality’!
We know that certain steps have been staged (as a good politician would). This staging is not unlike the game ‘GO’ where we place the pebbles in such a way that entices to other to place their pebbles, completing our strategies.

This I discussed in last week’s blog involving the fading pension plans. Yes, and as suspected, whilst Dutch politicians are in vacation mode, the Dutch pension funds are now filling the Dutch with dread of a possible 10%-20% loss of retirement. That is some fear in their world of quick rising prices. (www.nos.nl)

Today is not about that, even though there are possible links! Today it is about renewed issues on telephone taps and how the powerful Murdoch gets another painted target. Yet are his words so wrong? We had the phone tap probe, we have seen the Leveson report, and instead of actually acting on the Leveson report as much as possible. Parties involved seem to be having another go at Rupert ‘the Piñata’ Murdoch. A lot or the press is getting a little sour as words are hashed and rehashed into statements of whatever they could be called.

You see, is this an ACTUAL criminal investigation, you know the one with barristers, judges and both parties taking notice of the evidence act?

Or is this another inquiry that has gone on for two years, giving more visibility to Chairman Keith Vaz and a few other political head honcho’s? Do not think that I am on Mr Murdoch’s side. I will instantly stand by the views of Hugh Grant and Lord Justice Leveson in the attack on the events that surrounded phone hacking, and not just the Sun/News of the world.

There is however the valid thought that cooperation is required and should be given. However the following quote “The committee has heard from the Metropolitan Police’s assistant commissioner Cressida Dick that since May ‘voluntary co-operation (with News UK) has been significantly reduced’ and that police have had to obtain court orders regards ‘requests for new material’“.

Is that the issue? This has gone on for 2 years now. Is thus the statement by Mr Murdoch “totally incompetent” when it comes to describing the acts by the Metropolitan Police entirely wrong? If this has gone on now for 2 years, then yes, I think it is time to look at the questions being asked, and asking additional relevant questions to the investigating offices.

Not doing so could turn this entire phone hacking scandal into a fair label of ‘Witch hunt’ and as such, I would see this as the premise to attack the Leveson report. This is because the two are linked. I remain in favour of implementing the entire Leveson report. Not because I am so much in the know of things, but because I have utter faith in the wisdom of Lord Justice Leveson. Those who claim to know and judge the report as invalid, whilst not in possession of a Law doctorate are required to remain very silent on the matter, unless they show actual valid documentation! I admit that this is slightly strong wording, yet having listened to a few people blatantly attacking the Leveson report in favour of unmonitored freedom of the press, after which I asked in regards to the reports footnote 417 in regards to the accuracy of information, their….. ‘emotional repartee’ in my direction gave me what I needed to know. (They had no clue, or better stated, having never read the Leveson report).

By the way, that footnote is “Clause 1(i) of the PCC Code requires the press to take care not to publish inaccurate, misleading or distorted information, including pictures” (page 673, Leveson report).

If we could only apply this requirement to advertisements at times! (Big Smiles).

So we must prevent that these events to ‘evolve’ into a witch hunt. I am NOT stating that this is happening, but after 2 years that image is starting to linger and that is wrong too. My issue is with the statement that was in that same Sky news article (at http://news.sky.com/story/1117618/murdoch-phone-hacking-probe-excessive)

“In his letter he set out how the company disclosed 500,000 documents after 185,000 man hours at a cost of more than £65m.” When the coffers are at minus 1 trillion and student costs are growing and growing, these costs are only excessive if the government is not able to make Mr Murdoch pay for these costs.

I personally have always been to mind that once we need to focus and stretch the actual letter of speech, we lose facts of what is the goal. Basically, in these words I am wondering whether the committee has lost the view of the Big picture. (My apologies if I am incorrect).

So where is the issue of strategy? Well, if we read the “The Leveson Report: implementation” (at http://www.parliament.uk/briefing-papers/SN06535), then at 6.5 (in the full PDF version) we see some additional delays in implementing the Royal charter. I quote: “Lord Wallace of Saltaire: My Lords, my briefing says that it is not appropriate for the Privy Council to consider more than one royal charter at a time on the same issue. The noble Lord may consider that the Press Standards Board of Finance has therefore been extremely clever in what it has done and may draw his conclusions from that – and that accounts for some of the delay.”

So we have more delays. Granted that they are procedural, but I wonder how many papers have reported on that delay? I reckon not many! Out of sight, out of mind is a valid strategy that has been in long standing with politicians and corporate spokes people all over the world.

So is this a strategy by Mr Murdoch to keep the focus away, or is this an investigation that is getting stretched in a very expensive way to stop your privacy from getting chartered protection? Not non-privacy by government (aka GCHQ), but by those who are making money out of side stepping commercial reasoning for ignoring privacy for the simple reasons of greed?

The issues of strategies are actually wider set then most will think. Against the Dutch pension issues, there is the view of George Osborne, the British Chancellor of the Exchequer. This is viewed in the subtitle “A majority of directors at the Washington-based International Monetary Fund disagrees with its own advice on UK fiscal policy.” which is part of the article at http://news.sky.com/story/1117069/imf-board-disagrees-over-uk-fiscal-policy.

Even though this sounds good for the Exchequer, the issues of no tax rises in the upcoming years (or after 2015 as he states it) is not just short of wrong (at http://www.guardian.co.uk/politics/2013/jul/11/george-osborne-deficit-tax-rises) , I feel that this could only be kept if a play is made to the pension funds (like the Dutch are trying now), as well as the shale gas approach which is seen as ‘frackalicious’, yet, we should not forget the issues that the Dutch county ‘Groningen’ is going through as it has seen a rise in small earthquakes giving home owners massive costs to repair and additional losses in house values. These issues are to some extent denied/ignored as the investigation is going on, yet the damages that the people see in the news on a regular bases tells another story. At present corporations are now claiming for millions in damages from both the Dutch gas company (NAM) and the government. (at http://www.dvhn.nl/nieuws/groningen/article9972913.ece/Corporaties-claimen-miljoenen-bij-Nam) there is also the claim for compensation to be awarded for the loss of housing value, which adds up to over 10,000 houses for up to 25000 Euro. (Yet one house in the newscast has a value decrease of almost 150,000 Euro). Let us not forget that these were only test drilling, the actual drilling has not even commenced. If the exchequer is depending on these numbers then he might be in for a rough ride. In addition, even though Isla Britannia is decently larger then the Netherlands, there is enough evidence that these issues will have a serious impact on housings and the environment.

If this is all about strategy, then playing the cards close to the chest seems a debatable wisdom. Because when this all goes south, it is not about the Isle politicians are sitting on, but the issue whether there will be a nation left to serve.

Should you doubt that statement (which is fair enough), then consider on how ‘well‘ the US claims their economy is getting. The fact that Detroit is now bankrupt should be enough concern that the American way is not a solution.
We, the Commonwealth nations must stick together to stay afloat and survive, fight together to become the nations of true prosperity again.

None of these strategies are ready for that essential need!

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July 11, 2013 · 22:24

Boosting Pensions

Would you like to lose your pension? This is more than just a simple question. If you live anywhere in Europe, then the danger to your pension is a lot more realistic and will have a larger impact then you thought there would be.

Let’s take a look at a few countries.

Netherlands.
This was already under review, however, at present there are discussions going on to get a handle on accessing pensions for all kinds of reasons. The image in part is that the Dutch government needs this treasure vault to deal with more immediate issues as well as well as the application of spending to start an economy. As reported yesterday by the NOS, the issue at present is that the government thinks it is getting access to billions a year extra. The ABP comes to the conclusion that the changes will in the end cost billions, not save them. This comes as the government is presently trying to cut almost 3 billion Euro in retirement funding. The cut back was based on the fact that businesses and employees will save-up less per year, which might save 1000 euro, which would suit the government, as this gives them a taxation windfall of 2.3 billion. In the new system it is stated that not only do people lose the 1000 euro advantage, they will have to pay more. So there would be zero advantage, even worse, considering the amount of government jobs the treasury would be down a billion, so in the end no savings at all for the poor poor coffer, only additional losses to deal with. At a time when 6 billion in cut-backs are needed, this is not the bad news they want to hear. All this has a few more hooks. Especially when we consider the questions by Hachchi (D66) in regards pension premium raises that the ABP added in January 2012. The costs were raised by 300 million euro, as documented in  2012Z01310 (source: http://www.rijksoverheid.nl/bestanden/documenten-en-publicaties/kamerstukken/2012/03/06/antwoorden-inzake-de-verhoging-van-de-pensioenpremie-door-het-abp/antwoorden-inzake-de-verhoging-van-de-pensioenpremie-door-het-abp.pdf)

It is interesting that a similar issue is now appearing only one year later. There is more!

In one view we read that the ABP in 2010 was set at 105% coverage (which means that if 100% pension is paid out, 5% remains for growth). It is however interesting to read from the NRC (at: http://www.nrc.nl/nieuws/2011/12/01/abp-verhoogt-pensioenen-niet/) we read that in December 2011 the coverage was only 94%, so in one year they went down to some degree. The same can be read at http://www.pensioenbelangen.nl/label/abp/ , more interesting, the numbers state that per September 2012 is was only at 101%. So if we recall the blog I wrote a week ago “The Age of ‘no retirement left’ is coming“, it is interesting that in that case the government is stating so much wealth. As the ABP is considered to be the largest one, we should wonder whether the Dutch politicians have any clue on what they are doing. More important, is this about short sighted cutting avoidance, or is it about more. Do not worry, they are not alone, we will have some fun looking at the UK situation next.

Is there actual evidence to support my theories? Well, the sources above clearly show that the ABP is only marginally above 100%, yet they had remained below 98% for a decent amount of time, so there is a valid amount of concern. In addition, when we consider the questions as stated in

2012Z01310, then certain issues in the recovery measures of pensions were not known, yet the initial billing would have been there, so this again is a piece of evidence that reflects 11th hour budgeting. The fact that this was never completely properly addressed remains a worry and not a reflective concern considering that in part the same issues are now again in the news.

The issues are only part of the entire picture. The fact that the Dutch pension administrator PGGM, has stated that there are issues with Walmart, could have some serious repercussions. Reuters quotes that “PGGM held 2.76 million shares of Wal-Mart as of March 31” (at: http://finance.yahoo.com/news/dutch-pension-group-halts-wal-211416613.html) this was only last week. Should the PGGM pull out then there would be concerns on both isles of the Atlantic river. Those shares represent well over 200 million, which means that Wal-mart might get some renewed problems down the line. Whether this would be due to PGGM is not a given, the fact that questions from a shareholder holding almost 3 million shares are not answered is certainly matter for concern. If we consider the economic downturn the Dutch have faced over the last 2 years, considering the issues the IMF reported in 2011 on Dutch pension funds. In that time, people entering their retirement saw their funds cut and a support capital of 50 billion was needed. So when we read less than 2 years later that those finds are so rich and that they should be opened for additional means, whilst a week later we read on some of the alleged dangers, it seems to me that playing politics with pensions is a very bad and not too bright idea. The 2011 article can be found at http://www.europeanpensions.net/ep/imf-team-recommends-adjustments-to-dutch-second-pillar-system.php

United Kingdom.

So, let’s take a look at Australia’s baby brother UK (as UK is only 3% of the size of Australia). The UK is in dangers no less immediate. The Guardian reported last November that issues would impact greatest on savers and pensioners. Yet, the story behind several issues is not brought here. For that we should look at what is happening now. Part of that is set here as http://www.guardian.co.uk/sustainable-business/capital-markets-climate-change-pension-funds. Is that even a fair assessment? If we read the quote “The way pension funds invest will determine the future, which means that to thrive they’ll need to wake up to climate change” I will wonder whether this is wishful thinking of whichever politician or investor whispered to the author. When we looked at the Netherlands and other places, these nations are all looking at sustainability solutions. Yet at present the ROI of these options are not up to scrap, so WHY use pensions there. These are fields that have been ignored be several administrations. If it is SO lucrative, then why not invest in it yourself (me asking governments)? Yes, it will be the future, but at present too expensive, so getting articles out there for pension funds to invest in the future might read nice, but as ROI reports falter it will not hold a candle up to the coming rage. This view is shared by James Cameron, chairman of cleantech investor Climate Change Capital. I know that the next part sounds dodgy as hell, but when we consider the quote “Future pensioners are going to have to bear more of the investment risk themselves“. In that case Pension funds are much better of owning parts of Raytheon and Northrop-Grumman. It seems that governments all over the world are seemingly ready at the drop of any hat to buy missile technologies, and as such the ROI for pension funds are much better off going to those places. I agree that the statement is less appealing to read, but why should pensions now be put under more and more pressure whilst, those behind the scenes refused to budge when they should have done so. The investment risk reads like a joke considering the article published in May at http://www.guardian.co.uk/money/2013/may/22/one-five-poverty-line-state-pension where it states that  20% of those retiring this year will fall below the poverty line. This is in my mind the consequence of a housing issue never properly dealt with for over 27 years, whilst pensions were left alone. Taking both in the balance, then pensions might cover 80%-100% of the rent for this year, and those will come up short 2014 and later. So that is in the most positive case where people do not need to eat or drink ever. This is only for those not living in London, living there would almost amount to instant suicide. At least the Dutch can claim that their retirement issue had never been THAT bad. So, as there is a collective boost to raise the value of the RBS, that former bastion might be used to actually boost and increase value and strength of British pensions as they focus on getting back on the horse of profit (or at least try to get on that horse). Pensions are being cut in other ways too. That part can be read at: http://www.independent.co.uk/money/pensions/expats-call-for-fairer-pension-payouts-8659717.html. Some of these pensioners (almost 10%), saw the unaffordable future they saw coming their way and as such they moved to other areas. Some saw the light in time and bought a small place on Crete, some left for alternative Mediterranean locations and some went to the warmer regions of South Africa. These people saw the light, saw the non-linear growing costs and chose a better solution. It goes even further. What is less than possible in the UK becomes very affordable in India, where a week’s pension gets you a 2 bedroom secured apartment for a month, considering that rent is the most expensive part, three weeks of pension should keep a person well fed. So why not consider this? Instead of going on an exotic vacation, live in an exotic place, and of course, the Indians are all on average Cricket nut, so not the worst place to be during Cricket season. If these people are forced back because of pension issues, would the British government have the means to suddenly appoint housing to these people? They might not get an option in this as they froze pensions. In that regard, I do hope that the Exchequer George Osborne considered the consequence of even part of those 1.2 million pensioners returning to England and his 2 billion pound winter fuel allowance. That is only one post. On the other side, there is a genuine and acceptable concern of the people who are abusing that system. There had been earlier mention of the situation where UK men marrying Thai brides is a reason for the foreign pensions increase. If we voice the scenario where a pensioner marries a woman under 25 and she then gets the allowance after he is gone, then this would indeed be an unfair use of the system. We could argue that a marriage, not validated in the UK would not be seen as a marriage (I know, the legal nightmare behind this is so not nice). However, that those who never added to the British system, not being eligible for those funds would be slightly better phrased, yet the consequences for consulates to keep track of these people would be almost disastrous. Even though this would be spread over several countries, the fact that they could be required to deal with over 700,000 additional requests a year, is not likely to become a ‘relief’ to the system. Yet I must agree that something must be done. The dangers of cutting the transferred pension, if there was a marriage, could mean that these people might have a claim on humanitarian grounds to receive full Visa and transfers into the UK, which in the end might add up to be a lot more expensive. The only solution could be legislative, yet which of the ‘evils’ to choose from is not really for now. In my mind the options grows to make the pension only transferable if the marriage was longer then a certain period (5 years) or the spouse must have been a UK resident or lived, worked and paid taxes in the UK for no less than 10 years. I am just grasping the 5 years out of thin air, yet this would limit the dangers of UK pension abuse, it would also give a clear message to the valid pensioners that THEY are protected, yet that there are limits on passing over a basic state pension. In regards to those who are valid recipients of the basic state pension and their foreign setbacks there is more information at http://pensionjustice.org/.

 

Germany.

We should consider the German system, even though it is thought to be strong, secure and to some extent safe. They share the dangers those in the UK currently have. As reported by The Spiegel at http://www.spiegel.de/international/germany/germans-fear-poverty-in-retirement-even-after-life-of-work-a-855352.html, even though their economy is in a strong state, the lost investments, the futures of retirement are almost none existing. In fact, their pensions are a lot worse of then the UK ones. A person there would end up getting a mere 32% of their income. If we consider the Dutch system where 70% does not even foot the bill, the desperation of 32% is a lot less appealing. The question becomes important when we consider the required pension buffers these pension funds need to have. The interesting addition is that a report in 2012 from the labour ministry stated that “the Labour Ministry itself, which indicates about a third of current full-time employees could end up receiving social welfare unless the pension system is changed. Those who have spent 35 years working full time but earn less than 2,500 euros a month would also end up depending on welfare.”

So this is the third country playing politics for non-visible short gain and massive shortages in the long term. This gives serious concern for the bill the Germans adopted that as of January 2013 “for a reduction in the statutory pension contribution rates”. And that helps your citizens…..how?

So this is not just a national issue, this is a European issue on several levels. Unless some strong actions are taken, a large part of Europe will enter living conditions worse than that of several 3rd world countries, whilst comfortable living would be found for those moving to places like India and Argentina.

Go figure!

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July 6, 2013 · 17:31

A problem from luxury

It is Saturday and again the news station NOS (www.nos.nl) brings an interesting piece. Going back to my youth, I would love to walk around the marinas. I would admire the boats and their shapes. Those owners, so proud, they had their ‘yacht’. Boating in the Netherlands had always been big, now almost 40 years later thousands of boats are there. Neglected and in poor condition. Those who bought metal boats can sell it as scrap and end up with a few coins; those who bought polyester now own boats that are in a state where they are floating environmental disasters. These boats will not degrade; they are there to remain a pox on the Dutch landscape and especially marina’s from where they have no place to go, the people are often gone, many in no financial position to fess up to their choices. So now we get the issue that a fund needs to be created to clean up the mess others made. Government funding that would be needed to clean up the mess of these owners who claimed (or once were) wealthy.

So what gives?

Well, the question becomes what to do next. This is not an area of expertise for me, to the next part could be a well-intended effort to find a solution that is just plain BS (for that my apologies).

I have done a little reading and see that in some cases plastic bottles are recycled into polyester the clothing industry uses. So, if that is the case and agreeing that this initially could cost the government something, is it not an idea to crunch a boat into smaller parts and then process it into something better? Even crunching it into flakes might make this marina based solution into a less useless obstruction.

If you think that this is not an issue, or a rich person’s issue, then think again. Even though due to the size of the Netherlands (a really small nation), this nation has well over 200 marina’s, making this more than just a small problem. But what is involved?

1. Disown these neglected boats. Not unlike a car when it is no longer road worthy, if a vessel is no longer water worthy in its current state, then the owner would need to receive a writ, stating that it is fixed within a certain time, or the owner will be disowned, yet not financially disowned, so whatever loans he has out there on the boat, they will remain. The owner will get a processing fee (it is not up to a government to foot the bill for environmental hazards) and what was formerly known as a boat will be removed.

2. How to process the boats? To be honest, that is the true issue. Burning is not an option because of the toxic fumes (which are also not that environmental friendly). A boat usually will be made of polyester (the bulk/hull), aluminium (mast), metal (wires) and wood (sometimes deck, mostly internal parts). The hull is actually the big thing. That needs to be crunched into little parts. Whether we can dump the entire boat into some giant nibbler, or first manually remove parts as much as possible and then nibble it to splinters is part of this consideration.

3. What to do with the polyester. To just assume that what works for plastic bottles, would work for boats is just crazy. There are numerous versions of polyesters, which will mean that they might not be that mixable.

So what are the solutions my little brain could come up with in 30 minutes?

Option 1.

Can the polymers be liquefied and then turned into some tile, which could be used as some kind of insulation? Can they be used to be reprocessed into some other usable plastic (like bags or other usable items), especially if these are items that could be revenue making to some degree to counter the costs of processing this.

Option 2.

Can they be processed in some form to become collectible s that even not bio degradable, they could be used as some kind of foundation that even though not bio-degradable, they could be ‘dumped’ into natural places as they would not hurt nature and only take up space.

Before you attack option 2, consider that a thousand non usable boats are a blight on nature as is, to be able to bury them in a minimum size (providing we can prove it will not harm nature) is not the worst idea. The worst idea is to not do anything about it, which is what happens now.

In an age of such bad economy, this might actually prove to be a point of light. This is a niche market that has potential and seems to be in non-existence for now. Even if this is the most visible in the Netherlands, due to a largely lack of size, yet they have a massively sized marina market. Beyond this there is France, Italy, Spain, Portugal, Greece and a few more places where this, even to a smaller extent might be an issue.

The Netherlands do have one advantage. They have Wageningen University, which is one of the most renowned universities when it comes to environmental studies. When it comes to Chemistry, there are the Dutch Universities of Leiden, Rotterdam, Delft and Amsterdam. So, if a solution would be possible, then the Netherlands will be able to solve the issue that is most visible to them and create a possible new European market in the process.

An environmental issue that could help start a ‘new’ economy, who would have thunk it?

 

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July 5, 2013 · 13:18

The Euro coup is coming!

Good morning, so I got your attention? Excellent!

The first question, is what kind of coup of course? What is forming at present is an international alliance of parties. The parties at current seem to be the British UKIP under leadership of Nigel Farage. From France it is Marine Le Pen from Front National, Geert Wilder from the Dutch PVV and there is every indication that Bernd Lucke from Alternative für Deutschland (AfD, meaning Alternative for Germany).

Initially this situation was a non-option, yet the change with Front National where Marine Le Pen is a lot less extreme then her father Jean-Marie Le Pen makes this now a negotiating political force where the extreme is negated for a slight diversion towards the middle ground. There is also a change in messages. Where the French FN was initial strongly anti-Semitic, their new message is all about pro-France. It seems that the daughter Marine learned that lesson of gaining through honey instead of vinegar (you know the expression). Does this make them less anti-Semitic? That is indeed one of the questions. This alliance is all about parties getting stronger in forming and speaking their local language and population. As UKIP has a strong desire of a referendum to move the UK out of the Euro zone, the German AfD is all about moving Germany out of the Euro-coin. There are similarities, yet they are not in some given unison.

That makes this alliance somewhat unique. This is all about a team promoting their personal needs, not a common need. It is a slightly rare occasion. Yet, we could see a disjointed form of agreement. They all seem to promote their forms of economic protectionism. That part is interesting, as that could be a multinational move to get these banking issues under control. It is one option for the banks to give some Euro BS story to stay non-accountable, yet it is another problem when political parties start making these venues an open target where the bank is a free for all. I reckon that financial institutions did not reckon on these complications. If we accept that FN, UKIP and AfD are all three strong in that regard, then whatever happens in the bad bank moves would have to happen before those election become fact, because the changes might make the bad bank a non-event and leaving the debts where they should be, with the banks who caused this and not with the tax payers (and that would make you and me very happy).

I left PVV out of this because they are a slightly stronger wildcard in this equation. Like UKIP they are strong voiced about moving out of the EU. That approach is not unrealistic, yet the Dutch economy is strongly dependant on the German economy as whatever is created in Germany gets shipped via Rotterdam. The German Steel regions have a powerful grip on things, and that works as they have an efficient economy track via the Netherlands. UKIP has its reservations in regards to the Dutch PVV, because of the strong anti-Islamic views the PVV holds. Nigel Farage has mentioned that he could not accept the view on forbidding the Quran. One can agree on many levels, especially as this is a form of censorship and discrimination that is not legal in both the UK and the Netherlands (the law can be so easy at times). The AfD is another matter; they are mainly Euro-critical. The danger is not unlike UKIP. They were ignored and now they are about to become the ruling party. A fact that remains unknown until September 2013. What is interesting, that at present the party is not even listed as a possible contender against the party of Merkel or her opponents. This is wrong on a few levels. The fact that all these economic heavyweights are striking out against the AfD on how dangerous this move is, is one thing. the fact that these ‘experts’ like Marcel Fratzscher who was formerly the head of International Policy Analysis at the European Central Bank or Jörg Rocholl who as a professor holds the Ernst & Young Chair in Governance and Compliance are currently speaking out against their academic peer Bernd Lucke is quite another. Yes, sounds like the banks stay right away from this one. They all seem to forget that the people vote, and these people see their money go to all these places of ‘feigned incompetence’. I am all for helping my neighbour, yet I see less issues with saving him as he starts a BBQ in his living room to stay away from the rain and then panics as his house is on fire because the children kept on knocking things over in the living room. Such a parent should go to prison, plain and simple. So when I state that the AfD could become a massive player, I am not kidding. That means that Germany could face its own referendum in 2014 to move out of the Euro. Because these governments, as I mentioned in previous blogs have been so busy with ‘managing’ bad news, they forgot all about the people receiving these adjusted levels of bad news.

Next there is the French FN (Front National). Under Jean-Marie the FN was largely ignored, they were too extreme, so not many votes would consider this party under past leadership as a serious political player. His daughter is much less extreme and Marine Le Pen seems to be more about bringing the pro-France message then any anti-whatever message. This makes her the new player to note. As she advocates a “grouped departure” from both the Euro and the Euro zone, in addition to her less extreme views make her an interesting bedfellow for Farage and Lucke. It can be debated that FN could have had a much larger slice of French politics if Marine had been in charge earlier, yet, only now, as the economy will have longer shortfalls and more issues would any future election give her additional votes.

Considering UKIP and their likely new shaped alliance! How should we see them? Are they the disruptive element in the European order, or are they the patriots fighting to keep their nations safe? If we see the Banks as the current breakers of national economies then they are doing the opposite of what needs to be achieved in the views of the banks. In all fairness of it all is that the EU is more and more a failure. Those propagating its success have not been able to correct the budget shortfalls of hundreds of billions a year. New nations are offered a place, a handshake and a new credit rating (see Latvia), then even whilst its population has a vast majority against, the Euro gets pushed in. Now even more nations are added, and several of them in not such a good economic stable position, and they all get the new Euro Platinum Credit card. In that light their views are adopted by their own voter community faster and faster, meaning that this new ‘alliance’ will ensure massive changes.

Whether these parties will bring a better future for the nations they fight for? I do not know, what I do know is that dumping billion after billion into something to get the economy ‘started’ has not worked for years, and other ideas are needed. Perhaps I could be voted in as the new Executive officer for the Royal Bank of Scotland? I cannot prove I would do any better, but I can guarantee that I would not be any worse. In that light, that 20 billion they just found? How does a bank just find 20 billion? What else did their systems not notice? http://www.guardian.co.uk/business/2013/jul/03/royal-bank-of-scotland-business-lending-review If you wonder how these two are related (politics/RBS) then consider that these parties are growing as the European economy stays in this bad shape. The stronger the UK economy gets, the stronger interest of all nations to relocate legally or in other ways to the UK, so as the UK now suddenly has 20 billion extra, that interest will just spike. I am still wondering how 20 billion remained unnoticed. If several nations have been playing a game of ‘bad news management’, then what will be the effect of such good news? If you do wonder what 20 billion is, then consider that this ‘found’ money covers twice the amount all tertiary education needs and didn’t they have to up the prices there?

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July 3, 2013 · 17:18

The Age of ‘no retirement left’ is coming

Another day and another play for one of the last foundations of wealth. As the Dutch NOS news reported, the Dutch pension funds are willing to invest in its own country. The Netherlands is currently an investment location that is receiving a very small part of that fat fund. Yet, pension funds want a level of government guarantee for these risky investments at present. That guarantee will save them for a certain amount of losses should they occur. As such the government has a level of objections. As the news reported, this plan has been a year in the making. Basically the pensions will be doing all the tasks banks are supposed to do. There is a level of risk that the pensions are not willing to carry at present. And why should they?

The reporter Jeroen van Dommelen stated “the government does not have the funds to invest, it is poor“. This is part of all the mayhem and issues on play. When the government could have stepped on the plate, they refused to do so. They pushed the bills forward. They relied on certain numbers of bettering the economy. A game played since 2006. And every time the Dutch CBS, which has government stakes and are prone to certain levels of censoring presented them. Those numbers have been downgraded quarter after quarter and as such no issues were resolved. Now this government is pretty much at the edge of viable as they received invoices from past administrations, and now, the one cauldron of cash that remains, and needs to be kept safe is being tapped on. This is not a cauldron where money renews (you know that realistic 100 coin leprechaun model), no it is like a simple soup cauldron, what is taken out, is lost forever. Starting a grab from that last cauldron that keeps an entire generation fed is not acceptable. It is too dangerous. When there were options, we were not allowed to touch it. Now that there are no options they want to touch it against our wishes and diminish it?

This is why pensions what the government to accept levels of losses, and why the buck is not passed forward, but to another person. Why should these funds be used to renovate rental properties? The rental agencies have been making a killing, or at least bosses in these places were. As examples we have the Amsterdam Rochdale scandal (Source, Dutch Parool http://www.parool.nl/parool/nl/1284/Affaire-Rochdale/index.dhtml). The Rotterdam corporation PWS, where fraud was a massive tool to offset the rental market (source: http://www.volkskrant.nl/vk/nl/2680/Economie/article/detail/766332/2006/02/10/Baas-PWS-ontslagen-om-fraude.dhtml). The examples do not even end there. The issues of preferential treatment and other calamities have given these issues a bad taste. In this environment there are grounds for calling the risk of these investments too high, in addition, these expensive dwellings should be providing for its own invested renovations. None of that seemed to have been happening. If we would investigate the issues as the Dutch SHC is investigated in 2011, where fraud was a factor, then we see that these events led to fusions which ended several steps, including in my humble opinion the prosecution of several people. The fusion left Miss Hedy van de Berk in charge after 25 years of service to clean up a mess her predecessors left. She had to lean on ‘lessons learned’ and interesting that Councillor for the City of Rotterdam Hamit Karakus (US equivalent of Alderman), who was present at that meeting seems not to have been that vocal on certain issues. This is not an accusation towards either, yet the foundation of pushing forward seems to be a clear given, and as such investments with retirement funds should be classified as a definite risk. As such we should wonder why these funds have to chip in in the first place. When we look at the responses from Henk Knoop (VVD) as MP of economic affairs, we see that he makes a clear good case where politicians want to make it more interesting to invest in Dutch events. I personally have the view that risk factors currently remain too high and until certain guarantees are added until there is clear evidence that sound investments are proven to be sound investments, the current level of risk should be considered too high.

The fact remains that they want certain levels of guarantees from Finance minister Jeroen Dijsselbloem. His view is that returns are founding certain levels of risk. This is a fair and realistic view. The issue that many have in this regard is that the risks are unrealistically given. That view has weight if we accept the faltering views SNS Reaal brought forward as it needed to be nationalised. Those are levels of lost investments, especially in commercial enterprises that are too unacceptable. Until those issues are resolved and dealt with, it seems that retirement funds have no business in a field with so much risk.

In addition the message by Jeroen van Dommelen at the end stating “resolving these issues would give way that on the day of princes there will also be good news” is way too thin to base the risk of retirement funds on. For the non-Dutch, the day of princes is on the third Tuesday in September when the Dutch government through a royal speech announces the new annual budget.

These dangers are not just visible in the Netherlands, yet in a place where they have been one of the most secure in Europe, the fall-back might be larger than anywhere else. In the UK, there is the case that Simon Cox of BBC4 reported on in regards to the pension liberation scheme last March. (Source: http://www.bbc.co.uk/news/business-21844955)

The options for those before retirement could access some of this cash. The issue is not just whether people select this, it is about the dangers that the acts comprises. What people do not realise is that a person’s retirement is mostly built in the last 5 years of ones funds. At that time, the interest is so rewarding that those years are the days when a retirement almost doubles making it a good thing (read enough to survive on). To lower these amounts, means that people either work a few additional years, or fall short by a chunk of what they would need. So it is a danger one should not consider. My thoughts are not as full on extreme as those of Shaun Richards of “Mindful Money”. He is more into the question whether an economic war between the saving retirees and the youthful left with nothing (something according to those lines). I do not think it is that far, yet, the greedy and their prying eyes on those untapped resources are out there, so there are dangers. His story makes for a good read, so check it out at http://www.mindfulmoney.co.uk/wp/shaun-richards/is-there-a-danger-of-an-economic-war-between-pensioners-and-the-young-in-the-uk/

If there is one note of criticism from my side on this article then it is the focal view as he looked at the groups, yet outliers from those groups and whether they moved from one group to another is slightly ignored, so a possible factor of skewing from those evading the credit crunch and those who got pushed out into destitution all together seemed to have been ignored, that group might have remained too small (however, still unillustrated).

His views should not be discarded. It seems to me that his views are partially adopted by Peter Hain of the Guardian (alternative is that they came to similar conclusions). Peter was quite adamant on the loss of cohesion as he describes it. Where I disagree is the Nick Clegg view where the better off retirees should ‘abolish’ their tax benefits. Is that fair? Those who remained cautious are now better off, whilst those who ‘partied on’ need additional support. I see no reason for those who did give out those extra few bobs to benefit now should give that up again. The social structure is all good and fine, yet those who did not keep their responsible part are now, as should be suffering a little more. A model was long term agreed upon, as today’s irresponsible spending’s should not be charged to those who got charged and worked all their lives. This is where ‘the Clegg principle’ falls short in my view. Peter’s words strike goal at the end where he writes “Cutting or means-testing pensioners allowances risks turning young against old and rich against poor while making negligible savings for the Treasury“. That is a risk we should not allow. Not because of the unfairness of this, but for the risk that the young will allow the exploiting of funds that should not be touched. In the end it is not just a negligible saving for the treasury, there is every indication that this will propel certain additional costs forward. Especially considering that these costs could have been avoided all together.

These issues also raise a few questions when we look at the Swedish system. A system protected by government and is totally untouchable by people until they retire. This quote came from the Swedish national bank this year. The question on the safety of retirements as such what return on investment has been achieved. the statement was “The major Swedish banks’ liabilities in US dollar amounted to just over SEK 1,600 billion at the end of 2012. Approximately 20 per cent of these liabilities consist of deposits, above all from large non-financial and non-bank financial companies.” So at 1.6 trillion Kronor, the outsourced risk that adds up to almost to SEK 226,000 for every Swedish citizen, all those funds in one investment? That looks like a very dangerous investment indeed, as that makes it the bulk of all the retirement investments all in one fund. When I look at my Swedish retirement savings then I have seen it go up by less than 5% annually (because I have annual costs, but I no longer live in Sweden and therefor no longer add to it). So what dangers are there for retirement investments all over Europe? France is in a peril no less dangerous, especially as President Hollande is asking the retirees to fill the French Coffers. Perhaps he will add a “s’il vous plait” (‘please’ in French) to that request at the end, but the message is rather clear. (Source: http://www.huffingtonpost.com/2013/03/05/france-pension-reforms-hollande_n_2810024.html)

There is a European issue with retirement incomes, and it seems that the push it forward routine, as I started with in the beginning of this blog has been a blanket policy for many nations. Should they blame former president Nicolas Sarkozy? He tried to up the age of retirement by 2 years. I do not think it is fair (mainly because dangers were not reported in time). Not unlike the Dutch system as I mentioned in previous blogs. The push-it-forward routine has been employed for too long in several nations.

These retirees all worked hard until they retired. The fact that the younger generation holds those to account and not those who refused to act is unfair. We should add the question on issues that banks had like rogue trader Jérôme Kerviel. A person who decreased French bank values by almost 5 billion Euros. Even though he was convicted and he was supposed to pay this back. How much was actually paid back? Was all this money returned? It is so tearful to somehow this poor poor man has lost it all. Did he? He never owned 5 billion, so it was not his to lose. So if we see all these international trading shortfalls in France, UK, Netherlands, Italy and a few other nations (I reported on those issues in previous blogs). Those sums are more than the combined retirement funds that are about to get endangered. I think these governments should get those coins back before they go after the somewhat defenceless retirement funds.

Still today governments are setting out costs that they cannot foot the bill for. To now address retirement funds is an unacceptable step. Consider the initial Dutch version were in their own admission plans had been in the making for one year. Look at cutbacks that have not yet been met. These events show clearly that these events should have been stopped yesterday, whilst allowing them tomorrow has every realistic view that they could leave the entire upcoming retiring generation destitute.

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June 29, 2013 · 20:10

About that house you wanted!

It seems the Dutch are ready to take on the advice the Wijfels commission is giving. Even though not direct, it will end up that you have to pay 20% cash up front for any house or apartment you desire. And indeed, there was the subtle ‘line’ that if you do not have that kind of cash, you should address your pension funds. Interesting on how they are willing to open up pension funds to fund that.

Am I against it? There are two sides to this. On the one hand investing into your own future is perfectly sane. If only there was some level of certainty. You see, the fact that banks leave its taxpayers with their risky investments is one thing, the issue on your house is another.

How does this differ? Actually, it should not. A good house is a good house. However, consider some of the housing. How these houses are currently so much over any normal affordable income. It is nice to see a newscast in comparison with Germany; however, when we look at the quality and square meter price, then these prices are far from average. Of course, when seeking apartments in places like Munich, then yes, the prices might seem comparable. Yet, where we see average Munich prices, that is pretty an average price for living anywhere in the Netherlands. I agree that it is not fair that those factors are accountable to the banks, yet, they were at the centre of events when the prices were artificially pushed upwards.

As they sold mortgages no one cared too much about prices as the interest was tax deductable. When that 7%-9% is no longer part of tax deductibility, then we have a situation where the consumer now pays for it all. Add to that coming up with 20% (in due time) and someone slyly mentions the need to access ones retirement funds, we see another political play to get pensions into the banking equation. There is supporting evidence from all kind of sources. An interesting read was how on average house prices went down in US/UK and other places by well over 20%, whilst in the Netherlands the prices lowered less than 8%. It is unfair to just name one factor, as several economic factors had been in place in other nations too. The US crash never hit the European sides that hard, Europe might still fighting the backwash from those days, but on average Europe never had too much of the hardship the US faced. Another reason is the fact that the Netherlands is pretty much ‘full’. Whilst many nations have plenty of housing space outside of the great cities, the Netherlands has become a connection of large cities, with next to nothing to separate them.

Still this play as such to push people towards their retirement finds is slightly less than acceptable. There is however the other side that must be highlighted too. According to Ernst & Young, between 1996 and 2012, the outstanding mortgage has gone from 138 to 650 billion Euros, That means that outstanding mortgages currently have risen half a trillion Euro’s in just 15 years. Some might think that this is not a lot, yet, consider that that the Dutch population is under 17 million, which seems like the banks remain dealing with 100% of unpaid mortgages. If these numbers are correct, then it bears reason that these numbers should be looked at. Is that actually true? You see, feeling it is wrong, and knowing it is wrong (even with supporting evidence) seems nice from the writers point of view, however what about the reader?

There we get the issue that gives us the crux. When comparing apartments in the Netherlands and comparing them To Sweden and Germany, I noticed something. I lived in two of these locations, so I know what to look for. I compared the Dutch http://www.huizenzoeker.nl, Swedish http://www.bovision.se and German http://en.immostreet.com/germany. When comparing an apartment in Rotterdam and Kista (outskirts of Stockholm) we see a comparable raise of prices, yet overall we get a lot more apartment in Stockholm then in Rotterdam, for comparable prices (30%-40% more living space). This comparison takes an astute dive when we look at Germany, especially Bavaria; where all over the place we can buy 5 bedroom villa’s for a lot less than a two bedroom crinkly monkey apartment in Rotterdam. As such we get a first inkling; if we need 40K to buy a 5-bedroom villa is one thing, needing the same for a 2-bedroom apartment becomes a whole other matter. Interesting how this was not mentioned.

So why so much issues about the mortgage changes? We see a political engine too eagerly bowing to the needs of banks, bowing to a group that has visibly forsaken a population, a group that have left many billions in debts and we still bow to their ‘needs’? Now with the additional need to open up retirement finances that had remained relatively safe until now.

Yet, with the massive outstanding mortgages, what is left?
In addition, knowing that level of outstanding debts, are their demands out of proportions? That question becomes a whole lot more interesting when we consider the following from Bloomberg (source: http://www.bloomberg.com/news/2013-04-23/dutch-mortgage-bond-market-threatened-by-capital-rules-dsa-says.html).

This part throws a whole new hole in these issues. Banks are pushed to outside influences, and even though the government pretend to be fighting the good fight to protect this market, it is interesting that this part was not that visible on the news. It might be that the Wijfels report shows this, but I have not read it, so I cannot tell.

My issue is now with this part of the Bloomberg article “Dutch banks are the second-largest issuers of RMBS in Europe, relying on sales of the securities to help fill a 452 billion-euro funding gap between deposits and loans, Dutch central bank data show.” Excuse me?

Looking at some quick 2011 population numbers:
Germany 81.8 million , France 65.43 million, United Kingdom 62.74 million, Netherlands  16.69 million.

EXCUSE ME?

How (or better why) exactly are the Dutch banks the second largest in Residential mortgage-backed securities (RMBS)? Even if 100% of the Dutch population is now under mortgage (which is statistically impossible), those numbers are showing an enormous gap. What are we not told? Even if we consider the 25% difference in mortgage funding there are a few questions that should be asked out there. What have the banks been up to, and exactly what questions are not being asked, or better, what part are people and perhaps even politicians not getting information on? Half a trillion Euro funding gap reads like that there is a deficit of half a trillion Euro. That could never be covered by 6 billion in cut backs. Before you think that this has nothing to do with governments then think again, if that shortage is not addressed then that money will have to come from somewhere else. What are the odds that this needs to come from taxation in one way or another next?  More important is the news that people saw over the last year. What buffers do banks have, and if so, how come the Bloomberg (a respectable bringer of news) information was not part of the newscast?

Is this an orchestrate play? It seems to me that a clear yes is in play, however, there are sides to this that do not make sense and they are outside of government controlled sources, sources that currently seemed to remain largely unmentioned. To me it seems that both banks and politicians might need to publicly answer some questions in regards to some of these issues and it would be nice that this is done before banks are given any more leeway or options to shift certain finance issues around.

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June 28, 2013 · 13:02

Exploitation fears for tax-payers

The Dutch NOS reported another go with banks in the view of business. Bernhard Wientjes has been voicing the opinion that some of the banks (ABN/AMRO and SNS Reaal) should be sold. It was brought in the air of ‘when you have no more money you start selling the silver cutlery’ would be the next step. As the Dutch government needs to cut 6 billion, the cutting spree could be a lot less. Well, in this matter I personally stand with Finance minister Jeroen Dijsselbloem who is not that eager to do that. There is logic for not doing this, as this relief would be for one year only and after that the cuttings would still need to be found next year. I am worried that certain business men are now in a state to strong hand certain political decisions. I leave it up to the reader whether those decisions are purely for the need of greed.

If business is linked to greed (often called ‘enterprising solutions’) then that would clearly fit in the views of Bernhard Wientjes. As chairman of the VNO-NCW it would be an enterprising solution that is right up his alley. The VNO-NCW is a fusion of the VNO (League of Dutch Commercial Enterprises) and the NCW (Dutch Christian Business Society). Their mission is to support and further the needs of Dutch corporations both on a National and international level. In this he is doing exactly what he is expected to do.

Yet, in this light, at a point where two banks would be sold far below value and at the expense of the tax-payers, one should clearly ask and look at the possible windfall for Bernhard Wientjes and his friends should this work out in that way.

There is a clear valid question whether the Dutch Silver cutlery is currently in a safe position. The reality of 6 billion of cutbacks will start to show a strangling result, yet, this was the danger all along when previous political alliances (2006-2010) were clearly pushing the outstanding invoice forward. Now that there are no more options, the consequences are likely to be dire, and as such in his position Bernhard Wientjes is clearly trying to look forward for Dutch corporations. I see this specific step as a dangerous one and until Dutch banks are clearly on a minimum set standard nothing should change. In addition, I am all in favour at present to keep these institutions nationalised to prevent their boards to just seek additional high risk gains at anyone’s expense to meet personal commission goals, whilst ignoring local needs (mortgages and such).

Even seeing these banks as possible training steps for younger jobseekers on the dole, to give them short term jobs whilst staying on the dole, would give them additional food for job experience. The answers that some view that this is not how it is supposed to be, I would counter, with ‘what solutions do you have?’. We need to change the way we think and operate. Instead of trying to balance which pocket the money is coming from, we should accept that the money is coming from the suit the government wears and see how far we can walk with this suit. Instead of staying on principle of keeping tabs what pocket it comes from, use the principle of it comes from us anyway and focus on instilling knowledge and experience. That will strengthen the young to get a good shot in getting something better with a decent chance. If you have any doubt, then consider that the Netherlands is only one of 3 countries where youth unemployment rates are below 10%. Many of the Southern European countries are way over 40%. If the future of youth employment is about experience, then make sure that the youth are getting a running start now is going to be important down the line. If their future could be a decent job in Germany, then giving them an edge as they compete with desperate youthful jobseekers from Spain, Italy or Greece is essential. Do not think that those kids are any less. Those who graduated from Universidad Complutense de Madrid are more than top Notch. 7 of their graduates ended up with a Nobel price and graduates from there ended up with 2 dozen of other internationally acclaimed awards. So, if we are looking at future events, getting the youth ready NOW will be an essential step.

Yet, this week has even more issues involving banks. A report that is due to be released tomorrow on advised banking changes. The ‘advice’ is to change the mortgage market. In the Netherlands it is currently possible to get a 105% mortgage so that the house and the notary costs and change of owner registration can all be covered. The commission chaired by Herman Wijfels is now advocating that the mortgage cannot be any higher than 80%. This is to prevent that the debt of selling a house at loss would end up hitting the banks. It seems that the banks are all over their need for ‘securing’ for the little man (read the average consumer). Taking into account that the average house in the Netherlands is around $350,000 the question, especially in this era of lack of funds is where on earth will a person get $70,000 in savings when the Dutch taxation system makes it almost impossible to get that kind of money saved up. They also mentioned that this should not be done until the housing market is stronger and prices are on the rise. Like that will help people to get the money. It is interesting that there is no mention of the much more reliable and fair Swedish system. Perhaps the report due out tomorrow will mention it, but I have not been privy to the full report. In the Swedish system a house often has a two tiered mortgage. You have the bottom part which envisions the gross off it (let’s say 80% for argument sake) at a low base percentage. The rest goes into the top part. Now that part (in my case) was almost 2.5% interest higher, but the mortgage was 105% covered. So instead of the unaffordable savings needs, we have a slightly higher mortgage. So, even if we have to accept a slightly cheaper house, we at least can get a house and not be looking at houses, never being able to afford any of it. The question becomes on what it was about. The fact that a report leaks is no news, but that the report leaks just around the same time Bernhard Wientjes is making a play to sell banks is a rather convenient coincidence.

These events are important to consider. This is because the same issues are playing in the UK. Consider that Lloyds is in need of an extension as they are selling 631 branches. This and the issues around the Royal Bank of Scotland do have links, as the UK government needs to cut cost by a lot more than 6 billion (having a Trillion in deficit makes that an awkward necessity). So will we see the same play as some are now seeing if they can sell banking interests at no more than tuppence on the pound? There is absolutely no known plans at present (in case you got scared or overly enthusiastic), but the issues remain, and the solution as such would be there in equal measure. To allow the young unemployed to become part of the bank on internships and training places, so that we can offer a solution where those seeking jobs will have actual work experience in their CV. These measures might seem small, yet the confidence boost that the younger jobseekers gain, could be the winning factor. In addition, extra hands, helping to boost the value of these banks would mean that when sold, they will go for a much better and more realistic value then they are currently set at. All this in a combined effort to strengthen commonwealth economy and their assets, for the simple reason that the European Economic outlook remains grim at best and relying on overly confident reports of economic prospects, that get downgraded quarter after quarter is not doing anyone any good.

 

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June 26, 2013 · 11:01

Are banks now too much in control?

I mentioned some of this yesterday, some people are just too unwilling to learn and they are very willing to sell you a too pretty a picture. This is what is now starting to become clear and in a dangerous way. Again, not unlike previous events, this blog was inspired by the Dutch NOS (www.nos.nl).

Political parties are now starting to ‘panic’ and are quickly grabbing to solution wherever they can. The issue is that the Dutch economy is apparently even worse then was initially predicted by the Central Bureau of Statistics (www.CBS.nl). Their initial prediction of -0.1% is now -0.4%. Interesting fact is that I predicted something like this in my blog ‘A noun of non-profit‘ on May 15th, just over a month ago. So is this bad news management? To me it seems to be more and more the case.

Diederik Samson of the PVDA (Dutch labour party) is now trying to kick-start the economy by offering alternative sources to spend from. Well, Mr Samson, there are two issues with that idea. The first one, most people do not trust bankers and politicians, now they are seemingly joining hands many have reason to trust both of them even less. The second reason is that the unreliability of the current economy is stopping people to spend anything as long as they are in debt.

The basic issue is that there is too much uncertainty for the next two years. As such people pay their mortgage and essential bills as much as possible. The people are paying off their debts as banks cannot be trusted to play nice. This is the consequence of not containing the massive wave of simply put insane investment sprees. Perhaps some will remember how SNS Reaal needed to be nationalised?

So as the Dutch need to cut 6 billion in expenses, they now seek other way to find spending options to raise the economy and next on their list is the attempt to use pension funds to do this.

Basically, quoting Arjan Noorlander from yesterday’s NOS newscast “The people managing these funds are often investing abroad to get their dividends. This does not help the Dutch economy” He then further states “These funds should invest tens of billions by taking over mortgages from banks, so that they can offer new mortgage investments“.

How is this anywhere near a good idea? Banks, remember them? They are not to be trusted at present, or anywhere in the near future for that matter!

As we have all these bad bank mortgages out and floating, relieving banks from these burdens by losing upcoming retirement funds is more than just a bad idea. Arjan Noorlander did continue and did end with the fact that this is dangerous and retirement funds might get lost in this way, and that it might be an option if the government underwrites these loans so that they will pay the losses if those occur. To me it reads that in the end that another bill will be given to the taxpayers one way or another.

The issues of keeping the retirement funds safe was also mentioned by Alexander Pechtold (D66 = Democrats 1966), he continues by saying that first and foremost there should be clarity on how and if this should proceed.

 

You see, there are two sides to that part. In the first part the Dutch officials shot themselves in the foot for a long time by keeping housing too expensive for way too long a time. It was left to certain groups to keep the prices artificially too high. I myself viewed it as an artificial push to keep housing prices beyond acceptable as it increases the capital position of banks. Then there was the issue of preferential treatment for some places, as there were ways that the ‘right’ people got into those places. I myself experienced these events first-hand. Too many issues played and in a time when incomes were good, people got what they could and as such they are now stuck in a solid position, where moving away will cost any person a fortune. To illustrate this, my former, small, 2-bedroom apartment in Rotterdam would buy me an apartment almost twice that size in Stockholm, Sweden. So considering these facts, moving is not an option for many, which means that people are paying of their mortgage as much as possible.

The second part is that up to 2005, it was way too easy to get all kinds of credits and payment deferrals. These options all come at some percentage expense and as incomes were good, no one really cared too much. Now, to not end up in a situation where these people will have to eat their mortgage, or sell their house (making them destitute), they are now all paying off their debts as much and as fast as they can.

These two factors add to the fact that people will not spend money. Not unlike the government, too much money was taken in advance, and unlike the government, they are not getting to push it forward, so there is no spending. These factors had been known for a long time (at least 3-5 years), so when politicians are all so amazed that economic infusion plans are not working, then that amazement seems somewhat disingenuous to me. The fact that the Dutch are so about housing corporations, to be given the funds to grow is tying the cat to the bacon in more than one way.

This is not allowed to become an ‘opportunity knocks’ situation, especially when they are playing with retirement funds. If they really want to do something that adds up, then give people the option to use their retirement plan to pay of a mortgage of a new house. Those young enough will then have a building future. And it should be managed by a banking branch of those who keep those funds at present. Yet, I reckon that it will raise voices that this is not opening the economy enough. So is this about the banks, the people or the economy? I wonder how quick objections will loudly rise when banks are kept out of the equation. It would give rise to my suspicions that the banks are in more control then people realise.

Again, that risk is very real in the UK as well. Instead of keeping a decent flow of affordable housing, we see an economy in neutral whilst the hill it is up against seems to be rising more and more.

This was discussed in the Guardian, April 27th (http://www.guardian.co.uk/money/blog/2013/apr/27/pensions-system-failed-what-answer) When we look at this in regards to a failing amount of retirement savings as the predicted cost of living has been incorrect for at least a decade, likely closer to 2 decades, we now see a dangerous development. This is a market where over 40% of those approaching their elderly need will have to sell their residence to afford future care.

Suddenly ‘The Best Exotic Marigold Hotel‘ doesn’t sound like the worst idea for people to consider.

This again brings me to the idea of solutions. It is always nice to kick a parliamentarian (a therapeutic form of soul food), but we should consider options and opportunities for solutions.

There was an idea in South Australia several years ago that was quite remarkable. To solve housing, the government gave away land on loan. So basically, you got to buy a plot for $1. The conditions were that you had to place a house on it, and the value of the land was payable when you sold the house. So basically you had a house on free land as long as you lived on it. This solved two parts. One, the housing issues fell away for some, second a house needed to be build, so that was good for jobs and economy. I always thought that was a good idea to get people into their first house. The second part is the retirement issue. Now many prefer to remain where they are. This is fair enough. Yet, consider that instead of eating your house, you are leasing it away or renting it out. Consider that live in places like Greece, Spain and even India could be more rewarding (and warmer) as you live in a place where the cost of living is a lot lower. Lower cost means a better quality of life. I am not stating that this is an option for all, but perhaps it could be an option for a decent amount, giving breathing space to create new ideas and options. Whatever people choose, I hope it is one people will be able to live with in a comfortable way.

 

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June 25, 2013 · 14:49

Repeating lack of retirement insight

We have seen many plays in the past and present, where some are so short sighted on getting their own margins set, that they seem to be in short supply of common sense. Where is this coming from?

I remember issues evolving in 1997 that politicians did not heed the words of people in the know when it comes to the issues of retirement. It was stated within the corridors of those who work there that the retirement funds were not getting enough money to build the buffers needed for that generation to enter retirement. Those words were ignored by those who could do something about that.

It was not until the Dutch Central Bureau of Statistics warned of the upcoming dangers of shortages in retirement funds a year later. (Source: http://www.cbs.nl/nl-NL/menu/themas/arbeid-sociale-zekerheid/publicaties/artikelen/archief/1998/1998-0129-wm1.htm ) This specific article warns the reader that the amount of people going into retirement up to 2015 will drastically increase as this will be the time frame where the baby boomers will go into retirement. Other documents gave the same warning. There was even additional warning that the group that follows was a lot smaller, as such the then current non-retiring population would not be growing the retirement funds to the degree it needs to grow. The consequence would be that the funds would grow dry really fast.

In addition, this was all before the crashes of 2004, so the reality was even grimmer then most thought it to be. That reality became truth as the retirement funds started to pay less in 2011. Whatever the reason that got voiced by those involved, in the end it was about an increasing lack of retirement buffers.  Now, today (OK, yesterday), advertisements by groups like the FNV (Dutch Union of workers) is warning people about the dangers to retirements. Why?

Political parties are now in the mindset to lower retirement payments by people. They are hoping that fewer costs mean more income into the streets. Also, as retirement payments are not taxable, lowering the tax deductibility will result in more taxation entering the coffers of government. So, there is now a clear impression that certain people in government are really willing to betray those who need retirement later on and base that risk on the ‘I need to look good now’ option.

Am I exaggerating? Is it about their view, their look? That is a fair question, yet messing around with long term pension building, not just the basic fear that people might end up with no more than 55% of their retirement funds is a dangerous act. This is not even taking into consideration dangers of additional future bank and investment failings where the buffers are currently still way too small and too much danger is placed upon funds that needs to feed a generation is just short sighted and completely unwarranted and therefor unacceptable.

What is the opposite side? Well, if we pay a little too much now, then we do get into a field where pensions will be a true safety net, especially in ages where all costs keep on rising and rising. The AOW (Government paid pensions) will remain a true safety net and could be a future foundation of safety. All that should not now or ever be endangered by unproven and assumed options for revitalising the economy. This looks like an upcoming excuse where the statistics of a better economy in 2014 (a claim that is nowhere near any level of certainty) should not be fed with long term securities. I personally see that any politician signing of on this one is to be held liable. There is the crux; they will not care as it is all about the now! Can we allow politicians to remain in office as they overspend for such a long time, not being able to balance their accounts and now are willing to endanger the next generation?

This is not just about the Dutch system. We should investigate these issues as they are likely to emerge in the UK, Canada, Australia, France, Italy and other nations. These nations are all in a state of deficit and as such, politicians in those nations would also seek a way to look good. Playing poker with the retirement funds of a next generation is an unacceptable gamble which should publicly be stated as null and void.

It is very tempting for the young, restless and party generation to not care about those issues now, but those who are not in a field where they are assured of long above average paying employment will soon thereafter learn the hard way that they are looking towards working another 15 years just to make the bare minimum.

If a politician has one clear responsibility, then it is not about getting by now, but to create safety, stability and security for the future. We are used to the short-sightedness of ‘Excel managers’ managing the needs to their next commission with a lack of long term vision, we should not allow politicians to do the same to the future of so many.

 

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June 22, 2013 · 16:57

What is an economy?

Yesterday we saw all kinds of movement in the markets. The start of this was a violent sell off in almost direct answer to a message be Ben Bernanke (Source:  http://www.guardian.co.uk/business/2013/jun/20/stock-markets-violent-sell-off ). It is a name that ‘shines’ to some extent when we watch the movie ‘Inside Job’. Mr Bernanke has been involved with the Federal Reserve for over a decade and has been the chairman of the Federal Reserve since 2006. Bernanke’s message that started a whole lot was to end QE (Quantitative Easing). Is it wrong? That is the debate that many want to start, yet we are currently in a phase where this approach to bond buying must stop, the question is not just why, it is also current to ask why not sooner, or why would this have such a strong effect on global markets to this effect.

Does this event show that the US is actually getting stronger, or is the rest of Europe’s so much weaker? My initial voice goes to the second part and I will explain why. If we consider the outstanding debts then we must agree that the US remains now and for some time to come on the utter brink of bankruptcy. The total US debts are well over 120 trillion (almost 17 trillion national debt), which is so much outside of the reach of repaying for a long time to come. There is the valid question why the US should support Europe to the extent it is doing at present. Europe is so not getting a handle on their spending and many nations are showing more and more delay to getting it all under control. This is not just fuelling UKIP and the reason that the UK population is more and more intent on leaving the European Community, parties within the US are validly asking, why are we paying for all this? As the US pays the IMF and they keep on pouring money into bottomless pits like Greece, more and more are asking questions as to why this should continue.

It gets even better. If we add the sums of payments by the different parties into getting the economy going (jump starting was the label they used) , we end up with an amount well over the sum of all outstanding mortgages in US and Europe. So if we consider that amount, then consider the option of paying of the mortgage of EVERY household making less than $70K. That amount would be less than the amounts paid to get the economy started. In effect, no mortgage means that people would be spending money everywhere and the US (and also the European Community) would have an economy that is up and running.

So as Ben Bernanke stops QE and as the US is buying back the outstanding bonds the markets will not suffer, but they will reflect the poor position everyone is in.

If we see the past of Rothschild we see: “Amschel Rothschild’s (1773–1855) definition of economy saw this as financing national projects such as wars, goods and infrastructure”. Economy would be defined as a national economy as a classification for the economic activities of the citizens of a state. So our view of economy (you and me in general) sees this in relation to the citizens. As such, the US economy is seen as extremely poor as one out of six lost their house; one in ten had no job. This has now improved to one in 12 (which is really not that good yet), yet the overall considering healthcare (or lack thereof) and other topics mean that the economy is not yet in a state of health. It is only barely starting to be on a road to recovery. The Federal Reserve is considering that dropping QE would enable a stronger wave of recovery. Is that wrong? When we read about the economy in many places, and how much better the economy is doing, we feel we are being lied to, yet, is that true?

that point of view only hangs on what the definition of economy is. In a global market where we look on how corporations are doing in their markets we see a definition devoid of citizens as they only consider the consumers. I think that their definition is wrong, yet it is not incorrect. Many of us seem to look with at the same picture with wrong (different) standards and values.

If the market drops (as it did yesterday) because these sellable items are no longer there, then this is another matter. If a shop loses one item and it drops to such an extent, then we see evidence that are (or have been) living for the most of the ROI of one successful item. Today’s message on the Guardian (source: http://www.guardian.co.uk/global/2013/jun/21/global-markets-stablise-crisis-euro) only gives strength to my views. It shows on how Greece needs another 3 Billion, how can this continue?

The article shows the following quotes that are important for the next part: “EU leaders in Luxembourg are holding a day (and probably night) of talks to create rules that force losses onto large savers when banks fail.”

So like Cyprus, those who saved money for their retirement will see it dwindle? Because in Cyprus those over 100K Euro lost a bundle. After working up to 45 years, their retirement all based on joy of working hard is getting cut because no one has either the guts or the insight to actually deal with the banks and the governments behind these events?

Sweden’s Finance minister Anders Borg emphasised on the dangers of those moves. Also stated in the article by the Guardian was “A draft bill has suggests bank shareholders should suffer first, followed by bondholders and then savers. A new fund could also be set up to oversee new tighter rules.”

Now, I get the shareholders suffering side of this. When you invest in shares, you invest in risk. Yet the one part that needs an overhaul, the banks and their board of directors are still not properly dealt with. So whatever draft will be created on dealing with banks and their path of recovery is still not laid out in full. However, with the promotion of bad bank separation only gives pressure on taxation and tax payers. Who wants to live in such an environment, where what I see as unacceptable levels of risk-taking remaining undealt with. To me it seems that it is more humane to legalise drunk driving as that will only kill of a few people, the fact that banks and risk-taking financial institutions can dump these levels of risk on a population group many times the size over is just absurd.

We see all these ideas and patch jobs, yet the instigators of the harm we witnessed since 2004 keep on getting a pass by ‘the deans of industry’ to walk, talk and deal wherever they want. Especially after Cyprus, where we now see the legal proposals to force losses somewhere, seem to be less vocal on jailing the board of directors of banks when these levels of loss become visible. They apparently did not break any laws. If being drunk in traffic is no defence in court, how can irresponsible short-sightedness in financial institutions be legal? This level of high stakes poker where losses are not punished and winnings go to the individual must stop. In that same regard where the European Community (EC) is adding nation after nation, and when these places start to overspend as banks and politicians that the EC stamp is a free for all for name and fame making is short term and the outstanding debts are all dumped on the tax payers in the end. Perhaps it is no longer about saving failed banks. Perhaps any failing bank should be nationalised. The members of the board are investigated for negligence, whilst their belongings are sold at auction and they are scrapped from the banking and financial industry where they may never work again on any level of authority.
Yes, I agree this is equally an overreaction.

Yet, currently nothing seems to be effectively done. Greece remains a slice of evidence in that regard. It is nice for the Greek population to blame others (especially Germany), yet these levels of non-control into the Greek debts come from Greece. It is their own previous government being so utterly irresponsible, not to mention some of the financial institutions who were residing there. From Bloomberg this quote came: “Let’s begin with the observation that irresponsible borrowers can’t exist without irresponsible lenders“. There is logic in that statement. Can we however also mention that Goldman Sachs had given the assistance to hide the levels of Deficit in Greece? So there were more elements in play. Perhaps, when the Greek banks do go into a toxic bank solution, they should consider adding their entire Greek mortgage portfolio and add that to the bad bank. If you truly want to start an economy, taking away their fear of homelessness will go a long way. Especially when the monthly mortgage could then be spend on items that truly jump start an economy.

When nations and conglomerates are talking about the economy, then you should ask them ‘what is YOUR definition of an economy’. It is the same issue as companies hiding behind revenue. Revenue sounds nice, but the reality is profit and contribution. It is what is left after the costs are removed. You will see that many places are not in a good position and they are not getting better any day soon.

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