The Gaming Den

I can't remember where I read it, but I heard some bullcrap about the EU needing some ridiculously large bailout, like 16 trillion euros or some shit.

What the hell happened here? I thought the EU was doing all right except for some isolated banking incidents?

Certain countries such as the UK are really suffering worse than the US from the financial crisis. Incidentally, regarding your history thread, if you want something to feel guilty and bad about, your country is largely to blame for this.

I mean, sure, I'm still not quite over our embarrassment of our Iraqi mass murder so what's another bit of malicious ignorance on behalf of the US but bwuuh?

How the hell did this happen? I thought Europe had a less, you know, stupid approach towards the financial sector. UK I can sort of understand since they had Thatcherism and all, but Spain and France? WTF? The whole point of the US acting like a bunch of fools was so that other countries wouldn't do it.

16 trillion is way out of whack. That's the whole GDP of the EU.....

Ok just googled it and the UK Telegraph did run a story saying 16.3 trillion pounds (25T dollars) of toxic assets were on the books. The story was quickly editted not to include the numbers for some reason.

Some whacko tells the story here But his other noted work is 9000 pages showing the the bible is free market and anti-socialist so believe what you will

Fun fact: Iceland recently collapsed. Like, all of it. The country. The three banks that manage all of the nation's wealth were leveraged for some ridiculous amount like ten times the GDP, and it came crashing down on them in a major way. That probably has something to do with it.

How much is Iceland?

Can we buy pieces of it now?

Also, how is Sweden doing? I'm insanely curious about that nation as it's like some parallel-evolved cousin of America that somehow succeeded in many ways that America has always, and will probably continue, to fail.

For instance; suddenly passing (shoving) a massive reform AGAINST environmentalism to ensure that the nation has enough power in the ever-increasing threat of nonrenewable resource drain.
The result? More nuclear power plants.
For the better.
In contrast, far too many Americans spit the word "Chernobyl" when the topic of American nuclear power is mentioned, nevermind the fact that it was entirely a Soviet problem and a sloppy one at that...

The thing is that the US under Bush's watch convinced the rest of the world to purchase a lot of bad debt just as they convinced a lot of normal Americans to create a lot of bad debt - by refusing to actually have the SEC check any facts and rubber stamp everything as "sure thing" investments. So a bunch of banks in Europe were told straight up by the largest security and exchange commission in the world that a bunch of this bad debt was actually good debt, so the assets got mixed into the portfolio. Also, a bunch of countries like Italy and Germany are severely dependent upon industrial exports, which means that their economy hurts when other peoples' economies hurt, whether they do anything wrong or not.

But yeah, Iceland only has three resources: Cod, Geo-thermal Power, and Surreal Culture. So mostly they operate themselves as an international brokerage - loaning out money leveraged against their virtually limitless energy reserves and buying assets overseas. I mean, the Icelanders own White Wolf these days. With the collapse of international investment, Iceland collapsed like house of cards. Their nation is now bankrupt, their government collapsed, and the future looks pretty bleak. They are actually hoping that the notoriously recession proof electronic entertainment industry will eventually save them. Fortunately, the entire country only has three hundred thousand people in it. The city I live in is over four times the size of the entire nation - finishing the World of Darkness MMO could actually salvage their faltering economy.

Historically, the EU has been dominated by Thatcherish thinking. The EEC in Brussels seriously gave out weird monaterist tirades from time to time. It's helpful when they want to drop barriers to travel and trade - but they've seriously been on Sweden for their huge pile of social services for decades - which is exactly the kind of thinking that got the US into this mess today. So ironically the countries that caved in the most to EEC privatization schemes are the most "on fire."

If you're wondering, the Czech Crown lost 20% of its value in the last 2 months. Which is fine with me, because I am not paid in Czech Crowns. The Czech Republic is currently the nominal head of the EU - and the Czech President is a god damn corrupt moron who sucks the cock of Milton Friedman and Dick Cheney whenever he gets the chance. He rails against environmentalism and internationalism as the twin terrors that will somehow destroy everyone. But yeah, the Czech's stint at EU chairmanship has been so disastrous that they may not let the rotating presidency go back to us in my lifetime.

-Username17

Financial instruments were allowed a huge amount to work with from a tiny amount of leverage; hence, they're further in debt than the US banks.

Some countries - like Iceland - aren't at fault for this, there's no reason they shouldn't have been able to make their payments, but when the loan is called, you're up a crick. Other countries - like the UK - have nothing to barter for their money so they're also at a loss. What they need to do is join a larger currency system. The EU would be in good shape were it not for their stupid lack of laws regarding leverage and credit default swaps. A few countries - like Lebanon - never allowed this stupidity to start up, so they're in fine shape and trading normally. But they're the minority.

-Crissa

PS, the fact that none of the new nuclear power plants actually use the technological advance known as 'standardized parts' is really a good bet against them. Sweden has 0 new plants to show for its investment, and the biggest, first one that was started has basically been poured more than once and scraped on the ground because they fucked up building it because they didn't review the parts, contractors, and plans before starting it. For instance, the concrete laid for the core was of insufficient density and laid poorly because it was bottom bid - and then no one watched the contractor to make sure they did it right, which they didn't.

Koumei wrote:Well it doesn't seem to be doing too badly, but my girlfriend lost a lot of future money with her Super, so... I'm not sure.

Super(annuation funds) are pension funds for those of you/us from North America.

Just to point out that unless she is retiring soon she hasn't necessarily lost anything. You only lose money on an investment if you sell at a lower level than you bought it (or it is defaulted on). Assuming she has years of workable life ahead of her, the assets she is holding have plenty of time to recover their value.

Those interested in the crisis might find this interesting as long you don't mind Niall Ferguson's slant on things

ckafrica wrote:Just to point out that unless she is retiring soon she hasn't necessarily lost anything. You only lose money on an investment if you sell at a lower level than you bought it

Er, no right now her assets are smaller than they were before.

Not to mention as a managed fund here smaller assets almost certainly have at least in part (if not in large part) been sold at a loss during this process.

People like to pretend the number in their Super is just play money since they have very little control over it. But it is actually real money and when it goes down you have really lost money.

Once upon a time my Super fund was bought by another one that transferred the account without my permission and slapped a warning of a large fee onto me if I now transferred by choice. They proceeded to lose my money consistently until I copped the fee and moved.

Moving to a mildly functional fund was comparatively a significant profit. Of course what would be REAL profit for me is if I had direct control over my assets since Super in Australia is basically a giant semi fraudulent scam.

EDIT: Oh yeah, and in other news Australian super is in a way a small contributor to the Credit Crisis. See the whole motivating factor for privatising pensions and forcing us all to save significant portions of our income (aside from the "privatise yo momma and like it bitches!" policy) was that it made the private savings vs private debt books look better, allowing private debt to grow further.

And better yet when the private debt problems cause market fluctuations we then all lose large portions of our "savings"! It's win win! Why pensions and welfare wasn't like this from the start we will never know!

FrankTrollman wrote:Historically, the EU has been dominated by Thatcherish thinking.

The unfortunate conclusion is that most governments are dominated by such thinking ... the council/commission merely gives them a way to act out safely away from the eyes of their backbenchers and local media.

EU parliament though pretty liberal is in a poor position to reign them in without a formal right to amend. There is rarely any give and take, it's either rubber stamping or rarely full obstruction.

The super thing is a bit of a misnomer - If you owned 1% of BHP, you still own 1% of BHP.

All that has changed is that the market valueation of that asset has changed - but your right to the future stream of cashflows embodied in 1% of BHP hasn't.

So yeah, your share is worth a lot less on the market, but hurray, if you wait a couple of years it will be fine, and if you're about to retire and haven't adjusted your super mix you are an idiot.

Incidentally, I'm surprised self managed super funds are not more common in Australia. My parents are heading up for retirement age so they are rebalancing their portfolio and its not quite as good as some of the top performers, but because the management fee is 0, I still have consolidated all my super into that.

As a philosphical point, forcing private savings and cutting pensions is critical unless you are willing to implement social engineering schemes to control your dependant ratios.

As we are categorically unwilling to do that, I think super is a good solution. I'd advocate further cuts to part pensions and an increase in the super levy, payroll tax cuts and income tax increases imho.

I'm calling bullshit on Super being a good decision for society.

It's nothing more than a way of cooking the books for national private debt and forcing the Australian people to give vast amounts of money into the hands of private companies as part of the general robber baron corporate cronies network.

The bit where part of your income one day pays for your pension is the way it has ALWAYS worked, only in the past that part of your income was tax and the group that held onto it was the government.

They used that money for things that benefited you and society RIGHT NOW as well as in the future.

They did not have a goal of personal profit ahead of your welfare and were highly accountable, and compared to most private funds a lot more stable and competent.

You know what would be a good move for government? Diddling about with taxes, bah! They could renationalise all Super assets. That is one hell of a lot of money to spend on stimulus in our time of need.

PhoneLobster wrote:I'm calling bullshit on Super being a good decision for society.

It's nothing more than a way of cooking the books for national private debt and forcing the Australian people to give vast amounts of money into the hands of private companies as part of the general robber baron corporate cronies network.

The bit where part of your income one day pays for your pension is the way it has ALWAYS worked, only in the past that part of your income was tax and the group that held onto it was the government.

They used that money for things that benefited you and society RIGHT NOW as well as in the future.

They did not have a goal of personal profit ahead of your welfare and were highly accountable, and compared to most private funds a lot more stable and competent.

You know what would be a good move for government? Diddling about with taxes, bah! They could renationalise all Super assets. That is one hell of a lot of money to spend on stimulus in our time of need.

The problem with government and corporate pensions is that the actuarial formulas that were used to design them became out of date. We simply living a lot longer than the designers expected and so the cost of operating them outstripped the money coming in. This is because many pension funds were designed under the assumption that new workers contributions would pay for the retirees (many have been cheated/mismanaged by their corporate managers as well but that just a compounding of the problem rather than the root cause). To maintain the pay outs to current pensioners, the pension funds will have to increase the payments made by works of today.

The advantage of a RRSP, 401k or superannuation is that it's your money and only ever your money. The bad thing is if you are badly positioned in a decline like we're experiencing now, you could see an asset value reduction, which, should it not recover before you need it, might leave you in the lurch. If you played the market right this last year, you could be ahead significantly.

ckafrica wrote:The problem with government and corporate pensions is that the actuarial formulas that were used to design them became out of date.

Firstly that is not entirely true, while number of workers might eventually shrink and number of pensioners certainly will rise the wealth and productivity of society has ALSO risen significantly. Those who typically declare pensions to be in economic crisis are right wing hacks using dodgy figures, case in point the attempt to sabotage the US system under Bush based on entirely fabricated claims of future insolvency.

Secondly there is nothing that prevents governments from making adjustments to the system. Indeed it would be assumed by the workers engaging in this social contract that appropriate adjustments and their power to influence them through the democratic process is part of the whole advantage over using a network of private income pirates.

Thirdly poor planning of economic futures and poor handling of assets is a major flaw of the private pension system.

And finally the increases in life span, as well as the productivity and wealth that really can pay for it happens to be a direct result of all the wealth the government gained in taxes and spent as part of the whole social welfare deal. Giving that money to groups NOT in the business of using it for the betterment of society is by far the biggest flaw, indeed crime of privatising pensions.

The advantage of a RRSP, 401k or superannuation is that it's your money and only ever your money. The bad thing is if you are badly positioned in a decline like we're experiencing now, you could see an asset value reduction, which, should it not recover before you need it, might leave you in the lurch. If you played the market right this last year, you could be ahead significantly.

So you get to own your own assets no matter how unfairly large or small they are, and own your own risk no matter how large or small?

If you think that is a good point you don't understand the morality and justification behind taxation and welfare in the first place.

PhoneLobster wrote:The bit where part of your income one day pays for your pension is the way it has ALWAYS worked, only in the past that part of your income was tax and the group that held onto it was the government.

But now the tax rate is lower, how awesome is that. Everyone likes less tax. That super deduction, totally not tax with a different name.

I suspect enough people buy that to make it electable.

1) Supers can't lose money unless you move their funds around while they're 'worth less'.

2) They're still a stupid idea. If the companies managing them have any way of pushing off debts to tomorrow, it's smart (via profit motive, profit now > profit later). Which leads to pension funds running out of money and the companies that created them getting in trouble (see GM, Chrysler in the US right now).

PL is right on this one.

-Crissa

Crissa wrote:1) Supers can't lose money unless you move their funds around while they're 'worth less'.

Let's put it this way. Two guys magically get their Super contributions in cash at the beginning of the current economic crisis.

One put it in his super.

The other stuffed it in his mattress until now.

The first one has irrefutably lost money.

What either may do with their assets in future is irrelevant, the first one has less.

RRSPs have been around in Canada since the 1950s so I don't believe Bush can actually be blamed on them. And yes I like the fact that I can put my money into it and assuming I make good calls on my investments, I reap the benefits. And if you were being smart and paying attention over the past year, you could make profits.

Your scenario of mattress vs super in a one year basis is circumstantial. If I had invested it at the november bottom in China, I'd be up around 20% right now and you'd have just what you got started with. And over 5 years my super will always be bigger than the money under the mattress even if I did put the money in at the top. (Well assuming we don't go into a a cycle like the japanese markets have done since 1989.) I only lose money if I sell now when it's value is depressed. Assuming I can wait I'm fine; behind on by growth projects but fine.

Your money under your bed will have actually depreciated in value due to inflation btw.

Do I begrudge the existence of social security and government retirement plans, hell no. There has to be something there to assure that we have basic security for everyone in their old age, especially with our societies becoming increasingly less inclined to assist our family elders in their twilight years. But I'm not terribly thrilled that I'll likely be asked to pony up for the errors made by bureaucrats decades ago should I ever go back to Canada.

And I'm real glad I am not under one of the many pension schemes that have been actively fucked by its employers. The Nova Scotia teachers pension has been ass raped by the government because the won't pony up the millions they owe and it the young teachers who are going ass to mouth on that cock.
United airlines pensioners similarly got fucked in their 2004 restructuring and GM pensioner are staring at a 12.8 billion deficit in their pension fund for this year. Guess what is at the top of the pile for the automotive restructuring.

ckafrica wrote:And over 5 years my super will always be bigger than the money under the mattress even if I did put the money in at the top.

That is not actually true depending on the market and on the super fund. Right now in Australia basically all of them are making a loss and probably will for at least the next year or more, and some predictions extend to the 5 year range.

And yes those losses are bigger than the losses from inflation.

Imaginary perfect case investment is NOT an argument against the fact that the vast majority of people in my country right now are losing vast sums of their retirement money.

Imaginary perfect case investment is NOT an argument in favour of the system in my country that does not actually deliver imaginary perfect case investment and of course CAN'T. Indeed it regularly offers worst case investment, with fees and large hurdles with further fees and bureaucracy for you to take any measures to slightly remedy the situation.

And even if you are in a moderately comfortable fund you can experience what I did and get your savings snapped up without permission by a bunch of incompetent pirates. Or your fund could suffer the losses they ARE suffering right now so badly that the whole thing goes under.

And don't think self managed is the answer, it's not as freely self and the initiation of the policy was marked by large numbers of idiots losing their entire savings.

PhoneLobster wrote:I'm calling bullshit on Super being a good decision for society.

It's nothing more than a way of cooking the books for national private debt and forcing the Australian people to give vast amounts of money into the hands of private companies as part of the general robber baron corporate cronies network.

You know you can use your super money to invest in whatever you feel like?

Its not like the government is leaning over you and saying "YOU SHALT INVEST IN BHP" You can invest in cash, government bonds, residential property, whatever you feel like.

Anyway, look, it boils down to the fact the dependant ratio is massively changing, and yes, while our productivity is increasing, the standard of living expected by retirees is also increasing in lockstep. The Australian pension is living on the poverty line and needs to be either supplemented with

A) Massive private savings (Super)

B) Massive increases in income tax

Its not like you need 'less money' if you abolish super and give it to the government. You'd need to up taxes. As the estimated savings rate you need is 15% - by 15% across the board. This might be a bit unpalatable. Especially given that when the use does exactly what you are advocating, they invest in government bonds. I shall now show this is a problem.

Super is a long term investment. The share market makes 6% roughly p/a over a 40 horizon. Government bonds make.. less. Like 3%. Cash makes 0%. Inflation is 3.5%. Now the retirement age is 65, your working life is 40 years.

The government cannot really spend that money as the size of future liabilities is large. And if you want the government to invest in bonds, you need to up that tax rate increase to like 20%. Seriously, the current australian system is where it is at

A) Social safety net to pick up the needy

B) Mandatory savings plan to force people to save for the future

C) Flexible choice of offerings so people can tailor it for their needs.

Finally, the government cuddles us all plan has been discredited. The US social security system is essentially the system you advocate and it is.. stupid.

You can't just 'stuff' random money into your Super.

That would be called 'investing' and is taxed differently.

-Crissa

Nah, Australia has special provisions for investing into super annuation where you can salary sacrifice directly into your fund, which is only taxed at 15% rather than your income tax rate (which for me is quite a bit higher)

That's what I mean, cthu.

-Crissa