Tuesday, March 03, 2009

Who will save the Savers?

Here is ANOTHER comment inspired post - from ConservativeHome again too. Oh dear!

As explained in other comments and IMHO our economic system, based on fractional reserve banking and the necessity for perpetual exponential growth that underpins it, does not HAVE a future. A total re-think that recognises 'Limits to Growth' so-to-speak is what is required and I see precious little sign of that happening short of the cataclysmic force majeur that I judge will occur sooner or later anyway.

Be that as it may, on the assumption that the whole creaking edifice CAN be resurrected and propped up one more time, here is my personal experience of government actions and bailouts to date:

Over a 40 year, mainly self-employed business career, I have built up a modest pension fund (actually by the standards of the Fred Goodwins of this world, 'minuscule' would be a more accurate description). Back in 2004 I could clearly see the storm clouds gathering and moved the lot into deposit-based funds. With the Footsie then nudging 5,000, that turned out to be a little premature although at current levels I am comparatively better placed than most. Anyway, at that time the going rate for annuities at my chosen retirement date was around 7% (A few years earlier nearer 10%). Today it is about 4% - a 43% haircut! Had I not moved to cash, the value of my pot would now be about 30% less, implying a total haircut on the prospective pension of around 70%. That is probably typical of anyone relying on a personal pension whose fund is invested in equities and, given the incessant urgings of government about private pension provision and the obscene levels of such provision enjoyed by those doing the urging, it is nothing short of scandalous.

As if that is not bad enough, when taking benefits I am required to use 75% of the fund to purchase an annuity. From whom? - why an 'Approved Annuity Provider' of course, which in practice means a private Life Assurance Company. Can ANYONE have confidence that those 'approved providers' will be around long enough to pay my pension? I certainly can't and fully expect most of the balance of my little pot to vanish down another 'Black Hole' accompanied by yet more weasel words, crocodile tears and gross incompetence from those ultimately responsible - whilst they continue to draw their own tax-payer funded, protected and indexed pensions. This is the stuff of which revolutions are made.

So, who indeed will save the savers? - Because 'saving' appears to have become a dirty word doesn't it? Saving is anti-social (if not treasonable) when what is needed to save us all is SPENDING. 'Borrow and spend - BORROW AND SPEND' is the mantra - as though the actions that precipitated this whole sorry mess, can now be used to get us out of it. It really is Alice in Wonderland stuff.

When all this permeates through to the consciousness of the average Jo(e), He(She) is going to be as angry as I am - which means pretty damned angry. More weasel words are then likely to be the trigger for riots - as I think TPTB are only too well aware.

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