It's a cool but bright morning here in Sydney, lifting my mood. For reasons that I won't bore you with, I have had some difficulty in concentrating this week. I haven't been very productive at all. With the light brighter, I spent some time wandering around the internet, just reading.
Staying with the writing theme that began with So you want to be a writer part 1, fellow New England writer Denis Wright's Chutney, decisions, and writing looks at another aspect of the writing bug. It's a short piece, but worth reading.
In the midst of what has been a gray week, I did manage to dash off a 1,200 word opinion piece for On Line Opinion's December feature topic, Christmas: Naughty or nice: what should Santa bring Australia this Christmas? is the topic's theme. I will post a link here once its on-line. 
The search for Malcom Naden, Malcolm Naden & New England's fugitive country provides background, continues. Tim Barlass's latest story How police stumbled on fugitive provides something of an update.
It's been very wet in the area. This photo from Gordon Smith's lookANDsee is further north and in more open country, but will give you a feel for the conditions. Where Gordon lives outside Armidale, the annual rainfall is around the 770 mm mark (30 inches). So far this year it's been 1100 mm (43 in.)
Not pleasant conditions to be outdoors, especially if you can't light a fire!
On 6 December, Curtis Cartier reported on the case of US blogger Crystal Cox: Crystal Cox, Oregon Blogger, Isn't a Journalist, Concludes U.S. Court--Imposes $2.5 Million Judgement on Her. The story includes a link through to a copy of the actual court judgement.
The case is very much linked to US shield laws that protect journalists and sources, but is still interesting because it bears upon these questions: are blogs in fact part of the media; can bloggers especially independent bloggers claim to be journalists; where should the line be drawn? If you have time, have a quick browse of the judgement itself. Having read some of Ms Cox's material, I wouldn't classify her as a journalist myself, but that's just a personal opinion independent of the broader arguments.
The Australian media has been reporting on developments in Europe at some depth. I haven't commented at any length because I haven't had a great deal of value to add. However, European events over the Euro and EU are taking place against a background of broader economic change.
On Wednesday 7 December in one of my presently rare posts on the Managing the Professional Services Firm blog, Why Chinese over-investment is important, I reported on the views of Michael Pettis on imbalances in the Chinese economy. On 8 December, a report in the Indian Economic Times recorded that Indian industrial output fell by 7% in October, dragged down by a fall in the capital goods sector. Then on 10 December in the Sydney Morning Herald Ian Verrender's The madness that lies at the heart of the super system provides some interesting insights into problems with Australia's national superannuation scheme.
Three apparently disconnected stories, but each indicative of elements in the change process, with investment the common link.
By way of background to international readers, Australian has a compulsory national superannuation scheme under which employers must pay a proportion of salaries into a superannuation account chosen by the workers. The numbers involved are now quite mind-blowing.
China has a bit over $US2.3 trillion in overseas reserves. By contrast, the value of Australian super funds is now around US1.3 trillion. That may be smaller than the Chinese number, but its still a very big number and growing.
Now the growing size of Australia's accumulated superannuation funds raises all sorts of issues, some of which are explored by Mr Verrender. However, the thing that is niggling at my mind is the nature of investment and returns on investment itself.
I don't have time to spell this out today, so I will finish with a simple statement.
Global economic change requires a rebalancing of investment in a general sense. That's not new. We have seen it before. But what happens if at the same time the global desire to save exceeds real global investment opportunities?
Here my focus is not on the conventional macroeconomic effects, but on returns to investment itself. On the surface, surplus capital can only be accommodated via a fall in returns on investment. What does that mean? Further, what happens if there are market imperfections that actually prevent effective matching of savings and investment?
I guess that you can expect more on this later.
7 comments:
I loved Ian Verrender's piece. I always wonder how I can get the government to legislate so that people have to give me money and I can charge them for the privelege - a nice position to be in I think.
And his point that more of the money could be spent in Australia on worthwhile things bears examination (though the history of public-private partnerships for toll roads isn't exactly inspiring!)
this is so I can get email comments
It is a good piece, Evan. I have actually written something on the super issue from a purely local perspective. I will put the link up later.
The problem with private public partnerships, perhaps I should say one problem, is that they substitute for and are riskier than, the semi-government and direct state borrowings that they replaced. I think that have actually reduced super portfolio options.
Hi Jim
The super thing is a really sore point with me I'm afraid. I basically hate the fact that 'the government' forces me to forego part of my present earnings towards future retirement. There are a couple of things which niggle in this approach:
1) Historical. My father, every time he received Army promotion would 'buy back' his DFRDB contribution level, so that in retirement he was entitled to a higher pension. It wasn't called DFRDB back then, but who cares anyway, because in the mid 60's, I think, it became apparent that all of the contributions flowing into the DFRDB were far in excess of the proposed benefits, so what happened? Easy fix: the entire fund was 'absorbed' back into general revenues.
Part of that present laughably named 'Future Fund' is probably still my own father's excess contributions to his never-claimed pension benefits.
2) We are now in the position as both you and Verrender point out of very large salary confiscations flowing into badly managed super funds. And with that came the rise of yet another group of rent-seeking 'managers' each happily competing (with our money) to outdo each other in 'return'. Plus performance bonus, and early termination clauses, and free car parking at Sydney Airport for all I know.
A pox on the lot of them. They are given free chips in the casino that is the Australia investment scene, and we are hit with paying them bonuses if they lose the least?
Sorry for rant.
kvd
Understand your gripes, kvd. I still remember how when I had to draw down on super the amount I got back was less than I had to put in after taxes and fees. It's become a bit of a lottery.
Lottery - yes Jim
My description of Dad's treatment was very shorthanded, but reasonably accurate. My main memory is that his 'back-contributions' were a significant drain on family funds.
My oldest brother, Brian, was the senior NCO in the Australian Army at the time of the robbery (sorry - redefinition), and one of his many duties was to be involved in the discussions around this (straight out theft) - scratch that - 'rearrangement of fiscal priorities to better reflect continuing monetary imperatives'.
Or some such crap.
kvd
Interesting if depressing, kvd. If my memory serves me correctly, this was the time when a number of then super funds (private as well as public) were raided on very similar grounds.
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