Tuesday, 24 July 2012

Kiwisaver conned confirmed

The NZ Herald ran a story last weekend entitled Bigger KiwiSaver investment overseas predicted

Onepath predicts KiwiSaver will grow from about $12 billion now under management to $50b by 2020. At the same time it share of retail funds under management will increase from about 40 per cent to about 70 per cent, with total retail funds reaching about $70b, it says

This will mean that we have saved through Kiwi saver more than our share market is worth by 2020 and we will invest that money in the productivity of other countries – what losers we are!

Because our economy can’t absorb that level of savings under the current model the investment whizzo’s are going to put it into international share markets.  These while they have fallen back somewhat from their hysterical highs of the last decade are still horribly over valued and even the optimists expect no more than 2.5% return on capital from the Dow Jones for the next decade.  And that is if the money doesn’t disappear down the hole in the meantime either through business failure, skullduggery or inflation.  Remember that at the same time the EU, the USA and Britain are printing money like it was going out of fashion.  Your Kiwi saver will evapourate as this continues.

"The more money available [from KiwiSaver] the more money can come into the New Zealand capital markets and the more companies will use them," Body says.  "But the growth in the [KiwiSaver] industry will probably be too fast. That means more global exposure for a lot of fund managers.

So your savings are being used to help NZ’s capital markets grow fat- a bunch that even Stephen Joyce acknowledges as being less than honest over the past decade.  The investment advisors can’t see where in the NZ market they can invest so they are going to take it off-shore.  But BillE says that we need the money and the asset sales to build our capital markets.  The capital markets are saying that the asset sales wont make much difference.  And all that money pouring into the global capital markets is competing with all of the retirement funds of every other rich countries plus the money magic of the bank’s fractional lending and we will soon be wondering were our money has gone – a fool and his money – is an image that leaps to mind.

Body says state-owned asset sales will help. "But if you think about the raw numbers, we think KiwiSaver is going to grow $50b in the next 10 years and the [assets] float is about $6b in total.

Even if growing savings sees that triple by 2015, by that time the NZX may have a market cap of about $75b thanks to growth and proposed SOE privatisations, he says To date about $1b of KiwiSaver money is invested in the local share market from a NZX market cap of $58b

If the government wanted capital put into public assets why not just let KiwiSaver invest directly in our energy company through bonds.  Remember however that when all us old farts want our money out it wont matter whether it is through taxes or power bills - the next generation will cop the bill.

Why not use all this cash to get rid of the foreign banks that are bleeding us white and use the savings to fund our own internal borrowings – far safer and better returns than the share market, particularly the foreign share market.  Why not invest it in the rebuild of Christchurch?  Why not invest in energy self sufficiency? 

Do our leaders have no vision? No sense? No courage?

The current account deficit for the year to March 2011 was $7.2 billon, or 3.7 per cent of gross domestic product, Statistic New Zealand figures show.  Kiwi firms paid out $9.6b more to overseas investors than Kiwis received from other countries. On top of that we export another $4billion each year in Kiwisaver investments.  This is all stupid.

We are bleeding money and yet our leaders want to accelerate the bleeding.  Are they bleeding idiots or what?

Bigger KiwiSaver investment overseas predicted ELOISE GIBSON Business Day STUFF 23/07/2012

And Time magazine agrees with this current article...  Are Dividend Stocks the Next Bubble?

Dividend stocks are leading the market and some pundits believe the rally is a bubble about to end badly. But they may be underestimating the flood of income-starved retiree money heading this direction in a record low-yield environment

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