Finance, coronavirus, the economy, etc

UKBouldering.com

Help Support UKBouldering.com:

Offwidth said:
The Miners' scheme actuaries were working for the government and Ralfe was accusing them of not using the standard valuation methodology.
......

Yes bonds would have been safer in bad times but overall they grow much less fast over long time periods. A mix is best if you want to safely build assets.

I would be lying if I were to claim I know that much about whether the GAD has the ability to use very different valuation methods to those used in the private sector, but I would have guessed they probably dont. On the face of it, being able to use a significantly better assumed return than the index linked gilt yield doesn't sound especially controversial given what the article said about the asset mix. I didn't see anything in the article you linked that invalidates that, I don't think (an expected return on assets calculation yielding an expected return of higher than the linked gilt seems fairly plausible based on my understanding of how they might do it). But as I say I claim no great expertise on the fine detail of pensions regulation and how it might differ between GAD and the private sector.

My point wasn't that bonds are safer (generally you would assume that they are but it's not relevant to the point I was trying to make). The liability calculation behaves in effect like a large bond value calculation - you take a set of payments, you discount them at an interest rate, you get a liability value, in the same way that you would derive a bond market value. Mechanically therefore investing in bonds means your assets behave in the same way as the calculation of your liabilities with respect to interest rates and therefore you get dramatically reduced sensitivity of the surplus/deficit to interest rates. It's about the way the calculation works rather than about the assets themselves.
 
From having had a slightly deeper look, the schemes seem to be set up as any other (aside from things like the profit share) in terms of having a trustee and a trustee company and whatnot, it's just that the actuaries are GAD rather than a consultancy firm. Technically they're probably working on behalf of the trustees in that case, but more importantly I failed to find anything to suggest they were doing anything under different rules than normal.

1. I'm obviously not claiming to have proved a negative, just noting that from a skim of a few relevant documents I couldn't see it.
2. This leads me to default back to my initial conclusion pretty much. I'm left with similar feelings to when I read an article on climbing in the mainstream press - there's some correct facts here and there but the whole thing just doesn't quite fit together into a coherent story, or the conclusions don't quite make sense. I'm sure you get the same when your area of expertise hits the press.
3. :eek:fftopic:
4. :sorry:
 
petejh said:
In reply to Sean,
I’ve just come back to this thread, after being thoroughly pissed-off by what I perceived was the dismissive and condescending tone of Sean’s reply to what was a genuine question by me.

But reading your following reply about anti-vaxxers etc. (which I hadn’t seen) explains a bit more. I share your distaste of people ‘into bullshit’ so thanks for explaining.

I clearly misread the intention behind your original post - my apologies. Good luck with the investment!

Johnny Brown said:
We are all so invested in money's legitimacy that pointing out its illusory nature has become something of an revolutionary act. No surprise, then, that people are keen to theorise that it's value rests on more than imagination.


As for the general interest in money (the stuff), perhaps it is a struggle to see something socially created as "real". For sure money exists, and it's value is as a result of us thinking it's real, rather than being linked to gold or silver. But so what? As an analogy, consider caste in South Asia. Caste is most defintely "made up" (if a long time ago, and by the interactions of lots of people including us), but that doesn't make it any less real: it's the foundation of marriages, political parties, affirmative action schemes, the geography of villages, towns and cities. My better half thinks caste is complete bollocks but you can be damn sure she knows what caste she is and which members of the family are of a different caste!

And whilst caste is an awful lot of habit, it is also about something real, namely the division of resources and power in society. Money may be imaginary, but how else are you going to exchange stuff including your time?

This is old but covers money a bit:
https://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2011/11/monetary-cranks-vs-jessie-j.html
 
As for the general interest in money (the stuff), perhaps it is a struggle to see something socially created as "real". For sure money exists, and it's value is as a result of us thinking it's real, rather than being linked to gold or silver.

Sure. But to come at this from several angles:

Firstly, I don't think most people understand what a fiat currency is. Or fractional reserve banking. When these things are explained to them they are typically incredulous and then appalled. In most of the population there is a tacit but completely erroneous assumption that it must all rest on something a lot more concrete. Perhaps due to ignorance but surely also due to the fact that although fiat currencies have been flirted with for 900 years, they only really became dominant in 1971. This is a very new experiment, and one that makes many people instinctively uncomfortable.

Add to that the trend over the same period for the growing perception of money as a universal value system. We're now in a place where it seems impossible to express value in terms other than money. The worth of everything gets reduced to a cash value. That very narrow definition excludes but much of what makes actually makes life valuable. That we seem unable to question this as a society devalues these things further. Success today equals being rich. As I wrote a few pages back, what is it then that money is valuing? It's valuing the potential to make more money.

Money may be imaginary, but how else are you going to exchange stuff including your time?

To widen the context money is only real (as I mentioned a few pages ago) within the context of the economy. The economy is a subset of human society and human society is but a small subset of the biosphere - which is the real capital underlying all this. The economy is having a profound negative effect on the biosphere without any way to account for it. I'm sure some economists think it could given political will. I think this is profound hubris and only reflects a misunderstanding of the complexity of the natural world. This ability of money to move work and resources around in time can't just be viewed a bringing the benefits of modern life - the flipside is the destruction of the biosphere.

Thanks for the link - I was initially inclined to dismiss it but the comment thread is very interesting and touches on most of my beefs. Not many supportive comments are there! To attack the reality of modern money from a more economic perspective then, I guess this link from those comments is a much more expert critique than I can muster:

https://michael-hudson.com/2010/07/from-marx-to-goldman-sachs-the-fictions-of-fictitious-capital1/

Be interested in your thoughts.

TL:DR, you can go back to Marx who thought the value of money was derived from labour. Perhaps it was then, it isn't now. Such industrial capital did not dominate over finance as Marx expected, but the reverse happened, accelerating in the fiat currency era. Now money's value is based primarily on the ability to generate interest, rent or appreciation. It is self-referential, lacks solid foundation in physical reality, and being mostly wishful thinking given a number value is therefore highly prone to boom and bust. But it has such a grip on modern thought that we bailed the fuckers out.

"Marx characterized high finance as based on “fictitious” claims for payment in the first place because it consists not of the means of production, but of bonds, mortgages, bank loans and other claims on the means of production."

"Finance capital is fictitious in the second place because its demands for payment cannot be met as economy-wide savings and debts mount up exponentially. The “magic of compound interest” diverts income away from being spent on goods or services, capital equipment or taxes. “In all countries of capitalist production,” Marx wrote, the “accumulation of money-capital signifies to a large extent nothing else but an accumulation of such claims on production, an accumulation of the market-price, the illusory capital-value, of these claims.”

"Discussing the 1857 financial crisis, Marx showed how unthinkable anything like the 2008-09 Bush-Obama bailout of financial speculators appeared in his day. “The entire artificial system of forced expansion of the reproduction process cannot, of course, be remedied by having some bank, like the Bank of England, give to all the swindlers the deficient capital by means of its paper and having it buy up all the depreciated commodities at their old nominal values.” [15] Marx wrote this reductio ad absurdum not dreaming that it would come true in autumn 2008 as the U.S. Treasury paid off all of A.I.G.’s gambles and other counterparty “casino capitalist” losses at taxpayer expense, followed by the Federal Reserve buying junk mortgage packages at par."

I've not studied economics so this is probably 101 and taken as read. But it doesn't seem to be common knowledge.
 
andy popp said:
Oldmanmatt said:

Ayn Rand received at least $11,000 in social security during the last years of her life. She also received Medicare. But this was ok, apparently, because it was "restitution" of her stolen tax dollars, and not an entitlement.

I am surprised not a jot.

She probably also drove/was driven on public highways, cared for in her dotage by nurses or carers educated in state schools and generally benefitted from a myriad of aspects of social democracy, that she would have called socialist; if her head hadn’t been rammed so far up her own arse.
I really should read Atlas Shrugged though. Do the great and elite, wash their own underwear in their retreat? Or do they take staff with them? If so, did they raise and educate those employees from birth? When they built their business empires, did they also build the roads, educate all their employees, provide all their medical and welfare needs etc etc etc, during that time of wealth generation?
I don’t know. I’ll have to read it...
But I’m not paying for it, so a rip off copy.
 
I was going to put something in the YYFY thread, because we’ve been “silly” again here, in the name of having “adventure” and generally not doing what we would normally do.
You see, I would normally be quite careful with money. Had a bit of experience with “rainy days” and all that.
We’re not doing that.
We (Polly and I) have lost all our remaining grandparents over the last six months. Whilst it is possible that my Grandmother had Covid, at 93 and frail, it really could have been anything or, even, nothing. Both of Polly’s grandparents went to strokes and too early to be Covid related.
However, we both received small inheritances as a result.
We bought “kit” with it.
We bought a small RIB yesterday. Big enough for the six of us, small enough to break down and roll up into the van. Good for exploring the coast in fair weather and pootling around on the Dart or the Teign, towing the Kayaks or the SUP and finding little coves for a bbq etc. Coastal dive sites too.

Anyway, we wouldn’t have done this, if it wasn’t for Covid.
I’m sure we’re being way more “grab life by the balls” than we would normally be. Way more willing to spend than save.

Do you think this might be a common reaction?

Is anyone else feeling this way?
 
That sounds amazing. Im sure it is a common reaction but i think economy suggests that saving is cureently the more common choice!
 
Oldmanmatt said:
I really should read Atlas Shrugged though. Do the great and elite, wash their own underwear in their retreat? Or do they take staff with them? If so, did they raise and educate those employees from birth? When they built their business empires, did they also build the roads, educate all their employees, provide all their medical and welfare needs etc etc etc, during that time of wealth generation?

I read The Fountainhead on El Cap, partly for the irony! Although I felt its main ideas were complete bollocks, being an overlong Mills and Boon for proto political philosophers of her ilk, it was not without interest and I like to know the enemy. As ever in such works, her villains are real villains (at least despite the pantomime vision of them) but the heros seem to me like monsters as well: as an example one of the two main protagonists rapes the other, but that's OK as theirs will be one of the great true loves. That anyone could see these things as the most inspirational works ever seems laughable until you look at the names who said it was, when it becomes dangerous. I'm sure I will read Atlas Shrugged one day as well.
 
If rape isn't your thing in literature then don't go near Greek mythology! But Greek mythology could also be said to be some of the most inspirational works ever. Certainly more inspirational than Rand. Zeus seemingly raped his way through half his extended family, along with beastiality and torture.
 
Neither the Scandinavians nor the Mediterraneans never asked of their gods that they would be good or virtuous. The gods where not to be liked but to be feared and mistrusted.
 
The god of the Old Testament is not such a nice chap either, I believe.

As to Rand, I've long meant to read at least one of the novels, partly on a know thine enemy basis, and partly because I taught her work for several years. But I've never been able to summon up the resolve and fortitude.
 
petejh said:
If rape isn't your thing in literature then don't go near Greek mythology! But Greek mythology could also be said to be some of the most inspirational works ever. Certainly more inspirational than Rand. Zeus seemingly raped his way through half his extended family, along with beastiality and torture.

A bit late for that advice as Greek myths were a staple of mine from 13. I took them as a useful parable of bad behaviour, like most religion. People with power will very often abuse that position and any claims of religious motives must be treated with great sceptisism. The total dysfunction of Rand's great love story, starting from rape and moving to a public play of hate but totally dedicated passion in private seems an alien example to sell her philosophy but that's maybe because the philosophy was always going to be alien to me, as sell it does, and more.
 
andy popp said:
The god of the Old Testament is not such a nice chap either, I believe.

Careful now, the Jewish god as vengeful and the Christian god as compassionate is an extraordinarily unsympathetic description of G-d in Judaism. About as popular as Roman law, if you like.
 
A report of some economical analysis on the costs of prevention of future pandemics.

https://www.theguardian.com/world/2020/jul/23/preventing-next-pandemic-fraction-cost-covid-19-economic-fallout
 
Thought it might be good to revitalise this thread based on some of the comments on the Local Lockdowns thread.

This adds a bit of weight to my point: https://www.taxresearch.org.uk/Blog/2020/03/19/the-government-can-create-all-the-money-we-need-an-explanation/
 
Fultonius said:
Thought it might be good to revitalise this thread based on some of the comments on the Local Lockdowns thread.

This adds a bit of weight to my point: https://www.taxresearch.org.uk/Blog/2020/03/19/the-government-can-create-all-the-money-we-need-an-explanation/

Ahh, MMT.
Here's a critique of MMT, from the left, in fact from a think tank funded by individuals rather than corporations, so less ideologically suspect if that's your bag:
https://www.peoplespolicyproject.org/2019/02/24/whats-the-point-of-modern-monetary-theory/
 
Fultonius said:
Thought it might be good to revitalise this thread based on some of the comments on the Local Lockdowns thread.

Fultonius said:
National debt is never repaid, and likely never will.

I know you've resurrected the finance thread so I'm replying to a post of yours on Lockdown thread here - just in case anyone doubts the statement above, below is a graph of UK national debt since 1692 (more or less the start of the BofE) up until just post 2007 financial crisis, which as we know caused such (unjustified) panic that austerity was the result. So for clarity, "current crisis" isn't covid, it was the last one, although the current situation is basically unchanged in debt / GDP terms:

130904-1.jpg


I think it speaks for itself - the line never drops below the x-axis i.e. we *never* pay back the debt. Obviously there is a lot of historical context to take into account, but ultimately here we still are having been debtors for 330 years. The question of where it becomes a problem is, let's be diplomatic, unsettled. The only other comment I'll make is that expensive national endeavours (or catastrophes if you prefer) are what obviously causes the debt ratio to rise. Don't forget that we are guaranteed (another) one of these very soon, and I don't mean Covid. I suspect Brexit is playing into government financial calculations RE Covid despite it (Brexit) having been largely ignored / forgotten about by the public / media.

Fultonius said:
It really is the time for UBI to be properly explored. If peoples basic needs were covered, then businesses could effectively lie dormant until demand picked up. (as long as rates, rents, and interest payment were all frozen).

It would be worth exploring, but I would say the likelihood of the current government doing it are very slim, to none.
 
seankenny said:
Ahh, MMT.
Here's a critique of MMT, from the left, in fact from a think tank funded by individuals rather than corporations, so less ideologically suspect if that's your bag:
https://www.peoplespolicyproject.org/2019/02/24/whats-the-point-of-modern-monetary-theory/

Thanks Sean. I wouldn't say I'm in the "Modern Monetary Theory" camp, so to speak. I'd actually observed what has happened with QE since 2008 and come to that conclusion. Interesting, I'd posted something similar back before I binned farcebook and got a response from a friend saying I should check out MMT.

The link you gave ties in quite well with my thinking. I'm not naïve enough to think you can "have your cake and eat it", but I do think that at times of historically low (and even negatoive borrowing rates, with minimal inflationary pressure, we should flips things on their head and just fund what needs funded (and for me, right now, that includes energy transition, education, health) if that leads to inflationary pressure, then we tax. #

MMT has been bad-mouthed due to people thinking it means we can spend without consequence (tax rises), which is clearly bunkum. Doesn't mean we can't advocate a different way of addressing a country's needs though.
 


Write your reply...
Back
Top