Alan Kohler is one of Australia’s most experienced commentators and journalists. Alan is the founder of Eureka Report, Australia’s most successful investment newsletter, and Business Spectator, a 24-hour free business news and commentary website. He also hosts Inside Business, a half-hour Sunday programme on the ABC, is the finance presenter on the ABC News - and producer of the nightly graph (or two).
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Comments on this article
Comments PolicyBill, the formula is simple. GDP (gross domestic product) is a furphy. It is a lie. It does not exist (The great super time bomb, August 3).
Divide the world's economic activity by the world's population growth. It has to be a big negative.
So until world leaders address the one, the other is a figment of the imagination.
People have a choice they can live a basic lifestyle and give away all the material things they think are important but are not (The great super time bomb, August 3). The simpler your life the less money you need to maintain it.
Business may not like it but then who cares about they like.
Come on it's time to put this guy in a proper perspective and report he is fully owned by one of the biggest super fund managers in the world (The great super time bomb, August 3).
Alliance.
Gross needs to placate his bosses, he is not a lone character, charting his own trip, indeed he is not the boss of PIMCO.
Mohamed el Ali train has far more nous that Gross, but for some reason Alliance won't let him run the show.
Gross seems full of spin and his fellow CEO El AL. spout substance. One should be read for fun the other for knowledge.
I don't need to read this article. If the experts are saying "get out of stocks", that's a strong buying signal! Remember the "Death of Equities" Business Week article in 1979...be patient (The great super time bomb, August 3).
Unassailable logic from Bill Gross (The great super time bomb, August 3). The challenge for all investors is, like him, to keep thinking broadly and beware the assumptions and cliche aphorisms that abound in the money business. In the market, as in all of life, if it doesn't make sense it's probably wrong.
So, since Gross is obviously right – what's a bloke to do? Clearly, living off your money will be a lot harder than it was, and impossible for many. Thirty years of pleasurable idleness at the end of 30 years work always looked nuts. No bad thing in this country for the over-generous public sector pension schemes to take a belting. It always was immoral that one could retire at 55 then bludge on the public purse for decades. So – keep working if you want to keep eating. Second – ignore the ads about fun and games in retirement – endless round of golf, cruises, drinkies, and running along the sand with your beautiful wife and the golden retriever. Reduce your expectation. Be happy with less. A big cultural shift, but we always find a way to put up with reality and after all the grizzling, we'll accept what has to be. Asset allocation will be the big challenge and it's interesting that although Gross points out the problem, he doesn't advise on that. It think that's because he doesn't know. We'll all have to think for ourselves.
And we baby boomers also have a moral obligation to plan less for ourselves, and more for the welfare of those younger. We have been a shamelessly selfish generation.
I am staggered that so few people can see this (The great super time bomb, August 3).
What is worse – a long period of deflation, low growth, cuts in pensions, retrenchments and high unemployment as the real value of global debts are slowly repaid.
Or ... printing money to repay government debts and using inflation to reduce the real value of private debts. This will stimulate the economy and produce nominal growth to employ people and maintain pensions.
The only problem is to deal with requests to print money to feed starving people in third world countries, solve environmental problems, send men to Mars, etc.
Disappointing to see a personal attack by Mr Holland, but the tenor of most comments is anger (The great super time bomb, August 3). Yes, the world has changed. We have had a 1929 event and the world this time can bring better solutions to it. But when all is said and all is done, only inflation can distribute the pain – and some of us will suffer more than others.
Well said Bill! (The great super time bomb, August 3.)
Sadly, we in the developed world have been living a lie for the last few decades-using others money to fuel a lot of our 'growth'.That includes growth in the stock market.
Now we have the duel problems of huge debt and competition from much lower wage countries.The future WILL be more difficult for us, of that there is absolutely no doubt.
Our only option is how we choose to deal with it.
Peter Ross and David Mortimer: why not be honest and just confiscate people's savings at gunpoint to pay government debts instead of using inflation? (The great super time bomb, August 3.)
Curious using a 100 year graph to prove that "This time it is different"! (The great super time bomb, August 3.)
The 3.1% premium of equities over the growth rate is a reasonable return for enterprise and initiative and is offset by all sorts of governments and others who give away or otherwise lose the 3.1%.
Reflation is a proven method to get dead economies moving. Providing the long tern average of inflation over good times and bad does not change much there is no danger in stimulating flat economies and reigning in racing economies.
Back to the golf course for me.
So what are you going to do Bill? Go back to playing Blackjack? (The great super time bomb, August 3.)
As David Mortimer says, inlation is one way to get rid of debt, and it's the one that all the authorities bar Germany, Finland etc are pushing for (The great super time bomb, August 3).
It's a pseudo-sophisticated form of default that robs savers, as opposed to punishing borrowers that shouldn't have borrowed and lenders that shouldn't have lent. Reluctantly, one might accept that immoral 'solution' if if it had immense advantages over the cruder alternative. But I'm not sure that it truly does. It creates another kind of mess which you then have to clean up with an engineered recession ( like the one we 'had to have' .. he wasn't wrong .. in 1991). The big attraction for the suthorites is that that cleanup comes later! And they always willingly sacrifice tomorrow for today.
That said - it can be hard to 'make' inflation. Giving money to rich people and banks isn't working. They put it where they feel it most advantages them. An alternative is the Rudd/plasma screen path, which creates a momentary glow like that enjoyed brielfy by the the Little Match Girl when she is feezing and sets fire to her stock. Then what? A third option is state capitalism where they cut out the middle man and spend the money they just printed. Hmmm. Maybe the simple truth is that "there must be pain" and planning that should be the game, not avoiding it.
As govts keep inflating their economies with more and more money, the lazy amongst us rely on asset inflation instead of building things. Instead of super funds relying on dividends its all about gambling on prices (The great super time bomb, August 3).
I am surprised nobody pointed out survivor bias (The great super time bomb, August 3). The S&P500 index from 1912 does not have the same composite companies as 2012.
I will continue to hope a balanced portfolio of both equity and fixed interest funds.
It is not only a time bomb, but the Australian super is just a big fraud, and the managers of the super funds are doing very well, at the expense of its members (The great super time bomb, August 3).