Poor Ritchie, still doesn’t get it, does he?

So, further request, requirement or instruction that people ‘save’ in share-based funds cannot solve the pension problem. Shares are the problem, not the solution.
But the solution is readily available. And it happens to be extremely expedient for any politician with the will to use it. The biggest potential problem we have in our society is the lack of public spending on infrastructure. It is what people continually demand of politicians.

To date those same politicians have denied the population access to the very funds that can provide the resources the population wants, not just now but after retirement, because they’ve insisted people’s spare cash must go into shares.

If, however, politicians thought for a moment instead of following economic dogma, they’d let that cash be used for what the current generation wants. These are things of real worth, like schools, hospitals, sewers, transport systems and so on. Quite possibly, those who built them might benefit from them in their own retirement. It is equally possible that the next generation who use them might be willing to pay what is in effect a rent to do so, and so provide an economic return for the future.

It’s always been the case that long-term saving needed to be matched by long-term investment. If the government could create venture capital trusts at short notice to meet the needs of the dotcom boom, there’s no doubt that if it takes this problem seriously it could create a suitable investment vehicle for this purpose as well.

Nothing would restore confidence in pensions more than people seeing their cash paying for the new hospital they’ll use in old age. And we could at the same time see the back of the appalling burden of the Private Finance Initiative.

Social capital investment can provide just as much opportunity for the financial markets as the less desirable, and decidedly more fickle capital markets. All it needs is will power.

That Triumph of Will again.

So, workers save for their pension by buying bonds, the money invested in hospitals. Hospitals pay interest to pay off the bonds.

Hurrah. This is entirely and completely different from the current system whereby pensions funds buy bonds in PFI schemes.

No, no, it’s completely different in every manner.

21 comments on “Poor Ritchie, still doesn’t get it, does he?

  1. Worth quoting from the original link in full: It’s another advertisment for De Beers:

    ‘The only reason shares have gone up in price in the past has been that more people have been persuaded to buy them, either by choice or by coercion as pension funds have had little choice but to buy them.’ – Wrong then and I mean now just on another planet…..

    ‘The simple fact is that most of what people need in their old age can only be provided by people still at work. You can’t store healthcare, food and leisure activities for use at a future time.’ Technology like freezers, DVD Players and even the book simply did not exist in 2002….

    ‘Shares are intrinsically worthless, second-hand, unenforceable property rights to a future income stream from companies run for the benefit of those who work for them now, and not for the sake of those who might be in retirement at some time in the future.’ Holy Mackerel – I mean did this guy get burned in the Asian crisis by his hare portfolio – I had never seen a statement that ignorant prior to logging on to TRUK for the first time

    It’s becoming increasingly obvious (and if you look at his ‘Red Lines’ post) that he is screwed regardless of who wins the next election. Mcdonnell is one of the most monstrous politicians this side of the Second World War but I would not want to have crossed him. My guess is he has an elephantine memory for those who have dealt him some slight in the past – and the Conservatives only need look at a week’s worth of blogs to see the guy is a loon who hates them. In short, he has become something of an irrelevance to the debate. It could not happen to a nastier, more intolerant person.

  2. He doesn’t seem to realise that there are REITs – real estate investment trusts – already investing in property for the NHS.

  3. “workers save for their pension by buying bonds, the money invested in hospitals. Hospitals pay interest to pay off the bonds.”

    Er no.

    Workers save for their pension by buying bonds, the money is invested in hospitals. The State then decrees that in future the interest payments on the bonds are ‘suspended’ as they are profiteering at the expense of the sick. Pensioners starve……but then they were the sort of people who had savings so what does the State care for bourgeois capitalist scum anyway?

  4. Asking future users of the infrastructure created by the proceeds of the bonds to pay for the use of that infrastructure, in order to finance the interest on the bonds ? (Let alone the capital repayment when the bond matures).

    Anybody have a clue as to how Future Ritchie would view this rent seeking behaviour ?

    Another classic from the Dicktater (Unless it’s been used before, I’m copyrighting that. Because rent seeking and stuff)

  5. ‘These are things of real worth, like schools, hospitals, sewers, transport systems and so on.’

    UK has no schools, hospitals, sewers, transport systems and so on?

    ‘The biggest potential problem we have in our society is the lack of public spending on infrastructure. It is what people continually demand of politicians.’

    It is what politicians keep telling the people they need.

    ‘If the government could create venture capital trusts at short notice to meet the needs of the dotcom boom’

    I didn’t know that happened . . . but it could not have ended well. See “dotcom bust.”

  6. It is equally possible that the next generation who use them might be willing to pay what is in effect a rent to do so, and so provide an economic return for the future.

    Richie steals your pension, and a future generation might chuck you some cash in return. Might.

    The investment opportunity of a lifetime!

  7. “the government could create venture capital trusts”

    He can’t be talking about the VCTs here, can he? Really?

  8. Apparently he’s going to issue his new infrastructure bonds at gilt yields. And he thinks the pension schemes will suck them up because they obviously can’t get enough assets yielding 1.3%, whilst inflation is running at 2.9% (and much, much, more if the Dicktater© gets his wish to rape the Magic Money tree).

    I have a horrible vision of the future. Pension Managers of the UK : report to Door A for ‘re-education’

  9. “It is equally possible that the next generation who use (the hospitals) might be willing to pay what is in effect a rent to do so”

    Tuppence is advocating charging for using NHS hospitals!

  10. “If the government could create venture capital trusts at short notice to meet the needs of the dotcom boom”

    Dotcom boom. Generally reckoned to be c1997 – 2000. Saw massive and unsustainable growth in stock market listed tech companies.

    Venture Capital Trusts. Created by FA 1995. Aimed at creating investment opportunities in growing unlisted companies in any business.

    Fuck. Murphy just doesn’t care of stupid he looks, does he?

  11. Worzel

    It’s just occurred to me that Dicktater is a double entendre – I’m slow.

    Dictator and dick-potato

  12. BF, Boom, as I believe the modern vernacular would have it. Might even be a treble, ‘cos he’s a dick as well as being a Dick.

  13. He doesn’t appear to understand what pensions are. Ordinary people see as a way of saving and providing an income in their retirement.

    He sees them as a hoard of cash to take and ‘invest’ in building roads, etc. Let’s leave for the moment the idea that the Left wouldn’t actually build any roads, as they despise cars and road users who aren’t driven around by union members. What do pensioners live on in retirement when their pension has been spunked away on roads?

  14. This’ll be interesting. So the existing pension funds will be selling shares to meet their pension commitments, but not be buying shares with new pension contributions. Given the proportion of company issue held in PF’s, that should just about crash the stock market to a level not seen for decades.
    Great fun!
    Now what’s his plan for meeting the pension requirement needs for all those people left destitute by their blitzed retirement plans? Or to bridge the enormous tax gap that’ll appear when their pensions are not being paid & taxed?

  15. Oh sorry. Should have read the previous pot before commenting.
    Of course. Print the money. Why didn’t I think of that? Worked so well in Zimbabwe.

  16. “It is equally possible that the next generation who use them might be willing to pay what is in effect a rent to do so, and so provide an economic return for the future.”

    We tried that. It was called PFI and it turns out the next generation isn’t prepared to pay a rent to use public assets.

  17. Special Purpose Undertaking Debt gilts ?

    ‘… chuck this into the Pot A to..’

    ‘That’s a neat solution on the tater capital …’

    The Dicktater© is failing to see that, as well somebody pointing out why his loony scheme won’t work, he’s actually having his chain pulled quite hard.

  18. @ bis
    The proportion of UK shares held by foreigners has gone up as the proportion held by UK pension funds has gone down dince New Labour dictated that the levy to fund the PPF would be a function of the amount of “risky” assets, instead of “safe” gilt-edged, held by the pension fund.

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