Bankster Playing Field
Updated: Feb 16
One of the books I’m presently reading is about pensions. It’s a reality smashing piece of work..
Low-and-behold, I find news this week about a new proposed pension reform in Australia. As usual in the Bankster’s Paradise, the surface of the reforms is covered in good intentions. That is, until you dig deeper.
I found the story in Bloomberg, titled “Australia’s Failing Pension Funds Prepare to be Publicly Shamed”. (1)
Naturally, many people likely rejoice in hearing such developments.
“Why, it’s about time all those financial fat cats get what they deserve.”
It’s a similar case with the recent Reddit vs. Wall Street affair. Many people were pumping fists and cheering David’s defeat of Goliath in the investment markets, although I think the jury is still out on the battle and a verdict is far from publicly certain. In this age of ever-widening wealth disparities, I admit it was refreshing to see so many Banksters squirming.
But, as is the case with so many things, reality is rarely as straightforward as what we see on the surface of the situation.
In the Reddit affair, there are still many questions left unanswered, some on the verge of conspiratorial. I don’t have enough informational ammunition to go down this road, however.
What’s worth noting is that pension funds are known to invest in hedge funds. Need proof? Just Google “do pension funds invest in hedge funds” and happy reading to you!
What I’m getting at is that some people may be cheering on the destruction of some Wall Street hedge funds without realizing the implications on their own financial stability. It may come as quite the surprise when good ol’Joe Main Street gets off the couch to spend his pension when, low and behold, he receives a notice from his pension provider that, due to poor investment returns, in some cases owing to the collapse of some hedge fund, Joe Main Street’s pension benefits must be slashed. “Sorry, we know we promised you x amount of dollars every month but to be fair to all the pensioners, we have to redistribute all that pain from lackluster returns and the loss of capital resulting from a busted hedge fund or two. But we know you’re all about fairness so suck it up princess.”
So now, Joe Main Street turns his ire on pension funds. And perhaps rightfully so, depending on the pension fund.
Here’s where things get sticky. One question to consider in defense of pensions is, do they even have a choice in chasing returns anywhere and everywhere they can, given the economic and regulatory environment they’re faced with these days? Here's a hint, look no further than interest rates for a quick answer.
Of course, an opposing retort could question if pension funds even know what they’re doing, especially considering the fees they charge. Besides, whether they know what they’re doing or not, they are in a fiduciary position of using their knowledge to do what’s best for the pension’s beneficiaries, who are not versed in investment and financial know-how as it is.
Enter the Australian news.
“The new measures…are part of a push to overhaul the world’s fourth-largest pension system and try and prevent disengaged consumers from getting stuck with sub-par operators.
“Regulators will also get the power to close funds to new clients if the rolling eight-year targets are missed by more than 50 basis points for a second time. Ultimately, if things don’t improve, they can close the funds entirely.”
Furthermore, according to the piece, most Australians don’t have access to the benefits of a defined benefit pension as do a greater number of people in North America, though even here the number of companies and government institutions using defined benefit pensions is quickly dwindling. Instead, in Australia they’re left to their own devices of ensuring a comfortable retirement, although employers are mandated to contribute 9.5% to their employee’s retirement.
So, given that most people, not just Australians, don’t know the first thing about money management, it’s not surprising that such people go in search of professionals to do it for them. Enter such outfits as these pension funds.
Just as I need a professional doctor for my health or a professional plumber for my house’s plumbing needs, it may be surprising to some people to learn that a vast number of people need money management professionals for their money advice.
But here’s the kicker I’ve been stringing you along to.
“The draft laws have been criticized by Australia’s not-for-profit pension industry that claims many plans offered by bank-owned funds won’t be covered by the new rules.”
Did you catch that? Let me highlight the most important part:
“…many plans offered by bank-owned funds won’t be covered by the new rules.”
That's right! In other words, bank-owned funds need not be held to such high return and low fee standards.
By now it should be evident that I’m an expounder for a level playing field, anywhere and everywhere. In hockey, what’s called a holding penalty for one team should also be a holding penalty for the other team. In golf, balls in water are assessed the same stroke penalty, regardless of whether you’re named Woods or Mickelson or Joe Schmo.
And yet, when it comes to the financial industry, the banks get to play by a different set of rules, as is evidenced yet again by these proposed reforms in Australia.
And of course they are. Political Banksters know and respect the hand that feeds them so when their financial Bankster buddies are a callin’, they’ll bend over backwards to do their bidding. I ask you, would it be a stretch to consider that maybe it was the banks trying to squash any competition, who set these reform wheels in motion? It wouldn’t be the first time.
Let’s not forget that this is all being done with the best of intentions. “Why, it’s the small investor who must be saved from the evil pension funds, of which we, the banks, do not belong to. We’re all do-gooder banksters, here to do what’s in the best interest of our lowly banking customer.”
Please, don’t make me sick.
Think I’m over exaggerating? Then let me ask you this – why do you think Canada has only five “big banks”? Think that’s just a fluke and is simply because Canada is a “small market” country?
And let me posit another question – if I were to suggest you go talk to someone about your finances, what’s your first inclination? For most people, they know only of the bank as the epicenter of all financial knowledge, as false as I believe that notion to be. Do you think this is a complete coincidence?
OK, how about this? Why do you think there are so few independent or boutique investment advisory outfits in Canada? Let me clue you in. It’s because the banks sic their regulatory bulldogs on the little guys, drowning the independents and boutiques in regulations and fees, to the point of giving up.
Has anyone considered that maybe some financial management companies appear to charge higher fees because they’re merely trying to stay afloat and compete with what seems like endless Bankster pockets? Now, I’m not saying all high charging establishments have good intentions at heart. But not all of them have bad intentions either.
Take an example. A $1 million regulatory fine is a drop in the bucket for a bank. But for a standalone financial outfit, such a penalty would put them out of business. Bad behavior warrants penalties, don’t get me wrong. But why should a bank go virtually unscathed committing the same infraction as a “little guy”, who in turn gets decimated by such actions?
Oh, that’s right. Banksters!
But, starting today, let’s tone down the ranting a smidge and consider what can be done to correct these issues. Let’s be people of action rather than just bloviating.
For instance, rather than always running to your local big bank retail branch in search of financial solutions, how about considering the offerings of a local adviser who is trying to bring value to his community while also providing for his family?
Here's an example for your consideration.
In any case, next time you’re looking for solid and unfettered financial advice, do some digging and research. Don't just automatically assume your only option is a "big bank".
But of course, what do I know? These are mere rantings of a Recovering Bankster.