On the Facebook page John Key has let down New Zealand (If you don’t know about this page consider becoming a member. You would join more than 16.000 of us) people are waking up to the fact that overnight the have lost thousands of dollars of value on their Kiwi savers account. This is, so they are told, the result of the fluctuations on the stock market.
With about $ 1.5 quadrillion in unaccountable derivatives and financial products waiting to collapse and about $ 32 trillion in unnecessary trades made every year to make stockbrokers and banks richer and richer and investors around the globe poorer and poorer this may well be true but what causes the current fluctuations in the market and how will it end for you the Kiwi saver is a question that should be asked and for some reason never is.
John Key, who as an investment banker knows all about what is happening, tells us that this is just a correction of the market and we will all be sweet. As usual, he is lying and here is why:
The Kiwi saver fund is what is in the US is called a Mutual fund. I have no idea where the Mutual in the name came from because, unlike the name suggests, there is nothing mutual about it.
The Mutual fund was promoted as a great way to invest your savings for your pension and you were told that having experts invest your hard earned cash was by far saver than venturing out for yourself!
So how does it work? According to the Kiwi saver government website you, the government and your employer would open an investment account. The Government would donate a lump sum of $1000 into it and you could choose the percentage of your income you want to invest per month. This amount would be automatically deducted and put in the kiwi saver fund and your employer would add his part of the deal to that. The money would be invested by government appointed investment specialists and all you had to do was sit back and see your money grow. At the end around your 65th year you could take out the money after you paid your fees and tax and add it to your retirement funds. At least that is how they told you it would go and since it was a government endorsed scheme people invested in it in droves!
The first signs that all was not as it should be was when the National government stopped enticing people into the scheme by stopping the $1000 lump sum they promised. The second sign all was not as it should be was when the propaganda media started to tell us that the Kiwi savers scheme should be made compulsive as people were not really saving for their retirement as the should.
In New Zealand and most countries in the Western world the contract we have with our government is that a percentage of our income goes towards our future retirement, in New Zealand a sovereign wealth fund was started in 2002. We know it as the Cullen fund and this too was a fund in which we invested to guarantee future generations would be as lucky as the current superannuation receivers and have money to live on in their old age.
So why was this Kiwi saver fund started and why is it now promoted as the only responsible way to prepare for old age while we already have two provisions for our old age in place? And why was it started in what was arguable one of the most difficult times for the big global banks, the year 2007?
Here is my version of the Government kiwi saver sales pitch:
Government: “We want you to give us a lump sum of your hard earned cash now. We will make it easy for you and print it out of thin air and you will pay us back with your tax dollar. We also want you to pay us say about 3% of your wages every month until you retire. We will put this money in a fund. We will call the fund you put this in Kiwi saver. A nice catchy name you can all identify with.
In fact we will make it easy for you. The moment you sign a labour contract your new employer will start the scheme straight away BUT no worries you can always opt out but really, only silly people do that!
We will appoint the financial specialists to invest your money for you. They are all banks or financial institutions of our choice and as you know banks and other big name financial institutions are reliable and will do their very best for you to get the best returns for you; the Kiwi saver!
You will not be told what they invest it in, when they invest it or who is really doing the investing.
These banks and financial institutions will charge a fee of course every time they invest or change from one to the other investment but that is to be expected! Don’t worry about those fees. You will only pay them at the end of your period of investing with Kiwi saver.
Here is the small print: You are the investor. You are responsible for your investments. If you lose money you will have less money in your account. If you lose the lot that is not our problem. You have been given the choice to invest conservatively, medium or high risk. Choose wisely even if we advice those of you under 35 to go high risk.
From what I understand many Kiwi savers who, on the governments advice as safe for people under 35, invested in high risk products are finding themselves out of pocket for as much as $ 2000-300o in just one week. That is a lot of money for people who put 3-8% of their wages in fund that was sold to them by their government as a surefire way to put some money towards their old age or a down payment for a house.
What is worse is that many of these people are now finding out what people investing in Mutual and pension funds around the world have been finding out for some years now: The investment specialists for these mutual funds are the too big to fail banks and they have been gambling like the worst las Vegas gambling addicts with their hard earned cash knowing full well that hey could not be held to account for any losses while charging outrageous fees making $ 32 trillion worth of transaction a year!
What makes this even more outrageous, as in a heads should be rolling over this, is the fact that this was a predictable as bears shitting in the woods or counting to 10. It was a scam organised by the banks to rake in real money to continue their drunken gambling spree just for a couple of years longer and you the gullible Kiwi got shafted!
So what is the future? Will the Kiwi fund recover and will your investments grow again so you are safe in your old age?
Here is are a couple of hints:
- The current level of derivatives (Gambling bets) stands at $ 1.5 quadrillion. Well, that is what we more or less know about.
- New Zealand’s debt stands at approximately $ 110 billion
- New Zealand has about $ 122 billion of derivatives on its book (and yes all of them high risk gambling ones)
- We don’t know what the Cullen funds has invested in other than that 2 years ago it won the price in New York (yes Wall street) for the most innovative sovereign wealth fund which gives me reason to think it is also chock-a-block with crap financial instruments which could collapse at any given moment and probably already has.
- China’s collapse was not an accident. It is the result of the currency wars raging around the world and the collapse will continue in one form or another as the financial system is designed to do. Fiat currencies printed by unaccountable private interests always do in the end.
My advice? Take your money and run. Buy REAL, not paper silver, gold, bit coins or land. The Chinese elite did and they couldn’t care less whatever happens to the stocks their poor invested in. And neither does this New Zealand government! In fact you can be damn sure John Key has his next job lined up in a sweet heart deal for looting you the Kiwi saver many times over!