Sounds so PAPish. Strange this by a Guardian man. It’s a socialist newspaper. It would be correct to say that the need to invest money set aside to pay workers’ pensions have helped to fuel bubbles, but it is wrong to blame the workers. Just like it is wrong of some PAP MPs and ministers to blame the plight of the poor on themselves.
The real villains of the piece are the California teacher, the BT engineer and the German car worker. They have promised themselves an affluent retirement. Even lower paid workers in final salary schemes want a retirement income they can only afford if they bet on every rising asset, wherever it appears in the world.
These investors, along with the massive oil-rich sovereign wealth funds (think of the $330bn Norwegian pension fund and United Arab Emirates $750bn fund), are seeking the best returns they can and will stop at almost nothing to win big. …
Why is the California teacher at fault? Because they have an asset – a promise to pay a fixed and generous retirement package – and instructed fund managers to seek the best returns possible to meet a deficit in the pension scheme. Whether they understand the implications or not, they have effectively agreed to fund managers like Gross shunning their own government’s debt in favour of richer pickings elsewhere. They agree to fund managers telling employers to freeze pay and cut pension contributions to younger workers. They pay lip service to corporate governance while they demand extra dividends and asset price growth so they can cash-out before retirement.
These savers have racked up trillions of dollars over the last 30 years and own much of the wealth created during that period. Their power is vast. They own the homes, the stock markets and they lent their cash to the banks, governments and companies and as we know to our cost, there were plenty of them.
Now that such savers have lost money in the crash, they are desperate to regain their winnings.