The Guardians Of Your Super Say “Nothing To See Here”!

I discuss a recent RBA release about correspondence between the Treasurer and RBA about risks from derivatives. While the focus of the letters is superannuation, there are wider issues at play here, as I explore with Robbie Barwick from the Citizens Party.

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  1. I hope our friends at Nucleus Wealth are taking care of us Martin… Damien and the team seem to know what they are talking about on the streams….can they walk the walk though and protect or even make money in this market?

  2. As good as it has been for the nation’s overall savings, I wonder how much the super industry hides its true performance by constant mandatory inflows? What is the rate of return when the previous year’s inflows are removed?

  3. Frydenburg's slight worry about derivative gambling within retail banks should signal all-out terror in anyone who is actually paying attention…

  4. My Super called me , and asked me where , did i want to invest my Account .
    I said , i am a Driller , i know all about Drilling ! I know Nothing about Finance , that's why in have a Super Account .

  5. This is appalling. I recall macquarie bank shares fell to about 17 dollars during the gfc. An enormous amount of macquarie's profits is derived from trading. We have a right to know their derivative exposure.

    We also need a much more accountable system for super funds. Australian super reported their balanced fund only lost 2.7% in the past financial year. I'm sceptical this is actually true. The share markets around the world have fallen fairly heavily. I suspect, they revalued their non listed assets to hide their true position. I smell a rat. Im not sure anyone is really monitoring these funds appropriately.

  6. It feels somewhat ironic that I now understand derivatives and the huge potential risks by watching people become millionaires in 1% of cases or loose everything and then some in 99% of cases on wall street bets YouTube videos… The idea that the banks have trillions in positions is frightening. If super derivative positions are in things like selling covered calls or cash covered puts that's fine but I somehow doubt that it's all that safe.

  7. The Australian Prudential Regulatory Authority, is the regulator of the Super/Private Pension/Retirement funds, not the Reserve Bank of Australia. APRA's oversight is founded on the "QUALITY OF RISK" doctrine. The easiest oversight is to invest in "INDEX FUNDS", the hardest oversight is to directly deal with "HEDGE FUNDS". I doubt any fund would deal with such casino betting that Derivatives are.

  8. This was amateur hour. Derivatives for hedging in super is a non issue. If you want a story on industry super, look into their dodgy practices around valuations of unlisted assets, i.e. CALPERS just sold $6bn of PE investments at a 10% discount, did Aust super mark down unlisted assets… likely not??? As for banks, they're financial intermediaries, they're paid to manage risk which they do with derivatives. Regulators impose capital requirements against derivative positions on top of the daily collateral calls between counterparties, they also use netting agreements with counterparties that makes reporting gross exposures redundant. It is a highly complex interdependent global system with multiple levels of oversight, checks and balances. It is also levered and vulnerable, but risk can't be made to disappear, only transferred to those best equipped to manage it. I could go on, but its pointless, just stop misleading people with click bait.

  9. Sometimes ideas have flaws that are so attractive it gets buried so deep inside it that they never get examined. But the flaw remains and a developing pathology grows within it. Superannuation growing inside global financial markets is exactly one of these things. It tied the interests of the ageing to a finance capitalism and a status quo that silenced their discontent with so many other things.

    But, it all depends on not just on growth, but continuous growth and eventually that growth gets conjured with magic. Derivatives. But once it is unleashed, it is like a cancer that can't be treated because treatment entails suspending growth and allowing recovery.

    So it continues. The most perfect of these vehicles is SMSF because its rests upon characters who believe they are a genius when times are good. Superannuation, oh Jesus. But, if this spaghetti universe of counter party risk ever tears itself a part, it will destroy even the most conservative manager of a SMSF, without ever touching it. Its a weapon of mass destruction, potentially.

    I've said it before. Our new Treasurer has been captured by the Treasury Mr. North. You saw it from his first days in the language he took to the public. Derivative risks? I enjoy listening to Robbie Bobblehead, sometimes, he knows how rotten this financial system is. The trouble is he hasn't a clue on how to do anything about it, other than jumping up and down in the new Town Hall.

    Wait for the press conference Mr. North. It is still to arrive. Chalmers will present himself looking all serious holding the text of a speech that was written by his controllers. The system is going to save itself. It is not going to commit Seppuku simply because it is not stupid and people like you keep saying it is.

    Commendable and perhaps a timely presentation. See you in September Mr. North.

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