I’ve gradually come to understand that, whether it is the world economic system, or our domestic economy …. it’s all the same stuff.
So the Irish Times tells me this morning that the Irish government hopes to share with private equity in recapitalising the Irish banks. They plan to put in 10 bn euro. Since they don’t have it lying around just like that, it’s going to come from a contingency fund to do with public service pensions. Which seems to me pretty much like me raiding the car fund to go on holiday – or raiding the holiday fund to buy a car. Reassuring or not reassuring?
And then the story of the Madoff billions. It’s the oldest scam in the business – use the money coming in to pay the most amazing returns on capital. And banks and financiers line up to commit millions and billions. Yet if it’s too good to be true it must be too good to be true.
One would like to think that one or two of the masters of the universe will be pygmified by all this. But I doubt it. And the actuarial valuation of our Pension Fund is looming. I don’t want to be the first nonagenarian bishop.
Over here across the pond, our Social Security system pays those receiving with the money collected from those contributing. In the beginning (pre-WWII) about 10 people were paying in for each one being paid. Now it is about two paying in for each one being paid, since people are living longer and reproducing less. To paraphrase the Beatles, I wonder if they’ll still pay me when I’m 65.
Not that it’s of much consolation, but the National Pensions Reserve Fund is actually something that Britain does not possess at all. Should National Insurance contributions cease tomorrow, I understand that pension and benefit payments would cease in a fortnight. The NPRF was Charlie McCreevy’s attempt to set something aside for a rainy day. I think Britain may have spent its surpluses on other things.