German Study Proves It – 95% Of Greek "Bailout" Money Went To The Banks
ZeroHedge.com Submitted by Mike Krieger via Liberty Blitzkrieg blog, I simply cannot stress enough how important Greece is to freedom, liberty and civilization across the globe. Greece is not a one-off, or merely a small nation in big trouble that holds little relevance for the rest of us. Greece is everything. What is happening to Greece follows the exact same game plan of what will eventually happen to every other supposedly sovereign nation. First there is an explosion of debt. Then a crisis. Then a bailout. Then creditor imposed hardship is forced upon the average population, in conjunction with unlimited bailouts for the bankers and other oligarch criminals. Finally, when a public which mistakenly believes it is living in a democracy exercises its right to national sovereignty, the sad truth is exposed. They are not a people living under a free political system. – From last year’s post: This is Sparta – 1,000 Bitcoin ATMs are Coming to Greece A recent German study just confirmed what tens of millions of Greeks already knew. That they are a people fully conquered by criminal mega banks and the corrupt politicians and technocrats in their employ. Get ready for another epic screw job this summer. From Ekathimerini: Some 95 percent of the 220 billion euros disbursed to Greece since the start of the financial crisis as loans from the bailout mechanism has been directed toward saving the European banks. That means about 210 billion euros was eventually channeled to the eurozone credit sector while just 5 percent ended up in state coffers, according to a study by the European School of Management and Technology (ESMT) in Berlin. “Europe and the International Monetary Fund have in previous years mainly saved the banks and other private creditors,” concluded the report, published yesterday in German newspaper Handelsblatt. ESMT director Jorg Rocholl told the financial newspaper that “the bailout packages mainly saved the European banks.” The economists who took part in the study have analyzed each loan separately to established where the money ended up, and concluded that just 9.7 billion euros – less than 5 percent – actually found its way into the Greek budget for the benefit of citizens. “This is something that everyone suspected, but few people actually knew. That has now been confirmed by the study. The golden age of investing is over: get used to Wall Street's 'new normal'
Suzanne McGee theguardian.com We’ve become accustomed to exceptionally high returns in recent decades – but they were the exception, not the rule, as a new report explains. It’s a question that has haunted the minds of high-flying financiers, self-help authors and regular Americans for decades: what’s the best way to make money investing? In the past, the best way, hands down, was to have won the genetic lot: to have been born so that your peak earning and investing years coincided with a bull market. If you came of age in the early 1980s and started investing, you’ve already won the game. Those years saw an extraordinary bull market in the bond market, and the three decades since included what became a golden age for stock market investors. Sure, the stock market’s path was a bumpy one, with downturns, mini-crashes and other more serious bursts, like of the dotcom bubble in 2000. Overall, however, returns greatly exceeded historical averages, and recessions cleared the way for the market to climb to greater heights. Consulting company McKinsey is now warning us that the factors that contributed to those golden age returns don’t exist any more. But the era lasted long enough to make Americans think of it as normal, and to leave us wondering about what feels like an “abnormal” environment of volatile markets and mediocre returns. That, the McKinsey analysts argue in a new report making waves throughout the investment world, is precisely the wrong way to look at the whole matter. It was those abnormally high returns that were unusual, they point out. Now we’re heading into a period of compressed or collapsing investment returns, and we’ll need to adjust all our expectations and behavior accordingly. The McKinsey study attributes the exceptional returns to four unusual factors. A sharp decline in US inflation rates, to well below their historic average, led to a rise in the price that investors were willing to pay for every dollar of corporate earnings, or the much-discussed price/earnings ratio. A steep drop in interest rates boosted returns from bonds and also helped buoy stock prices. While global GDP growth was normal during the golden era, the researchers found that demographics in emerging markets and improving productivity worldwide boosted corporate profits and revenues, and contributed to stock market returns. Then there’s the unprecedented surge in corporate profits in the last three decades: US companies never had it so good. These factors are gone. It’s time to brace for a period in which investment returns could be lower than long-term averages. Between 1985 and 2014, the US stock market delivered returns of 7.9%, on average, every year; the bond market rewarded investors with an average annual return of 5%. Over the next 20 years, look for those figures to shrink to as little as 4% to 5% for stocks (if you’re cautious about the economic outlook), and zero to 0.1% for bonds. If you take a more upbeat view of the economy, you can ratchet the figures up to 5.5% to 6.5% for stocks, and 1% to 2% for stocks. Well, that’s OK, isn’t it? You could put all your money in stocks and ignore bonds – how much difference can a percentage point or two make? You could also put all your eggs in a proverbial basket, and ignore the details. While you’d be right to favor stocks in any asset allocation model (they tend to perform better over the long haul), you also need diversity. As the crisis of 2008 reminded us all, there will be periods when if you don’t have at least part of your portfolio in safer investments, such as bonds, you’ll end up losing capital. A similar look at the long term shows that a single percentage point can make a very, very big difference. Let’s say that you’ve got $100,000 and you’re earning an annual return of 5.5%. At the end of 30 years, assuming you have reinvested all of the money you make, thanks to the magic of compounding, you’ll have about $500,000. But if your returns are only 4.5%, that sum will fall to $375,000. A single percentage point has cost you $125,000 over 30 years. A decline of two percentage points, and you’ve lost nearly half of your total potential returns. McKinsey’s message is that investors need to lower their expectations, work more years and double their savings. While many advisory firms don’t find much to quibble about in McKinsey’s conclusions, some aren’t as willing to tell investors to simply give up. “McKinsey’s take on lower returns is spot on, in our opinion,” says a memo from New Jersey investment advisor RegentAtlantic. But it also argues there are parts of the market – such as the emerging markets, and smaller companies in those markets, in particular – that offer higher returns (and more risk). The report, however, merely articulates handwriting that’s been on the wall for a while. But it does warn that it’s going to be much, much more difficult for any of us to recover from any financial mistakes that we make. The markets aren’t going to give us a helping hand. So when you read lists of financial tips such as starting to contribute to your 401k as soon as you can, don’t see them as suggestions – they’re commandments. If the market isn’t going to help increase the amount you save, you’ll have to do it, making every dollar you put aside more valuable – and the dollars you save in your 20s will always be vastly more valuable than those you invest in your 40s or 50s, thanks to compounding. Just do it. Similarly, watch out for some of the worst financial pitfalls you can make: dipping into that 401k, except in the direst of emergencies; racking up credit card debt and making only minimum payments; buying more houses than you can afford. Even paying for private schools from kindergarten through college, or helping to finance your child’s wedding, can be a mistake if you’re doing it at the expense of funding your own retirement needs. Yes, you are investing in your children’s future (or the future health of the florist or wedding photographer’s businesses), but how will they feel when, in 15 to 20 years’ time, they realize that the price for that financial help is ongoing financial support? In a low-return environment, with investment tailwinds transformed into headwinds, those are some of the tough trade-offs that we’ll have to wrestle with. Like it or not, it’s time to prepare for the “new normal”. How Americans Blow $1.7 Trillion in Retirement Savings
Economists discover we're pretty shortsighted, and it's costing us. Ben Steverman bsteverman Bloomberg.com April 27, 2016 — 1:39 PM EDT You’re traveling across the desert, feeling parched and looking dirty. You take a long drink of water from your canteen, then wash your face with the rest. As you’ll discover before you die of thirst in a day or two, you just made a huge mistake.Outside of cartoons, nobody is this stupid. But people make the same kind of mistake all the time, putting their current happiness (vacations, flat screens, new cars) way above their future well-being. Economists call this kind of irrationality “present bias.” And according to a National Bureau of Economic Research study, it and other biases are holding back millions of Americans from saving enough money for that ultimate future need: retirement. How much money? Try $1.7 trillion on for size. That's 12 percent of the $14 trillion in U.S. individual retirement and 401(k) accounts. Another error economists worry about is “exponential-growth bias.” This is the failure to realize how savings compound over time. Save $100 at a 7 percent rate of return, and you’ll have only an extra $7 next year. But the gains compound year after year. In 10 years, your investment will nearly double and be growing at $14 a year. In another 10 years, it will almost double again and be yielding $27 a year. Some people have a hard time wrapping their heads around this concept. They think of money as growing in a linear way, by more or less the same amount each year. And that makes saving and investing seem much less attractive than the trip to Cancun or the 40-inch television. The researchers looked at survey data to try to figure out how many people are afflicted by more serious versions of these two biases. To find their “exponential-growth bias,” people were asked to predict how much an asset would increase over time. About seven in 10 underestimated its growth. To test their “present bias,” respondents were asked such questions as: “Would you rather receive $100 today or $120 in 12 months?” For those not interested in waiting, the survey raised the stakes: What about $130 in 12 months? After analyzing the answers, researchers classified 55 percent of people as “present biased” on money matters. What do a bunch of math problems and hypothetical questions have to do with the real world? The study, which appears in the NBER’s Bulletin on Aging & Health this week, found there was a strong relationship between respondents’ biases and their retirement account balances. The more biased they were, the less they'd saved in a 401(k) or other account. The connection held up even after researchers controlled for income, education, intelligence, and financial literacy. If somehow you could eliminate these two biases, retirement savings would immediately jump 12 percent.Of course, it’s not easy to wipe away irrational behavior. (We've all streamed another Netflix episode rather than go to sleep, knowing full well we’d regret it in the morning.) It may help, however, simply to be aware of your own shortcomings. The study tried to measure self-awareness and found a link to higher retirement savings. In other words, if you know you’re prone to doing something stupid, you may be more likely to ask for help. Or sometimes you can essentially trick yourself into doing the right thing: For example, to combat present bias, you might agree to have your 401(k) contribution automatically increased not now but early next year—just as your annual raise (assuming you get one) goes into effect. Then you can rely on that other shortcoming many of us share: forgetfulness. |
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