Sunday, February 5, 2012

Retirement worries (Cayman finances)

Retirees looking for places to live outside their own countries are spoilt for choice these days. The Internet reports on hundreds of places for English-speaking retirees, maybe thousands. All of them are tax-free, practically speaking, and all are cheaper than Cayman. Cheapness may become important to all of us, the way things are going.

There is talk of currencies collapsing. What does that involve, exactly, and could it happen to our Cayman Islands Dollar? What assets should we invest in, to provide income in our retirement years? Our Pension Funds are beyond our personal control, but how should we invest our other savings? There are lots of options: rental properties here and abroad, stock markets, gold & silver, foreign currencies... Will our wages keep pace with rising prices? Will interest rates rise again? Why am I asking all these questions?

Answers soon come. This is an introductory essay, the first of what will be an occasional series on the general topic of retirement. A “currency collapse” is another way of saying “hyperinflation”, and that is the one thing every retiree ought to be scared of. Hyperinflation can kill off just about everybody’s retirement dreams, when currency is replaced by barter, and the law of the jungle replaces the written laws we are accustomed to.

There is no effective hedge against it. Gold, maybe, but gold is really just another medium of exchange. The only difference between gold and all the world’s paper currencies is that its exchange value is harder for the financial Mafia to manipulate. Even then, only in bullion form. Futures contracts are just paper, too. A written promise to deliver gold to an investor who has bought it, is just another promise.

Financial-management ability is at a premium in hard times, and very few people have it – or recognise it when they see it. It’s not just retirees who suffer from not finding it when they need it. Some working people put their mortgage payments on their credit cards, for goodness sake. Some top up their mortgages to pay for everyday expenses. Some people have no idea how to economise. Those are serious defects.

Caymanians who are defective money-managers are usually bailed out by a government that is itself defective. It spends its revenues with an irresponsibility that is staggering. Cayman’s private sector keeps the government supplied with far more revenue than it knows how to spend wisely. The Social Services bail-outs merely pour good money after bad.

Debates are raging, in the Western mainstream media and alternative media alike, over the world’s financial chaos. At least our unsophisticated little territory has money enough to waste. The financial powerhouses of the world are under the control of a “New World Order” regime that creates money by journal entries, and invests it in invasions of foreign nations. Bomb a city to smithereens and then award contracts to rebuild it. Never mind the morality, look at the billions gained.

Corruption in the international investment-industry has spread like a cancer through virtually the whole system. In Cayman we are largely protected from the greed and corruption so rampant in many other communities. We lead a charmed life. Our tax-haven clients include plenty of arms manufacturers and investment funds of ill repute, but our local lawyers pay themselves mere millions instead of billions. Our commercial banks subscribe to a standard of ethics that Goldman Sachs and J P Morgan abandoned years ago. Our government is grossly over-borrowed, but our status as a British dependent territory has protected us from the insanity that is modern Greece. Even our politicians are honest compared with those of the US and Europe. What does that tell you?