A peculiar economy and Otto.

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“In the past two weeks the proliferation of negative-yielding bonds has erupted — 30 per cent of the global, tradeable bond universe is being sold with a guaranteed loss attached to the coupon.”

I understand the basics of adding and subtracting of numbers but in that little sentence above, a whole new world is threatening our survival. We know that when it rains and we stand outside we will get wet. Perhaps our survival will be enhanced when standing in the rain. Who knows?

https://www.abc.net.au/news/2019-08-19/forget-inverted-yield-curve-time-for-negative-yielding-debt/11425960

We are faced with negative yields on our savings. It means that instead of earning interest from the banks on our money we might have to pay the bank in holding our money. We will be borrowing money that promises us that we not only don’t have to pay interest  over the term we borrow money, but that we actually owe less money than the original amount, at the end of the term. To put it simply; we borrow let’s say $10 000.- over ten years. We do not pay any interest on the borrowing, and at the end of the ten years we pay back less than the $10 000.-

We are getting a miniscule pension from the Australian Government as a result of having some savings which are ‘deemed’ to earn some interest. However, try as I might, at the moment long term interests is almost zero. This results in us eating up our savings. So far, no problem. You can’t take it with you to that place beyond our final journey. The difficulty is figuring out the number of years one might still have ahead and then divide the savings by the number of years that one can still breath upon ahead with some dignity, and hopefully without getting bashed-up in some ‘Aged-Care’ home by one’s own slippers or shoes.

This might entail a risk whereby an underestimation of the number of years ahead could involve a rather financial painful end. If one figures, lets say another ten years or less, and divvy the savings by ten, no problem. But what about the other way, and one languishes for another fifteen years? What then? The financial plan was spread over ten years and not fifteen.

I have a good example by my good friend Otto. Otto is now ninety. I never expected him to reach that age. He wasn’t interested in exercise or strenuous physical activities. He never kicked a ball, did summersaults or hung from crossbars. He walked slowly and deliberately, and with care. Otto liked his food but ate well, avoided fat, sugar and salty food. He was Dutch, born in Indonesia which gave him his dietary habits and a love for vegetables. He also had a rather eccentric habit of drinking lots of water mixed with some cider vinegar.

Two months ago, Otto caught a bad flu and was hospitalised. After he fought off the virus and became reasonably well, it was apparent that Otto could not live independent anymore. He owned his own place but wasn’t mobile enough to look after himself.  His younger sister who looked after him during Otto’s times of need, told the hospital she no longer could. Otto now lives in a retirement home. He had to pay $200.000.- upfront for a space and his pension is just short of $75 weekly which pays for his main keep. This money will be deducted when his place gets sold. He shares his room with another inmate.

I spoke to his brother, Roderick, and in conversation I marvelled how Otto managed to get to his 90th year despite his seemingly corpulent figure and his dislike for any physical activity. His answer left me somewhat flummoxed. ‘ Yes, Gerard, Roderick said;” “but he never married like we all did’! ‘We brought up children,  had a marriage, a wife and all, and Otto never had that kind of worry.’ No wonder Otto lived so long. he seemed to imply!

Anyway, that’s how it goes, does it not? My worry is not the future for our grandchildren of negative monetary returns, but a world with a change of climate making the world uninhabitable.

That would be a much worse outcome.

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30 Responses to “A peculiar economy and Otto.”

  1. freefall852 Says:

    ” ‘ Yes, Gerard, Roderick said;” “but he never married like we all did’! ‘We brought up children, had a marriage, a wife and all, and Otto never had that kind of worry.’ No wonder Otto lived so long. he seemed to imply! ”

    I don’t know….what is it with this apparently modern dilema about being or not being married..?…I believe one never lives a full life UNLESS one gets married and has a child or two or so..and I’ve been in two looong term marriages w/kids…and I’ve never lived better!….What is it with people??
    I had a hell of a blue online on a blog with some people who can’t wait to castrate all males over twenty years old and condemn the very old men to have those “X-Ray glasses” confiscated that they got from a coupon on the back of those “Phantom” comic books or the back of “Pix” magazine all those years ago in case they use them to “see” something they oughtn’t!
    What’s wrong with people these days!?…Young blokes and women must just go out at nights for no other reason than to be seen by their friends…where they can show off the latest creation or suit they bought from an online App’…not to meet someone of the opposite sex…but just to show off!…will someone PLEASE tell them they are not that attractive!!
    I can remember that the ONLY REASON for going out was to meet a girl….!!…maybe I was a twisted, perverted fool?
    What’s wrong with people?????

    Liked by 3 people

    • gerard oosterman Says:

      Herewith an excerpt from what I wrote about girls and sex a few years ago, Jo.

      First dates and concrete bras.

      I don’t know about you, but first dates have a habit of infringing on memories as nothing else will. The catastrophes of life certainly include my attempts at romance many years ago as a just arrived migrant family’s son, looking even nerdier then now, although slightly younger. Consider that, on top of having a strong guttural accent and no car, how the hopelessness of the situation can well be imagined by some of you.

      My wheels at the time were a Lambretta scooter. I was also the proud secretary of the Parramatta scooter club, motor bikes not allowed. My position of power though allowed me to get my brother to come on a few ‘treasure hunts’ trips on his single cylinder Norton 500cc motor bike. I soon found out that my chances of dating a sheila would improve greatly if I had a car. This is where my 1949 Ford Single Spinner V8 came into being. It was light blue and had leather seats back and front and used oil almost as much as petrol.

      I had already found out through bitter experience that just to get a girl to dance was fraught with difficulties. There were so many men and so few girls willing to dance with nerds and reffos. The Ford V8 had to achieve what Dutch panache could not. The trick was to let it be known that you had a car. The fifties and sixties dance places in Sydney were The Trocadero in George Street, which is now a gaudy cinema complex, and Vic’s cabaret at Strathfield. Both had different bands and ambiences. It was also the period of TV serials Bonanza and 77 Sunset Strip. In one of hose there was a character called little Joey or was it Cookie, who was forever combing his hair while posing at a rakish angle to the movie camera? There were thousands of pretend little Joey’s, Cookies and James Dean lookalikes and the competition was fierce.

      My trump card was the V8Ford and, I tried with copious Brylcreme bouffant coiffure, to emulate a mixture of all three of the TV stars. As I was already 6ft I could not be a ‘little Joe’ but with practise, might just convey a hint of mysterious masculinity and excitement.

      The pride of Erin was the only Dance ensuring blokes of at least one dance.

      Liked by 2 people

      • freefall852 Says:

        Yes…that’s a good one, Gerard..I have read that on your archives page along with many others…wonderfully enternaining …and I, who used to sympathise with the “Surfie set”…( Little Patti was our pin-up girl) went to…almost..as much trouble in the preparations for courtship….only to have it all come unstuck when the Brylcreme lost it’s “dab of adhesion”…

        Like

  2. auntyuta Says:

    I wonder, Gerard, why Otto cannot be looked after in his own home? He does not need to be very mobile if he can get some help in! If he rather lives in a retirement home, well, that is his choice, isn’t it? It looks to me that he can easily afford the retirement home. Are there any nieces or nephews that would have liked to inherit?

    Liked by 1 person

    • gerard oosterman Says:

      Otto fought tooth and nail NOT to go into a retirement home, Uta. It was not his choice at all.He hates it. The amount of care he needed was beyond home-care or relatives. The hospital did not want to release him till a place was found where he could be cared for and that was in a retirement or aged care home. He lives in Queensland.
      The retirement homes do take care of any financial costs involved. They are run for profit. I suppose he had no choice and nieces and nephews come second after retirement costs are taken care off, I suppose, the Government subsidises part of retirement but would like their money back as well..

      Like

      • auntyuta Says:

        This is very sad, Gerard, that the retirement home is something he hates. It would be nice if some relatives could at least visit him on a regular basis!

        You say Gerard, that your worry for the furure is climate change that makes our world uninhabitable. I also worry that climate change can become very nasty for our children and grandchildren in the not so distant future. But on top of my worries is the fear of war. How on earth can we avoid WW III?
        With the way things are going right now the danger of another World War seems to be growing. Where are the peace loving people who can stop it? Once war breaks out, our money won’t be worth very much at all.

        Two things: How can we make sure, that there won’t be any World War and how can we make sure that as much as possible is being done to reduce climate change to a level where we have a chance of suvival.

        And another thing: As far as population growth is concerned, maybe you’d like to have a look at this video from December 2015:

        https://wordpress.com/post/auntielive.wordpress.com/648

        Liked by 1 person

      • auntyuta Says:

        Hi Gerard,

        Hans Rosling died in 2017:

        https://www.theguardian.com/global-development/2017/feb/07/hans-rosling-obituary

        A link to some videos is here:

        https://auntielive.wordpress.com/

        Liked by 1 person

      • gerard oosterman Says:

        Otto has two sisters and two brothers, all still alive. I am sure they will visit him. His family and my family came over on the same boat in 1956. We knew all of them very well.
        As for climate change, I just read Australia is the third largest exporter of fossil fuel thereby being a major contributor to the damage done to this fragile world.

        Like

      • gerard oosterman Says:

        Yes, Uta,

        With Otto in an aged care home, his brother told us, Otto did not want a phone nor TV. He must be deeply unhappy. We will try and visit him if at all possible. I believe one can now fly from Dapto airport direct to Brisbane from where we could catch a flight to Bundaberg where Otto has lived for a number of years and now in the aged care home.
        The problem is that a never ending string of appointments seem to follow us in our advancing years. Perhaps one should just cut the strings to all doctors and specialists and whoop it up regardless the consequences.
        What do you think?

        Liked by 1 person

      • auntyuta Says:

        For quite some time Peter and I had also a never ending string of appointments. But for a few months now the appointments seem to have become less and being spaced a bit further apart. I don’t have to tell you what a relief this is! Hopefully, over time, all your and Helvi’s appointments might become a bit less so that a bit of travel and holiday time may become possible. That Otto does not want a phone nor TV sounds not very good. I wonder, does he want visitors at all? How many visitors does he actually get?

        Like

  3. Therese Trouserzoff Says:

    Gez, This is not financial advice. Because I have no information on my longevity or anyone else’s. But after the train wreck of my divorce I retained a SMALL parcel of Comm Bank shares. Ever since I’ve held them, they gave paid dividends – twice a year that represent in total about a 5% return. And despite the sometimes furious fluctuations like dropping from $70ish to $24 during the GFC, they have been hovering around $80 of late. This is despite adverse findings at the Royal Commission – and nobody went to jail over money laundering.

    So, at a time when cash in the Com bank isn’t making depositors much of a return, owning a tiny slice of the pie hasn’t hurt much – unless you have some kind of moral compass. In which case you are going to find it a lot easier for you and your camel to pass through the eye of a needle. When the time comes.

    Remember this is not financial advice. It’s just a story.

    Kind regards to you and the lovely Helvi.

    Liked by 2 people

    • gerard oosterman Says:

      A return of 4 to5 % on shares is one reason shares are rocketing upwards and that is without the franking credits. Much of all that becomes irrelevant when the bells are tolling the final faltering step to the Pearly Gates.
      It’s funny how our health becomes so robust and improves each time a segment of the Royal Commission on ‘Aged-Care’ comes on the telly. Did you hear a ‘Care Home’ out in the never-never shovel all food left-overs together and make some kind of soufflé or combo-meat loaf out of it?

      The horror of it, Trouserzoff. Stay well and regards to FM.

      Like

  4. Julia Lund Says:

    So many things about what may lie ahead can cause uncountable amounts of worry. Money, health. Concern for those we love. A few weeks ago, I was diagnosed with breast cancer. Still no definitive treatment plan as I have seemingly endless tests, which come with seemingly endless waits for results … Finding peace and love and joy in the moment, amidst everything that is beyond our control is, I’m discovering in my last year of being fifty, the only way to live in this life of uncertain storms. Psalm 23 says it all for me. I find the source and mainstay of my peace there.

    Praying that for you and Helvi each day holds peace and love and joy amidst the difficult things you face, amongst the things about this world that disturb your justice-loving hearts.

    Liked by 1 person

    • gerard oosterman Says:

      As you know, Helvi too discovered she had breast cancer almost two years ago. It is now in remission but has spread to other parts. You are right, endless tests and I am so sorry to hear that. Modern treatments can delay cancer almost indefinitely, or at least that is what we cling to. Another few years would be nice. But, if not…so be it!
      Thank you for your prayers, Julia. Peace and love amongst all that becomes achievable, or that is what we hope for.
      Today the sun is out and the garden shows us some flowers and that is nice.

      Liked by 2 people

    • freefall852 Says:

      If only..:
      Would my wit be a sage much wiser.
      Would my courage be somewhat bolder.
      Would that time could take me back yonder,
      To de León’s youthful fountain mythical . . .
      There in a blush of delight so typical,
      Would I and thee..as Adam and Eve,
      As those children in the garden of Ede’,
      Brighten our eyes to that first sight,
      Of a new dawn rising over the mountain’s height.
      If only. . .

      Liked by 3 people

  5. gerard oosterman Says:

    Lovely poem, Jo. The moving hands that writ…

    Liked by 1 person

  6. freefall852 Says:

    I have a theory on longevity and the ending of our life….it goes like this…: Picture a circle, at one point of the circle we are born and from that first moment of conscious awareness, we start to gather memories..and then onwards through growing up and adulthood..layer upon layer ..like the skin of an onion…and then, when we get close to the end of our life, we start remembering back further and further..like the stripping away of the layers of that “onion” until we can remember clearly events from our earliest times with our mother…and less memories of the immediate and now…and it is when memory of that time is predominant over the here and now, is when we are close to joining the end of the circle to the beginning….if you get my drift…

    I am 68yrs..and I can remember more clearly the adventures with my siblings at the moment…only a few memories with just myself and my mother as a toddler…

    Just an idea….

    Liked by 3 people

    • gerard oosterman Says:

      It is best to keep an open mind on dying. Some people go on as if it is some kind of tragedy even though it befalls all of us. It is normal and that is of a great consolation. The important thing is to have the bills paid for in time and that one switched off the electric blanket before hopping out of bed.

      Liked by 1 person

  7. doesitevenmatter3 Says:

    I worry about the world in that way, too. It’s scary to think about.
    And I worry about other things related to the world I will not be alive in. I want everyone who comes after me to have a wonderful life.
    HUGS to you and Helvi!!!
    PATS and RUBS to Milo!!!

    Liked by 1 person

  8. shoreacres Says:

    In the midst of so much solemnity, I probably shouldn’t be laughing, but you’ve brought to mind something my mother said near a year or two before she died. “One of my biggest regrest,” she said, “is that I always prepared for the wrong crisis.” And isn’t that just the way? We spend all our energies preparing for what seems an inevitable challenge, and then something entirely unexpected shows up.

    I could worry myself sick about finances, but I decided it was a mor reasonable course to keep myself healthy so I can keep working. Who knows? Maybe I’ll end up in the Guiness Book of World Records as the world’s oldest living active varnisher!

    Liked by 1 person

    • gerard oosterman Says:

      Laughter is the best we can do and I wish I could do it more often. Helvi is good at laughter and she makes others laugh.
      I don’t really prepare for disasters and take things as they come. Even so, I am interested in what makes this world tick and the prospect of negative inflation or deflation of economics intrigues me. That is not to say that a nice Bromeliad or Daisy isn’t even more interesting. They are.
      You are more than an active varnisher, you also great at writing and photography. Amazingly so.

      Liked by 1 person

  9. Curt Mekemson Says:

    Too many things to worry about, Gerard. I’ve decided to stop, or at least limit myself to one worry a day. If I could only keep Trump from intruding. –Curt

    Liked by 1 person

    • gerard oosterman Says:

      Trump remains an enigma, a buffoon and charlatan all at once. Amazing how popular he still seems to be. He is also very dangerous.

      Like

      • Curt Mekemson Says:

        I make no claim to understanding Trump’s appeal, Gerard. There is no doubt that racism plays a part. And fear of a rapidly changing world by folks who have been left behind. Fundamentalism is also an element. There are also those who may not like, even despise Trump but see him as a way of getting things they want, like a conservative Supreme Court and conservative judges. Or tax breaks for the wealthy. And there are those who believe his lies. The list goes on. A dangerous man, yes.

        Like

  10. doesitevenmatter3 Says:

    Had you and Helvi on my mind today so I wanted to stop by with some prayers, ❤ , and (((HUGS))) 🙂
    PATS and RUBS, of course, for little Milo! 🐶 🐾 🐩

    Liked by 1 person

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