Henry is old enough to remember when there was a flood of money into superannuation accounts in the last week of the financial year. Indeed, Henry used help the troops count the loot as the flood turned into a king tide on the last evening of the year.

The new “simpler super” rules have from all accounts turned a king tide flood into a tsunami. But wait, are there any catches, gentle readers?

Simpler superannuation?

Henry has just begun to think about what the new “simpler superannuation” has to offer. “Too little, too late” was his accountant’s comment, itself a bit rich considering that he has failed to deal in a timely way with the accounts of Henry’s company, Henry personally and Mrs Thornton.

Most of Henry’s pals are bragging of having borrowed a million bucks to put into super by 30 June. Henry has been told for years that one cannot borrow for such purposes. The accountant (the source of this opinion over the years) concedes there is no trail from private borrowing to a super contribution, although he advises against it as too risky. Anyway, arranging something as borrowing a million for a doubtful enterprise would be to abandon the frugal habits of several lifetimes.

The next questions for Henry’s accountant was whether one could deposit shares in an unlisted but non-private company. “Seems sensible” the accountant replied, so Henry began the process of transferring the (heavily discounted, relative to cash invested) shares into his super fund.

“Hang about”, the accountant said with the nearest tone to panic Henry has experienced from this bloke, “I’ve consulted my brother, the superannuation lawyer. You could go to jail if you do that.”

Gadzooks, isn’t this new, simpler super? Don’t we want to encourage new enterprises?

To reiterate, despite all the ads about fulfilling the dream — the best being where old guys and gals sit on the man from Colonial’s knee — it is apparently a criminal offence to put shares in an unlisted vehicle in which the person doing this owns a chunk of the action. This is deeply irritating as well as alarming. Henry now feels all this “simple super” rhetoric is a bit of a fine-print con — but what else is new?

Apparently super funds can only accept cash, listed shares or real business property. Not great for the entrepreneurs amongst us, although ok for those clever chaps who borrow to make big cash injection. Unless … read on below, especially if you have seen a market bust in your lifetime.

Whither the markets?

Henry’s Lexington has struck out in a new direction, a timely intervention given the rivers of gold flowing into Australia’s pension funds.

H’s Lex been musing over his … “unexpected event will break the torper”… 15 June statement and wants to amend comment to encompass a larger set of threats to global economic and political equilibrium. The threats are geopolitical, financial markets and natural including bio-medical.

‘Equilibrium’ H’s Lex acknowledges is a relative state/term which incorporates all current events which are being discounted and assessed by financial markets, governments and the media. H’s Lex believes:

Each institution is too risk-averse and failing to assign a realistic probability of a scenario cascading into a catastrophic crisis impacting the global economy and peace between now and the end of 2008. Potential outcomes are a major regional war, global economic dislocation, most probably, a oil shock and financial markets subject to a 15-40% global Bear Market with major failures and casualties …

H’s Lex recommendation:

… reaffirm your risk tolerance and appetite for risk, your asset allocation and diversification critical, increase cash allocation, hedge a concentrated position and be vigilant and flexible …

Read more at Henry Thornton.