THE HERALD'S OPINION: Global economy on close watch

IT is often said that the advent of Australia’s universal superannuation system turned the country into a nation of shareholders, and that we are all dependent, as a result, on the health of the market.

In one sense, this is true, but superannuation was nowhere on the table in 1929 when the Black Tuesday crash of October 29 sent Wall Street into a tailspin, triggering the decade-long global chain of events known to history as the Great Depression.

So, like it or not, the health of the market has always been important to working people, simply because the real-world broader economy – where the bulk of the jobs are – finds it hard to function without a healthy financial sector.

The headline-grabbing losses that hit stock markets around the globe earlier this week might have been largely reversed in subsequent trading, but the nervousness that caused the rout is unlikely to disappear, meaning that more instability may well be just around the corner.

Those with an active interest in the market will know that share market indices have been trading in many nations at record highs, with the tech sector, especially, showing signs of the sort of irrational pricing that presaged the end of the bubble in 2001.

In a system loaded with cheap money – thanks to the historically low interest rates that still exist a decade after the global financial crisis – the world is awash with debt. For most of us, this debt is represented by the huge prices paid for housing. Similar levels of leverage exist across the business world.

As a growing number of financial commentators are pointing out, the historic relationship between full employment and wages growth appears to have disappeared, leaving working people with less real money in their pockets at a time of quite substantial increases in the cost of household necessities, especially power.

Around the world, voters are expressing their dissatisfaction with a system they believe has failed to serve them. Add electoral unhappiness to financial instability, and you have a recipe for troubled times. And that’s before the West’s uncertain relationship with an expanding China is taken into account.

All of these issues, and more, are influencing the health of the market, and for most working Australians, the state of their superannuation accounts.