Spain Robs the Pension System to Pay its Bills

Townhall.com ^ | August 22, 2014 | Mike Shedlock

[Kaslin]

The "recovery" news in Spain keeps piling up. Via translation from El Economista, Government has already taken 37% of the total 'pensions piggy bank'. If extractions continue at the current rate, the fund would be exhausted in 4 years.

The Government of Mariano Rajoy has released 24.65 billion euros of the Social Security Reserve Fund in less than two years. Such amount represents nearly 37% of the total 66.815 billion fund accumulation. That figure marks the highest cumulative piggy bank draw-down in history, following its commissioning in 2000 and after eleven years in which successive governments did not need to dip into it.

The situation changed dramatically with the height of the crisis. The current government has broken into the social security bank twelve times since 2012. The total amount withdrawn exceeds 24.6 billion euros while 54.69 billion remains.

This implies "at the current depletion rate, in a period of four years or so, the fund would be exhausted".

Advice of the Day

I am sure glad no one sees a problem here. As we all know, problems vanish if you ignore them. It's mind over matter. I learned that from former US secretary of treasury, Tim Geithner.

And as long as you are ignoring some problems, why not ignore all problems?

For example, please ignore Spain's trade deficit unexpectedly rising as noted in Recovery Mirage in Spain Dissipates Into Ashes.

Instead, let's focus on the dramatic improvement of Spain's unemployment rate.



click on chart for sharper image

In a few years, at the current rate of progress, Spain's unemployment rate may be back to a mere 21% or so. Isn't that something to be proud of?

I sure would think so. But will there be anything left in the piggy bank?

What, Me Worry?




To all you naysayer pessimists who may be shocked by the above, please consider this simple question: If Social Security bankruptcy doesn't bother the US, why should it bother Spain or any other country?

Far be it from me, Mish the eternal optimist, to be any sort of worrywart, but your answer must take into account one additional question: Who controls the printing press in the US and who controls the press in Spain?

[Wolfie]

I’m glad ourel SS accounts are safe and sound.

[newfreep]

But, but, but leftwing socialism is our utopia!

[Nervous Tick]

>> Government has already taken 37% of the total ‘pensions piggy bank’

Poor Spaniards; however I feel comfortable as I near retirement, ‘cause OUR pensions piggy bank (some call it Social Security) is CHOCK FULL of valuable, safe U.S. Treasury IOUs!

“Backed By The Full Faith And Credit Of The United States”

[Opinionated Blowhard]

Witness the death throes of the Welfare State. First, you tax and spend. When you can’t raise taxes anymore on “the rich,” you borrow and spend. When you can’t borrow anymore, you start writing checks on different accounts and grabbing any source of money you can to keep the spending going. When you can’t pay pensions as a result, riots and civil war follow.

[Calvin Locke]

In the waning year of Bush43, Dems were making noises about taking IRA, 401(k), and 403(b) accounts.

[dfwgator]

How do you say “Lockbox” in español?

[Nextrush]

Argentina seized all private pensions and combined them with the government pension system to try and stay afloat, but it failed.

Now the Kirchner regime calls a US federal judge overseeing the repayment of their debt obligations an “imperialist”.

[MichaelCorleone]

Uncle Sugar will be raiding our own 401K’s and IRA’s as well. Just a matter of selling it to the masses and the ‘right’ people getting out just in time so they themselves don’t get burned.

[Nervous Tick]

Being responsible is hard work! It’s “bullying” to demand responsibility of individuals (or countries).

[Iron Munro]

There they go - copying the US federal government again.

[grania]

How much of the money goes to EU banks for loans that the citizens had no say over? What would happen if Spain defaulted on those loans and went their own way? Not that the citizens would ever be allowed to vote on that.

[Nervous Tick]

I believe “lockbox” translates to something like “estas jodido” en espanol.

[Nextrush]

In the end our taxes will be raised and all the government benefits will be cut when the house of debt cards collapses in the United States.

[noah]

I say, “GOOD CALL.”

Now revise the pensions to something reasonable that
would have prevailed if “bargainers” were on opposite sides.
OK?

[A CA Guy]

When they get to losing 25000% of what was to be in savings they will be in the USA’s shoes.

[Rockitz]

But this could never happen here......NOT.

[ronnie raygun]

Zippys equality chant

[rwoodward]

This is the main problem with social security. The Gubmit holds all the money! And there ain’t a fllipin thing you can do about it. Even though its the money they took from you without your permission. You can’t stop them from taking your money and you stop them from spending it either. The perfect crime! He he

[Gritty]

I don't know how the Spanish do it, but I know our Social Security funds are safe and secure in Al Gore's Official Federal Government Lockbox.

I sure hope Spain has been as careful as we have been in assuring their retirement funds are in safe hands. It would be a shame if their pensioners get looted by their politicians. But at least we can take comfort knowing it won't happen here!