Spain’s Central Bank Loots its Social Security Fund

Thus converting bought-and-paid-for assets, entitlements to retirees, into future tax liabilities for their offspring.   As noted below, the US has been doing this for years (starting under the clinton admin), spain’s fraud is just more transparent because no one else is buying spain’s bonds.  The same will happen here.  Are the outlines of the real rulers of the world starting to take shape?  They aren’t politicians or generals or think tank operatives.  Look at who owns “sovereign” debt (backed by taxes enforced with guns).   That’s who owns you and everyone else who uses the currency backed by that debt.

With Spanish 10Y yields hovering at a ‘relatively’ healthy 5%, having been driven inexorably lower on the promise of ECB assistance at some time in the future, the market has become increasingly unsure of just who it is that keeps bidding for this stuff. Well, wonder no longer. As the WSJ notes, Spain has been quietly tapping the country’s richest piggy bank, the Social Security Reserve Fund, as a buyer of last resort for Spanish government bonds – with at least 90% of the €65 billion ($85.7 billion) fund has been invested in increasingly risky Spanish debt. Of course, this is nothing new, the US (and the Irish) have been using quasi-government entities to fund themselves in a mutually-destructive circle-jerk for years – the only difference being there are other buyers in the Treasury market, whereas in Spain the marginal buyer is critical to support the sinking ship. The Spanish defend the use of pension funds to buy bonds as sustainable as long as it can issue bonds – and yet the only way it can actually get the bonds off in the public markets is through using the pension fund assets. The pensioners sum it up perfectly “We are very worried about this, we just don’t know who’s going to pay for the pensions of those who are younger now,” or those who are older we would add.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.