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, raising questions about the fund's role as guarantor of future pension payouts.
Now the scarcely noticed borrowing spree, carried out amid a prolonged economic crisis, is about to end, because there is little left to take. At least 90% of the €65 billion ($85.7 billion) fund has been invested in increasingly risky Spanish debt, according to official figures, and the government has begun withdrawing cash for emergency payments.
Although the trend has drawn little public attention or controversy, it has become a matter of concern for the relatively few independent financial analysts who study the fund, which is used to guarantee future payments of pensions.
Wednesday, January 09, 2013
Spain Plunders 90% Of Social Security Fund To Buy Its Own Debt | Zero Hedge
Spain Plunders 90% Of Social Security Fund To Buy Its Own Debt | Zero Hedge
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This is very bad - and a sign of things to come here.
ReplyDeleteIt has been my contention for a couple of years now that government sponsored pensions will be worth little in coming years due to constant squandering.
Self directed funds, precious metals, and cash outside the banking system seem to be some of the few options remaining.