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The Global Pension Grab

( – promoted by buhdydharma )

  Most people who have been following the news about Ireland are aware of the austerity measures, such as middle-class tax hikes, the lowering of the minimum wage, and massive layoffs. But the most outrageous action the government is taking concerns pensions.

 Fine Gael, Labour and Sinn Féin attacked the intention to use the National Pension Reserve Fund to help provide a further €10 billion in further capital for the banks. In total, the banks could end up getting another €35 billion if their losses are bigger than expected.

 It’s a case of blatant theft. The government is stealing from the working class to give to the wealthy bank creditors.

 Ireland is not alone.

  Hungary is playing hard-ball with its own citizenry.

 Hungary is giving its citizens an ultimatum: move your private-pension fund assets to the state or lose your state pension.

  Economy Minister Gyorgy Matolcsy announced the policy yesterday, escalating a government drive to bring 3 trillion forint ($14.6 billion) of privately managed pension assets under state control to reduce the budget deficit and public debt. Workers who opt against returning to the state system stand to lose 70 percent of their pension claim.

  “This is effectively a nationalization of private pension funds,” David Nemeth, an economist at ING Groep NV in Budapest, said in a phone interview. “It’s the nightmare scenario.”

 The private pension system was mandated by the Hungarian government in 1998 in order to off-load public obligations.

 The path Hungary is taking has been walked before. In 2001 Argentina seized $3.2 Billion worth of private pensions in a desperate attempt to stay afloat. They forced that money into sovereign bonds, and then defaulted on their debts a few weeks later, thus wiping out 70% of the purchasing power of the savings.

  Two years ago Argentina simply nationalized the pension system when tax revenue fell short. Hungary made its move when a bond sale fell short of expectations.

 Other nations are also moving in this direction. France seized 36 Billion Euros from the pension system the other day in order to pay off other debts.

 Poland’s Prime Minister Donald Tusk had to deny the government was about to raid pension funds after it was leaked the government was considering suspending payments to private pension funds.

 Professor Jerzy Hausner, a member of the National Bank of Poland’s interest-rate-setting council and one of the architects of Poland’s current pension system, told Polskie Radio “I can’t describe [the government’s proposal] as anything but desperate, and those are the very mildest words I can use.”

The Counter Example

 While the raid on the working class rages from one nation to another, the news out of Iceland, the first nation to go under, has been mostly absent. Iceland’s President explains why in very simple terms:

 Iceland’s President Olafur R. Grimsson said his country is better off than Ireland thanks to the government’s decision to allow the banks to fail two years ago and because the krona could be devalued.

  “The difference is that in Iceland we allowed the banks to fail,” Grimsson said in an interview with Bloomberg Television’s Mark Barton today. “These were private banks and we didn’t pump money into them in order to keep them going; the state did not shoulder the responsibility of the failed private banks.”

 What a concept! Let the risk taking bankers go under. Don’t make the public pay for it, and the real economy will be stronger because of it.

  Of course the Iceland government shouldn’t be too proud. They wanted to bail out the banks too, but the people of Iceland prevented them from doing it.

  Both the government and people of Ireland should take a good look across the waters to Iceland and learn something.

 What lessons should Americans take home from this? The obvious lesson is: Let The F*cking Banks Fail! Don’t shift the cost to the taxpayers. It’s not just good capitalism, its the moral thing to do.

 But we also need to look closer at what governments do when they need cash. Our government has been living off of Social Security surpluses for decades now.

 Those surpluses are shrinking and will soon be gone. Before that happens the government will be looking around for more cash, and that means your retirement savings. They are already considering plans.

 Under Ghilarducci’s plan, all workers would receive a $600 annual inflation-adjusted subsidy from the U.S. government but would be required to invest 5 percent of their pay into a guaranteed retirement account administered by the Social Security Administration. The money in turn would be invested in special government bonds that would pay 3 percent a year, adjusted for inflation.

 The current system of providing tax breaks on 401(k) contributions and earnings would be eliminated.

 No one knows what the future holds, but you can be certain that if the government runs short on cash they will grab at anything they can get.

25 comments

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  1. gjohnsit

    What happens when China doesn’t want to lend us any more money?

  2. bigsurtree

    threw out a trial balloon suggesting that large state pension funds be used to purchase failing banks. [I’m not positive it was the FDIC, but I think so] I sure took quick notice, but I didn’t see any commentary anywhere on the suggestion.

  3. tahoebasha3

    I can’t help but to think that all of it is a direct result of the economic collapse that we engineered that dominoed!

    Strange how we always have the money to send U.S. carriers wherever we wish — now, to the Yellow Sea!  

    But then, all the military stuff was well planned out in September 2000 — “Rebuilding America’s Defenses” —  Strategy, Forces and Resources for New Century — (A Report of The Project for the New American Century)

    REPOSITION U.S. FORCES to respond to 21st century strategic realities by shifting permanently-based forces to Southeast Europe and Southeast Asia, and by changing naval deployment patterns to reflect growing U.S. strategic concerns in East Asia. (pg. v) . . . .

    Forces for Major Theater Wars

    The one constant of Pentagon force planning through the past decade has been the recognized need to retain sufficient combat forces to fight and win, as rapidly and decisively as possible, multiple, nearly simultaneous major theater wars. This constant is based upon two important truths about the current international order. One, the Cold-War standoff between America and its allies and the Soviet Union that made for caution and discouraged direct aggression against the major security interests of either side no longer exists. Two, conventional warfare remains a viable way for aggressive states to seek major changes in the international order. (pg. 8 [My emphasis in this paragraph]

    And even Social Security and Medicare are contemplated therein:

    In fact, the best way to measure defense spending over longer periods of time is as a portion of national wealth and federal spending. By these metrics, defense budgets have continued to decline even as Americans have become more prosperous in recent years. The defense budget now totals less than 3 percent of the gross domestic product – the lowest level of U.S. defense spending since the Depression. Defense accounts for about 15 percent of federal spending – slightly more than interest on the debt, and less than one third of the amount spent on Social Security, Medicare and other entitlement programs, which account for 54 percent of federal spending. As the annual federal budget has moved from deficit to surplus and more resources have become available, there has been no serious or sustained effort to recapitalize U.S. armed forces. . . . .

    After 2010 – seemingly a long way off but well within traditional defense planning horizons – the outlook for increased military spending under current plans becomes even more doubtful. In the coming decades, the network of social entitlement programs, particularly Social Security, will generate a further squeeze on other federal spending programs. If defense budgets remain at projected levels, America’s global military preeminence will be impossible to maintain, as will the world order that is secured by that preeminence. [my emphasis] . . . .

    Hummmm!  Looks like we’re right on target!

    [Although, I’ve yet to read every single word, the “sick” document is all about global domination, as you probably know!]

  4. Lasthorseman

    The soylent green age limit.  Or was that another dystopian sci-fi movie.

  5. dharmasyd

    …This is, in part, what the Boyles-Simpson Fiscal Cat Food Commission is about.  There just aren’t that many big pots of gold out there to rob anymore.

    The thought of the $2.5 trillion in the Social Security Trust Fund has these folks salivating like Pavlov’s dogs.

  6. tahoebasha3

    On December 1, 2010, President Obama’s Debt Deficit Commission, headed up by Alan Simpson, ultra-right conservative, goaded on by Peter Peterson, an 84 year old billionaire, who has believed that the “elderly” were and are a drag on society (as though we somehow had not earned the right to be elderly) will submit its findings.  TOMORROW, November 30, 2010, is National Call In Day to our representatives to tell them HANDS OFF our Social Security and Medicare.  See Strengthen Social Security:

    http://salsa.wiredforchange.co

    and PDA’s Action Page here:  http://capwiz.com/pdamerica/home

    SOCIAL SECURITY and MEDICARE are needed more TODAY than ever before even!  The wage disparity — wage stagnation over just the past 10-15 years alone, had made it near impossible for average Americans (those still lucky enough to be working) to amass any kind of funds for retirement (which are also taxed, BTW).  

    ~~~~  Yes, the MIC and Wall Street will find every nook and crevice from which to continue their mission of GREED!  And NO stone will be left unturned!  

    This should just about be the turning tide with Americans — at least, I would hope so — Social Security and Medicare BELONG TO THE AMERICAN PEOPLE — NOT THE GOVERNMENT!  

    SCREAM, PEOPLE, SCREAM AS LOUD AS YOU CAN.  OUR KIDS, GRANDKIDS, DISABLED, EVERYONE DOWN THE LINE WILL NEED TO HAVE THESE FUNDS AVAILABLE TO THEM — BIG TIME!  

  7. Xanthe

    you’d think we got our 401 funds out with no taxing.  Of course, we’re taxed.  Just less because we’re not working now and have less money.  

    Do they want all of us on the dole?  Anyone here know a good book showing us how to hide our money?  I’ll be damned if they’re going to get hard-earned savings –

     

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