Portugal Is Latest Country To Go "MF Global",
Raid Pensions Funds To Delay Fiscal Death
About a year ago, we discussed the very troubling moves by insolvent countries such as Ireland and Hungary to "raid" their pensions funds for various fungible purposes, a move which in virtuallyevery way a was a progenitor to the MF Global capital commingling, if not outright bankruptcy, and was explained as reflecting "a willingness by governments to use long-term assets to fill short-term deficits, including Ireland’s announcement last week that it would use the country’s €24bn National Pensions Reserve Fund “to support the exchequer’s funding programme” and Hungary’s bid to claw $15bn of private pension funds back to the state system." While it was unclear precisely what the use of funds was, back then FN speculated that it pension funds were being tapped to boost sovereign debt bids. Which if true means that Europe's peripheral pensioners have seen about a 20% drop in the NPV of their retirement assets. Today we add Portugal to the list of countries committing an MF Global type crime on a global scale: the Telegraph writes: "Portugal has raided €5.6bn (£4.8bn) of pension fund assets in a controversial scramble to meet its deficit targets." And since the money is once again implicitly and explicitly used to patch broken fiscal models, it is as good as gone. Which in a paradoxical way is almost welcome, as the true Arab Spring will not come to Europe (and America) until the citizens don't read, in clear writing, that their welfare state entitlement benefits are gone.... They are all gone. And at that point there will be truly nothing left to lose.
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