Sunday, 8 September 2013


Now then, now then; whilst the people watch the show, the dark cabal, always makes it's darkest moves.  A Pole doth protest to me, before I write this article, that the government stealing private assets to fund it's own balance sheet, is a 'good thing', and is protection from predatory banksters; rather, than the capitalist solution, of either JAILING the CROOKED PENSION PROVIDERS, or liberalising the Polish Pensions market, so that people had REAL choice, in provider.  

But no, the Poles it would seem, have been brainwashed into thinking the Polish Government STEALING their PRIVATE PENSIONS, to LOWER GOVERNMENT BORROWING COSTS, is really, a smart move.  How fast, and how far, Europe, is falling to the COMMUNIST BRAINWASHING that the STATE STEALING private Assets, to put on it's books, is a 'Good Thing'.  They will learn, clearly, the hard way.  It seems over forty years of communism, just wasn't enough for the Poles to learn, BIG GOVERNMENT STEALING ASSETS IS **THE** PROBLEM.

"Poland Confiscates Half Of Private Pension Funds To Cut Sovereign Debt Load

Submitted by Tyler Durden on 09/06/2013 14:50 -0400

While the world was glued to the developments in the Mediterranean in the past week, Poland took a page straight out of Rahm Emanuel's playbook and in order to not let a crisis go to waste, announced quietly that it would transfer to the state - i.e., confiscate - the bulk of assets owned by the country's private pension funds (many of them owned by such foreign firms as PIMCO parent Allianz, AXA, Generali, ING and Aviva), without offering any compensation. In effect, the state just nationalized roughly half of the private sector pension fund assets, although it had a more politically correct name for it: pension overhaul.

By way of background, Poland has a hybrid pension system: as Reuters explains, mandatory contributions are made into both the state pension vehicle, known as ZUS, and the private funds, which are collectively known by the Polish acronym OFE. Bonds make up roughly half the private funds' portfolios, with the rest company stocks.

And while a change to state-pension funds was long awaited - an overhaul if you will - nobody expected that this would entail a literal pillage of private sector assets.

On Wednesday, Prime Minister Donald Tusk said private funds within the state-guaranteed system would have their bond holdings transferred to a state pension vehicle, but keep their equity holdings. The funds would effectively be left with only the equities portions of their assets, even this would be depleted, and there will be uncertainty about the number of new savers joining.

But why is Poland engaging in behavior that will ultimately be disastrous to future capital allocation in non-public pension funds (the type that can at least on paper generate some returns as opposed to "public" funds which are guaranteed to lose)? After all, this is a last ditch step which no rational person would engage in unless there were no other option. Simple: there were no other option, and the driver is the same reason the world everywhere else is broke too - too much debt.

By shifting some assets from the private funds into ZUS, the government can book those assets on the state balance sheet to offset public debt, giving it more scope to borrow and spend. Finance Minister Jacek Rostowski said the changes will reduce public debt by about eight percent of GDP. This in turn, he said, would allow the lowering of two thresholds that deter the government from allowing debt to raise over 50 percent, and then 55 percent, of GDP. Public debt last year stood at 52.7 percent of GDP, according to the government's own calculations.

To summarize:

Government has too much debt to issue more debt

Government nationalizes private pension funds making their debt holdings an "asset" and commingles with other public assets

New confiscated assets net out sovereign debt liability, lowering the debt/GDP ratio

Debt/GDP drops below threshold, government can issue more sovereign debt

And of course, once Poland borrows like a drunken sailor using the new window of opportunity, and maxes out its new and improved limits, it will have no choice but to confiscate more assets, and to make its balance sheet appear better, until one day, there is nothing left in the private sector to confiscate. At that point the limit itself will have to be legislated away, and Poland will simply continue borrowing until one day there are no foreign lenders willing to take the same risk as the nation's private pensioners. At that point, Poland, which is in the EU but still has the Zloty, can just go ahead and monetize its own debt by printing unlimited amounts of its currency.

Of course, we all know how that story ends.

The response to the confiscation was, naturally, one of shock: "


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