A Bail-In Warning
Posted July 17th, 2013 at 10:21 AM (CST) by Jim Sinclair & filed under General Editorial.
My Dear Extended Family,
Bail-In does not need a crisis environment to occur. It will happen without anything worse than the present happening.
Bail-In can easily be applied to banks and financial institutions that do not pass a Stress Test at the will of the Federal Reserve and State Banking Authority.
Bail-In means your assets will be confiscated for reasons I have labored over for over 5 hours at the six recent Q&A sessions.
Those that do not protect themselves from Bail-In will be involuntarily downsized in the "Great Leveling" that is planned to occur during August of 2014 and late 2015.
That does not mean you can wait until August of 2014 to prepare.
Sincerely,
Jim
http://www.jsmineset.com/2013/07/17/a-bail-in-warning/
===========================================================
Bail-In does not need a crisis environment to occur. It will happen without anything worse than the present happening.
Bail-In can easily be applied to banks and financial institutions that do not pass a Stress Test at the will of the Federal Reserve and State Banking Authority.
Bail-In means your assets will be confiscated for reasons I have labored over for over 5 hours at the six recent Q&A sessions.
Those that do not protect themselves from Bail-In will be involuntarily downsized in the "Great Leveling" that is planned to occur during August of 2014 and late 2015.
That does not mean you can wait until August of 2014 to prepare.
Sincerely,
Jim
http://www.jsmineset.com/2013/07/17/a-bail-in-warning/
===========================================================
Another opinion--maybe not so fast...
September 7, 2013
Eric King: “Michael, there was a move by the Polish government to seize $37 billion of pension money. They literally just stole it. I’m just wondering if you think we are going to see that in other parts of Europe and even in the United States?”
Pento: “The confiscation of wealth isn’t a new phenomenon. For many years it has been done through insidious inflation, and then what happened in Cyprus, and now in Poland. But the United States still prefers surreptitious use of inflation to steal from its citizens.
I think the confiscation of savings and wealth is going to continue to occur. It’s going to increase in intensity, and this will go on for years and years before they resort to more overt action of direct confiscation of wealth.”
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/9/7_Top_Economist_Predicts_Increased_Govt_Theft_%26_Surge_In_Gold.html
===========================================================
September 7, 2013
Eric King: “Michael, there was a move by the Polish government to seize $37 billion of pension money. They literally just stole it. I’m just wondering if you think we are going to see that in other parts of Europe and even in the United States?”
Pento: “The confiscation of wealth isn’t a new phenomenon. For many years it has been done through insidious inflation, and then what happened in Cyprus, and now in Poland. But the United States still prefers surreptitious use of inflation to steal from its citizens.
I think the confiscation of savings and wealth is going to continue to occur. It’s going to increase in intensity, and this will go on for years and years before they resort to more overt action of direct confiscation of wealth.”
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/9/7_Top_Economist_Predicts_Increased_Govt_Theft_%26_Surge_In_Gold.html
===========================================================
In The News TodayPosted August 18th, 2013 at 12:27 PM (CST) by Jim Sinclair & filed under In The News.
[ Also look at what Jim Sinclair has to say under "Economic Prognosis" to the left as well as all of the articles under the very first folder above: "Home - GOTS: Get Out of the System" ]
Dear CIGAs,
Remember you read it first on JSMineset. You can find it in my interviews with King World News and in my Cyprus commentary.
Between 2008 and 2020:
-The Great Flushing = Lehman Brothers and Cyprus.
-The Great Leveling = The Demise of the Western World economic Middle Class.
-The Great Reset = The Emancipation of physical gold from paper gold as the price determination method. That is my view of Free Gold.
-The implementation of a new currency union which is the "Euro R4 Standard."
Your protection is not accomplished by diving deeper into the system, but by GOTS (getting out of the system).
The Destruction Of America’s Middle Class (In Under Seven Minutes)
Submitted by Tyler Durden on 08/17/2013 21:19 -0400
Asset-Backed Securities
While hardly news to frequent visitors, especially those who recall the following list, anyone who needs a 7 minute refresher into why the US middle class is on collision course with extinction is urged to watch the following brief video which highlights all the salient facts such as:
76% of Americans live paycheck to paycheck
27% of American have no savings at all
46% of Americans have less than $800 in savings
The conversion of America into a part-time working society and the country’s second largest employer – a temp agency.
The college trap and the student loan bubble
And of course, foodstamps, foodstamps, foodstamps and the nearly 50 million poverty-level Americans who need them to survive
Why seven minutes? Because everyone knows that just like you can’t get "six minute abs", so it is impossible to recap the doom of America’s middle class in only six minutes (or, gasp, less).
More
===========================================================
[ Also look at what Jim Sinclair has to say under "Economic Prognosis" to the left as well as all of the articles under the very first folder above: "Home - GOTS: Get Out of the System" ]
Dear CIGAs,
Remember you read it first on JSMineset. You can find it in my interviews with King World News and in my Cyprus commentary.
Between 2008 and 2020:
-The Great Flushing = Lehman Brothers and Cyprus.
-The Great Leveling = The Demise of the Western World economic Middle Class.
-The Great Reset = The Emancipation of physical gold from paper gold as the price determination method. That is my view of Free Gold.
-The implementation of a new currency union which is the "Euro R4 Standard."
Your protection is not accomplished by diving deeper into the system, but by GOTS (getting out of the system).
The Destruction Of America’s Middle Class (In Under Seven Minutes)
Submitted by Tyler Durden on 08/17/2013 21:19 -0400
Asset-Backed Securities
While hardly news to frequent visitors, especially those who recall the following list, anyone who needs a 7 minute refresher into why the US middle class is on collision course with extinction is urged to watch the following brief video which highlights all the salient facts such as:
76% of Americans live paycheck to paycheck
27% of American have no savings at all
46% of Americans have less than $800 in savings
The conversion of America into a part-time working society and the country’s second largest employer – a temp agency.
The college trap and the student loan bubble
And of course, foodstamps, foodstamps, foodstamps and the nearly 50 million poverty-level Americans who need them to survive
Why seven minutes? Because everyone knows that just like you can’t get "six minute abs", so it is impossible to recap the doom of America’s middle class in only six minutes (or, gasp, less).
More
===========================================================
Poland Nationalizes Retirement Accounts
Posted September 6th, 2013 at 8:30 AM (CST) by Jim Sinclair & filed under General Editorial.
Dear CIGAs,
I want to be absolutely sure that you have read this article:
Nationalization of retirement Account just occurred in Poland. It is shocking in that it has no compensation so far in this watershed event.
Note how it is spun as an OVERHAUL of the retirement system.
=======================================================
Poland reduces public debt through pension funds overhaul
Wed, Sep 4 2013
* Reform moves bond assets from private to state fund
* Some equity assets to gradually move to state as well
* Changes seen reducing Polish public debt by 8 pct of GDP
* Funds say moves could be unconstitutional
* Warnings that private pension funds could be wiped out
By Dagmara Leszkowicz and Chris Borowski
WARSAW, Sept 4 (Reuters) - Poland said on Wednesday it will transfer to the state many of the assets held by private pension funds, slashing public debt but putting in doubt the future of the multi-billion-euro funds, many of them foreign-owned.
The changes went deeper than many in the market expected and could fuel investor concerns that the government is ditching some business-friendly policies to try to improve its flagging popularity with voters.
The Polish pension funds' organisation said the changes may be unconstitutional because the government is taking private assets away from them without offering any compensation.
Announcing the long-awaited overhaul of state-guaranteed pensions, 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.
He said that what remained in citizens' pension pots in the private funds will be gradually transferred into the state vehicle over the last 10 years before savers hit retirement age.
The reform is "a decimation of the ...(private pension fund) system to open up fiscal space for an easier life now for the government," said Peter Attard Montalto of Nomura. "The government has an odd definition of private property given it claims this is not nationalisation."
Tusk said people joining the pension system in the future would not be obliged to pay into the private part of the system. Depending on the finer points, this could mean still fewer assets in the private funds.
"The (current) system has turned out to be built in part on rising public debt and turned out to be a very costly system," Tusk told a news conference.
"We believe that, apart from the positive consequence of this decision for public debt, pensions will also be safer."
MARKET FEARS
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 gross domestic product (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.
The private funds hold assets worth about one fifth of Polish economic output and are among the biggest investors on the Warsaw bourse. Players in the pension market include international firms such as ING, Aviva, Axa , Generali and Allianz.
Bonds make up roughly half the private funds' portfolios, with the rest company stocks.
Soon after Tusk unveiled his plans, the benchmark index on the Warsaw stock exchange was down 2.6 percent on the day.
"This is worse than many on the markets had feared," a manager at one of the leading pension funds, who asked not to be identified, told Reuters.
"The devil is in the detail and we don't yet know a lot about the mechanism of these changes, what benchmarks will be use to evaluate our performance... (It) looks like pension funds will lose a lot of flexibility in what they can invest."
Polish officials have tried to reassure investors, saying the overhaul avoids the more radical options of taking both bond and equity assets away from the private funds outright.
They say the old system effectively made Polish public debt appear higher than it really is.
UNCERTAIN FUTURE FOR FUNDS
Poland has a hybrid pension system at the moment; 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.
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.
"This may lead to the private pension systems shutting down," said Rafal Benecki of ING Bank Slaski.
Policy in Poland is still much more prudent than in many of its European peers. However, the reform could erode Poland's reputation under Tusk for steady financial stewardship.
In the past few months, the opinion poll rating of Tusk's Civic Platform party has, for the first time in years, slipped below that of the main opposition, the conservative Law and Justice Party.
Though the next election is not until 2015, some analysts believe electoral concerns are already influencing economic policy and pushing the government to find scope for spending.
http://www.reuters.com/article/2013/09/04/poland-pensions-idUSL6N0H02UV20130904?feed&
========================================================
Posted September 6th, 2013 at 8:30 AM (CST) by Jim Sinclair & filed under General Editorial.
Dear CIGAs,
I want to be absolutely sure that you have read this article:
Nationalization of retirement Account just occurred in Poland. It is shocking in that it has no compensation so far in this watershed event.
Note how it is spun as an OVERHAUL of the retirement system.
=======================================================
Poland reduces public debt through pension funds overhaul
Wed, Sep 4 2013
* Reform moves bond assets from private to state fund
* Some equity assets to gradually move to state as well
* Changes seen reducing Polish public debt by 8 pct of GDP
* Funds say moves could be unconstitutional
* Warnings that private pension funds could be wiped out
By Dagmara Leszkowicz and Chris Borowski
WARSAW, Sept 4 (Reuters) - Poland said on Wednesday it will transfer to the state many of the assets held by private pension funds, slashing public debt but putting in doubt the future of the multi-billion-euro funds, many of them foreign-owned.
The changes went deeper than many in the market expected and could fuel investor concerns that the government is ditching some business-friendly policies to try to improve its flagging popularity with voters.
The Polish pension funds' organisation said the changes may be unconstitutional because the government is taking private assets away from them without offering any compensation.
Announcing the long-awaited overhaul of state-guaranteed pensions, 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.
He said that what remained in citizens' pension pots in the private funds will be gradually transferred into the state vehicle over the last 10 years before savers hit retirement age.
The reform is "a decimation of the ...(private pension fund) system to open up fiscal space for an easier life now for the government," said Peter Attard Montalto of Nomura. "The government has an odd definition of private property given it claims this is not nationalisation."
Tusk said people joining the pension system in the future would not be obliged to pay into the private part of the system. Depending on the finer points, this could mean still fewer assets in the private funds.
"The (current) system has turned out to be built in part on rising public debt and turned out to be a very costly system," Tusk told a news conference.
"We believe that, apart from the positive consequence of this decision for public debt, pensions will also be safer."
MARKET FEARS
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 gross domestic product (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.
The private funds hold assets worth about one fifth of Polish economic output and are among the biggest investors on the Warsaw bourse. Players in the pension market include international firms such as ING, Aviva, Axa , Generali and Allianz.
Bonds make up roughly half the private funds' portfolios, with the rest company stocks.
Soon after Tusk unveiled his plans, the benchmark index on the Warsaw stock exchange was down 2.6 percent on the day.
"This is worse than many on the markets had feared," a manager at one of the leading pension funds, who asked not to be identified, told Reuters.
"The devil is in the detail and we don't yet know a lot about the mechanism of these changes, what benchmarks will be use to evaluate our performance... (It) looks like pension funds will lose a lot of flexibility in what they can invest."
Polish officials have tried to reassure investors, saying the overhaul avoids the more radical options of taking both bond and equity assets away from the private funds outright.
They say the old system effectively made Polish public debt appear higher than it really is.
UNCERTAIN FUTURE FOR FUNDS
Poland has a hybrid pension system at the moment; 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.
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.
"This may lead to the private pension systems shutting down," said Rafal Benecki of ING Bank Slaski.
Policy in Poland is still much more prudent than in many of its European peers. However, the reform could erode Poland's reputation under Tusk for steady financial stewardship.
In the past few months, the opinion poll rating of Tusk's Civic Platform party has, for the first time in years, slipped below that of the main opposition, the conservative Law and Justice Party.
Though the next election is not until 2015, some analysts believe electoral concerns are already influencing economic policy and pushing the government to find scope for spending.
http://www.reuters.com/article/2013/09/04/poland-pensions-idUSL6N0H02UV20130904?feed&
========================================================
Jim’s Mailbox
Posted September 8th, 2013 at 5:47 PM (CST) by Jim Sinclair & filed under Jim's Mailbox.
Jim,
Their game plan is so transparent that anyone not seeing it has to be blind, especially after YOU have made us all aware of it!
First it was the trial "Bail in" in the relatively "insignificant country" of Cyprus followed by the disclosure that almost all larger Western nations had already passed, or were in the process of passing "Bail in" regulations.
Now, it is retirement fund take over in the relatively "insignificant" country of Poland followed by the move in major western nations to do the same. Part of the "roll out" program is to have an increasing number of articles to establish the justification for it.
Here’s an interesting report that looks like an introduction to the argument that government needs to do something about 401Ks and IRAs.
Click here to read the overview…
Click here to read the actual report…
Who the Economic Policy Institute is: http://en.wikipedia.org/wiki/Economic_Policy_Institute
List of EPI Directors: http://www.sourcewatch.org/index.php/Economic_Policy_Institute
As my mother always used to tell us, consider the source! Watch for more and more "news" reports with research like this in the weeks and months ahead.
You are spot on again, Jim!
CIGA Buz
http://www.jsmineset.com/2013/09/08/jims-mailbox-1345/
======================================================
Posted September 8th, 2013 at 5:47 PM (CST) by Jim Sinclair & filed under Jim's Mailbox.
Jim,
Their game plan is so transparent that anyone not seeing it has to be blind, especially after YOU have made us all aware of it!
First it was the trial "Bail in" in the relatively "insignificant country" of Cyprus followed by the disclosure that almost all larger Western nations had already passed, or were in the process of passing "Bail in" regulations.
Now, it is retirement fund take over in the relatively "insignificant" country of Poland followed by the move in major western nations to do the same. Part of the "roll out" program is to have an increasing number of articles to establish the justification for it.
Here’s an interesting report that looks like an introduction to the argument that government needs to do something about 401Ks and IRAs.
Click here to read the overview…
Click here to read the actual report…
Who the Economic Policy Institute is: http://en.wikipedia.org/wiki/Economic_Policy_Institute
List of EPI Directors: http://www.sourcewatch.org/index.php/Economic_Policy_Institute
As my mother always used to tell us, consider the source! Watch for more and more "news" reports with research like this in the weeks and months ahead.
You are spot on again, Jim!
CIGA Buz
http://www.jsmineset.com/2013/09/08/jims-mailbox-1345/
======================================================
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:
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:
The reform is "a decimation of the ...(private pension fund) system to open up fiscal space for an easier life now for the government," said Peter Attard Montalto of Nomura. "The government has an odd definition of private property given it claims this is not nationalisation."
"This is worse than many on the markets had feared," a manager at one of the leading pension funds, who asked not to be identified, told Reuters.
"The devil is in the detail and we don't yet know a lot about the mechanism of these changes, what benchmarks will be use to evaluate our performance... (It) looks like pension funds will lose a lot of flexibility in what they can invest."
Catastrophic consequences for fund flows aside, the Polish prime minister had a prompt canned response:
Tusk said people joining the pension system in the future would not be obliged to pay into the private part of the system. Depending on the finer points, this could mean still fewer assets in the private funds.
"The (current) system has turned out to be built in part on rising public debt and turned out to be a very costly system," Tusk told a news conference.
"We believe that, apart from the positive consequence of this decision for public debt, pensions will also be safer."
You see, he is from the government, and he is confiscating the pensions to make them safer. Confiscation is Safety and all that...
Polish officials have tried to reassure investors, saying the overhaul avoids the more radical options of taking both bond and equity assets away from the private funds outright.
They say the old system effectively made Polish public debt appear higher than it really is.
Well, once you nationalize private assets, the public debt will lindeed appear lower than it was before confiscation: we give them that much.
End result: "The Polish pension funds' organisation said the changes may be unconstitutional because the government is taking private assets away from them without offering any compensation.... This may lead to the private pension systems shutting down," said Rafal Benecki of ING Bank Slaski."
Unconstitutional? What's that. But whatever it is, it's ok - after all the public pension system is still around. At least until that too is plundered. But in the meantime, all such pensions will be "safer", guaranteed.
But best of all, in the aftermath of Cyprus, we now know what the two most recent European blueprints for preserving the myth of solvency are: bail-ins, which confiscate deposits, and pension fund "overhauls", which confiscate, well, pension funds.
And now, back to the global recovery soap opera.
http://www.zerohedge.com/news/2013-09-06/poland-confiscates-half-private-pension-funds-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:
The reform is "a decimation of the ...(private pension fund) system to open up fiscal space for an easier life now for the government," said Peter Attard Montalto of Nomura. "The government has an odd definition of private property given it claims this is not nationalisation."
"This is worse than many on the markets had feared," a manager at one of the leading pension funds, who asked not to be identified, told Reuters.
"The devil is in the detail and we don't yet know a lot about the mechanism of these changes, what benchmarks will be use to evaluate our performance... (It) looks like pension funds will lose a lot of flexibility in what they can invest."
Catastrophic consequences for fund flows aside, the Polish prime minister had a prompt canned response:
Tusk said people joining the pension system in the future would not be obliged to pay into the private part of the system. Depending on the finer points, this could mean still fewer assets in the private funds.
"The (current) system has turned out to be built in part on rising public debt and turned out to be a very costly system," Tusk told a news conference.
"We believe that, apart from the positive consequence of this decision for public debt, pensions will also be safer."
You see, he is from the government, and he is confiscating the pensions to make them safer. Confiscation is Safety and all that...
Polish officials have tried to reassure investors, saying the overhaul avoids the more radical options of taking both bond and equity assets away from the private funds outright.
They say the old system effectively made Polish public debt appear higher than it really is.
Well, once you nationalize private assets, the public debt will lindeed appear lower than it was before confiscation: we give them that much.
End result: "The Polish pension funds' organisation said the changes may be unconstitutional because the government is taking private assets away from them without offering any compensation.... This may lead to the private pension systems shutting down," said Rafal Benecki of ING Bank Slaski."
Unconstitutional? What's that. But whatever it is, it's ok - after all the public pension system is still around. At least until that too is plundered. But in the meantime, all such pensions will be "safer", guaranteed.
But best of all, in the aftermath of Cyprus, we now know what the two most recent European blueprints for preserving the myth of solvency are: bail-ins, which confiscate deposits, and pension fund "overhauls", which confiscate, well, pension funds.
And now, back to the global recovery soap opera.
http://www.zerohedge.com/news/2013-09-06/poland-confiscates-half-private-pension-funds-cut-sovereign-debt-load
==========================================================
Pensioners and will-be-pensions should listen to the suggestions in the U.S. Senate...