For example, US pensions are underfunded by an estimated $3 trilion. That adds up to about $8,000 for every man, woman, and child. The State of California alone has a an estimated $500 billion shortfall. Pensions are contractual obligations that, supposedly, must be paid. But how? That which cannot be paid will not be paid, right? Here’s what one economist writes:
Ambrose Evans-Pritchard has covered world politics and economics for 25 years, based in Europe, the US, and Latin America. He joined the Telegraph in 1991, serving as Washington correspondent and later Europe correspondent in Brussels. He is now International Business Editor in London.
Argentina seizes pension funds to pay debts.
Here is a warning to us all. The Argentine state is taking control of the country’s privately-managed pension funds in a drastic move to raise cash.
It is a foretaste of what may happen across the world as governments discover that tax revenue, and discover that the bond markets are unwilling to plug the gap. The G7 states are already acquiring an unhealthy taste for the arbitrary seizure of private property, I notice.
“A state takeover of pensions creates all kinds of doubts and throws into relief the extreme financing needs of the government next year,” said Jorge Alberti, from ElAccionista.com
My fear is that governments in the US, Britain, and Europe will display similar reflexes. Indeed, they have already done so. The forced-feeding of banks with fresh capital – whether they want it or not – and the seizure of the Fannie/Freddie mortgage giants before they were in fact in trouble (in order to prevent a Chinese buying strike of US bonds and prevent a spike in US mortgage rates), shows that private property can be co-opted – or eliminated – with little due process if that is required to serve the collective welfare. This is a slippery slope. (Source)