Wednesday, January 12, 2011

Pensions Seized In Europe

.... and don't think that can't happen here.

With a major pension crisis on the horizon and a government that is hungry for revenue, it's just a matter of time before we see something similar to what is happening in Europe.
People’s retirement savings are a convenient source of revenue for governments that don’t want to reduce spending or make privatizations. As most pension schemes in Europe are organised by the state, European ministers of finance have a facilitated access to the savings accumulated there, and it is only logical that they try to get a hold of this money for their own ends. In recent weeks I have noted five such attempts: Three situations concern private personal savings; two others refer to national funds.

The most striking example is Hungary, where last month the government made the citizens an offer they could not refuse. They could either remit their individual retirement savings to the state, or lose the right to the basic state pension (but still have an obligation to pay contributions for it). In this extortionate way, the government wants to gain control over $14bn of individual retirement savings.
The article continues on describing other pension grabs in Bulgaria, Poland, France and Ireland. Americans should be on notice, because the same scenarios can play out here at home. As the article states: "If fiscal austerity becomes a real issue in the U.S. the way that it's been reaching critical mass in Europe -- don't think that U.S. lawmakers regard your either your personal wealth or money they might owe you as sacrosanct. Government has a habit of looking out for itself."

... and so what should WE do to stop government from raiding our 401K's and IRA's?
The government has already been manipulating the stock and bond markets. It could very easily make the markets crash taking the value of your savings with it. They could offer you a "sweet deal" to "help you cut your losses" confiscate your account in return for some IOU and then return the market to "normal" after grabbing your account... or some other similar scenario.

Don't think it can happen?
Maybe not today, maybe not tomorrow - but it could very well happen.

Remember, there's about $3 trillion in 401(k)s in the United States.
All that money is pretty tempting to the powers that be.

and don't forget that the government made a deal with Prudential to takeover veterans life insurance benefits.

They already have been stealing our wealth via the inflation they are creating with Zimbabwe Ben's magical printing presses.

Taking your savings from you is not that much more of a leap.


Eric Holcombe said...

Newt Gingrich seeks bill allowing state bankruptcy.

Jennie said...

Your argument is cloudy here.

"The gov't made a deal with Prudential to takeover vet's life insurance." Are you saying the gov't is going to take it over or that Prudential took it over after a deal with the gov't? I'm a little uncertain what you mean.

If I understand you correctly, you want private industry to handle things like insurance and retirement accounts, and yet when a private corporation does what a corporation does best, namely to squeeze profits out of every place it can to better enrich it's shareholder, you cry foul. I don't think you can have it both ways. You can either let the gov't handle such things and (to some small extent) have a say in how it's run, or you can let a private corporation handle it, but have absolutely no say in what they do with the funds entrusted to them.

I understand the frustration of watching the printing presses inflate your savings away, but I think you're kidding yourself if you think a private corporation won't screw you over in a heartbeat to insure more profits for their stockholders.

So, what's your stance here? Are you in favor of taking your chances with the profit-hungry corporations? Or would you rather see the gov't do more to protect benefits owed to veterans and do more to protect your savings? The methods the gov't will use are probably the methods you so vehemently call out as Socialism/Commie/Liberal.

If I've misunderstood, please let me know, I'll check back in to continue the conversation.

My take is to bypass all of the above. I don't trust the gov't any more than I trust corporations. Neither of them is actually looking out for my best interest. Occasionally their own best interest and mine align, and I'll occasionally take advantage of those windows, but it's getting rare. I don't have a 401K, I don't have money in the stock market, and while I do have money in a bank, it's a local bank, and I don't keep my savings in there. I try to keep my money out of the hands of large corporations, and out of the hands of gov't officials. It's not a perfect solution, but at least I know where my money is and what it's doing. And if anyone wants it they'll have to come through me to get it.

It seems more honest than giving money to someone else with the expectation that they'll increase it with no risk and no gain to themselves.

Judy Aron said...

I am a believer in free market Austrian economics.. not the garbage that is being peddled by the incestuous relationship between government and corporations in Washington.

Corporatism is just as bad as Statism and combined they do enough damage to economic liberty and prosperity and they create tyranny and slavery for all.