Sad news for the Polish people this week. Part of their pensions have been confiscated to pay off Polish Government debt.
And it’s not as if Polish Government debt is out of control by international standards – public debt is around 54% of GDP. The confiscated pensions will be used to pay off the debt and reduce it to 49% of GDP. The Polish Government couldn’t see a way out.
So why should you care what happens in Poland? Because it’s another bloody canary in the coal mine. Just like the Cyprus bail-In, MF Global, Greece, the crackdown on tax havens, etc. What we thought was impossible a couple of years ago, is becoming reality in countries on the periphery. How long before it becomes reality in countries in the middle?
“Poland’s government this week announced plans to transfer 121 billion zlotys ($36.99 billion) in bonds held by private pension funds to the state and subsequently cancel them.” (Reuters)
What’s sad is, again, the people who have done the right thing are having their money stolen:
- The re-capitalisation of the US banking system has been funded by savers and retirees who earn next to nothing in interest bearing accounts.
- Bank depositors paid for the losses incurred by the Cypriot banks who piled into Greek Government Bonds – assuming the Europeans would never let Greece default.
- MF Global customers paid for Jon Corzine’s massive leveraged losing bet on European bonds – and then had to watch him hide behind his political connections.
- Polish salary earners who have made the maximum pension contributions to look after themselves during retirement will be hardest hit.
Emini-Watch has always been about one thing: the next 30 years are going to be nothing like the last 30 years. Don’t assume the old investment rules will work going forward. We’re through the looking glass. We’ve reached peak debt. First world Sovereign Debt Defaults are coming – or the politicians will just take the public’s money until the public says “enough is enough”.
We’re off to France
And talking of the slow collapse of Socialism, we’re off to France next week. Lots of personal admin taken care of this week and so no trading or Emini-Watch videos. Sorry.
The malaise was just starting to set in when we left France last December. It’ll be interesting to see what has changed. Euro-zone PMI is up and so I’m sure everything will be hunky dory.
Good luck with your Emini trading next week.