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97% Of Spanish Social Security Pension Fund In Domestic Bonds

Tyler Durden's picture




 

In January, we discussed the stunning fact that Spain's social security pension fund was 90% allocated to Spanish sovereign debt. The latest data shows that this farcical epic reach-around has become even more ridiculous as, according to Bloomberg BusinessWeek, the fund's holdings are now 97% weighted to sovereign bonds. The fund purchased about EUR20bn of Spanish debt last year, while it sold EUR4.6bn of French, Dutch and German bonds. More than 70 percent of the purchases took place in the second half of the year, after Draghi's 'promise' to "do whatever it takes" moment.

It appears, since the Spanish government does not explicitly have its own Fed to monetize debt, that it has merely plundered another quasi-governmental entity to do the bond-buying reach-around. The fund, which was profitable last year on this bond-buying in its self-sustaining way, still contributes 1% to Spain's deficit as contributions to the fund are outweighed by the benefits paid.

Rules have been changed to enable this drastic concentration but at 97%, it is perhaps no wonder that Spanish bonds have been more volatile in recent weeks - as the implicit government buyer is now almost all-in. The potential for a vicious circle here is immense - but perhaps that is the point, more TBTF sovereigns for Draghi to deal with.

Via Bloomberg BusinessWeek,

Spain’s pension reserve-fund ramped up its holdings of domestic debt last year, profiting from a rally across southern Europe and making it easier for Prime Minister Mariano Rajoy to raid the fund to finance his budget.

 

The so-called Fondo de Reserva de la Seguridad Social in 2012 increased its domestic sovereign debt holdings to 97 percent of its assets from 90 percent at the end of 2011, according to its annual report due to be presented to lawmakers today at 12:30 p.m. in Madrid and obtained by Bloomberg News.

 

The fund purchased about 20 billion euros ($26 billion) of Spanish debt last year, while it sold 4.6 billion euros of French, Dutch and German bonds. More than 70 percent of the purchases took place in the second half of the year, after European Central Bank President Mario Draghi pledged to do “whatever it takes” to defend the euro, boosting Spanish bonds.

 

...

 

The bond-buying strategy enabled the fund to end 2012 with 63 billion euros, an amount equivalent to 6 percent of Spain’s gross domestic product. A 3 billion-euro gain offset part of the 7 billion euros used by Spain’s Cabinet starting from September to finance an increase in retirees’ pensions and Christmas bonuses, according to the report.

 

Spain’s state-run social security system, also in charge of unemployment benefits, stopped registering surpluses in 2011. Its deficit was 1 percent of GDP last year, contributing to the nation’s total budget gap of 10.2 percent of GDP.

 

...

 

The maximum amount that can be invested in a given security was increased to 35 percent of the total portfolio from 16 percent. At the same time, the fund raised to 12 percent from 11 percent its maximum share in the Treasury’s total outstanding debt. The Treasury’s debt stock was 634 billion euros in February, according to data on its website.

 

...

 

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Thu, 04/04/2013 - 09:57 | 3407701 israhole
israhole's picture

PONZI

Thu, 04/04/2013 - 10:00 | 3407718 JPM Hater001
JPM Hater001's picture

Wait, Isn't America's SS 100% held locally? 

 

That would mean ours is a Ponzi Scheme too.

 

Uh oh.

Thu, 04/04/2013 - 10:06 | 3407749 MillionDollarBonus_
MillionDollarBonus_'s picture

So?? Spanish bonds are paying some sweet yields. The capital gains are irrelevant to funds who intend to hold these bonds to maturity.

Thu, 04/04/2013 - 10:13 | 3407777 hedgeless_horseman
hedgeless_horseman's picture

 

 

...capital gains are irrelevant to funds who intend to hold these bonds to maturity.

True. 

Default?  Not so irrelevant.

Thu, 04/04/2013 - 10:18 | 3407804 francis_sawyer
francis_sawyer's picture

What could possibly go wrong?

Thu, 04/04/2013 - 10:22 | 3407818 BaBaBouy
BaBaBouy's picture

BITCOIN Would Have Been A Better Gamble For These CHUMPS ...

Thu, 04/04/2013 - 10:37 | 3407861 Irelevant
Irelevant's picture

Bitcoin is a illusion, totally dependent on a functioning and unregulated Internet. To this respect the dollar, backed by the US military is "the best" illusion of them all.

Gold, silver, fresh water, frozen meet, bullets and canned food on the other hand are not illusions, they are real, tangible.

Thu, 04/04/2013 - 10:37 | 3407862 idea_hamster
idea_hamster's picture

It's exactly like Enron -- which held 100% of its employees' 401k "savings" in ... Enron stock.  No choices.  No exit.  Just sit back and get poor.

Thu, 04/04/2013 - 11:06 | 3408016 butchee
butchee's picture

No plan B!

Thu, 04/04/2013 - 11:15 | 3408079 Umh
Umh's picture

Not really true; it's just that many Enron employees  were heavily invested in Enron. They did not have to be 100% invested in their employer.

Mon, 04/08/2013 - 20:45 | 3424490 idea_hamster
idea_hamster's picture

Interesting -- thanks for noting that.

I've always accepted what I realize was the anecdotal story that Enron's 401k program had only the one investment option.

Should have cite checked my shit before posting....

Thu, 04/04/2013 - 10:27 | 3407819 hedgeless_horseman
hedgeless_horseman's picture

 

 

What could possibly go wrong?

Haircut, Francis?

Thu, 04/04/2013 - 10:11 | 3407778 Pladizow
Pladizow's picture

Siesta time!

Thu, 04/04/2013 - 10:17 | 3407791 resurger
resurger's picture

Spot on!

 ill "restructure" at maturity for another 10 years, when Interest rate then is 1% , and if the STHTF i will also "restructure" at 20% no problem. just keep the money coming.

I just love a No Plan B Ponzi

W.R.R

Thu, 04/04/2013 - 10:15 | 3407794 NoDebt
NoDebt's picture

You should do that.

Thu, 04/04/2013 - 10:14 | 3407788 AGuy
AGuy's picture

"Isn't America's SS 100% held locally?"

Worse, They are not even in bonds, just a bunch of paper IOUs

 

Thu, 04/04/2013 - 10:18 | 3407808 NoDebt
NoDebt's picture

The difference being?

It's all just left pocket/right pocket in the same pair of pants.  It's the government, it's a government program and it's government money.

 

Thu, 04/04/2013 - 10:28 | 3407833 resurger
resurger's picture

I dont even know why traders still say "who's paper is it" ... Now it's just some fucking digital numbers and a formula that calculates basic interest rate S/A etc.

Back in the days, if one holds an IOU paper and the debtor does not pay the fuck up, he would put a a fucking barrel to his mouth and blow his brains out.

No angel, no demon, no divine intervention, no QE, no Twist, no OMT, no Fed, nothing can save you.

And if the creditor was a fucking a kyke, make sure you execute him and shove his IOU up his ass.

Fuck this illusionary world they have created. 

Thu, 04/04/2013 - 10:34 | 3407848 Oldballplayer
Oldballplayer's picture

It's not a Ponzi scheme because those are illegal.

You have to love that logic.

Thu, 04/04/2013 - 11:14 | 3408081 ShrNfr
ShrNfr's picture

Nah, most of it has been spent already. The rest is in untradable government bombs.

Thu, 04/04/2013 - 10:05 | 3407744 traderjoe
traderjoe's picture

Patriotic!

Thu, 04/04/2013 - 10:56 | 3407853 Banksters
Banksters's picture

The historical avg for the us 10 year is 7.1 percent.   Spain, at 26 percent unemployment thinks theirs should be at 5 percent or lower.  Hahaah   Why let the market dictate yield when you can manipulate lower.  Problem is, one day your schemes: esm, efsf, ltro 1, 2, qe 4eva, lending facilities, bond swaps, etc blow the fuck up.

 

 

 

 

 

Thu, 04/04/2013 - 19:14 | 3410257 Chuck Walla
Chuck Walla's picture

PONZI

¡ONCE!


 If only they can figure a way to get their hands on all that lotto cash Franco gave away.

 

FORWARD SOVIET!

Thu, 04/04/2013 - 20:27 | 3410450 Buck Johnson
Buck Johnson's picture

Big time, what until this whole thing implodes it will take them all down.

Thu, 04/04/2013 - 09:57 | 3407708 Capitalist
Capitalist's picture

One way or another, the state will steal your money.

Thu, 04/04/2013 - 10:37 | 3407857 Banksters
Banksters's picture

The state is a tool of banksters.  Those fuckers want it all.

Thu, 04/04/2013 - 12:00 | 3408298 Boston
Boston's picture

Not if it's safely stored on the bottom of a small lake..........

Thu, 04/04/2013 - 09:56 | 3407709 ekm
ekm's picture

There you have the GREATER FOOL.

Nobody foolishly greater than the spanish ss fund.

Thu, 04/04/2013 - 09:58 | 3407714 TeamDepends
TeamDepends's picture

What are they thinking?  The DOW is where the action is.

Thu, 04/04/2013 - 09:59 | 3407715 IridiumRebel
IridiumRebel's picture

¡Chenga lo!

Thu, 04/04/2013 - 10:00 | 3407716 Super Broccoli
Super Broccoli's picture

97% of your pension money has been invested in the debt we had to create to pay your grandad's pension ...

Thu, 04/04/2013 - 10:01 | 3407735 IridiumRebel
IridiumRebel's picture

Pretty much!

Thu, 04/04/2013 - 10:15 | 3407789 OliverTwist
OliverTwist's picture

I think I have a solution for this problem.

Young unemployed should form death squads and kill their grandparents.

A non standard measure I know but it could work.

And no, it's not a template!!!

 

Thu, 04/04/2013 - 11:06 | 3408015 TeamDepends
TeamDepends's picture

Grandparents?  They may or may not be guilty.  We need to channel their rage in the proper direction.  Dimon and Kissinger spring to mind.  Add your fav's to the list!

Thu, 04/04/2013 - 10:16 | 3407800 Edward Fiatski
Edward Fiatski's picture

On the backs of the young, with 25% yoof undemployment. Seems sustainable.

:)

ROW HARDER!

Thu, 04/04/2013 - 11:29 | 3408155 krissstofer
krissstofer's picture

Edward, general unemployment is approx 25%, while youth is in fact now around 50%... uh oh

Thu, 04/04/2013 - 10:00 | 3407720 Racer
Racer's picture

Have they never heard the saying about all eggs in one basket? Obviously not ...the morons

Thu, 04/04/2013 - 10:09 | 3407768 pods
pods's picture

Not all the eggs.

Some are no doubt deposited in Bank of Cyprus.

pods

Thu, 04/04/2013 - 13:31 | 3408796 ncdirtdigger
ncdirtdigger's picture

Shirley they hold some Greek bonds. Think of the yeild they can collect!

Thu, 04/04/2013 - 11:08 | 3408034 NorthPole
NorthPole's picture

They still have 3 eggs in the Portuguese basket.

Thu, 04/04/2013 - 09:59 | 3407722 LawsofPhysics
LawsofPhysics's picture

Ha - ha!  The situation in the U.S. can't be that different.  When playing poker, if you can't readily identify the sucker at the table, it's probably you.

Thu, 04/04/2013 - 13:32 | 3408802 ncdirtdigger
ncdirtdigger's picture

No 'probably' about it.

Thu, 04/04/2013 - 10:00 | 3407723 Silver Garbage Man
Silver Garbage Man's picture

And I'm crazy for buying the PHYZZ!

Thu, 04/04/2013 - 10:01 | 3407727 Hondo
Hondo's picture

Is that better than US with nothing more than IOU's in a file cabinet

Thu, 04/04/2013 - 10:08 | 3407758 NoDebt
NoDebt's picture

That's sort of the problem everywhere.  "If I'm goin' down, I'm takin' you all with me!!"

The only GOOD part of this slow-motion train wreck is the absolute assurance that ALL the players have the same problems, differing only in degree, not in structure.

Thu, 04/04/2013 - 10:17 | 3407801 ziggy59
ziggy59's picture

, and timing...

Thu, 04/04/2013 - 10:01 | 3407730 UK debt marsh
UK debt marsh's picture

Their jobs are gone.

Their houses are debt millstones.

Now somebody has spent their pension pots on a handful of magic beans.

What is the Spanish for ROTFLMFAO?

!caramba!

Thu, 04/04/2013 - 10:01 | 3407736 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Buy local. All you Euro naysayers, BIS off !

Desperation is in the air.

Draghi : (ZH) VASTLY UNDERESTIMATES committment to Euro ... blah blah blah ... blah blah blah.

Buy Euro, short yen, buy SPY ... hmmm, this all looks familiar ...

Thu, 04/04/2013 - 10:04 | 3407743 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

WTF ?

Rather a bottle in front of me than a frontal ...

Thu, 04/04/2013 - 10:04 | 3407740 colin
colin's picture

the other  3 then must be in physical Gold?

Thu, 04/04/2013 - 10:13 | 3407787 Super Broccoli
Super Broccoli's picture

nah those 3% have been invested in some investment fund that only holds spansih bonds ;-)

Thu, 04/04/2013 - 10:06 | 3407751 Quinvarius
Quinvarius's picture

You are crazy if you are not buying gold here.  Whatever they do to the price between now and the end, you'll be glad there was a price to buy at all.  Having some money will be better than farming your back yard at gun point.

Thu, 04/04/2013 - 10:12 | 3407780 LawsofPhysics
LawsofPhysics's picture

Indeed, scarcity is always denied by the likes of Krugman, much like gravity.  Same as it ever was, and when fraud is the status quo, possession is the law.  As far as "farming your backyard" goes.  Already doing that, and my tribe is already very well armed.  We are very thankful for the wet spring the southeast is having, not so much on the cold.  Unfortunately, the only thing less reliable than a banker is the weather, such is life.

Thu, 04/04/2013 - 10:23 | 3407823 Going Loco
Going Loco's picture

Maybe but this morning the spot price hit 1554 which was the support in the last dip, and this time it was resistance. If the POG does not close today above 1554 the bugs must hope that it is bid to keep it above 1520 for at least a couple of weeks, otherwise it will probably fall to somewhere around 1480 before we see a meaningful rally. Prices of coins at my dealers are following the POG accurately; supplies are good. The key line on my personal chart is an extended Raff regression support line which discounts the 2011 blow-off top (can't argue that was anything else now) and suggests that if we go below 1500 the bull market is over. Not saying that will happen, just being cold-blooded about the whole thing.

Thu, 04/04/2013 - 10:41 | 3407888 gaoptimize
gaoptimize's picture

All this technical analysis does is allow you to ignore fundamentals.  So you think the Chinese and other buyers of gold will loose their appetite one they see this drop in prices?  My bet is they ramp their conversion of fiat foreign reserves into physical.

Thu, 04/04/2013 - 10:50 | 3407952 Zaydac
Zaydac's picture

Bollocks. Technical alnalysis does much more than that. It highlights buying and selling behaviour and gives you something to compare the current price with. There is no correct price for anything. Prices are set by buyers' and sellers' perceptions. TA helps analyse what those perceptions are. In the last 5 years I have made a lot of money trading gold at Bullionvault (FD: I am OUT at the moment).

But I pray that there will always be people who make buying and selling decisions on fundamentals because they are my counterparties.

Thu, 04/04/2013 - 11:12 | 3408056 LasVegasDave
LasVegasDave's picture

It should be fairly obvious that the countries accumulating gold (Russia, China, Turkey etc.) are the ones doing the manipulating.

That they have hired JPM, GS and others to do the job should surprise no one.

Thu, 04/04/2013 - 10:25 | 3407830 ArkansasAngie
ArkansasAngie's picture

And ... if they implement capital and gold controls you will do what?

Too bad they have stop price discovery in real estate.  

lordy ... there is no risk free asset I'm aware of

And ... all because they are arfraid of deflation.

I'd surely like a crack at buying some of the 1%'ers 80% hoard of assets at true value versus the CB's ring fencing for these shatheads

Thu, 04/04/2013 - 10:37 | 3407859 Oldballplayer
Oldballplayer's picture

Bit coins, bitchez.

Thu, 04/04/2013 - 10:42 | 3407883 Sandmann
Sandmann's picture

Speculative Bubble

Thu, 04/04/2013 - 10:44 | 3407904 Oldballplayer
Oldballplayer's picture

Why? Just because its gone up like 600% in a week?

You mean that wont continue? I wouldn't go to that dance now without my own chair strapped to my back for when the music stopped. The rush to the door will be something to see.

Thu, 04/04/2013 - 11:01 | 3408006 LawsofPhysics
LawsofPhysics's picture

"if they implement capital and gold controls you will do what?"  - Shift even more of my business to "under the table" and local markets/transactions.  Please, all eCONomies are really local.  These "elite douchebags" and their political puppets want to make the entire world as corrupt as India and China, so be it.  They can outlaw fucking gravity if they want, but it won't make gravity any less effective.

Thu, 04/04/2013 - 10:07 | 3407753 chinaboy
chinaboy's picture

Are they led by a man-child leadership like North Korea?

Thu, 04/04/2013 - 10:07 | 3407756 chinaboy
chinaboy's picture

Where is goldcore?

Thu, 04/04/2013 - 10:08 | 3407757 resurger
resurger's picture

97% of SS holdings are in Government paper, 3% Cash , 0 Gold

 "No Plan B"  Super Mario Dragon

http://en.wikipedia.org/wiki/File:Exter.png

 

Thu, 04/04/2013 - 10:07 | 3407760 Kirk2NCC1701
Kirk2NCC1701's picture

I tend to agree with Jim Rickards, who, at Simon Black's event this past w/e (Offshore Tactics Workshop), said that... the American version of Cyprus will probably involve US pensions having to buy a portion of the US debt... in the form of Bonds and Treasuries. 

--> Your 401k & IRA get what I call "re-allocated", while you get to dance to Psi's new dance: "Hangman style!"

Thu, 04/04/2013 - 10:14 | 3407783 fonzannoon
fonzannoon's picture

It's not that dramatic. They take away your money market option and replace it with a government bond fund. It's happening a lot already.

Thu, 04/04/2013 - 10:26 | 3407827 Edward Fiatski
Edward Fiatski's picture

You could increase the penalties for early withdrawal by a lot in one year, then promise to increase it further in the next - that in itself would cause a run on the funds, with peasants willingly paying 30, 40, 60% haircuts on their "savings".

DoublePlusGood is that it wouldn't be regarded as overt confiscation.

Thu, 04/04/2013 - 10:09 | 3407766 wcvarones
wcvarones's picture

Ummm... don't look now, but 100% of the US Social Security fund is in domestic bonds.

Thu, 04/04/2013 - 10:10 | 3407773 Going Loco
Going Loco's picture

All previous economic practices and habits (like saving for retirement) are now dead and buried. Markets are no longer functioning effectively as price discovery mechanisms and support for investment in equity capital for productive enterprises. Capital in the form of investable economic surplus is no longer forming. Laws designed to support productive and honest economic behaviour are being circumvented or ignored. Wealth is being concentrated in fewer and fewer hands. But if you want to sum the whole thing up in four words, it's easy. It's a Ponzi scheme.

It is taking a long time but I am gradually learning how to adjust my own economic behaviour to suit the Ponzi. Part of my behaviour is designed to cope with confiscation. There can be no doubt that confiscation will be the only way that the Ponzi scheme will play out.

As each stage of confiscation takes placve there will be those who see it coming and do something about it. We saw that in Cyprus. One simply has to try and stay one step ahead of the game.

Thu, 04/04/2013 - 10:16 | 3407793 mammoth mo
mammoth mo's picture

What do you recommend?

 

I've heard invest in the physical and keep your basic farming, carpentry, medicals skills sharp.

Thu, 04/04/2013 - 10:27 | 3407831 Going Loco
Going Loco's picture

I am adapting by learning to trade instead of invest. Hardest lesson was that in this environment even gold and silver must be traded, not hoarded. I am also taking some other measures which I would never post on a blog. I believe I was the person who started the whole boating accident meme on ZH, when I put up a comment saying that I thought the gold stackers were mad to boast about their hoards.

Thu, 04/04/2013 - 10:39 | 3407867 OliverTwist
OliverTwist's picture

"I am also taking some other measures which I would never post on a blog."

You mean hoarding kidnapped family members of bankers, politicians in your basement?

Thu, 04/04/2013 - 10:54 | 3407975 Going Loco
Going Loco's picture

LOL. (BTW I do not have a basement)

Thu, 04/04/2013 - 11:13 | 3408076 OliverTwist
OliverTwist's picture

Hey Loco .... we won't discuss it here on the blog ;)

But .... I have an e-mail address ...

...and a basement for rent :D

for such a good case I could give you a very special price my friend.

Incl.....seasonal own grown food for our "precious guests"!!

Thu, 04/04/2013 - 11:58 | 3408296 Going Loco
Going Loco's picture

Seasonal food - hemlock I suppose? Or deadly nightshade?

Thu, 04/04/2013 - 11:19 | 3408100 mammoth mo
mammoth mo's picture

I cannot trade because I believe the market will tank.  If I buy defensive positions in the VIX or metals they drop in value in the short term.  I don't trust buying the S & P because it is an inflated POS.  I don't know how to trade a market that should have crashed but hasn't and may not as long as it's pumped up by ECB.

Thu, 04/04/2013 - 12:04 | 3408326 Going Loco
Going Loco's picture

OK, here's some advice. Take out a subscription to Vadym or Elder and learn that personal expectations and emotions are your enemy. By all means have a hypothesis but if it is not validated by hard evidence consider that your hypothesis may be incorrect.

BTW if by "the market" you mean the USA stock market (Dow and S&P500 indeces) is going to crash you may find this helpful.

Thu, 04/04/2013 - 12:15 | 3408386 mammoth mo
mammoth mo's picture

Thank you.

Thu, 04/04/2013 - 10:14 | 3407784 mammoth mo
mammoth mo's picture

 

So, here's the situation.  90% of your retirement is invested in bonds that are worthless.  5% is invested in the market which will either tank soon or be artificially inflated until it tanks.  5% is in banks that hold the worthless bonds.

 

Good luck

Thu, 04/04/2013 - 11:00 | 3408000 Bingfa
Bingfa's picture

LOL, at least it will be a quick death....

 

Thu, 04/04/2013 - 13:56 | 3408923 forwardho
forwardho's picture

For those with a medical condition it may be a quick death...

For he rest, I hear starvation is a tough way out.

Thu, 04/04/2013 - 10:14 | 3407790 ziggy59
ziggy59's picture

The whole toolbox is in the gears, not just a wrench. These friggin bankster jugglers are starting to drop things...
Only a matter of time before a major distraction occurs or is manufactured, i.e. false flag to improve things, no?

Thu, 04/04/2013 - 10:16 | 3407795 Zer0head
Zer0head's picture

this is worth listening to as it connects the dots to Greece interpersed wtih interviews of people who have been cleaned out by the actions of the Troika et al

The Bank That Brought Down Cyprus

http://www.bbc.co.uk/programmes/p002vsn0

Thu, 04/04/2013 - 10:21 | 3407815 ziggy59
ziggy59's picture

They like to blame others and not themselves.. Its always a rogue trader, the bank, etc, and not the people that are being paid billions to oversee and manage these corrupt systems.

Thu, 04/04/2013 - 10:19 | 3407805 B2u
B2u's picture

At least our Social Security is stored in a lock box...somewhere...I think....

Thu, 04/04/2013 - 10:18 | 3407807 FieldingMellish
FieldingMellish's picture

As always, the answer to any question anywhere in this squid-dominated world is CTRL-P.

Thu, 04/04/2013 - 10:31 | 3407842 RMolineaux
RMolineaux's picture

I don't understand why the fact that the Spanish pension fund is invested 97% in govenment bonds should attract attention while the US Social Security Trust Fund is invested 100% in US government bonds.

 

Thu, 04/04/2013 - 10:53 | 3407968 FieldingMellish
FieldingMellish's picture

Ever-so slightly higher risk of default on the Spanish bonds. Truth is no one will default when infinite printing is available.

Thu, 04/04/2013 - 10:31 | 3407840 CheapBastard
CheapBastard's picture

I have a bad feeling about this.

Thu, 04/04/2013 - 10:33 | 3407852 cherry picker
cherry picker's picture

Anyone know whatever happened to Cyprus?

Everyone was issuing news about the upcoming tragedy there a week ago and now it is forgotten?

What's up with that?

Thu, 04/04/2013 - 10:39 | 3407872 Sandmann
Sandmann's picture

One of the problems with "democracies" is that Noone seems to be accountable. Just who made the Decision ? Who is accountable ? Too often these guys just melt away and forget their decisions.

It is time that NAMES were attached to DECISIONS and retained as a WARRANTY

Thu, 04/04/2013 - 10:40 | 3407874 Fix-ItSilly
Fix-ItSilly's picture

Trumped.  The USA Social Security fund has 100% in its sovereign bonds.  Would it be wrong to say the G8's social security is predominately invested in its sovereign wealth?  It makes perfect sense - if the Govt can't pay its debt - it can't pay social security either.

Thu, 04/04/2013 - 10:55 | 3407978 Bingfa
Bingfa's picture

+1...I would bet a very large percentage of Americans don't know that either....

Thu, 04/04/2013 - 10:46 | 3407914 hugovanderbubble
hugovanderbubble's picture

Ive told this in 2011 (in rankia)

 

I have warned population of this flagrant abuse and extrarisk. 

 

Nobody buying our bonds, just our own banks....Forced by DIRECCION GENERAL DEL TESORO.

 

bad times for banks next months.

 

Specially in Spain included BBVA and SANTANDER with DEBT HAIRCUTS COMING YES OR YES In SPANISH SOVEREIGN BONDS and SUBGOVERNMENT BONDS.

 

C u in Ibex 3.500-4.500,

 

Signed: Hugo Peterssen

Thu, 04/04/2013 - 11:05 | 3408017 orangegeek
orangegeek's picture

Ok Spain.  Now who wants a haircut?

Thu, 04/04/2013 - 11:15 | 3408078 hugovanderbubble
hugovanderbubble's picture

YEAR 2011  - 1st spanish Financial Website-Rankia Re: ¿Alguien cree que la bolsa se puede ir a 0???

 

La bolsa puede ser negativa poca gente sabe que hay acciones negativas ...,(No en cotización si en valoración)- "Negative Equity Value".

Simplemente con el bono a 10 años entre [-1%,0,5%] las bolsas se hundirían.

Esto es mandar practicamente el bund a 200 puntos, con los short squeezes que habría de gente que está apostando por un recuperación en el tramo largo de la curva.

Que es un caso aberrante pues por supuesto,

Pero...

Recordad que el ibex nace en 3000 artificialmente, es decir la base de cálculo es ya de por hecho una trampa matemática/estadística/psicológica-

2.Cuando los dividendos de las empresas, se vean reducidos y/o eliminados por las quitas en deuda, muchas empresas van a pedir el maidai y la exclusión de la bolsa.

Será lo contrario de lo que hemos visto en año....Mayor número de opas de exclusión que OPV/OPS...

*

Yo repito que ver el ibex entre 4.500-5.500 en los próximos 12 meses no es ninguna película de ciencia ficción.

*Yo me preocuparía seríamente de del Fondo de Reservas de Pensiones Español....(que está quebradito)

*Sacar vuestra pasta de esta trituradora de sueños llamada Bolsa hasta que suspendan todos los mercados de bonos,divisas _ MULTI TRADING HALTED MAKETS DAY----

-----------

Spanish Covered Bonds Fraud

----------

van a petar todos los bancos.'¡¡¡:)

-----

Pilla oro,plata,....Físico:¡:)

 

Os invito a que investiguen sobre la composición y gestión del Fondo de Reserva de Pensiones Español...Próximo Escándalo en Wikileaks/Enolakeaks:)

Thu, 04/04/2013 - 11:17 | 3408093 Iconoclast
Iconoclast's picture

With circa 58% youth unemployment Spain will never recover in our lifetimes, it's a big economy to go wrong, once the shtf with
the bondholders needing a bailout it'll make Cyprus and Greece look irrelevant, and then the banks/bondholders march in Italy...

Thu, 04/04/2013 - 11:17 | 3408096 css1971
css1971's picture

Draghi says there's no plan B.

He'll do whatever it takes.

 

What could possibly go wrong?

Thu, 04/04/2013 - 11:57 | 3408290 Hal n back
Hal n back's picture

only 3 trillion in sovereign debt--the rest is  the unfunded IOU which I am not sur eif thats good or bad when comparing to Spain. whats the "best in class" for this type of comparison, Illinois?

 

Thu, 04/04/2013 - 12:11 | 3408359 NoWayJose
NoWayJose's picture

Let's see - Spain's retirement funds are invested in Spanish government bonds - sounds risky but they at least have some value (especially with the ECB backing them up?).  Oh, here's a better model - the United States has plundered its Social Security Trust Fund, and left only a bunch of IOU's in it place.  These special interest IOU's cannot be sold and have no value at all.  They only exist as yet more debt that the Treasury will have to pay out. 

Thu, 04/04/2013 - 12:29 | 3408435 shovelhead
shovelhead's picture

Confiscation?

DHS:

Dear local police,

Please stop what you are doing and go grab any gold or silver bullion or coin in your area.

Thank You,

Janet

 

LOLOL...Pass the donuts, Chief.

Thu, 04/04/2013 - 14:11 | 3409011 Voamerica
Voamerica's picture

I read the headline on this, and then realized that the US Govt. is 100% in US Treasuries(actually not, only

promise to pay US Fictional notes). These notes don't really exist.

Soon it will be in the US, just like in the old Soviet Union

"We pretend to work, and they pretend to pay us"(our retirement benefits, that is)

VO

 

Thu, 04/04/2013 - 16:51 | 3409720 pashley1411
pashley1411's picture

Its not that a politician did something stupid.   Politicians each and every day make decisions that are simply beyond farce.    

Its that, thanks to a centralized, large, state, a politician can impoverish a citizenry for a generation, in a matter of weeks.

What is Spanish for "sackcloth and ashes"?

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