Thread: Insolvent Spain Forced To "Borrow" From Social Security Fund To Pay Pensions

Insolvent Spain Forced To "Borrow" From Social Security Fund To Pay Pensions

Submitted by Tyler Durden on 07/22/2013 15:56 -0400

Spain's slow-motion implosion into an insolvent singularity has been one of the most amusing sideshows for over a year. The chief reason for this is the sheer schizophrenic and absurdist polarity between the sad reality, visible to everyone, and the unprecedented propaganda by the government desperate to paint a rosy picture. While on one hand the economic data shows very clearly the painfully obvious sad ending for this chapter of European integration, it continues to be punctuated almost daily by such amusingconfidence games as Spain's Economy Minister de Guindos telling anyone who cares to listen that the labor market is improving "beyond the seasonal pick up" and that Q2 GDP would be close to zero (because 0% GDP is the new killing it). That's the good news. The bad news is that as Reuters reports, and contrary to fairy tales of unicorns and soaring 0% GDP, Spain's government is so insolvent, it was just forced to "borrow" from its social security reserve to fund pension payments.

From Reuters:

Spain tapped its social security reserve fund for the second time in a month on Monday, the Labour Ministry said, to help with extra summer pension payments as unemployment and retirement costs deplete government funds.

The government turned to the fund for 3.5 billion euros ($4.6 billion) on July 1 then for a further 1 billion euros on Monday. Spanish pensioners receive two cheques in summer and two over the Christmas holidays.

Spain was forced to tap the reserve for the first time last year to help pay pension costs, using some 7 billion euros.

Record high unemployment, which hit over 27 percent in the first quarter, and a growing number of retirees on a state pensions have put an unprecedented strain on Spanish social security funds.

The fund was worth 59.3 billion euros, or 5.65 percent of gross domestic product, after the operation on Monday, the Ministry said.

And the punchline: virtually all of the "welfare" cash, and at least 97% of the social security pension fund, is invested in Spanish government bonds. In other words, if one country goes, and its people lose all their retirement money most likely leading to riots and a revolution now that there is nothing from the old system left, all countries go.

Think the TBTF banks had it good when they made it so that one failure would lead to defaults for all and a collapse of civilization? Just wait until the reality about sovereign "cross-default" provisions is finally grasped by the broader public...

http://www.zerohedge.com/news/2013-0...d-pay-pensions

Total comex gold falls again to 6.885 million oz/Spain starts to borrow funds from its pension fund to pay out

by Harvey Organ, HarveyOrgan.Blogspot.ca:
Gold exploded up $42.60 to $1336.40 (comex closing time ). Silver was also up by $1.05 to $20. 50 (comex closing time)
In the access market at 5:00 pm, gold and silver finished trading at the following prices :

gold: $1335.90
silver: $20.55

It seems that our specs are in deep trouble with the commercials net long. We will have in the next few weeks a plethora of buyers and a scarcity of suppliers of paper gold.

At the Comex, the open interest in silver rose by 788 contracts to 132,732.

The open interest on the entire gold comex contracts rose by 5193 contracts to 439,539 with gold’s rise in price on Friday.

Read More @ HarveyOrgan.Blogspot.ca

http://sgtreport.com/2013/07/total-c...nd-to-pay-out/