Time is money and money is the root of all evil?
With Spanish 10Y yields hovering at a 'relatively' healthy 5%, having
been driven inexorably lower on the promise of ECB assistance at some
time in the future, the market has become increasingly unsure of just
who it is that keeps bidding for this stuff. Well, wonder no longer. As
the WSJ notes, Spain
has been quietly tapping the country's richest piggy bank, the Social
Security Reserve Fund, as a buyer of last resort for Spanish government
bonds - with at least 90% of the €65 billion ($85.7 billion)
fund has been invested in increasingly risky Spanish debt. Of course,
this is nothing new, the US (and the Irish) have been using
quasi-government entities to fund themselves in a mutually-destructive
circle-jerk for years - the only difference being there are other buyers
in the Treasury market, whereas in Spain the marginal buyer is critical
to support the sinking ship. The Spanish defend the use of pension
funds to buy bonds as sustainable as long as it can issue bonds - and
yet the only way it can actually get the bonds off in the public markets
is through using the pension fund assets. The pensioners sum it up perfectly "We are very worried about this, we just don't know who's going to pay for the pensions of those who are younger now," or those who are older we would add. Spain Plunders 90% Of Social Security Fund To Buy Its Own Debt
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