Tuesday, March 22, 2016

The great global governing elite scam - By Thomas Lifson

It turns out that the scam perpetrated by Democrats in this country has been common among most of the world’s advanced economies.  To wit: bribe the large and growing population of government workers for political support by promising them future benefits, in the form of retirement and lifetime health care, that don’t show up right away.

AT readers are by now very familiar with the extent of unfunded pension liabilities facing state governments, especially Democrat-controlled satrapies like California and Illinois, many big cities, and the federal government.  But it turns out that the same scam has been used everywhere a liberal elite dominates government.  The American Interest highlights a report from the New York Times on the global reach of what TAI calls the “Blue Model.”

When Detroit went bankrupt in 2013, investors were shocked to learn that the city had promised pensions worth billions more than anyone knew — creating a financial pileup that ultimately meant big, unexpected losses for Detroit’s bondholders.
Now, researchers at Citigroup say the groundwork has been laid for similar conflicts across the developed world: Governments have promised much more than they can most likely pay to current and future retirees, without revealing the disparity to investors who bought government bonds and whose investments could be at risk.
Twenty countries of the Organization for Economic Cooperation and Development have promised their retirees a total $78 trillion, much of it unfunded, according to the Citigroup report.
That is close to twice the $44 trillion total national debt of those 20 countries, and the pension obligations are “not on government balance sheets,” Citigroup said.
“Total global government debt may be three times as large as people currently think it is,” the researchers warned, after gathering as much information as they could about various government pension plans and adjusting the amounts where necessary, to permit fair comparisons with bond debt.
Getting each country’s unstated pension obligations down on paper, along with the sovereign debt, showed that some countries have almost certainly promised more than they can deliver.

This staggering level of debt simply can’t be paid by taxpayers.  The stark fact is that governments all over the Western world have enriched themselves and created a protected elite of their own employees comparable to a feudal system in which the peasants struggle to survive while handing over all of their surplus to a governing elite that rules them.
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