European nations begin seizing private pensions

[Verrocchio]

Re: European nations begin seizing private pensions

Don't you think the implementation of that is a little more subtle than sending everyone a letter saying that the Gov't is flat-out confiscating their Roth IRAs and 401Ks? Do you think that we will ever see overt, in-your-face confiscation of retirement funds by the government?

Ah, but subtlety is surely the quality on which successful taxation most depends. King Louie the 14th's Minister of Finance said it best: “The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing."

[goodrich4bk]

Re: European nations begin seizing private pensions

I read the link you posted above to the Irish bailout details and found this interesting:

"The National Pension Reserve Fund will effectively be liquidated. This should come as no surprise. A country that is being bailed out by others cannot expect to keep a pot of gold stashed away – that would be akin to going to family members seeking financial help while keeping a fat savings account untouched."

Notice how the shell game is played. Before Ireland transferred its banks' debts to the public, senior bank bondholders had taken all of the risk of bank failure because they had been paid to take that risk. After the Irish government "saved" its banks (i.e., the senior bondholders and bank shareholders), the ECB had to arrange a similar bailout of the Irish government. Suddenly that "pot of gold" held for the benefit of pensioners was an asset that "naturally" had to be liquidated to get the bailout.

The article's analogy is false. It was not "akin" to a debtor seeking financial help while keeping a "fat savings account untouched." A properly formed pension is a trust, and the assets of the trust are not the assets of the trustee. Rather, they are held by the trustee for the benefit of the trust's beneficiaries. Here, the Irish government raided the beneficiaries "fat savings accounts", not its own. I'm not sure how they accomplished this. Perhaps the National Pension Reserve Fund was merely an accounting convenience and was not a segregated trust account. If so, that would make the Irish example inaplicable to IRA/401k accounts, which are trust accounts.

The example that troubles me more is the Hungarian scheme. A similar plan might pass a Fifth Amendment challenge in the U.S. because it would be "voluntary", not a "taking". Give up your 401k/IRA or you get no SS. I still think it would be unconstitutional, though, because the Fourteenth Amendment requires equal protection of the laws. If my neighbor gets SS without giving up an IRA/401k (because he doesn't have one), how can the government deny me the same benefits?

That's why I agree with one of the commenters above. A more likely scheme in the U.S. is to means test SS. It would apply "equally" to all people of similar income, thereby passing the 14th amendment. And it would not "take" any property, thereby passing the 5th (notwithstanding the common use of the term "entitlements", eliminating a future benefit from the government has been held not to constitute a "taking" of property. SS benefits are not, in fact, entitlements. They are government promises that do not become property rights until you retire, and even then you are only entitled to the current month's payment.

[nero3]

Re: European nations begin seizing private pensions

From the Christian Science Monitor via Drudge:

http://www.csmonitor.com/Business/Th...ivate-pensions

Excerpts: (Bolded font is mine) The whole thing is outrageous and a tragedy, but the part about Ireland, people's savings stolen to be given to the Banks, is absolutely obscene!

What are the chances of this trend spreading to the U.S.? How would it be presented to the people and what would be the fallout? Opinions?

That seems like an east block ghost. In the West I think it's more that for those in position in the private sector to keep in position in this period of debt deflation they need a transfer of wealth from the public sector, however the public sector is kind of broke, that means, there is a direct competition to get funds between the private sector and all sectors of the welfare state.

[DSpencer]

Re: European nations begin seizing private pensions

In the U.S., we have the protection of the Fifth Amendment. This is what protects secured creditors from the cancellation of their rights in a borrower's bankruptcy. The government can pass no law that takes private property without "just compensation".

You still believe that the bill of rights offers you real protection from government, how quaint.

The example that troubles me more is the Hungarian scheme. A similar plan might pass a Fifth Amendment challenge in the U.S. because it would be "voluntary", not a "taking". Give up your 401k/IRA or you get no SS. I still think it would be unconstitutional, though, because the Fourteenth Amendment requires equal protection of the laws. If my neighbor gets SS without giving up an IRA/401k (because he doesn't have one), how can the government deny me the same benefits?

While I was making a joke above, I really don't understand how you believe the constitution would stop them from doing this. They take your money all the time without compensation. They take from you when work, buy something, own something, live somewhere, and even when you die. How is this any different?

Equal protection??? If my neighbor gets unemployment/welfare/food stamps/housing assistance etc etc etc and I, like an idiot, try to work for a living and save for my own retirement, how is that equal protection?

I'm not saying that you're wrong about these being technically unconstitutional. I just think the precedent has been set that it does not matter what the constitution says.

[goodrich4bk]

Re: European nations begin seizing private pensions

Taking your money to satisfy a debt to the government is giving you "just compensation" by discharging your debt dollar for dollar. Now, I certainly understand that some people don't want to pay their taxes, but that's another thing altogether. The point is that enforcing tax laws does not violate the 5th amendment.

Similarly, the 14th amendment does not require equal outcomes. It only requires equal protection of the law. So if you qualify for welfare/unemployment/food stamps/housing assistance, then the law requires that you receive it without regard to who you are, what religion your practice or the color of your skin. But if you don't qualify because your income is too high, the 14th amendment does not guarantee an equal outcome. In fact, you could earn $100k this year, lose it all on Enron stock and be penniless while your lazy neighbor keeps his minimum amount of assets allowed under government assistance programs. The 14th amendment only guarantees that you are free to join him at any time and receive the same government assistance.