Government Seizure Of Pensions / Gold / Foreign Assets?

[Guest_ringledman_*]

So with the UK being the basket case economy out there alongside the USA what is the probability that we default on our debt (a la Argentina 2002) and the government enact laws to seize ones assets???

It's happened before (US -Gold, Argentina -Pensions).

Peter Schiff talks about this in 'Crash Proof' in relation to the USA. Although there doesn't seem to be an easy answer for how to protect yourself.

Own gold coins? Or Australian Perth Mint certificates?

I don't think this situation is that far fetched. I already own most of my assets abroad but a future government may even try to take these.

Any thoughts???

Edited September 23, 2009 by ringledman

[Thread Killer]

zero, in my opinion.

The only debts that the UK has are repayable in pounds sterling, and those can be manufactured at will by the bank of England.

The reason Argentina and the US (gold) defaulted on their debts is that in both cases the debts were denominated in somthing they did not have the ability to manufacture - i.e. foreign currency in the case of Argentina, and Gold in the case of the US.

[lowrentyieldmakessense(honest!)]

Any thoughts???

we join faber and parry on the farm

[Guest happy?]

So with the UK being the basket case economy out there alongside the USA what is the probability that we default on our debt (a la Argentina 2002) and the government enact laws to seize ones assets???

It's happened before (US -Gold, Argentina -Pensions).

Peter Schiff talks about this in 'Crash Proof' in relation to the USA. Although there doesn't seem to be an easy answer for how to protect yourself.

Own gold coins? Or Australian Perth Mint certificates?

I don't think this situation is that far fetched. I already own most of my assets abroad but a future government may even try to take these.

Any thoughts???

Yes, mods take-away his posting rights until he sobers-up.

[InternationalRockSuperstar]

So with the UK being the basket case economy out there alongside the USA what is the probability that we default on our debt (a la Argentina 2002) and the government enact laws to seize ones assets???

...

they already have.

[Bloo Loo]

it was illegal to own gold following the depression until quite a few years late....In the UNITED STATES OF AMERICA. less than 70 years ago.

and they didnt have as much debt and their dollars were exchangable for silver.

[Guest_ringledman_*]

Yes, mods take-away his posting rights until he sobers-up.

You must be the most pointless poster on here.

All you do is knock anyone you disagree with without adding any meaningful rebuttal.

No wonder our country is going down with such useless dossers.

Edited September 23, 2009 by ringledman

[InternationalRockSuperstar]

it was illegal to own gold following the depression until quite a few years late....In the UNITED STATES OF AMERICA. less than 70 years ago.

and they didnt have as much debt and their dollars were exchangable for silver.

less than 40 years ago.

[Bloo Loo]

less than 40 years ago.

thank you...I think you are refering to the end of the repression.

[InternationalRockSuperstar]

thank you...I think you are refering to the end of the repression.

yep.

[Guest tbatst2000]

zero, in my opinion.

The only debts that the UK has are repayable in pounds sterling, and those can be manufactured at will by the bank of England.

The reason Argentina and the US (gold) defaulted on their debts is that in both cases the debts were denominated in somthing they did not have the ability to manufacture - i.e. foreign currency in the case of Argentina, and Gold in the case of the US.

A boring answer that has the misfortune of being correct. I wouldn't rule out exchange controls though.

[Toto deVeer]

zero, in my opinion.

The only debts that the UK has are repayable in pounds sterling, and those can be manufactured at will by the bank of England.

The reason Argentina and the US (gold) defaulted on their debts is that in both cases the debts were denominated in somthing they did not have the ability to manufacture - i.e. foreign currency in the case of Argentina, and Gold in the case of the US.

This in fact is not correct. The UK has assumed the debts of Northern Rock, Lloyds, HBOS and RBS (as well as some others). These debts are largely foreign currency, and are in excess of 3 trillion USD. Keep in mind that this does not include derivatives exposure.

[christhpc]

You must be the most pointless poster on here.

All you do is knock anyone you disagree with without adding any meaningful rebuttal.

No wonder our country is going down with such useless dossers.

Good point well made. I'd forgotten why he was on my ignore list previously. Sorted.

[Toilet-Currency]

The UK has assumed the debts of Northern Rock, Lloyds, HBOS and RBS (as well as some others). These debts are largely foreign currency, and are in excess of 3 trillion USD.

To my understanding, the UK government hasnt offered a binding guarantee to all of the overseas creditors of these banks- merely an understanding that they wont let the banks fail. Nor could it ever offer such a guarantee. UK govt has only acquired these debts by becoming a major equity shareholder in these banks. There is no cross-default mechanism that would place the UK govt "in default" if its equity investments go under.

One slightly tangential observation. Once you mess up a currency like argentina did, it is near-impossible to restore popular trust. I am in Argentina at the moment and there are so many trivial and not-so-trivial day to day problems that stem from 1990s and 2001 monetary crises. Things like: people hoarding coins so you cant find change for the buses, coins going missing to be melted down, people never wanting the larger-denomiated banknotes, banknote forgery, use of USD for larger transactions( ) etc.

I am sure that the BofE and others are aware of this. The sneakiness of inflationary default or legal confiscation may seem attractive to those in power, but it's a disaster, because this lack of trust weighs on an economy over a very long period of time. Much better to lose face and default legally. Unfortunately, here in argentina, they seem to have done the default, the pensions confiscation and then piled some inflation on top, and the result is the worst of all worlds.

[dr ray]

To my understanding, the UK government hasnt offered a binding guarantee to all of the overseas creditors of these banks- merely an understanding that they wont let the banks fail. Nor could it ever offer such a guarantee. UK govt has only acquired these debts by becoming a major equity shareholder in these banks. There is no cross-default mechanism that would place the UK govt "in default" if its equity investments go under.

One slightly tangential observation. Once you mess up a currency like argentina did, it is near-impossible to restore popular trust. I am in Argentina at the moment and there are so many trivial and not-so-trivial day to day problems that stem from 1990s and 2001 monetary crises. Things like: people hoarding coins so you cant find change for the buses, coins going missing to be melted down, people never wanting the larger-denomiated banknotes, banknote forgery, use of USD for larger transactions( ) etc.

I am sure that the BofE and others are aware of this. The sneakiness of inflationary default or legal confiscation may seem attractive to those in power, but it's a disaster, because this lack of trust weighs on an economy over a very long period of time. Much better to lose face and default legally. Unfortunately, here in argentina, they seem to have done the default, the pensions confiscation and then piled some inflation on top, and the result is the worst of all worlds.

Can you tell us more about Argentina. I was vaguely aware of their problems but it was hardly covered by the MSM (or I was too busy to notice).

Their per capita meat consumption is among the highest in the world which doesn't sound like a population without money. Has an alternative system of real money or barter taken over. Do people horde gold and silver or are they content to leave savings in a bank.

I'm interested because going Argentina is a possible outcome for the UK. More likely than Zimbabwe or Iceland.

[Toilet-Currency]

Can you tell us more about Argentina. I was vaguely aware of their problems but it was hardly covered by the MSM (or I was too busy to notice).

I can make a few observations but have only been in Buenos Aires a few weeks , so am no expert! It has so much going for it though- well worth a visit.

Their per capita meat consumption is among the highest in the world which doesn't sound like a population without money. Has an alternative system of real money or barter taken over. Do people horde gold and silver or are they content to leave savings in a bank.

True- they have a very strong private farming industry, but with some state subsidy and also, i think, some taxes to disincentivise the export of food. That's why the farming industry goes on strike periodically - export taxes cap the overall demand (national and international) for argentine food. The agricultural sector is definitely a massive positive for this country, like it once was for Zimbabwe.

To make a gross generalization, home-grown or home-made things are pretty cheap by european standards (especially meat but also other foods, wine, leather goods, public transport etc). Imported goods are very dear - especially electronics, phones, swiss chocolate....

Not sure on the precious metals, but I guess there are plenty of enthusiasts here. Overall, I would say the peso doesn't fulfil all of the functions that we in the UK would expect of a national currency. If you are making a large purchase, USD seems to be the preferred choice. USD prices also serve as the reference point for many things like rent and houses, with the peso equivalent constantly increasing. To compensate for this, it is very cheap and easy to exchange pesos for USD in either direction and in small or large size (e.g. a typical 2-way price might be 3.83-3.86 pesos to the dollar - compare that to the tourist rates you would get at Travalex! ). Also you can withdraw USD from many ATMs - presumably many people have USD accounts for savings, if they have significant savings.

I am convinced that some parts of the economy would not function without the USD (or maybe one day, Euro or yuan) prop. There is no confidence in the peso, no desire to hold pesos over another currency, no expectation of price stability (in peso terms) and no confidence in government stats (especially not inflation).

Most of what I have written is very negative but I am loving the place (gonna stay for a few months). And at the end of the day, central Buenos Aires feels like the capital city of a developed country. The culture and nightlife are still very strong and above all, authentic.

[dr ray]

I can make a few observations but have only been in Buenos Aires a few weeks , so am no expert! It has so much going for it though- well worth a visit.

True- they have a very strong private farming industry, but with some state subsidy and also, i think, some taxes to disincentivise the export of food. That's why the farming industry goes on strike periodically - export taxes cap the overall demand (national and international) for argentine food. The agricultural sector is definitely a massive positive for this country, like it once was for Zimbabwe.

To make a gross generalization, home-grown or home-made things are pretty cheap by european standards (especially meat but also other foods, wine, leather goods, public transport etc). Imported goods are very dear - especially electronics, phones, swiss chocolate....

Not sure on the precious metals, but I guess there are plenty of enthusiasts here. Overall, I would say the peso doesn't fulfil all of the functions that we in the UK would expect of a national currency. If you are making a large purchase, USD seems to be the preferred choice. USD prices also serve as the reference point for many things like rent and houses, with the peso equivalent constantly increasing. To compensate for this, it is very cheap and easy to exchange pesos for USD in either direction and in small or large size (e.g. a typical 2-way price might be 3.83-3.86 pesos to the dollar - compare that to the tourist rates you would get at Travalex! ). Also you can withdraw USD from many ATMs - presumably many people have USD accounts for savings, if they have significant savings.

I am convinced that some parts of the economy would not function without the USD (or maybe one day, Euro or yuan) prop. There is no confidence in the peso, no desire to hold pesos over another currency, no expectation of price stability (in peso terms) and no confidence in government stats (especially not inflation).

Most of what I have written is very negative but I am loving the place (gonna stay for a few months). And at the end of the day, central Buenos Aires feels like the capital city of a developed country. The culture and nightlife are still very strong and above all, authentic.

So they have essentially abandoned the local currency as a store of wealth and just use it in small denominations for convenience. Their de facto currency is the dollar. Interesting that the Zimbabwe economy stabilised when they allowed the US dollar to be used legally as an alternative to the Zim dollar.

I noticed in the Caribbean that US dollar was generally the means of exchange too.

It will hit them hard if the dollar is trashed.

[LuckyOne]

zero, in my opinion.

The only debts that the UK has are repayable in pounds sterling, and those can be manufactured at will by the bank of England.

The reason Argentina and the US (gold) defaulted on their debts is that in both cases the debts were denominated in somthing they did not have the ability to manufacture - i.e. foreign currency in the case of Argentina, and Gold in the case of the US.

I may be incorrect but I recall that Russia defaulted on its Ruble denominated debt somewhere around 1998 but continued to service its foreign currency debt.

The "classic" economic view is that nations only default on debt denominated in foreign curreny.

The reality is that they can default on domestic currency debt too despite their ability to print money ad infinitum.

[catsick]

Argentina is certainly a good parallel to the UK situation , basically years of bloated quasi socialism turned one of the richest countries in the world into a vision of white middle class educated poverty , The public spending orgy was followed by decades of poverty despite the natural wealth of the country , at the start of this year I could not see why the us debt of argentina ( a country to some degree on the mend ) was yileding 30+% while that of the uk (a country in a scarier situation was yielding 1% ) so switched out of gilts into Argentine bonds which have now more than doubled in price ...

As far as confiscation goes during the forties the uk government made it mandatory to register all us brokerage accounts then overnight gave one big order to morgan stanley in the us to sell everything owned by uk citizens and trousered the $ , the uk punters were made good with replacement pounds that promptly collapsed in value .

Its also worth remembering that in france we had the situation where there was a mandatory death sentence for the possession of physical gold !

If I had to put something away for the doomsday scenario I would say a kilo of cocaine would probably be the best thing to have salted away some place (-: , light small and easy to sell in small amounts .... ( obviously not in singapore where that would have a mandatory death sentence too ! )

Edited September 24, 2009 by catsick

[Toilet-Currency]

If I had to put something away for the doomsday scenario I would say a kilo of cocaine would probably be the best thing to have salted away some place

yeah - if you are interested, Daddy Bear will surely be a buyer for his crack up den.

sorry.