Spain Finds Mysterious New Revenue Source

Screw the old people!

Since its financial crisis began, Spain has been having trouble finding buyers for its increasingly risky government bonds. It thought it had found the perfect solution to this problem: tapping its own Social Security Reserve Fund as a buyer of last resort. But there’s one small catch. As the Wall Street Journal reports, with 90 percent of the fund already invested in Spanish government debt, the buyer of last resort is almost completely tapped out.

As more and more Spaniards retire, the government will have a major crisis on its hands as it attempts to pay pensioners through a fund composed mostly of its own debt:

“Most of the [Spanish] fund is an accounting trick,” said Javier Díaz-Giménez, an economics professor in Spain’s IESE business school. “The government is lending money to another branch of government.” . . .

[S]ome analysts say Spain will have trouble finding buyers for the estimated €207 billion in debt it plans to issue in 2013, up from €186 billion in 2012, to cover central-government operations, debt maturities of 17 regional administrations, and overdue energy bills.

 As goes Spain...