Poland Selectively Defaults on Its Debt

Email Print
FacebookTwitterShare

Bad news arrived earlier this month for anyone with a stake in any private sector pension fund that had invested in the Polish government bonds. The government announced a 100 percent default on these bonds. It stiffed its creditors (lenders). It did this by seizing the bonds and cancelling them. All that takes is a few key strokes and the absence of law that protects the subjects from their rulers. I do not know if this default applies only to bonds in Polish funds or also to bonds held outside Poland.

The Polish constitution apparently calls for compensation when the government seizes assets, or seems to because some criticized the move as being unconstitutional on that ground. Whatever the details turn out to be, this event is important. It sends a strong signal about the potential consequences of excessive government debt, and it sends a strong message that the world’s governments are hegemonic.

Every government has a small set of rulers that have extremely large swaths of control over a large number of people, their subjects. The governments have domestic hegemony. To them, people are not real persons with natural rights. They are artificial persons called citizens whose lives and property belong to their rulers. In this situation, there is nothing that you can call your own that cannot be taken by the government, if that government deems that necessary and legal.

5:24 pm on September 30, 2013