French Pension Riots Escalate
Paris riots escalated after French President Emmanuel Macron used special powers to raise the retirement age from 62 to 64. The legislation was widely unpopular, and Macron used special powers to bypass a parliamentary vote. More than 1,500 protests broke out throughout France following the pension rule change, with 700,000 people in the streets of Paris and 3.5 million nationwide. France's Interior Minister Gerald Darmanin instructed police to use "enhanced protective measures” for members of Parliament. Police have begun using batons, tear gas, riot shields, and water cannons to clear demonstrators from central Paris.
Macron’s signature bill of his second term to raise the retirement age was wildly unpopular. More than 80% of the French population opposed the legislation. Far-left and far-right legislatures vehemently opposed the bill. Moderates in Macron’s Renaissance party were very divided about 50/50. Its passage was doubtful. Macron used what he called the “nuclear option” to pass the legislation. Macron used Article 49.3 of the French Constitution to force the legislation without Parliament's approval. Article 49.3 allows the government to force a bill without a Parliamentary vote at the risk of a no-confidence vote. However, no-confidence votes of this type are unlikely to pass because they may also entail the legislature's dissolution.
Macron’s far right and far left oppositions immediately called for a no-confidence vote, which Macron barely survived. More no-confidence votes may be held soon. Opposition lawmaker, Mathilde Panot, said, "Since Macron bypassed the assembly, we will not stop just because the motion of no confidence has barely failed, just lacking nine little votes."
The protests started on October 16, 2022. Tens of thousands of Parisians took to the streets to protest the rapidly increasing cost of living. Protests have accelerated in the last few weeks. Recently, the unions have gone on strike to protest the bill's passage. Trash has not been collected in more than two weeks. According to USA Today, there are piles of trash taller than the average human. Parisians fully support the striking sanitation workers. The Parisians have begun burning garbage to draw more attention to the situation. The pictures are from the USA Today article.
Macron's justification for the bill to raise the retirement age is that the French pension system must be financially sustainable in coming years. Macron sent a letter to the unions stating that the alternatives were “decreasing pensions, raising taxes, or letting our children and grandchildren carry the financial burden.” Later in the letter, Macron addressed his campaign promise to raise the retirement age up to 65 years, so 64 years was a compromise. Macron acknowledged the union's concerns with the following statement. "You strongly express your disagreement. I don't underestimate the discontent…as well as the anxiety expressed by many French people who have concerns about never getting any pension." The strategy of many left-wing lawmakers to pay for pensions is that successful companies and wealthy individuals should pay more taxes to finance the pension system.
What does it mean?
France made retirement promises to its citizens that it couldn't financially fulfill. When the reality of the math reached a breaking point, the executive took extreme measures to break France’s commitment against the will of the people and government procedure. The people are violently protesting in the streets because the government suspended democracy. Maybe France is an isolated incident or perhaps not. France's situation sounds eerily familiar.
Social Security and state pensions are on an unsustainable path. The U.S. Social Security system is expected to be insolvent in 2035. 17.5% (and growing) of the non-retirement age U.S. population receives government assistance.
On average, U.S. governmental pensions are funded around 78% or -6.14% less at the end of 2022 than in 2021, leaving more than 4.4 million pensions unfunded. The state pension shortfall in 2022 was $1.45T across the 50 states, up from $986B in 2021.
The U.S. is quickly reaching a situation where ugly things may happen to Social Security, leaving many seniors with either less or no benefits. Like France, the U.S. debt is increasing faster than wages can keep up. 10,000 Baby Boomers turn 65 daily, rapidly increasing the stress on Social Security.
If the U.S. defaults on its Social Security promise or any other loan, it will be a mark against the full faith and credit of the U.S. The Dollar is a fiat currency, meaning it is only backed by the faith and credit of the U.S. If people lose faith in the government to fulfill its obligations, then the Dollar will fall against other currencies. When the Dollar loses purchasing power, the price of commodities like precious metals tends to increase.
France should be a warning to the world. It is not a failed state. Instead, it is the 7th largest economy and a member of the G7. People are burning garbage in the streets to protest inflation, tyranny, and broken financial promises. If this type of reaction can happen in France, it could happen anywhere. Unfortunately, most people will be unprepared when the U.S. Social Security issue hits critical mass like the French pensions. The clever will protect themselves long before the government breaks its promises.
Did you know you may be legally able to roll over part or all of your retirement account into a precious metals IRA without fees or taxes? You may want to set up your account immediately with everything going on.
Call the U.S. Gold Bureau Retirement Services Today.