Argentina’s leftist President Cristina Kirchner signed a proposal nationalizing the country’s private pension funds in what could be seen as a grab for cash and power amid the global economic crisis.
As usual with dubious proposals,
Details of the proposal — which must be approved by the country’s legislature — were not immediately available.
However, it’s all done to “rescue Argentine retirees from uncertainty.” Sound familiar?
Of course, it had the predictable effect:
The proposal, which triggered a steep drop on Argentina’s stock market after it was disclosed by union officials and reported in the Argentine press, reinforces Argentina’s image as a pariah in financial circles and represents a repudiation of a system of private pensions that had been in vogue in developing countries. In 2001, Argentina announced the largest sovereign debt default in history.
And they need more funds right now.
The government said the takeover of the private system, created as an option to state pension funds in 1994, aimed to protect investors from losses due to the global market turmoil. But economists said the underlying motive would be to provide the government with about $5 billon in annual pension contributions that it needs to plug a gap in financing next year and avert a second debt default.
Think it can’t happen here?
Do you think the politicians here won’t lie trying to get their hands in your retirement money?
UPDATE: Wednesday, 22 October
Argentine Bonds, Stocks Sink as Takeover Fuels Default Concerns