Argentina to confiscate retirement savings

The Wall Street Journal reports:

Hemmed in by the global financial squeeze and commodities slump, Argentina’s leftist government has seemingly found a novel way to find the money to stay afloat: cracking open the piggybank of the nation’s private pension system.

The government proposed to nationalize the private pensions, which would provide it with much of the cash it needs to meet debt payments and avoid a second default this decade. . . The private system has about $30 billion in assets and generates about $5 billion in new contributions each year.

While no one knows for sure what the government would do with the private system, economists said nationalization would let the government raid new pension contributions to cover short-term debts due in coming years. . .

Argentina is doubly hurt. Having stiffed creditors as recently as 2001, it has few prospects of returning to international lending markets soon. Economists who were critical of the nationalization proposal said it reinforced Argentina’s image as a renegade in financial circles.

The private pension system was created as an alternative to state pension funds in 1994, when conservative President Carlos Saúl Menem ran Argentina and free-market policies were in vogue in Latin America. Countries in the region followed the example of Chile, which had privatized pensions in 1981. In Argentina, workers have the option of paying into individual retirement accounts run by pension funds rather than the government.

Three million Argentines do so. They can track their accounts and have some say over how the pension funds invest the money, making the system somewhat like U.S. 401(k) accounts. After a nationalization, it’s presumed the government-run system would absorb the private funds.

It’s just the latest in the Argentine horror show:

Mrs. Kirchner won’t have trouble making the case for expropriation to Congress, which is controlled by her fellow Peronists. When the Argentine government ran out of money in 2001, it blamed the market and increased its own role in the economy. Since then it has imposed price controls, defaulted on its debt, seized dollar bank accounts, devalued the currency, nationalized businesses and tried to set confiscatory tax rates with the aim of making society more “fair.” Mrs. Kirchner and her predecessor (and husband) Nestór Kirchner have also preserved the Peronist tradition of big spending.

All of this has been deemed acceptable because of the “crisis.”

You spend your entire life saving for retirement, and then the government takes it away. It could never happen here, right? The Democrats might abolish 401(k)s in favor a government-owned plan, but they would never confiscate existing ones, would they?

(Via Power Line.)

3 Responses to Argentina to confiscate retirement savings

  1. notarealamerican says:

    In America you save your entire life for retirement and the Republican wingnuts take it away with their absurd belief in the inherent virtue of the so-called free market. But that’s OK because the oligarchs get their millions, which is all that matters.

  2. K. Crary says:

    It’s true that we haven’t had a free market in this country; Fannie, Freddie and the CRA have seen to that. The oligarchs in this story are people like Herb Sandler, Franklin Raines, Jim Johnson, and Angelo Mozilo, big Democratic supporters all.

    Still, markets go up and down, and always have. That’s entirely different from confiscation.

  3. notarealamerican says:

    Hilarious! It’s amazing what nonsense you’ll believe in your utter isolation from reality.

Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: