The other day I observed that seeing as how Democrat foolishness had screwed the mortgage market and allowed Cuba to grab vast oil reserves off our shores, what could they destroy next?
Sounds sort of 3rd World-ish doesn't it? That's because it is - see Argentina spreads the wealth:
The country's mediagenic socialist president, Cristina Fernandez de Kirchner, announced Tuesday the state would "protect" private pensions from "policies of plunder" by proposing to hand them over to the government.
Praising her own scheme, she claimed Argentina would "set an example" for global financial crisis management by pulling $29.5 billion out of the private sector, and making it public.
As aghast as Argentines are about this, Americans should be too, because a Democratic supermajority in Congress would have similar ideas about nationalizing 401(k)s.
But, under the ruse of "protecting" Argentines from their own decisions, everyone will soon be forced into an involuntary pay-as-you-go program, like U.S. Social Security. Not only will the private assets be managed by bureaucrats, pension-holders will be paid what the government dictates.
With commodity prices falling sharply, the Argentine treasury strained for revenue, and the population aging, it's unlikely to be more than the $200 a month pensioners currently are paid. In fact, it's likely to be much less.
The assets are likely to be spent by government — not invested. It will save the government about $3.2 billion in interest payments since the government won't pay interest on $16 billion of government bonds in pension assets that it would own.
The Argentine Congress says it will ensure that assets are used for the pensions, but with money fungible and Argentine fiscal transparency weak, it's an easily skirted requirement.
Right now, markets see the pension grab as a sign of governmental insolvency following a 40% surge in spending this year in socialist redistribution schemes, and amid a political climate of blaming businesses.
"We believe that the actual motivation of the reform is to capture the flows of the private pension funds to cover the government's financing needs in the context of a severe credit crunch," said analyst Pablo Morra at Goldman Sachs Monday.
Because Argentina defaulted on $95 billion of sovereign debt in 2001, blaming its bondholders then unsatisfactorily settling its arrears, it's pretty well priced itself out of global capital markets. With $16 billion in bonds maturing in 2009 and 2010, and no new revenue in sight, the government seems to want that private pool of pension cash — $4.2 billion in contributions a year — to pay its bills and carry on as usual.
Sounds like a Barack Obama wet dream fer sure. All your money belongs to them. If you let them get away with it.