Argentina grabs all private pensions:
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.
So this is being done in order to “protect” retirees, correct?
Argentine President Cristina Kirchner said the move to take over the private pension system was aimed at protecting investors from losses resulting from global market turmoil. Funds in the system, which is parallel to a government pension system, are administered by financial firms. The private system has about $30 billion in assets and generates about $5 billion in new contributions each year.
That’s a 30 billion dollar piggy-bank sitting there with 5 billion more coming in every year. I realize that 35 billion dollars is chump change for a nicy hopey, changey Democrat – but think about it. All of a sudden you wake up one day and find that the government is gonig to take over you 401K and “manage” it for you in order to protect you. What would you think would happen to the stock market where all that money is now?
How about something like this:
Argentina’s Merval dropped 10% to 941.49, and headed toward its lowest closing level since 2004. The benchmark slid 14% a day ago on fears about the possible takeover plan. Prices for the discount bond on Tuesday dropped more than 6% to yield 19%.