Pensions and Politics: Argentina Seeks to Nationalize Private Pensions
According to Wall Street Journal reporter Matt Moffett, Argentina's leader would like to nationalize the private pension system, allowing this South American country to "raid new pension contributions to cover short-term debts due in coming years." The picture appears bleak indeed. Trounced by lower commodity prices and rising IOUs, the $30 billion plan looks like a juicy target. (See "Argentina MakesGrab for Pensions Amid Crisis," October 22, 2008).
In "Argentina stocks, bonds plunge on pension reform plans" (October 21, 2008), Reuters reports that investors look unfavorably upon a takeover of the private retirement system. In "Argentina Pension Funds Attack Government Plan, Defend Result" by reporter Michael Casey (Dow Jones Newswires, October 21, 2008), a coalition of Argentinian private pension plans decry the need for a takeover. Asserting the need to review long-term performance, private pension leaders say "the reform project was founded on results incurred during the current financial market crisis."
This reminds one of the optical illusion that asks the viewer to recognize both a beautiful woman and an "old hag." Some see Argentina's pension reform as good news and others question the real motivation behind such a proposal.
Is this likely to become a trend around the world? We never thought global megabanks would be nationalized and now they are.
