Thursday, November 20, 2008
Argentina's Impending Bankruptcy
"Argentina's leftist government presented its controversial proposal to nationalize private pension funds to the lower house of Congress, which was expected to approve it late Thursday or early Friday. President Cristina Kirchner said that seizing the private funds--which have nearly $30 billion in assets, as well as future pension contributions amounting to $4 to $5 billion annually--will protect Argentina's savers amid the global market turbulence. ... 'The government says it has its accounts in order, but it is launching a fiscal grab,' opposition Congressman Fernando Iglesias said in remarks during the debate on Thursday. ... In the meantime, the government has been employing strong-arm tactics to bolster the embattled peso and stem a surge in dollar-buying by Argentine investors unnerved by the nationalization bid. ... The government has said it is aiming to halt tax evasion, but exchange traders say the move [on currency-exchange houses] is actually aimed at intimidating those seeking dollars and those selling them", my emphasis, Matt Moffett at the WSJ, 7 November 2008.
When the US dollar reverses its present course it will be interesting to see if the Obama administration follows Argentina.