"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.
7 comments:
Nationalized theft... incredible...
Do you really think Americans would be as passive?
Me hopes not...
Anonymous:
Read my 6 November post about Ben Franklin. I have a follow up post coming on this topic in about a week. Yes, I think they're as passive. The bankers' bailout bill passed, didn't it? The Fed manipulates interest rates to keep the banks afloat to the detriment of small savers, doesn't it? Government theft of the public's savings is the story of history. As Franz Pick once said, "Government debt certificates are certificates of guaranteed confiscation".
I.A.
Defining nationalized theft as you have I must concur...
Somehow confiscating retirement accounts does seem an order of magnitude more significant...
BTW: There is no entry for Mr. Pick in Wikipedia although there is a NYT obituary available...author of 50 books... :)
One mechanism to do this (to start with) would be to direct federal government employees to allocate at least, say, 50% of their Thrift Savings Account portfolio towards the G fund. Which is what Argentina was doing with the private pension funds before they started to nationalize them. With nationalization, they'll just force the pension plan to buy govt bonds only.
It's seriously irresponsible for the WSJ to publish such nonsense, and people should know better than to quote it.
The Argentine peso is frequently subject to crude manipulation when the markets feel the least bit threatened by potential state action, as Matt Moffett should know. The central bank is quite often forced to defend the resulting short-term currency fluctuations; calling that "strong-arm tactics" is some serious yellow journalism.
Comparing that with possible dollar depreciation in the US... seems very apples and oranges.
More details on Argentina (debunking that ridiculous WSJ article) in this CEPR paper.
David:
You're entitled to your opinion. I don't share it. If you wish to call me "irresponsible", go ahead.
David is the only sane one in the bunch.
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