We already know that the global economic crisis is having far-reaching effects in the United States on the 401(k) plans of individuals and may also mean that fewer employers are able to afford offering health plans. Now comes word from foreign countries that have national pension schemes that the economic impact of the collapse is causing governments to invade the money in those national pensions.
From the Wall Street Journal yesterday:
Argentina’s leftist President Cristina Kirchner signed a proposal nationalizing the country’s private pension funds in what could be seen as a grab for cash and power amid the global economic crisis.
Details of the proposal — which must be approved by the country’s legislature — were not immediately available. It was signed by Ms. Kirchner, along with Labor Minister Carlos Tomada and Amando Boudou, the head of the national social security system, ANSES. But an announcer during the televised signing ceremony described it as a project to “eliminate” the “capitalization system,” a reference to the defined-contribution plans run by 10 private funds known as AFJPs.
In a speech following the signing ceremony, Mr. Boudou said the reform would “rescue Argentine retirees from uncertainty.”
The proposal, which triggered a steep drop on Argentina’s stock market after it was disclosed by union officials and reported in the Argentine press, reinforces Argentina’s image as a pariah in financial circles and represents a repudiation of a system of private pensions that had been in vogue in developing countries. In 2001, Argentina announced the largest sovereign debt default in history.
The government said the takeover of the private system, created as an option to state pension funds in 1994, aimed to protect investors from losses due to the global market turmoil. But economists said the underlying motive would be to provide the government with about $5 billon in annual pension contributions that it needs to plug a gap in financing next year and avert a second debt default.
So add to the employee benefit consequences associated with the global economic collapse the reversion in developed countries away from private defined contribution plans to traditional, nationalized defined benefit plans.
It will be interesting to see whether other developing countries take Argentina’s lead and re-nationalize their countries’ pension plans.
About the recent court decision in Miami, regarding the smuggling of millions of dollars in Argentina by Venezuelan agents, I would like to comment the following, What this guy Antonini Wilson and the others did was with the complete knowledge of Kirchner’s inner circle, they wasn’t just a bag, we are speaking here about several million dollars loaned by Chavez to their friends the Kirchner couple, if they have something in common is their immorality, total lack of ethics and their deep disrespect for the rule of law. We would like to see the Miami court condemning these guys and the Venezuelan tyrannical regime, and if they find something in relation with the “Argentinean royal couple” let this know to the whole world.
But changing more or less subjects, the Argentine government once more had showed us that there are no limits to their goals, total power and the destruction of what remains of our democracy. The Kirchner couple ruled the country with a complete contempt for our Constitution, first they tried to smashed the agriculture sector, with completely disproportionate export taxes, which they provoked a paralysis in our international trade. They were defeated in the Congress on July 17 when they tried to assume extraordinary powers on this regard. But they are using now the international crisis to confiscate the savings of some 10 million of Argentines, which are worth more or less some 40 billion dollars.
We are completely horrified with this new move; we thought that they had learned something after their setback last July. Disgracefully they want more cash to “buy wills”, which means use our money to dominate the political scenario and remain in power beyond 2011, when Cristina Kirchner should hand over her office to a new elected president, probably if the opposition is not united, for our disgrace would be her husband Nestor Kirchner who will be back “in office”. So a real absolute monarchy is replacing our republic step by step.
This government is taking now all of our entire life savings without any compensation, but we will fight in the courts and even in international courts if necessary. They still have deposited in Switzerland some 2 billion dollars, which belong to the State of Santa Cruz, the province ruled in a quite open authoritarian way by this couple of crooks for 15 years. The Argentine Constitution establishes on Article 17. Property is inviolable, and no inhabitant of the Nation can be deprived thereof except by virtue of a judgment supported by law. The confiscation of property is stricken out forever from the Argentine Penal Code. It is crystal clear according with law that there aim is to confiscate our savings once more, which as I quoted is completely forbbiden in our legal system.
The Government had asked once again to the Congress that they need “Extraordinary powers” the Constitution is quite clear on this regard when it determines “Article 29. Congress may not confer on the National Executive extraordinary powers, or the whole of the public authority, nor grant them acts of submission or supremacy whereby the property of Argentines will be at the mercy of governments. Acts of this nature shall be utterly void, and shall render those who formulate, consent to or sign them liable to be called to account and punished as infamous traitors to the country”. Our congressmen and women should think twice before grant these powers to the Kirchners Our country which used to be one of the most advanced in the whole world from 1850 to 1946 (when Peron was elected), is still a great promise awaiting for a decent leadership that should rescue us from abyss. By the way, Mrs. Kirchner will travel to Europe soon; probably she will continue her “traditional shopping” in Paris at Louis Vuitton, Hermes, Dior at Avenue Montaigne, and Gucci with our moneys and our resources. I hope that nobody will receive her, she doesn’t deserve to be treated as a head of state, like Robert Mugabe, or Hugo Chavez, Mrs Kirchner and her husband “King Nestor” are just demolishers of democracies and freedoms.