Friday, October 24, 2008

Pilfering Pensions

As it is prone to do, oh....all the time, Argentina started a sh*tstorm this week that has regional and global implications.

President Cristina Kirchner announced plans for the Argentina government to take over $29 billion dollars in private pension plans, which will affect some 3.5 million retirees and workers. Cristina says it is a "strategic" move to shield Argentines from the global financial crisis.

The local Merval stock market plummeted on the news, dropping as much as 17% at one point on Wednesday; other markets in the region also slumped. Argentina's bond ratings fell, and its risk index jumped. Investors are worried about another 2001-like default. Many Argentines think the money will just go to stuff the state coffers.

It's another unusual and inexplicable political move by the Kirchners. As I said live on CNN International on Wednesday, people in Argentina have come to expect the unexpected; it's in their DNA.

I'm very curious to see how this latest move is greeted by citizens and lawmakers. I think people here are more than tired of government meddling in their affairs, and I don't think this initiative will have much support, or an easy road to approval in Congress.

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