Argentina nears bankruptcy, raids pension funds to pay government

[Ah Xoc Kin]

Oct. 22 (Bloomberg) -- Argentina's stocks headed for their biggest drop since 1990 and dollar bond yields topped 30 percent as a planned takeover of pension funds heightened concern the government is headed for its second default this decade.

"They're taking people's pensions away and using that to fund the government," said David Bessey, who manages more than $8 billion of emerging-market debt in Newark, New Jersey, for Prudential Financial Inc.

"Tapping into the pension funds makes it blatantly obvious that it needs funds," said Aryam Vazquez, an emerging markets economist with Wells Fargo & Co. in New York. "This is bad news any way you look at it."

http://bloomberg.com/apps/news?pid=20601068&refer=home&sid=apDlwrW9f4c8

[indepat]

1. Thank God, our Congress, even if as venal, corrupt, self-serving, disingenuous, and mendacious

as it seems, would never raid Al Gore's mythical social security lock-box to fund other government programs/expenses, would never raid that lock-box to fund junior's tax cuts. :P

[DemReadingDU]

3. I think it could happen to our pensions too

and 401Ks and IRAs

[Dover]

2. Argentine pension plan has local, global impact

BUENOS AIRES (Reuters) - Argentina's surprise plan to nationalize its private pension system caused chaos on local markets on Wednesday and raised fears about a debt default, sending a ripple effect of fear about emerging-market investments into European stocks and Asian bonds.

President Cristina Fernandez, who has repeatedly criticized financial markets for speculating rather than investing in real production, announced on Tuesday she would send a bill to Congress for the state to take over the $30 billion in funds in the 14-year-old private pension system.

Fernandez defended the plan by saying that she was rescuing pensions from the global market crisis but some investors saw the plan as a sign of desperation by a government facing billions of dollars in debt obligations next year.

The plan is likely to pass Congress and be broadly popular in Argentina, where there is broad-based suspicion of the privatizations that took place during the 1990s when free-market reforms swept Latin America...>

http://www.reuters.com/article/worldNews/idUSTRE49L73H20081022