Wednesday, October 22, 2008

Argentina's Government Goes After Private Retirement Funds

Argentina works hard to keep its place among the world's most backward economies.

In an unprecedented move, Argentina's leftist government proposed the take over of all private retirement accounts in the country, under the lame excuse that the government is doing it for the good of the rightful but disowned account holders. The proposal will probably have the approval of Congress.

As expected, the government didn't offer any choice to the owners of the accounts regarding the takeover.

Just imagine if the US government would suddenly and unilaterally decide that all private retirement accounts in the country, such as 401(k)s, IRAs, and employer-sponsored retirement accounts, had become property of the Treasury. Well, that's what's happening in Argentina.

Chilean economist Piñera summarized it well:
José Piñera, a former Chilean cabinet minister who pioneered the privatized pension system and has served as a consultant to many other countries that have implemented it, called the nationalization proposal "just another step in Argentina's 100-year 'road to underdevelopment.'"

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