Argentina And I Stare Into Crisis

Argentina
Considering nationalizing pension funds...

ARGENTINA'S BOLD PLAN TO NATIONALIZE its private pension funds should make it easier for the government to refinance short-term obligations but would further undermine its credibility among investors, Moody's Investor Service said on Thursday.

President Cristina Fernandez de Kirchner unveiled on Tuesday a plan to take over the $30 billion in funds managed by its 14-year-old private pension system, saying she seeks to protect pensions from the global market crisis.

"Although the proposal, if approved, would provide the government with greater financial flexibility in the short term, it undermines the government's already weak policy credibility and adds to negative perceptions about Argentina's institutional integrity—particularly governance and respect of contracts," Moody's analyst Mauro Leos said in a statement.

The move would boost the government's annual revenue by 1 percent of gross domestic product as contributions of the private pension participants are brought into the national budget, Moody's said. With higher revenues, the government will be tempted to delay a needed adjustment in public spending, which is on an "unsustainable path," Leos warned. "The pension proposal appears to be a short-term fix to a long-term problem," Moody's said in the statement.

Cristina-de-Kirchner
Cristina de Kirchner

Hello. This is definitively a global crisis, and one which escalates with each passing day. But what can the average Joe the Plumber do to protect himself and his family. I just had an argument with my wife about withdrawing some cash to tide is over in case of a money freeze or continued run on our FDIC-insured but troubled bank which ended when she snorted, "But we pay all our bills online."

I gave up. Some people just can't snap out of the foggy bottom haze they've created for themselves. Cash reserves, cash reserves, cash reserves. How many times do we need to hear this before suddenly we find ourselves liquidated or frozen out of assets for who knows how long if not forever, and can't put gasoline into our tanks or put food into our mouths, especially if we must leave wherever we find ourselves in peril —in a hurry. I'm not advocating panic mode here, but I do believe in being prepared, old Boy Scout, Troop 219, that I am. Guess she's afraid we'll lose ten bucks worth of interest on a few thousand dollars in a short run. Go figure.

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