Sure. This will be THE ISSUE OF THE CENTURY that causes the peasants to grab their pitchforks and storm the Bastille.
Most of our 401's have already tanked in the last month and I don't see mobs in the streets.
Posted on 10/22/2008 8:25:27 AM PDT by marshmallow
Bloomberg is reporting Argentina Default Looms as Pension Funds Seizure Roils Markets
Argentina's planned seizure of $29 billion of private pension funds stoked concern the nation is headed for its second default in a decade.
Investors say President Cristina Fernandez de Kirchner's decision may further hurt markets already reeling from slumping commodity prices and slower growth. The retirement system, set up in 1994 to help bolster capital markets, owns about 5 percent of companies listed on the Buenos Aires stock exchange and 27 percent of shares available for public trading, data compiled by pension funds show.
Argentine bond yields soared above 24 percent before the announcement late yesterday, and the benchmark Merval stock index tumbled 11 percent. The last time the government sought to tap workers' savings to help finance debt payments was in 2001, just before it stopped servicing $95 billion of obligations.
"It's the final of many nails in the coffin from an institutional investor perspective," Bill Rudman, who helps manage $3 billion of emerging-market equity at WestLB Mellon Asset Management in London. Argentina is "disappearing into irrelevance."
Bond markets also have tumbled. Yields on the government's 8.28 percent bonds due in 2033 have almost tripled to 24.69 percent from 8.83 percent a year ago.
Double Default
Additional information on the bleak situation in Argentina can be found in Argentine Bonds, Stocks Tumble on Pension Fund Takeover Plan.
"It's horrible," said Jaime Valdivia, who manages $1 billion of assets for Emerging Sovereign Group in New York. "We're going back to the dark ages. Not even in times of the worst financial stress did the government ever think about taking over the private pension system."
Argentina defaulted on its bonds in 2001, offering investors 30 cents on the dollar in 2005. Some investors refused and are still haggling over it. Seems like they should have taken the 30 cents and run. Here we are again, with Argentine bonds trading at 30 cents on the dollar. Only this time, that 30 cents is before default.
Argentina was about the 7th wealthiest country during WW2. Thanks to Peronism and endless corruption - the country is constantly broke. They screw bondholder retirees in Europe by defaulting on their debt years ago.
Obama and the Dems will tax 401Ks and IRAs even more than they already do once you get the money.
If they tried that here there’d be a popular revolt.
Maybe a good idea to take ALL money out of 401ks and IRAs (with penalty) and buy some gold...
I am too young to pull it out without penalty but too old to start all over again...
Dow down $297 now, crude at $67.70; 2nd installment time?
I'm beginning to think about backing off my 401k contributions and pay the tax on that income right now. I expect no matter which party is in charge taxes will be much higher when I retire than they are right now.
Clinton tried to sneak that through back when he siezed power.
When word got out about his plan, it was quickly squashed.
they will do it to fund reparations.
Sure. This will be THE ISSUE OF THE CENTURY that causes the peasants to grab their pitchforks and storm the Bastille.
Most of our 401's have already tanked in the last month and I don't see mobs in the streets.
There’s a difference when the market experiences a selloff that everyone knows is a buying opportunity, and when gooberment puts their grubby fingers on it. Once the government takes it, it doesn’t get to appreciate back.
If the best banks in the US can barely borrow at double digit rates, dodgier governments across the world aren't going to see a drop of capital.
Hungary raised its rates 3% to defend the currency. Pakistan is in talks with the IMF about a loan, to avoid a default. The Russian stock market is trading at a PE of 3 and foreign investors have withdrawn $65 billion since the Georgia war. The BRIC countries - Brazil, Russia, India and China - are all off 55% at least, with Russia more than that, from their highs. The commodity smash has spread to them.
Eastern Europe saw 40% money supply growth per year in the boom, and is now crashing, as another bubble. Turkey also on the ropes. South Korea, the currency is dropping like a stone despite government bank bailouts akin to those in the developed world.
Everyone following populist anti-financier or anti-western policies is going to be completely shredded. Meanwhile, the dollar has soared 25% against the Euro and Pound since the spring, and even more against the softs.
All of it is a sign that safe dollar denominated assets are the one place of safety, and demand for dollars is soaring, not collapsing as the inflationary end of the world script called for. Every bet made against the US over the last 3 years is crashing and burning.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.