Tuesday, October 21, 2008

Argentina Continues to Lead the Way

I am still of the strong opinion that the Great Collapse here in the U.S. will follow the example set by the Argentine economic crisis of 1999-2002 and the continuing aftershocks, such as:

Argentine Bonds, Stocks Plunge on Pension Takeover Speculation
by Drew Benson and Bill Faries, Bloomberg
Oct. 21 (Bloomberg) -- Argentine bonds soared above 24 percent and stocks sank the most in a decade on speculation the government will seize private pension funds and use the assets to stave off the second default this decade.

President Cristina Fernandez de Kirchner will unveil a new pension fund plan at 4 p.m. New York time today, the country's social security administration said in a statement. Fernandez will nationalize the system, giving the government control of $29 billion in retirement accounts, La Nacion reported, citing government officials it didn't identify.

"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..."

Makes you wonder, when the elites in the U.S. finally wake up, or, as is more likely, are forced to acknowledge the debt tsunami that is washing over the country, will the feds be able to ignore that huge pot of money sitting out in IRAs, Roth IRAs, 401(k) plan accounts, etc.? All that cash, ready to be gathered up, for the Good of the People, of course, exchanged for new government bonds and the cash disbursed to the many bondholders, such as China, Japan, Europe, etc. - nah, they wouldn't ever do that, right? That's as crazy as saying that the Bush Administration would preside over the natioinalization of the banking industry or something like that.

I strongly recommend reading the Wikipedia account of the Argentine crisis. This was a developed nation that cratered due to a debt crisis. The federal government defaulted on their foreign bonds (forcing debt holders to suck it up and take new bonds at 30 cents on the dollar) and enacted a wide variety of measures to halt runs on the banking system, forcing many formerly middle class men and women into cardboard-collecting poverty and barter.

At the very least, it provides a real-world example of what can happen when debt and stupidity overtake the spending habits of a country and its people.

1 comment:

Chris said...

Speaking about an earlier topic of electromagnetic pollution, apparently depression can be cured by electromagnetic pulses.