Tuesday, April 13, 2010

The Argentine Test Bed

Argentina continues to serve as an example to the rest of the world of how "developed" countries are likely to behave as tax revenues dry up and public clamoring for benefits increases.

Argentina seizes pension funds to pay debts. Who's next?
by Ambrose Evans-Pritchard, the Telegraph
Here is a warning to us all. The Argentine state is taking control of the country’s privately-managed pension funds in a drastic move to raise cash.

It is a foretaste of what may happen across the world as governments discover that tax revenue, and discover that the bond markets are unwilling to plug the gap...

Remain calm. All is well. The DJIA is at 11,000. Spending more makes you wealthier and the Fed has everything under control.

4 comments:

David said...

Argentina is undoubtedly a partial crystal ball given they have had 9 years since their complete financial meltdown.

A local guy writes a useful blog from there: http://ferfal.blogspot.com/ and the fun part is separating the "Argentina-unique" parts from the stuff we're likely to see land here in the USA.

Will our problems be worse, because there's not likely to be an intact USA-like country from which to buy things, or is Argentina's situation worse because it had decades of Peronist idiocy sawing away ahead of time?

Beats the stuffing out of me.

David said...

Note however that this report is from 2008.

Flagg707 said...

! Thanks for catching that David. I knew the story sounded familiar. I didn't take a few seconds to check that and should have.

David said...

It's a good story, though. I reiterate that Argentina has many instructive lessons to offer us. There's an entire thread there now about the (un)wisdom of bugging out to a rural retreat in the event of a STHF environment, how isolated people are easy pickings for criminals.

Ours will be our own path and there will doubtlessly be many sub-paths within the larger experience, butwe ignore this information at our peril.