BUENOS AIRES -- Hemmed in by the global financial squeeze and commodities slump, Argentina's leftist government has seemingly found a novel way to find the money to stay afloat: cracking open the piggybank of the nation's private pension system.Private pensions, as in your 401(k) with your company, are being siezed by the Argentinian government. But why?
The government proposed to nationalize the private pensions, which would provide it with much of the cash it needs to meet debt payments and avoid a second default this decade.
While no one knows for sure what the government would do with the private system, economists said nationalization would let the government raid new pension contributions to cover short-term debts due in coming years.Oh. That's why. Isn't there something else they could do?
Argentina's financing needs are growing quickly as the global financial squeeze pushes down prices of its commodity exports, such as soybeans. Coupled with unchecked government spending, the commodity downturn has carved a gap of around $10 billion to $11 billion in what Argentina must pay on its debt between now and the end of 2009Never mind. I didn't realize that they needed the money for important things. (Emphasis mine.) Well, I guess there's nothing to worry about.