Opening of Paul Hsieh's article "Government Grab of Retirement Accounts a Matter of 'Social Justice'"
Uncle Sam wants your retirement money.
The Obama administration has just solicited public comment on their proposal to take money from Americans' private 401(k) retirement accounts and convert it into government-backed annuities. In other words, they want to take your money now to purchase U.S. Treasury bonds, then pay you a monthly sum later after you’ve retired.
Although this proposal is being initially portrayed as a voluntary choice, Americans already have the ability to purchase Treasury Bonds with their retirement money. Moreover, the Obama administration is considering making these annuities the default option. And as analyst Karl Denninger noted, "'choices' have a funny way of turning into mandates." Nor is his concern unjustified.
In 2008, Professor Teresa Ghilarducci of the New School of Social Research testified before Congress proposing a similar scheme to convert private 401(k) accounts into government-run "Guaranteed Retirement Accounts" that would pay a 3% return. And in 2008, the Argentinian government attempted to nationalize private retirement funds to help cover its runaway deficit.
As the U.S. Social Security system moves ever closer to bankruptcy, the billions of dollars Americans have saved in their private retirement accounts will become an increasingly tempting target for our politicians. ...
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Edited by Old Toad on Feb 24, 2010 9:32 PM
Argentina: Major Insurance And Reinsurance Developments In 2008
January 15, 2009
Article by M. Machua Millett
On October 21, 2008, Argentina's president, Cristina Fernandez de Kirchner, announced a plan to nationalize the country's 30 billion dollars in private pension funds (a number of which were managed by affiliates of international banks and insurance companies), ostensibly in a effort to protect retirees' savings during the current global economic turmoil. The announcement, however, rather than stabilizing Argentina's economy, resulted in greater uncertainty and tremendous economic and social turmoil. Argentina's stock market subsequently lost more than half of its value, the bond market plummeted and the value of the Argentine peso dropped dramatically. The Argentinean government publicly blamed the markets' performance on the ten companies in charge of the pension funds, but much of the losses were attributable to declines in the value of government bonds. After the announcement, the Buenos Aires police raided the pension system's offices and a judge prohibited the companies from trading on the Buenos Aires exchange for a week. The private pension funds then proposed a series of reforms as an alternative to nationalization.
Despite significant domestic and international concerns, the Argentine government moved forward with its elimination of the country's private pension system later in the year. A nationalization bill was passed by Argentina's lower house of Congress on November 7th and by the Senate on November 20th, and President Kirchner signed the law on December 4, 2008, establishing an Argentine Integrated Pension System (SIPA) to replace the current capitalization regime as of January 1, 2009.
Post #: 106
Wow that is absolutely frightening. I can't tell you how happy I am that the majority of my 401k holdings were converted to IRAs (though I don't kid myself that those aren't next.)
And government bonds are FABULOUS investment instruments. Why my I-bonds with a guaranteed inflationary adjusted interest rate are paying great... what? They're paying 0%? How can that be?