In the various measures of vulnerability for emerging markets (middle income countries open to capital flows) that are now being examined and re-examined carefully, Argentina does reasonably well. Its banking system does not appear to be highly exposed to problems in the US and Europe, and its macroeconomy – while not in great shape by any means – is far from being among the most dependent on continued capital inflows from abroad.
Argentina does produce and export a lot of commodities, and these prices are falling, so this creates a potential difficulty for government finances. Still the government’s proposed response is a stunner: President Cristina Fernandez de Kirchner announced Tuesday that she plans to take over (i.e., nationalize) 10 private pension funds (the Argentine Congress would have to approve this; we’ll know soon how that will go). The pension funds hold a great deal of government debt, so grabbing them would presumably get the government off the hook for that debt. But what about people’s pensions?!?
Most importantly, does this indicate that governments around the world feel they can break contracts and expropriate property freely just because all economies have encountered some sort of trouble and many industrialized countries are “recapitalizing” something? If the global crisis is becoming a smokescreen for confiscation, then our problems just got a lot worse.