The Argentine Senate approved a plan Nov. 21 to nationalize 10 private pension funds worth about $24 billion. Politicians are promoting the government's appropriation of the private funds as a way to rescue the public's retirement funds from volatile foreign equity markets, where about 13.5 percent of the funds (about $3.46 billion) are currently invested. The $24 billion will be handed over to ANSES, the state's social security mechanism, and will be managed by a board of 13 members charged with investing it "profitably and safely." In actuality, Argentine President Cristina Fernandez de Kirchner's plan is a thinly veiled attempt to generate cash at a time when the budget is coming up short and debt payments are coming due. Argentina faces a swarm of economic troubles. First, its export-based economy is sinking into recession as demand drops in foreign markets, and the recession will exacerbate endemic weaknesses in industries bent out of shape by years of heavy taxation, price controls and subsidies. Second, the government's budget is getting tight as it struggles to pay for economic controls, social safety nets and $150 billion worth of debt. Third, few foreign countries are capable of offering any loans amid the financial crisis. And even if there were no crisis, only a precious few countries (such as Venezuela) would lend to credit-unworthy Argentina, which defaulted on its debt in 2002 when its economy tanked. Tax revenues are falling along with export profits, and stock markets have taken a beating as the possibility of another default compounds the general financial turmoil. Buenos Aires is genuinely afraid it will not be able to make the $14.4 billion debt repayments due by mid-2009. Fernandez thus proposed the pension nationalization to raise the cash she needs to keep the country solvent. But the plan is a catastrophe waiting to happen. While most of the pension funds already are invested in national bonds, the amount being withdrawn from foreign markets will provide little short-term relief and much long-term woe. The mere suggestion of the nationalization sent stock and bond markets diving as investors saw the government becoming more desperate for cash; this trend will continue. Problems also will arise with liquidating the funds: The United States already has moved to freeze Argentine investments, and others could do the same. Some countries will challenge Buenos Aires legally, involving Argentina in a host of disputes and worsening its already-poor credit rating. There is also the problem of how well ANSES will manage the funds, and whether it will be able to generate much in the way of returns. Moreover, the government will siphon off more money from the pension program in the future. Currently, private pensions are required by law to invest in government bonds, since few other investors are interested in them. When all Argentina's fiscal issues come to a head, and Buenos Aires is facing the prospect of default, the government will be able to "renegotiate" the bonds' rates with ANSES (itself a governmental entity), putting off default as long as possible by subtracting bit by bit from the pension system. When default inevitably comes, the pension funds will be gone. Ultimately, the pension grab is a poorly thought-out move by a government desperate for cash that in the long run probably will jeopardize the pensions themselves. The social ramifications of such a disaster, combined with Argentina's other worries, are grim.