WASHINGTON—I recently suggested that the U.S. government’s bailout of the financial system, which includes the de facto nationalization of several banks, would arouse populists around the world and give them the perfect alibi to confiscate private property. President Cristina Fernandez de Kirchner of Argentina has been the first to confirm my prediction.

Terrified that she would not be able to pay off about $10 billion of public debt fast approaching maturity, Fernandez de Kirchner nationalized her country’s private pension funds. The 10 affected funds constituted the biggest source of savings for Argentina’s economy and the financial system’s primary source of liquidity. With the stroke of a pen, the savings of 10 million people—about $30 billion—have been passed on to the Peronist government, which is sort of like putting the family jewels in Ali Baba’s care.

Unlike what happened in other Latin American countries that privatized their social security regimes in the 1990s, Argentines who opted for private, individual accounts were allowed to go back to the old system if they so wished. When Cristina’s husband, Nestor, was president, the couple announced that they would change their own private pensions back to the state-owned system.

If that is not enough indication that the hand of the authorities was never too far from the workers’ pockets, consider this: The government was already using a large chunk of the money belonging to the private pension funds by virtue of the fact that 60 percent of their capital was invested in government bonds—something that was required by law. Given the magnitude of the government’s spending commitments and the national debt, not even that was enough.

The government wants to pay off the debt that will mature in 2009 so that it can request new loans and sustain its populist model. With a 30 percent inflation rate and the prices of commodities going south, the model is already in dire straits: The price of soybeans dropped 50 percent this year, as did the price of oil. (Argentina exports natural gas, whose price shadows that of oil.)

One-third of the 10 million Argentines who owned individual pension accounts were still economically active and contributing 11 percent of their wages. The government is betting on those contributions as a source of funding for its ongoing populist spree once it pays off part of the debt.

The financial meltdown in the U.S. and around the world gave Fernandez de Kirchner an ideal opportunity to plunder the people’s savings. “When the interventionist policies are adopted by the United States,” the president said, sarcastically, “they are charming and intelligent, but when Argentina adopts them they are statist and populist.” The pretext was that if the government did not nationalize the private pension funds, their investments would be dragged down by the financial crisis. Of course, as soon as the nationalization was announced, the Argentine stock market collapsed. The ripple effects were felt as far as Spain, where the markets also suffered dearly.

Unlike six years ago when Argentines took to the streets in order to protest the freezing and devaluation of their bank deposits, this time there has been little initial reaction. “Now,” says Argentine economist Gabriel Gasave, “you will not find the victims of this plunder in the public square. Many of the people affected are future retirees for whom retirement funds are an abstraction.”

Under the Kirchners, Argentina has been living in a world of make-believe. Following the old populist recipe, the presidential couple raised public spending 200 percent and salaries 40 percent in the last four years, kept interest rates artificially low, established price controls and created state-owned enterprises. But the truth is that there was little private investment and scant wealth-creation. Foreign direct investment dropped almost 30 percent in the last three years. Sooner or later, reality was going to explode ... in the faces of the middle class and the poor.

The Kirchners have prolonged Argentina’s modern tradition of self-destruction. To think that six decades ago, when Europe was engulfed in World War II, Austrian author Stefan Zweig could write in his famous autobiography that in Argentina, “there was an abundance of food, wealth, surplus, there was endless room and hence food for the future!”

The delicious irony here is that even Juan Domingo Peron, the legendary populist whom the Kirchners regard as a national hero, declared in the 1970s that “nationalizing private pensions is theft.” He was talking about his own heirs.