Wednesday, September 24, 2008

Sound familiar?

C and I, preparing for our upcoming vacation in Buenos Aires, have been reading guidebooks including the Buenos Aires City Guide of the Lonely Planet series in which you will find this startling bit of history:

As an economic crisis deepened into a recession, voters turned to the mayor of Buenos Aires, Fernando de la Rua, and elected him president in 1999. He was faced with the need to cut public spending and hike taxes during the recession.

The economy stagnated further, investors panicked, the bond market teetered on the brink of oblivion and the country seemed unable to service its increasingly heavy international debt. Cavallo was brought back in as the Economy Minister, and in January 2001, rather than declaring a debt default, he sought more than US$20 million more in loans from the IMF.

Argentina had been living on credit and it could no longer sustain its lifestyle. The facade of a successful economy had been ripped away, and the indebted weak inner workings were exposed. As the storm clouds gathered, there was a run on the banks. Between July and November, Argentines withdrew about US$20 billion from the banks, hiding it under their mattresses or sending it abroad. In a last ditch effort to keep money in the country, the government imposed a limit of US$1000 a month on bank withdrawals. Called the "corralito" (little corral), the strategy crushed many informal sectors of the economy that function on cash (taxis, food markets), and rioters and looters took to the streets. As the government tried to hoard the remaining hard currency, all bank savings were converted to pesos and any remaining trust in the government was broken. Middle class protestors joined the fray in a series of pot-and-pan banging protests, and both Cavallo and then de la Rua resigned.

Two new presidents came and went in the same week, and the world's greatest default on public debt was declared.

The peso devalued rapidly and people's savings were reduced to a fraction of their earlier value. In January 2002, the banks were only open for a total of six days and confidence in the government was non-existent. The economy ceased to function: cash became scarce, imports stopped and demand for non-essential items flat-lined. More than half of the fiercely proud Argentine people found themselves below the national poverty line: the once comfortable middle class woke up in the lower classes and the former lower classes were plunged into destitution. Business people ate in soup kitchens and homelessness became rampant.


This story has a happy ending, with Argentina eventually settling its US$9.5 billion international debt in 2006. Still, inflation went crazy. The only thing that saved Argentina was international tourism.

Is it wrong to fear that New York City might be plunged into rioting and looting if nothing is done to stop the dominoes from falling in our current crisis?

9 comments:

Y | O | Y said...

Buenos Aires? I am totally jealous. Don't be surprised if I sneak down to the city and stowaway in your luggage!

TedBear said...

Honey, you will LOVE Buenos Aires. We were there for two weeks in 2006 and loved it. We stayed at the Hotel Alvear Palace, and had a great time. We went all over. Had a side trip to Iguazu Falls, too. Great fun. Fantastic people. Get ready to eat a lot of red meat. We enjoyed several meals at Los Lilas on the waterfront. Once you get there, everything is inexpensive.

Father Tony of the Farmboyz said...

Dear YOY, you will have to fit in the overhead bin. We never travel with more than carry-on. Especially to BA where great clothing is a bargain. I'm thinking custom made leather.

Father Tony of the Farmboyz said...

Dear Tedbear,
Tell us more!

Mike said...

I second the recommendation of a side trip to Iguazu Falls. It's a natural-spiritual experience.

As for the current economic crisis, I'm bewildered that there is a lot of talk of a bailout there is no accompanying talk of re-regulating the excesses and shameful practices in the banking and securities sectors. It's like all these bankers and the administration are saying to the Congress "Give us the money and shut the fuck up."

henry said...

BA is wonderful for just going with the flow, like Paris.

I loved watching opera at the Teatro Colon, but that may still be in a renovation phase.

Oh, and don't forget your Tango heels.

Eric said...

I am going to BA with my parents in November, so I am anxious to hear about your experience.

Father Tony of the Farmboyz said...

Dear Eric,
I'd love to fill you in, but since your profile and/or blog are private, you'll have to send me an email.

TedBear said...

You asked...

Argentina is a beautiful country with warm, lovely people, and very inexpensive once you get there. Besides, Argentina has an obscene number of swarthy handsome men. The flight is long and totally worth it.

Restaurants. Cabana Los Lilas was excellent. It is one of the finest steak houses in Buenos Aires. It is cheap. We had great food in Argentina. Lots of beef! The Argentine Malbec wines are spectacular and a total bargain. You will enjoy Malbecs we cannot get in the USA. Outstanding. We brought back cases of wine.

A night of Tango is almost a requirement of your visit. At our night 'o tango at Carlos Gardel, we enjoyed watching a tango menage a trois with two men and a woman. Tango Night ran a bit long, and was kinda entertaining. I don't know where the gay tango shows are held. The tango street dancers around the weekend antique show were great, and dance for tips.

Shopping. We only purchase a very nice gift for the Overeducated Redneck's best friend as payment for watching our pussies (cats, dear, two grey/black tabby cats). The friend is a college religion professor, so we get to find unique religious relics as a thank you. We have had lots of fun learning about religious practices in many countries locating the religious relics. The relic search has introduced us to the most interesting people. The relic from Argentina was a one foot high silver filigree cross mounted on a 1.25 foot tortise shell cross. The cross hung for 100+ years in a private family chapel at an estancia. Stunning. Politically incorrect, 120 years old, stunning. My relic was a silver filigree rosary beads from the matron of the same estancia. It has the most wonderful warm feeling when you touch it. Neither item was very expensive. That antique shop owner that sold us the relic was the hottest man of the Argentina trip;)

We had another few days at a ranch, an estancia. Fun, lazy and relaxing.

Wear lots of bug spray to Iguazu Falls, and watch for snakes falling from the trees. Yes, there are signs with that warning. You have to fly to Iguazu Falls. Two days would be a nice trip. It is a bit much for a one day, but it could be done. There is a Sheraton or Westin there, just for the Iguazu Falls visitors.

If you have time, go to Patagonia. Dramatic scenery. Pack warm! It is early spring in Argentina now.

Navigating through the city and bars meeting people was great. taxis are cheap. I speak enough Spanish, so it was easy for us to get around. We paid our respects at Evita's tomb. I had to keep reminding myself it wasn't Madonna's tomb to keep from bursting into tears or Andrew Lloyd Weber song. The Recoleta is fun.

We always felt safe in Argentina. Just abide NYC or any big city travel rules and you will be fine. We were warned about rogue taxis, and stuck with Radio Taxis or hotel cars.