Can one financial crisis be worse than any other? You might not be sure, but Paul Blustein, author of And the Money Kept Rolling In (and Out), is quite certain that the Argentinean crisis in 2001 was one of the worst ever. He certainly feels that it was worse than the Asian Financial Crisis of the late 1990s, which he covered in detail for his previous book, The Chastening: Inside the Crisis that Rocked the Global Financial System and Humbled the IMF.
A longtime reporter for the Washington Post, Blustein was asked to cover the Argentinean crisis for the paper. While in Argentina talking with people and gathering information, he became profoundly disturbed as he learned how this impending crisis had been allowed to evolve and cause such mammoth hardships to Argentine citizens. The peso was pegged to the dollar in 1991; turbulent market ups and downs ensued in the following decade; and the country was encouraged to pile on more debt. By 2001, debt accounted for an astounding 64 percent of gross domestic product. As the title so aptly states, "the money kept rolling in."
Where the author takes particular issue is how key advisory bodies such as the International Monetary Fund, after years of participating in and enabling this tremendous debt burden, abruptly refused additional funds for Argentina in December 2001 and cleared out of town. Blustein writes, "The complicity of global markets and the IMF in pumping up the Argentine bubble would be less deplorable if the bubble had been gently deflated, that is if the international community had effectively assisted Argentina in minimizing the impact once its economy fell on hard times and market psychology turned negative. Unfortunately, the international community blew it."
The author exhaustively interviewed everyone—from IMF bankers to ordinary Argentineans who lost everything—to provide a detailed picture of what happened. He also includes some commentary on related topics, such as how the events in Argentina mirror the way the financial community generally deals with emerging market countries. In a way, all the loans and easy debt from Wall Street serve as teasers, giving the emerging market community the impression that they have a chance of joining the "First World Club," he writes. In reality, as soon as they are close to entering, the door is abruptly shut due to their insupportable debt burden or other financial limitations.
The question lingers: Will they ever trust us again? "The bait-and-switch treatment that is all too often accorded countries aspiring to enter the rich nations' club should be an issue of immense concern," according to Blustein. And the 2001 Argentinean crisis is one of the most egregious examples of this.—Ann Cullen