And the Money Kept Rolling In (and Out) Wall Street, the IMF, and the Bankrupting of Argentina

January 10, 2005
Argentina's economic boom in the 1990s made it a "poster-child" for the "Washington consensus" of market-oriented reform; when the currency, banking system, economy and a succession of governments all collapsed in 2001, the country became an object lesson in the pitfalls of that model. Journalist Blustein (The Chastening
) offers a fine postmortem of the debacle, from a more centrist perspective than the subtitle might suggest. The problem, he contends, lay in Argentina's unsustainable government deficits and its policy of tying the currency to a rigid exchange rate of one peso to the dollar, a measure that ended hyperinflation, but, when the dollar soared, eventually priced Argentinean products out of the market. He criticizes the International Monetary Fund and Wall Street not for imposing austerity, but for indulgently lending Argentina vast sums, despite warning signs, that saddled it with debt and delayed a necessary devaluation and loan restructuring. Blustein's discussion of Argentina's free trade policies and their effects on industry and employment is skimpier than it should be. But working from a colorful inside account of the decision-making processes of the IMF and international investors, he does an admirable job of elucidating the complexities of international finance, currency reform and debt, taking note of their consequences for ordinary people.