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Tuesday, 30 April, 2002, 11:09 GMT 12:09 UK
Crisis in Argentina: Share your experiences
A day after all banking transactions in Argentina were halted indefinitely, President Eduardo Duhalde warned that the country's financial system could collapse.
The threat, according to him, comes from the courts which overturned restrictions on access to savings.
One newspaper estimated that on Friday alone, Argentineans withdrew over $200 million from their bank accounts.
Huge crowds continue to gather outside banks as people are trying to cash their salary cheques or get money from automated teller machines.
Some analysts say these events remind them of the 2001 Argentinean crisis which claimed dozens of lives and paralysed the country's economy.
What can be done to prevent this from happening again? Have you been personally affected by current crisis? Tell us about your experiences.
This Talking Point has now closed. Read a selection of your comments below.
I live here and I have had the opportunity to travel a lot around the world and around my country (I am a middle class, 27 years old guy). I have to work every day as almost all of you who are reading this, and what I can say is that we are just as civilized as Europe and USA or Japan or many other places. We are full of incredible good people and we have a very rich country - what I am trying to say is that we are just like you - the only difference is that the people that rule our country (politicians, judges, maybe church) are incredibly corrupt, but they are learning now what a social condemnation is like as they can not even walk in the streets without been insulted.
On the other side is the international money organizations drowning us, paying our corrupt politicians to keep doing bad things for our country (as they do on every Third world country). I only hope for our future and the future of many other countries that could end just like us, that we (the common people) push to make things right and start to grow without these international money organizations. We have enough wealth to do it when we overcome our own fears.
The government of Argentina, my birth country kills my future again. I am actually studying in Savannah, Georgia, trying to obtain my degree. I am here because I saved the money for seven years of work. My dream was always to get a degree and a job to progress and help my family.
Since December 3rd, when the government decided to freeze
all my savings, I thought that I was going to die. I am living since two months ago with two hundred dollars and the great help of my friends that live in different states of America. I think that I have no future if I do no fight for my rights. I will keep my hopes up. I will not surrender. Nobody is going to kill my will and my hopes.
My family returned from our vacation in Buenos Aires on March 31st. We had a wonderful vacation but we felt the sadness in the people in Argentina. The peso changed from 2.8 to 3.9 for one dollar while we were there. People were always in line waiting to exchange their money. In the midst of all this we have met some of the kindest hosts we have ever encountered in our travels around the world. God help Argentina.
This is the worst economic and political crisis ever. The corruption is in every institution of the nation and the provinces. Argentina is not living in a democracy, we're ruled by a corporation which has no ethic.
The Argentine crisis will be solved by Argentineans. The IMF policy has done nothing else than getting us closer and faster to this disaster. I do not personally oppose to the help from the outside, but in any case I think that sovereignty has to be defended. Yes, the solution starts with us, radically changing the quality of leaders we have, respecting our institutions more than ever, and taking the decisions that are better for us.
I think what the UK government should do at this time is give Argentina vast sums of development aid, with the condition attached that they completely drop their claim to the Falkland Islands, but other than that, completely free of obligation. And also, if they ever reinstate their claim in the future after accepting the aid, they should be made to pay back the money at 20 times what we originally paid them, inflation adjusted, and currency fluctuation adjusted as well. Then we might just be able to have an end to the Falklands debate.
Ultra free market policies in a country with an inoperative justice system will inevitably lead to widespread corruption. Large businessmen have run the country for over a decade with the sole intention of maintaining the Peso pegged to the US Dollar at a high exchange rate. The paradox is that while they proclaimed their love for free market they used the State to guarantee both their privileges and an exchange rate insurance to guarantee their profits in hard currency. Almost every relevant market in the country has ended up in very few hands and the power of the State has almost vanished. During and after the important capital inflow at the beginning of the 90's the State has provided financing to this perverse system through huge indebtedness. This could not be ignored by international financial organizations that until 1998 presented Argentina as an example of the good results obtained by free market policies. The bubble has finally exploded.
I've just been speaking to a friend who runs a small IT company with a customer in Buenos Aires - today he received a small parcel, delivered by courier. It contained just over $30,000 US, in bills of various denominations. This was the only way that his customer could pay their account, given that cheques are not honoured, and electronic transfers are also apparently not working. Goodness knows how the customer got hold of the cash!
The causes of the present crisis are three. First, a huge external debt impossible to be paid back. Second, politicians who are both corrupt and incompetent. Three, Argentina is too far away: it's not Mexico with Big Brother just next to it; it doesn't have a geostrategic position like Turkey, it doesn't have nuclear missiles like Russia, etc. So, no one really cares.
Even though I descend from the Italians and I love them, I am positive about the fact that Argentina is such a corrupt country because of its Italian ancestors. They went there to escape their poverty and, unfortunately, didn't care to teach their descendants how to take care of the country in a non corrupt way.
The many wrong and political measures applied in Argentina have hit hard to all social classes in Argentina. It's all consequence of the many bad government administrations that have been in power a long the last past century. The middle class -something of what we Argentineans used to feel proud of in the whole context of Latin America - is now disappearing. This middle class, mainly composed by workers are losing their purchasing power; the recent devaluation policy has increased the price of main and basic products it has also brought the devaluation of salaries.
Fedra Metaxa, Greece
Yes the Argentinean crisis affected me as all Argentineans. I'm studying architecture and last year I was working but now I have lost my job. Next year I will be finishing my studies, and what then? I don't know what's going to happen... I see all the young man of my country leaving this land to find their future in Europe. But I love this land, it's impossible for me to leave my country, despite the fact that my family are in Italy.
People are dying and are going to die because of lack of treatment for common illnesses: asthma, heart attacks, malnutrition, etc. We owe that to corruption.
What happened to Argentina (and Indonesia, and Russia, and Mexico) has nothing to do with free market economics. It has everything to do with those who claim to be free marketeers, then turn around and get breaks and cash from government. God help us if the powers that be are just doing this to make state socialism (or Peronism, or Fascism) acceptable once again. They'll keep winning and we all will keep losing; the villains will only have changed hats.
Lorena, Argentina (ex-UK resident)
If the government of Argentina had tried to raise what they needed as taxes instead of borrowing from other nations, they'd have been kicked out long ago. So our officials have kept Argentina corrupt and now it's cost us dear. We need to be holding our own politicians to account for: this debacle, and the Dome and the European Parliament, etc. Public officials with budgets should be responsible for proving they are getting value for our money, instead of hiding the paperwork and pocketing the cash as happened with the Dome and in Argentina.
Osamah Alhaidry, Riyadh, Saudi Arabia
If a country is going bust it's worth casting an eye over its tax revenues. Shock horror, just as in the Russian crisis, no one has been paying their income tax. It's all very well blaming the IMF, the banking system, the government and civil service, but when will the population take responsibility for their part in this mess? The economy is corrupt from top to bottom. How can they expect any sane lender to extend credit to them?
I live in Cordoba, Argentine, and things are not looking good. The word in the streets is that the banks may never open. Please pray for Argentina
I went to Argentina just over a year ago and it was very clear to me that there was something wrong. I did not see any peso, only dollars; there was a huge gap between the haves and have not's and it was a lot more expensive than London or New York. All bubbles have to burst in the end and the IMF is there to help countries in a time of need, not make the rich and the government richer.
Estefania Fondovila, Buenos Aires, Argentina
One of my fellow citizens wrote that our country is "a nation of liars, cheats, bullies and thieves", and finds in this situation the main reason for our problems. I respect his opinion but it seems to me that he incurs in a strong ingenuity. First of all, Argentina is not a nation. As some people may know, we argentines are a bizarre mix of many different cultures (maybe too many, most of them Europeans), with natives. There is not a typical Argentinean yet and therefore there is no nation. Therefore, we should be able to synthesize the goods and the bads to create an honourable society. In my country there are, as well, millions of honest, well educated workers and professionals that have been highly productive for decades. In fact, in every country there are liars, cheats, bullies and thieves, even among the most elevated personalities.
All our problems effectively started as far back as 1930 with the "radical" revolution. World War II was a respite and at the end we were very rich compared to Europe. Then came Peron who squandered it all. After that came the military who borrowed heavily, paying double the value for arms from the UK, the USA, France and others. This is the basis of our current debt. All governments since the military were thrown out by Maggie Thatcher have been crooks and stealing is a way of life. Any Argentine who does not steal is mad at those who do until he gets a chance at it himself. We are a nation of liars, cheats, bullies and thieves. We deserve what we get.
I am a native Argentinean, born in '48, left for the US in 1984, age 35. I have vivid memories of all our disastrous governments. Historically, Argentina was at its best during the cattle baron days when oligarchy reigned. Though I am not of that oligarchy, I believe something similar might be practical. A few big successful landowners manage the country, while the military police the people. It does sound horrible. Still it is better than the mobsters that run and have ran the country in the last two decades.
Nora Femenia, USA
Until the international community creates a system of deterrence for those individuals taking on leadership positions in the name of democracy, and holding them responsible for their corrupt and self-gaining actions at the expense of the people, the suffering of those the bottom of the pool will continue.
The root of the problem seems to be the eternal Argentine attitude of "I'm all right Jack and too bad for whoever comes after". Whilst the country was being robbed blind in the Menem government, people still had readies in their pocket and therefore didn't worry the slightest bit what was going on. Now that the curtain has finally come down they are having to face reality in the end. I don't know what the solution is, or who there is to make things work now. The Argentine situation as it is today is the fault of the people with short morals, short memories, and a vast aptitude for howling when things get rough
Has the situation affected me? The only effect I've noticed is that Argentine wine is now cheaper at my local market.
Paul Davies, Argentina
Unfortunately, Argentina is under the domain of corrupt politicians and businessmen who only think about themselves, not the people.
How can it be that Alfonsin (who had to leave his government a few months before it ended) is now again linked to the government? How can it be that we always have to vote the same people? And worst, how can it be that the alternative are those corrupt business men that present a plan to save themselves?
We have a black future ahead...
Esteban Bogani, Argentina
Argentina should default. The country has enough people and resources to do this and some other countries should follow their example.
The current situation of Argentine is the result of an ambitious and corrupted government administration. Furthermore, the country was affected by the recent world economy slowdown which is impacting all of the Latin America. The solution for most of the Latin-American countries is to develop some specific industry or service that suits better the region and make it grow by private and government initiative so that no dependency on the IMF is required.
I did not take enough cash out of my bank last week and my funds are now bone dry as I cannot access my money out of the machine. I am just hoping my family have not done the same thing.
Saul Philpott, Argentina (UK Resident)
Argentina shows that the capitalist system for the developing world simply does not work. Even the IMF has published reports that the countries in which poverty has been most greatly reduced are China, Cuba and Vietnam. Argentina is an extreme example of the capitalist state. People don't have the money which they earned. But the political and financial elite are OK, as are the banks, which secretely taken their money out ahead of the current crisis.
The IMF are an easy target but the problem is that a lot of Argentineans will not recognise that of their problems come from the endemic corruption in the federal and state civil services. I have met a number of people who blame the USA, IMF and the EU for holding back Argentina.
Also Carlos Menem and his cronies enriched themselves at the peoples cost during his time in power.
Really the IMF should have stopped lending to Argentina ages ago but didn't so part of the blame does lie with them.
In my mind the only way incidents like this can be stopped is by lenders insisting that political change as well as economic change be carried out before money is lent.
The real victims are the mass of Argentines who have trusted their government not to rip them off as has happened before, but yet again they are the ones holding the can.
From a personal note, I can say that considering what happened in Argentina during the Christmas period I am glad that my Mother in law was with me and my wife and most of my family over there were in the provinces which were less effected by the riots and violence
I spent two years in Argentina in the early nineties and I am not at all surprised with events of late. Friends have complained to me for years that the economic elite is sucking dry the country and the government is fully in the hands of this small group. In effect, Argentina has turned the clock back 100 years, where the landowners control everything and the people have nothing. And now they cannot even get at their money. It's a disgrace and a tragedy.
The Argentinean people have suffered too long under a political regime where the politicians and the military have benefited by robbing the state purse. Just look how Menem has benefited financially from being president.
I was in Buenos Aires over Christmas and it was evident from the number of security vans heading to the airport that big institutions and banks were taking US-Dollars out of the country to protect their own assets
Strange isn't it that the members of the Argentine government do not seem to be suffering under the hardships it has imposed. I wonder why?
Dave, San Diego, USA
For me, the only solution in this moment is privatise the administration of the economic ministry. With an international team of specialists who bring the necessary confidence to the Argentinean people to leave savings in the banks. We don't want more corrupt politics and we don't have a serious option to vote for.
I wonder if Kyle Markley would be kind enough to explain his comment? Also, given that this is the system upon which most of the banking systems of the world are based, does he see this as a fundamental weakness of the global banking system and therefore something that will affect us all? If so, what would he suggest as an alternative?
The real villain here is the system of fractional reserve banking.
Is the Argentine crisis a precursor of what is to happen in the western economies? It is clear the banks are unable to guarantee the depositors credit. But there are winners as well as losers. Can the systems be put in place to ensure that the pain is spread evenly and fairly?
20 Apr 02 | Business
Argentina closes all banks
22 Apr 02 | Business
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05 Apr 02 | Business
IMF 'to ignore' Argentina cash plea
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