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The following article appeared in Left Business Observer #99, February 2002. It retains its copyright and may not be reprinted or redistributed in any form - print, electronic, facsimile, anything - without the permission of LBO.


The first collapsing model is Enron.

Though the orthodox now blame Argentina for bringing on its own woes, not long ago it was the model of orthodoxy. The IMF's 1999 review of the country praised its "strong investment-led growth," "commended the authorities for their prudent economic management," and "noted the substantial progress made by Argentina in recent years in structural reforms, particularly in privatization, deregulation, pension reform."

Of particular relevance to the current crisis, the Fund "observed that the currency convertibility plan has served Argentina well, and continues to be an adequate framework for stable growth." (More on this in a moment.) A year later, the Fund's annual review noted the strains from recession, but continued to praise the authorities' prudent fiscal management (i.e., budget cuts) and continuing structural reforms (i.e., privatization and deregulation). The currency regime was praised again. The banking system was praised for its admirable soundness. These are the very same banks that Argentines spent the holiday season lining up in front of, hoping to be reunited with their threatened deposits.

Hardened money

Faced with an economic crisis in the late 1980s and early 1990s, then-economy minister Dominigo Cavallo