In September 1999 I made my first visit to Argentina at the invitation of IADE, the Institute for Economic Development. I arrived with the stormclouds that let to the 2002 collapse of the peso already gathering, and began to become familiar with the disastrous effects of pegging the peso to the dollar, and demolishing – according to standard IMF advice – all national defence against capital flight, whilst allowing the tragically deluded upper middle classes to pile a mass of unpayable dollar-denominated debts onto the ‘dishonourable debts’ that had already been heaped upon the nation by the military dictators and the neoliberal government of Carlos Menem. Within two months, Menem was succeded by a coalition of oppositionists who placed the compromise Fernando de La Rua in office without undoing any of the harm that the dollar peg and debt had caused. I returned in 2002 and found myself in the midst of a huge social uprising provoked by the devaluation of the peso, which deposed De La Rua whilst I was there, and eventually propelled Nestor Kirchner to office.
In an interview with Argentina’s left-leaning daily Pagina Doce, I was asked whether Argentina should devalue. Having just atttended a seminar at which representatives of the Federal Reserve had already private shared the advice that the peso was doomed, I stated that this was the wrong question: Argentina was going to devalue, and the question was what to do about it. This was however the one thing that should not be said when a devaluation was pending. I was catapulted to brief but exhausing fame, and my command of Spanish put to a test I never wish to experience again, by a series of radio, press and live television appearances as the ‘Western economist who predicted the crash’. On my return I set out to campaign for the relief of Argentina’s debt, a measure which to this day is an overdue recompense owed by the USA and its vulture funds to a proud people whose economy they robbed blind and devastated for no motive other than to sate the thirst of its financiers.
The presentation of 1999 was mild enough, and appears below. The slide show that accompanied it is a useful visual aid which can also be downloaded. This was probably one of the more rapid transitions from the realm of theory to the realm of practice that I had experienced until that time, but I think it’s fair to say that if you follow the slides and the paper, you will see that the theory did a reasonable job of explaining the reality unfolding on streets and squares of Buenos Aires before my eyes.