False Economy - Alan Beattie [19]
The pretense that Argentina was still a First World country should have disintegrated in the 1970s. Swelling oil prices and economic dislocation battered even seaworthy governments, and Argentina was thrown repeatedly onto the rocks. Time and again throughout the 1970s and 1980s, Argentina promised a fresh start, and often a new currency, and each time failed.
In rich countries, the 1970s generally presaged a move to more free-market administrations and policies, as faith in the ability of governments to guide the economy evaporated. In the United States it eventually meant appointing the tough-minded Paul Volcker as chairman of the Federal Reserve, the central bank. Volcker successfully squeezed inflation out of the economy, even at the cost of rising unemployment. The advanced countries experienced strikes and demonstrations and gasoline shortages, but they survived and stabilized.
Argentina slid instead toward military dictatorship. Political stresses between civilian and military rulers—and criticism from more traditional conservatives who thought that Peronism looked too much like socialism for comfort—reached the stage where an army junta took over in an out-and-out coup in 1976, just as the White House was changing hands peacefully and constitutionally again. But after the disastrous misadventure of seizing the symbolic but economically worthless Falkland Islands from the British and humiliatingly being forced into retreat, the junta, too, collapsed. As the wits of Buenos Aires said: First the generals showed they could not manage an economy; then they showed they could not run a country; finally they showed they couldn't even win a war.
Their successors were little better. A "lost decade" of stagnation and strife followed. Economies contracted and hyperinflation wiped out the value of households' lifetime savings in a few months—not just for Argentina but for many Latin American nations who had borrowed like the United States but without the trade to support it. In 1985, the promise of a fresh start for Argentina with a new currency, the austral, lasted only a few months before inflation was once again running several thousand percent a year. Osvaldo Soriano, an Argentine author, wrote an article in 1989 noting how during the time it took him to type the piece, the price of the cigarette he was smoking went from eleven to fourteen australes.
Among the investors who subsequently spent years mired in negotiations with bankrupt governments south of the Rio Grande were the big American commercial banks like Citigroup, which had placed a large (losing) bet on the southern half of their continent acting like the northern half. The banks, wanting never again to expose themselves to that much risk of failure, broke up their damaged loans into pieces and sold them to investment funds and individual investors.
Sadly, when the time came, these investors proved as liable to episodes of self-delusion and absurd optimism as the banks had been. They were soon given a good excuse. The demise of the Soviet Union reduced the ability of murderous and thieving right-wing dictatorships to keep power by proclaiming themselves a fortification against communism. The lost decade was giving way to a golden one.
In the 1990s, many fragmented markets around the world once more dissolved into one. Like the Golden Age of the late nineteenth century, the lurch forward of globalization was helped by a shove from new technology, this time in information and telecommunications rather than steamships and railways. As in the Golden Age, transport times shrunk: the Internet compressed to zero the time taken to transmit anything that could be digitized. As in the Golden Age, the United States and Argentina were both leaders of the charge. And as in the Golden Age, the