June 23, 2011
A decade ago, as Argentina slid toward financial collapse, banks barricaded themselves behind sheet metal to keep out protesters demanding access to their life savings.
“Thieves!” some yelled, banging hammers.
It was a low moment for Argentina as it abandoned an experiment to peg the peso to the dollar, froze bank accounts and defaulted on $100 billion in mostly foreign debt.
Today, the sheet metal is gone. But the debilitating effects of Argentina’s 2001 default and currency devaluation still linger. And now, as Greece edges toward a possible default, the Argentine lessons could be instructive.
For one thing, a decade later, Argentina has still not been able to re-enter the global credit market.
“A default is not free,” said Jaime Abut, a business consultant in Rosario, a city north of Buenos Aires. “You have to pay the consequences, and for a long time. Argentina is no longer considered a serious country.”
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