Argentinians, battered by decades of apparently cyclical economic crises, fear a new one following a US supreme court ruling this week that could make the country liable for up to $15bn (£11bn) owed to so-called "vulture funds".
The vultures, led by a US billionaire, are mainly hedge fund investors who snapped up Argentinian bonds at rock-bottom prices following the country's $95bn default on its foreign debt in 2001. The court in Washington DC has ordered that they be repaid in full – and that ruling threatens a new default, possibly within weeks.
Argentina descended into chaos after the 2001 financial crisis, then the largest in world history. "My husband and I were never the same afterwards," said María Inés Ochoa, a schoolteacher from the small city of Funes in the central province of Santa Fe.
Violence erupted across the nation after Argentina declared itself unable to meet its payments in the last week of December 2001. The widespread rioting, supermarket looting and the death of young social volunteers by police fire took their toll on Ochoa.
"That's when I had my first panic attacks, which completely affected my life afterwards and even today." Argentina had lived through hyperinflation up to 12,000% in 1989. There had been economic collapse in 1975 and decades of military rule.
But what happened in 2002 was unique, even in comparison to those catastrophes. Bank accounts were frozen and withdrawals banned. Barter clubs sprouted like mushrooms after rain everywhere. Old clothes were exchanged for vegetables, psychology sessions for cuts of meat. "The 2001 crisis hit me with four kids already," recalls Ochoa.
"I met with the parents of other kids outside school to locate nearby barter clubs, count our coins to get there and find whatever we could find, but something at least." Like many other workers and employees, journalist Italo Daffra found himself thrown out of his job. "I went through an enforced sabbatical in 2002 and 2003," Daffra says.
"I was the editor of three magazines and our publisher crashed overnight. I burnt through all my savings and my unemployment insurance."
Well-off middle-class families were affected as essential services, including phones and electricity, were cut off for lack of payment.
Although the situation in Argentina today is a far cry from that dismal crash 12 years ago, recent supermarket lootings that left 11 dead, caused by the economic slowdown of the last year, have triggered painful memories for those who lived through the 2001 default.
On Wednesday the government tried to deflect attention from those reminders and its handling of the debt crisis by papering the city of Buenos Aires with large posters against the vulture funds, which it claims are bent on destroying Argentina.
"To those who say we should negotiate with the vultures, I say the vultures are vultures because they don't negotiate," economy minister Axel Kicillof said defiantly.
But with the heady days of an annual 8% growth definitely behind Argentina now, Central Bank reserves dwindling, inflation by some estimates close to a yearly 40%, consumption collapsing and Argentina's peso steadily losing value against the US dollar, strong words from the government of President Cristina Fernández de Kirchner left the survivors of 2001 unimpressed.
"We never trusted our savings to a bank account again," says Ochoa. "Over 10 years have gone by but nothing makes us suppose our political class have learned anything from what happened. Their arrogance and our classical apathy create a lethal combination for it to repeat itself all over again."
theguardian.com
The vultures, led by a US billionaire, are mainly hedge fund investors who snapped up Argentinian bonds at rock-bottom prices following the country's $95bn default on its foreign debt in 2001. The court in Washington DC has ordered that they be repaid in full – and that ruling threatens a new default, possibly within weeks.
Argentina descended into chaos after the 2001 financial crisis, then the largest in world history. "My husband and I were never the same afterwards," said María Inés Ochoa, a schoolteacher from the small city of Funes in the central province of Santa Fe.
Violence erupted across the nation after Argentina declared itself unable to meet its payments in the last week of December 2001. The widespread rioting, supermarket looting and the death of young social volunteers by police fire took their toll on Ochoa.
"That's when I had my first panic attacks, which completely affected my life afterwards and even today." Argentina had lived through hyperinflation up to 12,000% in 1989. There had been economic collapse in 1975 and decades of military rule.
But what happened in 2002 was unique, even in comparison to those catastrophes. Bank accounts were frozen and withdrawals banned. Barter clubs sprouted like mushrooms after rain everywhere. Old clothes were exchanged for vegetables, psychology sessions for cuts of meat. "The 2001 crisis hit me with four kids already," recalls Ochoa.
"I met with the parents of other kids outside school to locate nearby barter clubs, count our coins to get there and find whatever we could find, but something at least." Like many other workers and employees, journalist Italo Daffra found himself thrown out of his job. "I went through an enforced sabbatical in 2002 and 2003," Daffra says.
"I was the editor of three magazines and our publisher crashed overnight. I burnt through all my savings and my unemployment insurance."
Well-off middle-class families were affected as essential services, including phones and electricity, were cut off for lack of payment.
Although the situation in Argentina today is a far cry from that dismal crash 12 years ago, recent supermarket lootings that left 11 dead, caused by the economic slowdown of the last year, have triggered painful memories for those who lived through the 2001 default.
On Wednesday the government tried to deflect attention from those reminders and its handling of the debt crisis by papering the city of Buenos Aires with large posters against the vulture funds, which it claims are bent on destroying Argentina.
"To those who say we should negotiate with the vultures, I say the vultures are vultures because they don't negotiate," economy minister Axel Kicillof said defiantly.
But with the heady days of an annual 8% growth definitely behind Argentina now, Central Bank reserves dwindling, inflation by some estimates close to a yearly 40%, consumption collapsing and Argentina's peso steadily losing value against the US dollar, strong words from the government of President Cristina Fernández de Kirchner left the survivors of 2001 unimpressed.
"We never trusted our savings to a bank account again," says Ochoa. "Over 10 years have gone by but nothing makes us suppose our political class have learned anything from what happened. Their arrogance and our classical apathy create a lethal combination for it to repeat itself all over again."
theguardian.com
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