We had a fascinating briefing in Buenos Aires from an economist, who delved into the whats and whys of Argentina’s economic collapse in 2001 … and the possibilities of a forthcoming crisis.
What I found particularly interesting was to hear his comments after having lunch with my inspiring colleague, Jorge Schulman, JDC’s Argentina Country Director. Jorge noted that Argentina is unique for the Joint in one special way. In other Latin American countries, Jewish community members say to us “you saved us,” meaning that we rescued them from DP Camps and the Shoah. But here in Argentina they say to us “you saved us” and we know they’re referring to the 2001-2 Collapse.
There's no question that 2001 was the “1930s” Great Depression of Argentina. The difference, though, is that in the US we had a stable government – in Argentina they went through five presidents in one week. The devaluation was so massive that the peso dropped 75% in one night, and GDP dropped 25%.
Why did all this happen? There are a lot of immediate causes, but the explanation I found really fascinating was the psychological one. The economist, same age as me (let’s say “early 40s”) has lived through five major crises. Not recessions, but full-blown meltdown crises.
Argentina, he thinks, has no real checks and balances on its money, its finances and its economic health.
There’s a lot behind this statement. It gives you an idea about how Argentinians think about money, how they save, and how they worry. I’ll try to write some more about this down the line, but in the meantime, here’s a joke I heard in various formats when people tried to explain the crisis in 2001. True, it’s not a very funny joke and I know, you've probably heard it before, but the fact that several people told it (and not always in a clean version) is revealing …
- How’s the current crisis going?
- No problem - I sleep like a baby.
- Yes, I wake up every three hours crying.