Carolina Mack
Dialogue of Civilizations – Argentinean & Uruguayan Culture
Professor Sokol
July 5, 2018
Book Review #2
And the Money Kept Rolling In (And Out) by Paul Blustein
And the Money Kept Rolling In (And Out), Paul Blustein’s astonishing account of the historic 2001 market crash in Argentina, paints a clear and disturbing picture of how such a terrible crisis was allowed to evolve and wreak such havoc on all aspects of Argentinean society. He begins his analysis in 1991, with the election of Domingo Cavallo to the position of Argentina’s Minister of Economy. The series of events leading up to the crash was set off, according to Blustein, by Cavallo’s plan to fix the dollar-peso exchange rate at 1:1 in order to combat inflation. Combined with other tactics that privatized and expanded the economy, this policy at first caused the Argentinean economy to prosper, and the international community took notice. Investors flocked to the opportunity to profit from a growing market, Argentinean bonds were bought in higher quantities than ever before, and the International Monetary Fund (IMF) promised to loan Argentina money to assist with repaying its debts. However, this economic growth and prosperity could not go on forever. When Argentina’s economy began slowing down in the late 90’s while its debt continued to skyrocket, the IMF abruptly informed the Argentinean government that it was pulling away its assistance. Turbulent international market swings ensued, the public debt continued to climb, and Argentina’s economy plummeted. By 2001, debt accounted for 64 percent of Argentina’s GDP. When all was said and done, Argentina came out on the other side of the crash permanently altered –the dollar-peso fixed exchange rate was abandoned, its president resigned, its banking system was closed down, and unemployment and poverty were at record high levels.
One major theme of this work is the financial community’s consistent manipulation and then abandonment of developing countries. According to Blustein, the rise and then fall of Argentina’s economy and the way the IMF responded is indicative of a pattern in the way developing countries are treated by the international financial community. When developing countries like Argentina experience extended periods of growth, they are given false hope that they have a chance of joining the “First World Club”, as Blustein puts it. The IMF praised Argentina’s economic efforts for years on a public stage while failing to inform either the country or its investors of the risks they faced. So Argentina continued taking on more debt in the hopes of expanding, and the IMF enabled this behavior with loans that the Argentinean government did not realize would not always be available to them. However, often right when developing countries get close to achieving large-scale success, the financial community abruptly turns its back on them due to their insupportable debt burden or other financial issues. In this fashion, the IMF pumped billions of dollars into Argentina, allowing its debt to continue growing dangerously high, and then pulled out when Argentina needed assistance most. And the Argentinean people were left to suffer the consequences. In summing up the extent of the damage the IMF and other international players inflicted upon Argentina, Blustein notes that “the complicity of global markets and the IMF in pumping up the Argentine bubble would be less deplorable if the bubble had been gently deflated, that is if the international community had effectively assisted Argentina in minimizing the impact once its economy fell on hard times and market psychology turned negative. Unfortunately, the international community blew it” (8). Throughout And the Money Kept Rolling In (And Out), Blustein illustrates how powerful international economic and political forces continue to restrict underdeveloped countries from catching up to the rest of the world.
Another theme present in this book is that powerful economic and political entities must learn from past mistakes, whether they be their own or those of someone else, or they will be bound to repeat them. The Argentinean economic crash perfectly illustrated the danger of huge amounts of foreign investment in developing markets. However, both the Argentinean government and the IMF could have avoided this crucial mistake had they learned from the causes of previous economic downfalls. Throughout the book, Blustein points out many similarities between Argentina’s dramatic rise and fall and other crashes that occurred in places like Brazil, Indonesia, Russia, South Korea, and Thailand. In all these countries, it was proven time and time again that developing markets are often too volatile for investment, and that the IMF giving out large loans only prolongs the inevitable and perhaps makes the crash worse when it finally comes. Blustein extends the theme of learning from past mistakes by analyzing the problem the United States is currently facing with its huge, constantly growing public debt. While he concedes that there are many differences between the two countries, he asserts that lessons from the Argentinean market crash can still be applied to the current situation in the United States. He argues that just as Argentina was crippled by its overextended debt, the United States too will soon run into serious problems if it does not learn from the mistakes of the many countries who have already been down the road it is going down now.
I thoroughly enjoyed reading this book because of the format Blustein used to deliver information. He crafted the tale of Argentina’s crash in a very unconventional way: by piecing together exhaustive interviews with many different types of people. He interviewed IMF bankers, poor Argentineans who lost everything in the crash, and everyone in between, to get a complete, unbiased perspective on the events that took place. This enhanced my experience because it forced me to consider the events from so many unique viewpoints. While reading, I was not caught up in the facts and dates and numbers of the crash, but rather experiencing the events through the eyes of the people they actually affected. However, despite its optimal format, And the Money Kept Rolling In (And Out) also possesses weaknesses. While reading, I often noticed a slight bias in Blustein’s writing. Such a large part of the book was dedicated to detailing the IMF’s wrongdoings, while the role of the Argentinean government itself in causing the crash felt downplayed. Furthermore, at times I felt like Blustein was implying that the IMF acted out of malice or ill will, but he failed to offer any evidence to back up that suspicion. At times, these inconsistencies forced me to feel skeptical of how complete and accurate a picture of the situation Blustein was presenting. But despite this small bias, And the Money Kept Rolling In (And Out) remained an informative and exciting story packed with in-depth analysis.
This book expanded my perspective on the global economy in many different ways. While I have always looked at a country’s economy on a micro level, analyzing what policies the government put in place and what consumer behavior might explain current trends, I have been blind to all the different international factors that contribute to an economy’s growth or decline. It is fascinating and heartbreaking that so many events leading up to Argentina’s market crash were outside of the country’s control, and yet, it was the Argentinean people alone who suffered most of the consequences. Furthermore, I thoroughly enjoyed learning about the inner workings of the IMF, what its role in global markets is, how it executes that role, and to what extent it is successful in doing so. This newfound knowledge will enhance my experience in Argentina by helping me keep my experiences in perspective. Before reading this book, I was unaware of the state of Argentina’s economy and how that might affect my experience traveling there. However, I now know that Argentina is in the process of recovering from a severe crash, so when I witness poverty during my travels, I will not be disgusted or scared, but rather will simply keep in mind that Argentina is developing, growing, and improving, and that it has had to overcome many challenges to get where it is today.