Argentina: How to Survive a Financial Crisis

If you want to know how to survive financial collapse there are 40m experts on the subject in South America. They are called Argentines.
 
Six years ago their financial system melted and almost overnight a sophisticated economy became a basketcase, turning millions in the middle class into paupers.

What did Argentines do? In brief, this: they got angry, they got depressed, they improvised, they coped, they rebounded – and they stayed worried.
 
"Argentines are used to a more unstable form of capitalism than in Europe or the United States. As a result, they are more creative in their responses," said Marcela Lopez Levy, author of a book ‘We Are Millions’, about Argentina’s  collapse.
 
If so, northerners better start acquiring some Latin dexterity. Step one, it seems, is to let the anger froth.
 
From sleek Buenos Aires to wilderness Patagonia Argentines had reason to be furious: banks froze savings, the peso lost three quarters of its value and more than half the population slid into poverty.
 
Millions marched to demand politicians’ heads; the president duly resigned (fleeing the palace in a helicopter), as did three successors. The demonstrations morphed into formal protest groups with drums, saucepans and road blocks the preferred weaponry of the aggrieved picketers, the ‘piqueteros’.
 
These social movements reflected profound alienation, said Sergio Berensztein, a political analyst. "They demonstrated a complete rejection of the political parties and a desire to replace the government."
 
The famously neurotic citizens of Buenos Aires rival New Yorkers in their attachment to therapy and when the crisis hit demand for psychological care rocketed.
 
"The public mental health centres were very busy," said Hector Basile, of the Argentine Association of Psychologists. "The middle-classes were more nervous than ever but they didn’t have the money any longer to go to a private psychiatrist."
 
Rates of suicide and serious mental health problems did not soar, however, partly thanks to step two: community solidarity. Marooned by imploding state services, people huddled on street corners to devise solutions and debate everything from organising soup kitchens to writing manifestos denouncing global capitalism.
 
More than anything, these so-called "neighbourhood assemblies" helped vent frustration at the crisis. "They were like group therapy on the street," said Lopez Levy, the author.
 
Necessity bequeathed step three: invention. With cash devalued to a third of its initial value money was eschewed in favour of barter. Some 5,000 barter or ‘truque’ clubs, operating by word of mouth and the internet, had well-heeled professionals swapping goods and services with blue-collar workers. Some $7m of paper scrip went into circulation and reportedly $400m in goods was traded.
 
The clubs were an improbable safety net for the middle class, said Ibsen Martinez, a journalist, and the system collapsed after thieves stole million of barter coupons and went on a shopping spree.
 
A boom in recycling proved more enduring. Groups of collectors known as "cartoneros" scoured bins for glass, paper, cardboard and other salvageable material. Buenos Aires subsidised a train to transport them in from outlying shantytowns.
 
Another innovation was worker-run cooperatives in which laid-off employees took over idle businesses. "We took it back," said Ricardo Ruiz, of Cortidoros Unidos Limitada, a leather processing plant. "We broke the locks, turned on the lights and started the equipment up. We´re running things now."
 
Many cooperatives failed but some thrived. "I can quote you Marx or Lenin but this is not about ideology. It is about what works. And this is working," said Luis Caro, a leader of the  National Movement for Recovered factories, which boasts 10,000 members.
 
An export-led commodity boom helped resurrect the economy, halve poverty and boot out the hated IMF, whose policies contributed to the crisis. As the country regained its shine many emergency initiatives petered out.
 
To countries now facing their own financial meltdowns Argentina is a hopeful example. Its swift recovery, however, has not extinguished the trauma. Argentines are braced for another crisis, said Lopez Levy. "They don’t expect things to change so they just try and weather the storm as best as possible."