(Thanks to Evan for the graphic!)

First of all, I would like it on record that it is grossly unfair that Nestor Kirchner, Argentina’s former president and star of Young Frankenstein can be married to such a smokin’ hottie WHO GETS TO BE PRESIDENT, TOO.  No matter your political ideology, can we all be in agreement that had Hillary Clinton won the Democrat’s nomination for president this year, she would never have brought the sexy to the husband-and-wife oligarchy that Cristina Kirchner does?  Also, why can’t our president wear a sassy sash like that?  I can understand not wanting to wield a giant phallus, but c’mon, at least a sash.

But on with the show.  In an earlier post, I told the funny-if-it-wasn’t-true story of Argentina’s nationalizing the private pension funds.  But did you know that was only the latest in a long history of failures of the Argentine economy?  It’s true!  Why, if LOLFed were an Argentinian site, we would have filled up three servers by now.  Also I expect my Spanish would be a lot better.

Let us hearken back to the days of yore…

All the way back to 1976, when the party really got started.  Isabel Peron was president, having taken over the office from her late husband (heyyyyyy), and generally making a mess of things thanks to the country really being run by some of her husband’s nuttier (read: more fascist) advisers.  So, as these things tend to go, a coup was staged which led to the country being under the control of a hard-right military dictatorship which did awesome things like institute nationwide wage freezes, severe interest rate hikes, undermining the country’s industrial base, invading the Falklands, nationalizing private debts, and disappearing about thirty thousand political dissidents.  Oh, and their currency completely collapsed for reasons that no one has ever been able to explain.

So, in 1983, the people had Had Freakin’ Enough of this crap and voted in a new president, named Alfonsin. I mean, he had a first name too but I don’t remember what it is.  Poor guy inherited a mountain of debt from the dictatorship because militaries, you know, maybe not so good with the money.  Awesome at the fighting, little less so with the budget.  Argentina was left owing money to foreign countries as well as the IMF, who are kind of like bookies when you owe them money and they’re all, hey, you can’t buy groceries until you give us our money, where’s our money, don’t try and dodge us man, you’ll make us mad, we don’t want to get mad, you think we enjoy hitting you?  Tired of having his kneecaps re-broken every three weeks by the IMF, Alfonsin put more energy into paying off the nation’s debt than, say, keeping the nation running.  So the currency (which he replaced in 1985, I mean he literally invented a new currency because he is hardcore) went tits-up again, inflation reached 5,000% (yes, I said FIVE THOUSAND percent, so stop whining about 5% a year) in 1989, so like everyone was poor.  Poor people cannot do much, but by God they can riot and riot they did, so Alfonsin quit because he knew his history and knew what happened to unpopular leaders when the populous is rioting.  That reminds me, someone should go knock on his spider hole and tell him it’s probably okay to come out now.

So, new president, Carlos something or another.  It isn’t racist for me to assume his name is Carlos just because he is of a particular nationality because I know his name is Carlos.  So there.  Carlos would have made Reagan proud, if Reagan had been aware of anything going on anywhere in the world by 1989, because Carlos was all about the deregulation and the privatization and the free trade and the tearing down of walls.  As one might expect after FIVE THOUSAND percent inflation, Argentines did not care for their own currency and instead preferred to use the US dollar, which was once worth something.  So Carlos pegged the austral to the dollar at 10,000:1, and directed banks to keep as many dollars in cash reserves as there was corresponding australs in circulation, in an effort to make the people stop worrying and come to love the austral.  If you’re thinking “Hey, Argentina uses the peso,” you’re absolutely right.  1991 saw the end of the austral and a return to the peso, which was fixed to the dollar at 1:1 by law and was otherwise realistically no different from the austral except for being easier to spell.  But perception is everything, and inflation dropped, interest with it, and the people were prosperous once again.  Hooray!

Alas, the government itself was not so fortunate.  Its debt had began to grow again, imports being cheaper meant more goods were imported, and those of us familiar with NAFTA can guess how this went for them: jobs lost, money going overseas, Ross Perot saying I told you so, all that sort of thing.  Oh, and offshore banking was huge, so that’s even more money leaving the country.  If that wasn’t exciting enough, the whole fixing the peso to the dollar by law thing kind of blew up for them in 1999 when the dollar’s exchange rate vs. that of some of Argentina’s major trading partners shifted dramatically.  Whoops.

You know things are bad when your own states start trading bonds in their own currencies because yours sucks that bad.  So that is what Argentina’s provinces started doing.  And then the federal government itself started doing it, which makes no sense but that is what happened anyway.  One might expect this would lead to a complete loss of confidence in the country’s wealthy, and one would be right.  Even more money left the country, there were actual and literal It’s A Wonderful Life bank runs, which led the government to take the popular measure of freezing all bank accounts for an entire year, allowing only small withdrawals.  Oh, this is delicious.  Of course, the people rioted, because Argentines are really good at it.  They rioted so hard they scared off another president, this time de la Rua, who seriously jumped into a helicopter and got the eff out of there.

This is where it gets really fun.  The country’s vice president had resigned the previous year, so the president of the Senate was next in line of succession.  He didn’t want to be president so he quit, and then the president of their version of the House was basically forced into office, and then HE quit.  All of this happened within about a week.  Finally, their Congress pinned the tail on a donkey named Adolfo Saa (seriously, how does someone named Adolfo get elected to office after WWII?).  Saa’s first act as unwilling president was to default on the national debt, $93b, the largest sovreign default ever, at least until 2013 when the US defaults on its $29t debt.

But Saa wasn’t finished yet!  His plan was to create a third currency (this was called the Third Currency Plan, because while Argentines are excellent rioters, they are terrible writers).  This third currency would coexist with the peso and the US dollar, be used only as cash, and be backed not by gold or pixie dust or something, but by federal land.  Bankers loved the idea; politicians did not understand how this worked any better than I did and wouldn’t support it.  So Saa quit within a year, and the Congress held a national lottery to pick the next president because why not.

The “winner” was a Senator, who decided fixing the peso 1:1 to the dollar was a terrible idea, and had that law repealed.  The peso reacted by losing much of its value.  He decided it wasn’t such a terrible idea after all and reset it to 1.4:1, and had everything in the country currently held in dollars converted to pesos at this new rate, which was met with predictable enthusiasm (none) and support (less than none) of anyone who, you know, had money in the bank.  So the peso was detached from the dollar again, and lost most of its value again, and inflation rose 80%, and people lost their jobs, and businesses closed, no one could afford anything anymore, and wages…stayed about the same.  That worked out well, don’t you think?  And the provinces kept right on using their own currencies because seriously by this point it’s all just Monopoly money anyway, especially after the federal government more or less quit recognizing them.

Then Igor took office, fixed everything, and the nation is actually doing pretty well, considering.

And here we are today, with the government trying to raid private pension funds to pay off debt that dates back to the 1976 coup.  Most of the government’s bonds in the epic default of 2002 were renegotiated to 33 cents on the dollar, or whatever currency they are held in, and with extended payoff terms.  The very hot president Kirchner is trying to get the rest of the bonds renegotiated at similar rates, which will likely cost a whole lot of money – presumably to be paid for by the nation’s pensioners.  The hope is that the country’s growth will continue to the point that when it comes time for the government to replenish the pension funds, it will not have to borrow money to do so.  If it does, start at the beginning of this post and re-read, changing dates as needed to make everything old brand-new again.  The US might be heading down this same path, if we weren’t all too lazy to riot.