From the archive

9 March 2002: What though the spicy breezes blow soft o’er Buenos Aires, incompetence messes it up

24 June 2011

As the world braces itself for the inevitable Greek default, and investors look nervously at potentially exposed banks, perhaps it’s worth recalling Argentina’s implosion a decade ago. Here is what the Spectator made of it at the time:

The missionary Bishop Heber wrote a hymn about Ceylon: ‘Where every prospect pleases And only man is vile.’ On being told that this was unfair to his converts, he corrected ‘Ceylon’ in the second edition to ‘Java’, but his point stands: there is no prospect, however pleasing, that is beyond the power of human and governmental incompetence to mess it up. We have seen the Heber factor at work in our own green and pleasant land, we can see it today in Japan, where the government seems to have run out of ideas, good or bad, but for a proven test for the bishop to preach from, there is nothing to beat Argentina. Writing off $1.1 billion, which is more than three times its investment there, HSBC is only the latest bank to have learned this the hard way. Barings were there first. This was once the world’s tenth largest economy, as prosperous as France or Canada, self-sufficient in fuel and food and wine, unravaged by warfare – so what got into it? The Heber factor.


Twenty years ago, Argentina was one of the world’s big four debtors. Ten years ago its inflation rate touched 5,000 per cent.

A new regime sought to cure that by making the peso as good as a dollar, or trying to, but the act proved too hard to sustain. Roque Maccarone, the central bank’s aptly-named governor, had to preside over the biggest default in history, with countless savers and pensioners among the losers locked out of their money. Now they are being encouraged to blame the gringos – foreign banks (such as HSBC) and the International Monetary Fund, which always serves as the scapegoat of last resort. I blame the Heber factor, myself. It is time for his hymn to go into another edition.

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  • Fex Urbis


    Don’t remember you moaning when banks started lending more and more to people to buy houses pushing up prices higher and higher and forcing people to take on massive debts just to buy some crappy house, did you never congratulate yourself a little as to how wise you had been in buying your house for peanuts.

    How long did it take you to pay off your student debts? Oh that’s right your education was free. So off your high horse and just hope that the generations coming along to try and sort out the utter mess you and your generation have made of things.

  • disenfranchised

    there are millions of people in this country, most of a certain age, who’ve always lived within their means, never extended themselves financially, saved until they could afford their treats and luxuries, having been taught proper rules of prudence by their parents.
    these poor souls now sit shaking their heads in disbelief as to how millions more of their countrymen believed they could have it all, big house, big car, big holidays, without having earned the money to pay for any of them.
    as a long-dead old schoolpal of mine used to say: “if you want it, have it, that’s what banks are there for”. the huge debts he built up never worried him at all, as he rolled up, freshly suntanned, in his latest mercedes.
    today’s fantasy economy would have suited him down to the ground…..

  • Baron

    a Heber factor? Hmm, too late for invoking it, we are humans, we never learn, repeat the same mistakes.

    there’s one, blindingly glaring lesson the Greeks should learn from the Argentine collapse, it was the coupling of the peso to the dollar what had fugged it up for the country that once cried for Eva Peron, having broken off the shackles of the tie-up, Argentina’s devaluation has led to a steady recovery that’s still continuing.

    The Greeks should get out of the Euro, that’s what killing them, only a return to the drachma, its devaluation, will enable the Zorbas to export more, import less (import substitution), attract foreign money in direct investment to get the economy going again.

    By keeping Greece within the straightjacket of the synthetic currency the Brussels apparatchiks are sacrificing the livelihoods of millions of Greeks at the altar of their delusional pan-European project, a political ideal far ahead of the economic reality. A default by Greece whilst the country retains the Euro will move the Euro and the EU into a totally uncharted territory, it’s not beyond the boundaries of probability the default may collapse the project with unforeseen social and economic consequences for all of us.

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