“In Argentina, we have a financial crisis every five years, and after each one, we are a little worse off.”
We had wandered into Alejandro’s tour company looking for information on a few day trips from Buenos Aires; the history lesson on the Argentine economy was a bonus.
“Our last crisis was about five years ago,” he explained. “My wife had the equivalent of ninety thousand U.S. dollars in the bank. There was a run on the bank and a devaluation of our currency. Some people lost everything.”
“My wife received a bond that matures in 2013. It will be worth thirty thousand U.S. dollars – if the government can pay it.”
“Her money vanished, and was replaced by a vague promise. That’s why people here don’t trust banks. Businesses want to be paid in cash, and when people have cash they either buy property or hide it in their mattresses. It makes things very difficult,” Alejandro said.
When we rented our apartment, we were required to pay the entire month’s rent and security deposit up front – in cash. No credit cards. No traveler’s checks. No bank wires.
There are low daily limits on ATM withdraws, further complicating things. It took us a week and three ATM cards to gather the money we needed to rent our apartment.
Alejandro asked a rhetorical question: “How can an economy work without trust?”
We booked the tango show he recommended (paying in cash, of course). I asked if many American tourists were coming to Buenos Aires.
“Two years ago a lot of Americans were visiting. But now, fewer Americans are coming and most come on cruise ships. I suppose if your economy is bad, people are traveling less,” he said.
“A financial crisis in America is not good for your country or the world. If Americans can’t borrow money, what will happen?”
“Without credit, there is no America,” he said.