And the Money Kept Rolling In (and Out) Wall Street, the IMF, and the Bankrupting of Argentina

by Paul Blustein

In the 1990s, few countries were more lionized than Argentina for its efforts to join the club of wealthy nations. Argentina's policies drew enthusiastic applause from the IMF, the World Bank and Wall Street. But the club has a disturbing propensity to turn its back on arrivistes and cast them out. That was what happened in 2001, when Argentina suffered one of the most spectacular crashes in modern history. With it came appalling social and political chaos, a collapse of the peso, and a wrenching downturn that threw millions into poverty and left nearly one-quarter of the workforce unemployed.

Paul Blustein, whose book about the IMF, The Chastening , was called "gripping, often frightening" by The Economist and lauded by the Wall Street Journal as "a superbly reported and skillfully woven story," now gets right inside Argentina's rise and fall in a dramatic account based on hundreds of interviews with top policymakers and financial market players as well as reams of internal documents. He shows how the IMF turned a blind eye to the vulnerabilities of its star pupil, and exposes the conduct of global financial market players in Argentina as redolent of the scandals -- like those at Enron, WorldCom and Global Crossing -- that rocked Wall Street in recent years. By going behind the scenes of Argentina's debacle, Blustein shows with unmistakable clarity how sadly elusive the path of hope and progress remains to the great bulk of humanity still mired in poverty and underdevelopment.

Genres: Economics, Nonfiction, Finance, Politics, Business, History

304 pages, Paperback

First published February 15, 2005

About the author

Paul Blustein has written about economic issues for more than 40 years. A graduate of the University of Wisconsin and Oxford University, where he was a Rhodes Scholar, Paul spent most of his career reporting for The Washington Post and The Wall Street Journal. He is currently a Senior Fellow at the Centre for International Governance Innovation.
Paul's books have received critical acclaim from leading publications including The Economist, Financial Times, Foreign Affairs, and the New York Review of Books. He especially loves hearing from professors and college students that his books help make complex economic subjects interesting and intelligible. A resident since 2010 of Kamakura, Japan, where he lives with his wife, Yoshie Sakai, he is the father of four children and in 2018 attained his most cherished status yet--grandpa.

Reviews

[Sequoyah · Rating 4 out of 5]

I think this book is highly indicative of how complex the world economy is. The more you learn the less you understand. The situation detailed in this book—the Argentine economy collapse of the early 00’s—is endemic of the bigger picture and how you can’t really pinpoint any one thing as the blame for these types of crises. Is it the IMF, foreign investors, the Argentine government, or any of the innumerable moving parts of the international economy? I guess it was everything, I still don’t get it after reading the book. However, it did remind me of the sticker I saw on the fuel pump after getting some gas last week: a photo of Biden saying “I did this” while pointing at the gas price. Now this issue is much more cut and dry than the Argentine crisis: Putin invaded Ukraine, yada yada yada, gas prices are higher. Now, even with something with such an obvious cause as this example, Americans are so insular as to think everything happens inside this bubble (much like how Argentines demanded political blood). It’s easier to blame a political opponent than it is to actually try and grasp how Byzantine the globalized world is. Even the monetary crisis currently happening resulting from years of COVID is domestically to blame by Americans. I think this book is important in that it shows how everything in this world is profoundly entwined and there are rarely any one thing to blame, so don’t believe any demagogue who weaponizes economics for political gain unless it is demonstrable.

[briz · Rating 4 out of 5]

This is a lively, even frisky account of the 2001 Argentine financial crash. Written by a journalist with great passion and brio, it enlivens what can sometimes seem the most dull of disciplines (macroeconomics) - reminding us that macro isn't just impenetrable dynamic stochastic general equilibrium models (why, God, whyyy), it's people and money and market panic. It's big, and it can have huge, rippling effects throughout countries and the world. Indeed, I haven't seen dismal science humanized this well since n+1's excellent Diary of a Very Bad Year (about the 2008 global financial crisis).

Blustein's pen is wide-ranging, knowledgeable, sardonic and scathing: it spares no one. We get some great peeks into the inner workings, and culture, of the IMF. We get a fairly damning critique of the IMF for being too circumspect in dealing with zombie countries: countries with enormous foreign debt, floundering in a recession, unwilling to loosen their dollar-peso currency peg. Indeed, Blustein's main message is that Argentina should have cut the cord much sooner, letting the Argentine peso float and then, presumably, plummet. The wings here are clearly burning, the best we can do is cushion the fall!

There are similarly damning portrayals of Wall Street emerging market traders; and then vulture-like "rogue creditors", who hunt for the heavily indebted in order to buy the debt cheap and then sue the debtor for the full amount later, thereby reaping great profit. Did you know the Styrofoam billionaire (via inheritance, ahem), Kenneth Dart, is basically a vulture creditor on Argentina? Suing them when they underwent this massive country-level default, holding out for ten years (!), and trying to seize Argentine assets? This blew my mind. Blew. My. Mind. Make a better little white crumbly cup, Kenneth, for the love of Jesus! Stop capitalizing on the economic agony of millions! This is not what capitalism is about! My Lord. Talk about parasite. (And no wonder Argentina doesn't like him and has called him "enemy number one".) Blustein, indeed, uses Dart as an unsavory symbol for the collective action problem: when creditors refuse to accept revised terms when a country is in free-fall, unable to pay its bills. And damn, Kenneth. Just damn. I still can't wrap my head around this complete moral vacuum, this incredible greed.

Phew. Shake it off. Shake it off.

ANYWAY. So, as you can see, macro can be something which empassions, fellow microeconomists! And what of ye, non-economist people? Will you like and enjoy this book? I think yes, as long as you (like me) clarify early on what the difference between "deficit" and "debt" is (hey, it's been YEARS since my last macro class). But even then, Blustein is a journalist, and so he writes for the general reader. And this is a great primer, and great fodder, on the big issues of macro, globalization, and our increasingly, crazily interconnected financial systems. Recommended.

[Michalyn · Rating 5 out of 5]

I never thought a book about financial crisis could read like a soap opera but Blustein manages just that in And the Money Kept Rolling in (And Out): Wall Street, the IMF, And the Bankrupting of Argentina

With careful analysis, and an engaging writing style Blustein traces the events leading up to Argentina's financial crisis in 2001. It's a fascinating look inside the IMF as well as the Argentinian government. Moral hazard, an imperfect financial system, the IMF's desire to use Argentina as an example of the success of economic liberalization and its fear of damaging its own reputation led it to keep pumping money into the country when it should have been pushing Argentina to restructure its debt or abandon the convertibility system.

What makes this book so interesting is not just the way Blustein illuminates the inner workings of global institutions, but the cast of characters who parade through the book. We're reminded time and time again that policy and politics are inseparable bedfellows.

I'm not sure I'm convinced by Blustein's assertion that something similar could happen to the US (short of the dollar being displaced as the world's reserve currency) but his point about not taking the availability of credit for granted is sound. In the end what I liked best was that Blustein didn't content himself with pointing fingers and vilifying different actors as I'm sure it would have been easy to do. The final chapter which explores ways to improve the international financial system is particularly insightful.

[Brian Flaherty · Rating 3 out of 5]

I enjoyed 95% of this book only to get furious at the final section for the author insinuating that America’s debt puts it in a similarly risky position to Argentina. Absolutely not the case. No, America’s debt is not unsustainable, we are not reliant on foreign countries to fund our deficits, and we can never be forced to default on our debt.

On a related point, I was frustrated with the author for his hand waving comparisons between Argentina and other emerging markets despite different exchange rate mechanisms, fiscal rules, levels of monetary sovereignty, etc…

With all that said, it’s a readable account of Argentina’s 2000-era debt crisis and makes a compelling argument that the common narrative blaming the IMF is wrong (or at best incomplete).

[Flo! · Rating 3 out of 5]

Three stars for the effort. Although the chronological reconstruction is well done, the core of the story can be told in a summary. The bulk of the book does consist of 'and then this happenend..' which of course makes sense in a journalistic reconstruction, but I felt that a lot of information just doesn't seem that important, therefore I don't precisely know what I should remember about this book. So right now, I am not familiar with what exactly the critique on the IMF here is. It is about a recession in Argentina, but there is no overview about the economy of Argentina. Now I still don't know what exactly goes wrong then for exports. For such a relatively small book, it doesn't give me any good overview.

What the book does do well, is showing the consequences of the crisis. Giving anecdotical stories of people going into poverty and the political chaos that went with it. Kudos for that.

[Mike Sanders · Rating 4 out of 5]

Gives an excellent view of the political and economic decision making process behind the Argentine depression, the default and the collapse of convertibility. The last 2 chapters are especially strong and provides a good holistic, broadly neutral (despite the click-bait-esque title and subtitles) perspective of the sovereign debt story and lessons beyond Argentina. However, the main criticism is that some of the "stories" provided, especially those that go into vivid detail on very many extremely private developments across varied countries, contexts, and events seem too detailed to be accurate, and read more as a dramatic retelling and fictionalization of a few interviews. Despite this, the overall content does wonders and the message is surprisingly balanced, making this an interesting and important read to understanding one of the more debt-crisis driven parts of the world.

[Zoe Cubanski · Rating 2 out of 5]

I had to read this against my will for a class, I don’t mind reading about this subject, but god the writing style is too dry. (Not that anyone is willingly looking to read this book)

[Frank Stein · Rating 4 out of 5]

The Argentinian collapse of 2001 is an odd subject for someone looking to bash the international monetary system. After all, unlike the Asian financial crisis of 1997, which the author, Paul Blustein, also wrote a book on, no one claimed the Argentinian crisis had at its root sudden "hot money" capital inflows to and outflows from the country, or that the crisis was exacerbated by a merciless "austerity" imposed by the IMF. In fact, Blustein admits early on that the undoubted reason for the crash was that the IMF did not demand cutbacks in spending and higher taxes sooner, and that Argentina failed because it refused to rein in its deficits when times were good in the mid-1990s. He also admits that the IMF for most of the period was opposed to the "currency peg" of the Argentine peso to the dollar, and that it was suspicious of attempts to retain it by deep spending cuts in the midst of the crisis.

Still, Blustein makes a good case that all that does not make the IMF blameless. Far from it. The suspicions the IMF had about the Argentinian policies were kept inside the IMF, and it's the exposure of the once secret internal concerns of the IMF and the US Treasury that make this such a fascinating read. As usual, the IMF was fighting the last war, and was scared of letting the Argentinian economy it had once celebrated as a model go bankrupt so soon after the Asian crisis. So it extended every loan it could, long past the point when the everyone knew, including most of the IMF, that the odds were hopeless. We see Stanley Fisher, as deputy manager and effective chief of the IMF, agree to a new loan in December 2001, even when his staff (including economist Kenneth Rogoff) put the odds of success at 0% (Stanley Fisher is now deputy governor of the Federal Reserve). We see the IMF invite the Argentinian President and reformer Carlos Menem to be the keynote speaker at their 1998 conference, even when privately many thought his country was headed for disaster.

So Blustein makes a good case against the IMF, but it's not the typical one. Mainly he argues that it didn't have the strength of its convictions to call in its loans before they became nothing but a burden for an already indebted economy. His attempts, however, to tie the failure to the "Enronization" of financial analysts, and a growing "bubble" in emerging market debt look a little laughable in retrospect. Since the book was published, emerging markets have enjoyed an unprecedented decade with almost no defaults. The book therefore demonstrates the dangers of calling "bubble" whenever one sees financial upticks. Yet the book does show the value of dedicated journalism for exposing the skullduggery going on in the highest chambers of power, even if it's not always what one would expect.

[Zo · Rating 4 out of 5]

Very readable account of the tragedy that was Argentina's economic boom from 1991-98 followed by collapse and eventual default in 2002. Was helpful to me in understanding the workings of the emergent country bond market, how the IMF operates, and what goes into an eventual bottoming out and default. I'm not sure how much to trust the author's analysis of causal mechanisms -- better evidence has likely emerged since the writing of this? -- but his basic argument is a somewhat evenhanded laying of blame across the Argentine govt, the IMF, and international investors. The Argentine govt, due to various political economy problems, did not run a tight enough budget in the good years of the 90s, and then was subsequently too fiscally tight in the beginning years of the crash, foolishly hung on to the coanvertibility system, and refused to restructure debts until the harm was orders of magnitude larger. All of those problems could have been averted internally but were abetted by the IMF who did little to pressure fiscal discipline in the 90s, and then extended "catalytic" loans as the recession persisted that had little chance of success and only made the ending default more disastrous (to what extent this is true about the catalytic loans is a source of ongoing debate). The global investment community should be blamed for its eagerness to pour money into Argentine bonds without appropriately analyzing the country's economic prospects, some of which can be blamed on the perverse incentives of investment bankers who do research on sovereign debt but get paid out of the banks supporting bond transactions. The book ends with a great chapter on how to think about reforming the international banking system to prevent a crisis like this from occurring again. I'm not sure what has or has not changed since the writing of this book, but I found particularly compelling the idea that we need something more analogous to corporate bankruptcy courts to settle international debt restructuring, that the IMF should be more generous in supporting restructuring but less generous in catalytic loans, and that greater restrictions on international capital flows (i.e. redirection from bonds to equity and FDI) are needed. The bureaucracy of the IMF and its inability to have proper skin in the game of its decisions loomed as a major problem at many times in this book: it made me want to think about more creative ways of structuring IMF governance that would reward correct analyses and punish wrongheaded ones (internal prediction markets that are salary linked anyone?). Overall, I wish the book was more like the last chapter and less a procession of narrating high-powered official meetups, but I really enjoyed it, and learned a lot about how the mismatch in incentives between domestic politicians, global investors, and the IMF can exacerbate economic woes and end up severely damaging the livelihood of thousands of people.

[Isak · Rating 5 out of 5]

"And the Money Kept Rolling In (and Out)" is a not-so-great title for an otherwise excellent book on the subject. It's an informative, entertaining, and intelligent account of one of the world's greatest financial busts before the Great Recession. Honestly, I would recommend it to anybody remotely interested in Argentina, the IMF, and macroeconomic policy of development.

What's special about the book is the central role of macroeconomics. Blustein rivals (and, in my opinion, exceeds) Michael Lewis in explaining financial concepts to the general reader. But, while writers like Lewis ultimately write stories that are about people, with the financial detail as a narrative device, Blustein flips this ordering by telling a story about macroeconomics through a host of characters. Because of that, it may be helpful to brush up on your "macro" - focusing on bonds, currency exchanges, and capital controls. But to anyone who's interested in these concepts, Blustein's book makes for a fascinating and intellectually rewarding read, especially if you've never encountered these concepts outside of a textbook or a final exam.

A story about macroeconomics would sound boring by default, "And the Money" is surprisingly entertaining. I would go so far as to say it's as close to a "Goodfellas" of international finance as I've ever seen, not because of its depiction of crime (there is none), but because of its temporary focus (or zoom) on memorable characters, and a narrative focusing on a profitable enterprise that goes really, really, really bad in the end. It was a page-turner for me, and I don't find that with many fiction books, let alone economic histories.

[Ritvik Chatani · Rating 4 out of 5]

I had always wondered how Argentina went from a global superpower in the 1900s and then to Milei cutting every single government department because their budget is so bad now. This book is a brilliant account of the Argentina debt crisis and how each actor played its part. Here is an entirely oversimplified summary of the chain of reactions:

1. Due to economic mismanagement and corruption, inflation soared in the 80s and Argentina took a lot of debt to overcome deficits.
2. Argentina enters convertability to equate one peso to one $ to curb inflation and attract FDI
3. The high interest rates and high currency rates helped inflation but led to mass budget deficits, which the government financed with debt because they didn’t want to cut spending or increase taxes
4. They ultimately lost the peg and had to cut spending by a lot and raise taxes to fix the deficit, entering another period of hardship for the country

It was interesting to further understand Argentina's reliance on exports (lowered market share as well as time went on), the overall role of the IMF and the greed of political actors and how they played a part in the country's downfall

[Luis · Rating 5 out of 5]

A clear dive into the context of what happened in the financial crisis of 2001.

It's hard to define who's to blame for the fall, as it was surrounded by unusual circumstances, different political paradigm, and a perfect storm of events that would pressure the financial system, and by extent, innocent civilians that had no say in the decisions that ultimately brought the collapse.

The author goes out of his way to paint a clear picture on a high level, as in the decision making from the IMF, congress, and Argentine government and how those decisions affected ordinary civilians.

It's a great book to learn how the collapsed happened and to understand the advantages and disadvantages of a open and deregulated market and why it may not work in emerging markets

[Andrea Bauer · Rating 3 out of 5]

Honestly, I gave this book only three stars because of political disagreements. Blustein does a great job of making the intricacies of global crises and the roles of the IMF, U.S. Treasury, and affected countries like Argentina highly readable and easy to understand. But, although he is critical of specific IMF decisions, it is as someone who believes in capitalist globalization and the role of the IMF and of the U.S. as global leader within that. I couldn't disagree more. But I still found it to be a very interesting look at how decisions are made among the various actors as crisis looms.

[Izzy Taylor]

I found this book really interesting. It explored the role of the financial markets in Argentina’s debt crisis. Other research for my diss then sowed seeds of doubt as respected Diplomats said the thesis of the book could be thrown out. I disagree with them. I think the thesis here is worthy of consideration, and that what remains difficult to answer, the reason why they jump to criticism, is how to quantify exactly how big of a role international financial stakeholders played.

[Jake Henceroth · Rating 4 out of 5]

Really exhaustive history of the Argentinian peso crisis and the resulting fallout. I could see not loving this, given the amount of technical detail it delves into combined with how much time it spends explaining ultimately unused counter-proposals and such, but I'd argue that all of this makes it more compelling and illuminating.

[John Crippen · Rating 3 out of 5]

Great way to start the year, learning about Argentina's spectacular crash 20 years ago. Blustein shows no mercy to the IMF or to Wall Street, as he explains how their timidity and greed, respectively, made Argentina's terrible situation even worse. Thanks to Katie P. for the recommendation.

[Steven Truong · Rating 4 out of 5]

Don't cry for me Argentina...

[Michael · Rating 4 out of 5]

Well-written, manages to make macro really accessible and understandable. Found this to be an informative quick read.

[Kevin Keller · Rating 5 out of 5]

Really clearly written. Instructive and inspirational!

[Zack · Rating 3 out of 5]

Informative, though dry.

[Amna Zahra · Rating 4 out of 5]

Gripping and deeply researched account of Argentina’s economic collapse in the early 2000s.

[Ian · Rating 5 out of 5]

In honor of Argentina's current 2014 currency collapse and economic crisis, I figured now was as good a time as any to read about the previous economic tragedy there. This book is an excellent work of financial journalism, and though I'm not sure if it was the topic or the writing that made the difference, this book came out much better than Blustein's other book on the IMF: The Chastening.

Argentina has been a most important story in the debate between those for and against globalization, for and contra globally connected financial markets and free trade. Blustein, as a generally pro-markets guy with well-placed caution about the more hyperbolic claims from the pro-markets side is a perfect author to take us through the IMF's handling of the situation.

What went wrong? The IMF fell in love with Argentina, as it was the best remaining example of the success of globalization after the failure of the Asian tigers in 98. This complacency led the IMF to give Argentina an overly long leash with which the country promptly hung itself.

Important takeaways:

1. There may be a place for capital controls in a free market capitalistic economy. Note the commentary on Chile Vs. Argentina in the conclusion of the book. Chile, as an economy ranked freer than the U.S. in economic competitiveness, is no shrinking violet when it comes to economic liberty, but they still felt the need to limit hot money coming into their country to prevent easy money bubbles of the sort that sunk Indonesia, Korea, and ultimately Argentina.

2. Indexing is a grave hazard to financial markets. The commentary on how index weighting forces managers to buy more and more debt of the most heavily endebted EM countries is spine-chillingly perverse.

[Brian · Rating 3 out of 5]

This book seeks to understand how and why Argentina sank into financial chaos in the early 2000's. The book looks at the role of the IMF, US treasury, private markets, and the Argentinean government in the overall downfall of the country. The author writes very well about his subject and has a good understanding of international economics. The IMF is not completely vilified as it is in many of the current financial crisis's and although it shares a large amount of the blame the book hands it out equally. There is quite a bit of conspiracy theory and engaging in theories behind the IMF and Wall Street as well as the Bush administration. The author acknowledges in most cases that these are conspiracies but they did not really need to be discussed. The most interesting part of the story has to do with the role that the markets played in Argentina. It is an interesting foreshadow for the future of emerging markets and looking at the self fulfilling prophecies of debt and equity. This book deserves its credit for focusing on real issues without engaging in much ideology or theory. If you want to understand how financial markets are impacting areas overseas this is a great book to start with.

[Alkek Library · Rating 4 out of 5]

In the early 2000s, middle class Argentinians regularly awoke to find scavengers going through dumpsters looking for plastic bottles. In many cases, these scavengers had once lived in the same neighborhood or one like it. Looting, fires and civil disturbance were regular features on the evening news.

The culprit? Argentina's currency had collapsed and set loose a disastrous inflation rate that decimated the savings of normal people. Read the book for the gory details of a too large government, national debt, and an ill-thought basis for currency exchange.

The situation is not completely analogous to the issues the United States faces now. Argentina's problems were caused by pegging its weakening national currency to the dollar. Nevertheless, the episode does show what lurks under the delicate threads of currency valuation, debt and ultimately savings and societal trust.

And the Money Kept Rolling In is recommended as a lesson in national finance policy. For any student of Latin American economic history, it's a must read.

[Charles Allan · Rating 4 out of 5]

In the early 2000s, middle class Argentinians regularly awoke to find scavengers going through dumpsters looking for plastic bottles. In many cases, these scavengers had once lived in the same neighborhood or one like it. Looting, fires and civil disturbance were regular features on the evening news.

The culprit? Argentina's currency had collapsed and set loose a disastrous inflation rate that decimated the savings of normal people. Read the book for the gory details of a too large government, national debt, and an ill-thought basis for currency exchange.

The situation is not completely analogous to the issues the United States faces now. Argentina's problems were caused by pegging its weakening national currency to the dollar. Nevertheless, the episode does show what lurks under the delicate threads of currency valuation, debt and ultimately savings and societal trust.

And the Money Kept Rolling In is recommended as a lesson in national finance policy. For any student of Latin American economic history, it's a must read.

[Win · Rating 5 out of 5]

A detailed story about Argentina's economic crisis in the early 2000s. One small section in the last chapter struck me the most. It explains how the US economy works in similar system; how they run huge trade deficit and budget deficit, and how their national debt keep rising up. What if the international market starts to losing confidence in the US economy and selling their bonds?

[Lisa · Rating 3 out of 5]

Interesting up-close and well researched account of the financial scandals that caused the meltdown of the Argentine economy in the 1990's. Not a lot of personal details, as the writer is a financial reporter with the Washington Post and only sent to Argentina at the beginning of the scandal when the economy went bust. However a fascinating overview of a recent, modern-day financial collapse of our time.

[Paul Tennant · Rating 5 out of 5]

Great book. It deals with the Argentine Economic crisis of 2001. How having their currency pegged to the dollar while solving hyper inflation, actually made their products less competitive with their major trading partners. You'll learn a tone, and enjoy the read. Things like country risk, currency risk vs credit risk, exploding debt dynamics, home bias and much much more. I read both this one and The Chastening, while both are good, I couldn't be more in love with this book.

[Cristobal · Rating 4 out of 5]

A detailed account of how everyone in the Argentine government, the IMF and Wall St saw the coming meltdown forced by the country’s inability to serve its debt but no one did a thing. It’s as if a train at 150mph came barreling downhill with no brakes and those watching instead of doing something to help stop it said “well, maybe it’ll slow down on it’s own.”

The world’s credit markets, especially those of sovereign debt, are built on a infrastructure of perverse malincentives.

[Anna · Rating 4 out of 5]

This is the most engaging account of international finance I have ever read. Blustein's writing takes the reader on a current through the events of the Argentine economic collapse of 2001-2002. The story, while focussed on economic elements, proves that politics and economics will always have a complex relationship.