Hi guys, this article is pretty old, dates back to 2002.
English not being my mother language, this is a well written piece that explains many things much better than I can.
If you believe USA is already in a depression and it could get worse, PLEASE read this article.
It will explain better to those that are unfamiliar with Argentina, why there are many parallelisms between this country and USA, and in some ways it will portrait a better picture of what I try to explain here many times.
Please do read it. A lot of water has gone under the bridge and we have an entire set of new problems, but these ones during the first months and years, may unfortunately become common in USA one day.
I took the liberty of marking in bold letters the parts that I may have talked about before, or the ones that I found particularly interesting.
Again, PLEASE notice the marked comments about the situation in rural and agricultural areas, and the explanation on what happened to the middle class.
These folks left behind their homes in the agricultural provinces and moved to pick trash for a living in the city for a reason, them being stupid not being it.
Despair in Once-Proud Argentina
After Economic Collapse, Deep Poverty Makes Dignity a Casualty
By Anthony Faiola
Washington Post Foreign Service
Tuesday, August 6, 2002; Page A01
ROSARIO, Argentina -- Word spread fast through the vast urban slums ringing Rosario. There was food on the freeway -- and it was still alive.
A cattle truck had overturned near this rusting industrial city, spilling 22 head of prime Angus beef across the wind-swept highway. Some were dead. Most were injured. A few were fine.
A mob moved out from Las Flores, a shantytown of trash heaps and metal shacks boiling over with refugees from the financial collapse of what was once Latin America's wealthiest nation. Within minutes, 600 hungry residents arrived on the scene, wielding machetes and carving knives. Suddenly, according to accounts from some of those present on that March day, a cry went up.
"Kill the cows!" someone yelled. "Take what you can!"
Cattle company workers attempting a salvage operation backed off. And the slaughter began. The scent of blood, death and fresh meat filled the highway. Cows bellowed as they were sloppily diced by groups of men, women and children. Fights broke out for pieces of flesh in bloody tugs of war.
"I looked around at people dragging off cow legs, heads and organs, and I couldn't believe my eyes," said Alberto Banrel, 43, who worked on construction jobs until last January, when the bottom fell out of the economy after Argentina suffered the world's largest debt default ever and a massive currency devaluation.
"And yet there I was, with my own bloody knife and piece of meat," Banrel said. "I felt like we had become a pack of wild animals . . . like piranhas on the Discovery Channel. Our situation has turned us into this."
The desolation of that day, neighbor vs. neighbor over hunks of meat, suggested how profoundly the collapse has altered Argentina. Traditionally proud, Argentines have begun to despair. Talk today is of vanished dignity, of a nation diminished in ways not previously imaginable.
Argentines have a legacy of chaos and division. In search of their "workers' paradise," Juan and Eva Peron declared war on the rich. During the "dirty war" of the 1970s, military rulers arrested tens of thousands of people, 15,000 of whom never resurfaced. And when then-President Carlos Menem touted New Capitalism in the 1990s, the rich got richer -- many illegally -- while the poor got poorer.
Yet some things here never really changed. Until last year, Argentines were part of the richest, best-educated and most cultured nation in Latin America. Luciano Pavarotti still performed at the Teatro Colon. Buenos Aires cafe society thrived, with intellectuals debating passages from Jorge Luis Borges over croissants and espresso. The poor here lived with more dignity than their equals anywhere else in the region. Argentina was, as the Argentines liked to say, very civilized.
Beatriz Orresta, 20, holds her malnourished son, in Rio Chico. She had been feeding her children soup made with the dried bones of a dead cow her husband had found. (Silvina Frydlewsky for The Post)
Argentines have watched, horrified, as the meltdown dissolved more than their pocketbooks. Even the rich have been affected in their own way. The tragedy has struck hardest, however, among the middle class, the urban poor and the dirt farmers. Their parts of this once-proud society appear to have collapsed -- a cave-in so complete as to leave Argentines inhabiting a barely recognizable landscape.
With government statistics showing 11,200 people a day falling into poverty -- earning less than $3 daily -- Buenos Aires, a city once compared to Paris, has become the dominion of scavengers and thieves at night. Newly impoverished homeless people emerge from abandoned buildings and rail cars, rummaging through trash in declining middle- and upper-class neighborhoods. People from the disappearing middle class, such as Vicente Pitasi, 60 and jobless, have turned to pawn shops to sell their wedding rings.
"I have seen a lot happen in Argentina in my day, but I never lost hope until now," Pitasi said. "There is nothing left here, not even our pride."
Wages Fall, Prices Rise
Late last month, on the eve of the 50th anniversary of Eva Peron's death, thieves swiped the head of a new statue of her. Nothing, really, is sacred here anymore. Ads by concerned citizens appear on television, asking Argentines to look inward at a culture of tax evasion, incivility and corruption. But nobody seems to be listening.
Food manufacturers and grocery stores are raising prices even as earning power has taken a historic tumble. A large factor in both the price rises and the slump in real wages is a 70 percent devaluation of the peso over the last six months. But the price of flour has soared 166 percent, canned tomatoes 118 percent -- even though both are local products that have had little real increases in production costs.
Severe hunger and malnutrition have emerged in the rural interior -- something almost never seen in a country famous for great slabs of beef and undulating fields of wheat. In search of someone to blame, Argentines have attacked the homes of local politicians and foreign banks. Many of the banks have installed steel walls and armed guards around branch offices, and replaced glass windows decorated with ads portraying happy clients from another era.
Economists and politicians differ on the causes of the brutal crisis. Some experts blame globalization and faulty policies imposed by the International Monetary Fund. But just as many blame the Argentine government for runaway spending and systematic corruption. The one thing everyone agrees on, however, is that there is no easy fix.
Statistically, it is easy to see why. Before 1999, when this country of 36 million inhabitants slipped into recession, Argentina's per capita income was $8,909 -- double Mexico's and three times that of Poland. Today, per capita income has sunk to $2,500, roughly on a par with Jamaica and Belarus.
The economy is projected to shrink by 15 percent this year, putting the decline at 21 percent since 1999. In the Great Depression years of 1930-33, the Argentine economy shrank by 14 percent.
What had been a snowball of poverty and unemployment has turned into an avalanche since January's default and devaluation. A record number of Argentines, more than half, live below the official poverty line. More than one in five no longer have jobs.
"We've had our highs and lows, but in statistical and human terms, this nation has never faced anything like this," said Artemio Lopez, an economist with Equis Research. "Our economic problems of the past pale to what we're going through now. It's like the nation is dissolving."
The Suffering Middle Class
Every Argentine, no matter the social class, has a crisis story. Amalia Lacroze de Fortabat, 80, one of the country's richest women, was forced to offer up paintings by Gauguin, Degas, Miro and Matisse at a Sotheby's auction in May. For many of Argentina's well-to-do, the sale was the ultimate humbler, a symbol of decline in international stature.
Those suffering most, however, are the ones who had less to begin with.
On the morning of her 59th birthday, Norma Gonzalez woke up in her middle-class Buenos Aires home, kissed her husband on the cheek and caught a bus to the bank. There, before a stunned teller, the portly redhead, known by her family and friends mostly for her fiery temper and homemade meat pies, doused herself with rubbing alcohol, lit a match and set herself ablaze.
That was in April. Today, Rodolfo Gonzalez, 61, her husband, keeps a daily vigil at the burn center where his wife is still receiving skin grafts on the 40 percent of her body that sustained third-degree burns. She had no previous record of mental illness, according to her family and doctors, and has spoken only once about that morning.
"She just looked up at me from her hospital bed and said, 'I felt so helpless, I just couldn't take it anymore,' " Gonzalez said. "I can't understand what she did. It just wasn't Norma. But I suppose I can understand what drove her to it. It's this country. We're all going crazy."
Argentina long had the largest middle class, proportionally, in Latin America, and one of the continent's most equitable distributions of wealth. Much of that changed over the last decade as millions of middle managers, salaried factory workers and state employees lost their jobs during the sell-off of state-run industries and the collapse of local companies flooded by cheap imports.
Initially, Rodolfo Gonzalez was one of the lucky ones. An engineer for the state power company, he survived the early rounds of layoffs in the early 1990s when the company was sold to a Spanish utility giant. His luck changed when the company forced him out in a round of early retirements in 2000.
He was 59 and had worked for the same company for 38 years. Yet he landed a part-time job, and with his severance pay safely in the bank, he and his wife thought they could bridge the gap until Gonzalez became eligible for social security in 2004.
Then came "El Corralito."
Literally translated, that means "the little corral." But there is nothing little about it. On Dec. 1, Domingo Cavallo, then the economy minister, froze bank accounts in an attempt to stem a flood of panicked depositors pulling out cash.
Most banks here are subsidiaries of major U.S. and European financial giants that arrived with promises of providing stability and safety to the local banking system. But many Argentines who did not get their money out in time -- more than 7 million, mostly middle-class depositors, did not -- faced a bitter reality: Their life savings in those institutions, despite names such as Citibank and BankBoston, were practically wiped out.
Virtually all had kept their savings in U.S. dollar-denominated accounts. But when the government devalued the peso, it gave troubled banks the right to convert those dollar deposits into pesos. So the Gonzalez family's $42,000 nest egg, now converted into pesos, is worth less than $11,600.
As the family had trouble covering basic costs, Norma Gonzalez would go to the bank almost every week to argue with tellers and demand to see a manager, who would never appear. As prices rose and the couple could not draw on their savings, their lifestyle suffered. First went shows in the Buenos Aires theater district and dinners on Saturday night with friends. Then, in March, they cut cable TV.
Around the same time, the Gonzalezes' daughter, Paula, 30, lost her convenience store. Separated and with two children, she turned to her parents for support.
The Gonzalezes had been planning for 18 months to take Norma's dream vacation, to Chicago to visit a childhood friend. After the trip was shelved as too expensive, she seemed to break.
"I can't explain it, and maybe I never will be able to," Rodolfo Gonzalez said. He added: "But maybe you can start to figure out why. You have to wonder: Is all this really happening? Are our politicians so corrupt? Are we now really so poor? Have the banks really stolen our money? And the answers are yes, yes, yes and yes."
Scavenging Urban Trash
"There is not enough trash to go around for everyone," said Banrel, one of the participants in the cattle massacre. Rail-thin, he normally passes his days combing the garbage-strewn roads around the Las Flores slums in Rosario, a city of 1.3 million residents 200 miles northwest of Buenos Aires and long known as "the Chicago of Argentina."
If Banrel finds enough discarded plastic bottles and aluminum cans -- about 300 -- he can make about $3 a day. But the pickings are slim because competition is fierce. The misery villages, as shantytowns such as Las Flores are called, are becoming overcrowded with the arrival of people fleeing desperate rural areas where starvation has set in. About 150 new families arrive each month, according to Roman Catholic Church authorities.
With more people in the slums, there are fewer plastic bottles to go around. Banrel said he was getting desperate that day when he joined the mob on the highway.
His family of three -- his wife is pregnant with their second child -- had been surviving on a bowl of watery soup and a piece of bread each day. He earned at least $40 to $60 a week last year working construction. With that gone, and with food getting more expensive, he said, "You can't miss an opportunity, not around here."
"Am I proud of what we did?" he added. "No, of course not. Would I do it again? Yes, of course. You start to live by different rules."
Reality of Rural Hunger
For some rural families, the crisis has gone further. It has generated something rarely seen in Argentina: hunger. In the province of Tucuman, an agricultural zone of 1.3 million people, health workers say cases of malnutrition have risen 20 percent to 30 percent over the previous year.
"I wish they would cry," whispered Beatriz Orresta, 20, looking at her two young sons in a depressed Tucuman sugar cane town in the shadow of the Andes. "I would feel much better if they cried."
Jonatan, 2, resting on the dirt floor behind the family's wooden shack, and Santiago, the 7-month-old she cradled in her arms, lay listlessly.
"They don't act it, but they're hungry. I know they are," she said.
Orresta can tell. Jonatan is lethargic. His lustrous brown hair has turned a sickly carrot color. Clumps of it sometimes fall out at night as Orresta strokes him to sleep. Santiago hardly seems to mind that Orresta, weak and malnourished herself, stopped lactating months ago. The infant, sucking on a bottle of boiled herbal tea, stares blankly with sunken eyes.
Six months ago, the boys were the loudest complainers when their regular meals stopped. Orresta's husband, Hector Ariel, 21, had his $100 monthly salary as a sugar cane cutter slashed almost in half when candy companies and other sugar manufacturers in the rural enclave of Rio Chico, 700 miles northwest of Buenos Aires, were stung by dried-up credit and a massive drop in national consumption.
Ariel now earns just over $1.50 a day, not enough for the family to survive. The peso's plunge has generated inflation of more than 33 percent during the first seven months of the year, more than double the government's projection for the entire year.
Goods not in high demand, such as new clothing, have not gone up significantly in price, but staples that families need for daily subsistence have doubled or tripled. The last time inflation hit Argentina -- in the late 1980s, when it rose to a high of 5,000 percent -- the unemployment rate was half the current 21.5 percent and most salaries were indexed to inflation. Today, there are no such safety nets.
"I could buy rice for 30 cents a kilo last year," Orresta said. "It's more than one peso 50 now."
"At least we will eat tonight, that's the important thing," she said, stirring an improvised soup.
The concoction, water mixed with the dried bones of a long-dead cow her husband found in an abandoned field, had been simmering for two days. The couple had not eaten in that time. It had been 24 hours since the children ate.
Orresta, like most mothers in her village, started trimming costs by returning to cloth diapers for her two young boys when the price of disposable ones doubled with inflation. But then she could no longer afford the soap to wash them, and resorted to reusing the same detergent four or five times. The children began to get leg rashes.
By late January, the family could no longer afford daily meals. A month later, Jonatan's hair began turning reddish and, later, falling out. Although he has just turned 2, Jonatan still cannot walk and has trouble focusing his eyes.
Orresta stopped lactating in April. But the price of powdered milk had almost tripled by then, from three pesos for an 800-gram box to more than eight pesos. At those prices, the family can afford 11 days of milk a month. The rest of the time, Santiago drinks boiled maté, a tea that also serves as an appetite suppressant.
"You know, we're not used to this, not having enough food," said Orresta, with a hint of embarrassment in her voice.
She paused, and began to weep.
"You can't know what it's like to see your children hungry and feel helpless to stop it," she said. "The food is there, in the grocery store, but you just can't afford to buy it anymore. My husband keeps working, but he keeps bringing home less and less. We never had much, but we always had food, no matter how bad things got. But these are not normal times."