Domingo Cavallo is around 55 years old and Argentina
's former Finance Minister, and he's had an interesting career
. He has a PhD
and back in March 2001
he was asked to be Argentina's Finance Minister
. He resigned in December
, which shows you the pretty shoddy
state of Argentine politics
. But hey
, I'm getting ahead of myself here, let's start
from the beginning
March 2001 was really a bit of déjà vu for the chap: he'd cocked up the same economy back in 1989, and I have no hesitations about using such strong langauge because you can't perform experiments with a country's macroeconomic policies.
But lets go even further back ... born in San Francisco, Provincia de Córdoba, Argentina, he went on to get a PhD from Harvard and a doctorate in Economics from Cordoba National University. He has written several books: among them 'Economía en Tiempos de Crisis', 'La Argentina Que Pudo Ser', 'El Desafio Federal', 'El Peso de la Verdad' and 'Pasión por Crear' and and he is a Correspondent Member of the Royal Academy of Moral and Political Sciences of Spain (says his official bibliography).
In the late 1980s in Argentina, inflation had hit mind-boggling levels (so that you would pay much, much more for goods in the afternoon than you had in the morning - see hyperinflation and its costs), and the government wasn't helping by printing cash wholesale. Then, in 1989, Carlos Menem of the Peronist party was elected (or as close to elected as you can be in an autocracy) President (I think) and he appointed Domingo Cavallo as his Finance Minister. Cavallo had several unorthodox policies, but to his credit he attempted to put in place a brutal economic austerity program, although it must be said that he botched the job. The austerity measures themselves and the crisis that he created are worthy of their own node, which I will create soon, but the crucial detail is his installment of a currency board, which I think had last been seen in Hong Kong in 1983, and was pretty much considered to be a colonial relic.
To put it simply, Argentina said: 1 peso = 1 Dollar, and for every peso in circulation there must a Dollar in reserves. It sounds bizarre, but it worked.
Cavallo and Menem's creativity halted inflation in its tracks (perhaps a bit too much in fact) and they marched into the mid 90s with nothing but optimism (someone a bit more cynical might say 'with their heads up their respective rectums'). Then the Tequila Crisis hit (another topic worthy of its own node), but Argentina marched on, severely bruised. Then the Asian Currency Crisis hit, and Argentina, like Monty Python's The Black Knight, limped forwards. Then the Brazilian Real collapsed and Argentina's economy finally had its head metaphorically lopped off: their currency board basically resulted in total macroeconomic inflexibility since the peso couldn't devalue, no matter how hard it tried.
While all this is going on, i should say, Cavallo resigns in 1996 amid allegations of corruption and sleaze (just like New Labour then). Of course, Argentines don't seem to learn, and reinstated him in 2001.
So, the peso had to devalue some time, and it finally did, resulting in the dollar value of Argentina's debt exploding... but that's another node entirely.
Taken from Cavallo's official site:
Visiting professor, Stern School of Business, New York University
Honorary President, Fundación Mediterránea
MOST RECENT POSITION
Minister of Economy (2001)
National Congressman (1997 –2001)
President Party Acción por la República (1997-2001)
Ph. D. in Economics, Harvard University (1977)
Doctor in Economics, Cordoba National University (1969)
M.A. in Economics, Cordoba National University (1968)
C.P.A. Cordoba National University (1966)
PRIZES AND AWARDS
Doctor Honoris Causa in Political Sciencies. University of Bologne
(Italy) October 2000.
Americas Award 1999. Award by The Americas Foundation. New
York , November 1999
Doctor Honoris Causa. University of Paris 1, Pantheon-Sorbonne
Doctor Honoris Causa in Economics. University of Turin
Honor Diploma as Academic Member of the Economic, Legal and
Social Research Institute of Argentina (April 1995).
Doctor Honoris Causa in Philosophy. Ben Gurion University
(Negev, Israel) April 1995.
“Eagle of the Americas” award bestowed by the Association of
American Chambers of Commerce in Latin America (declaring
Dr.Cavallo Promoter of International Trade). February 1995.
Doctor Honoris Causa in Jurisprudence. Genoa University (Italy).
Correspondent Member of the Royal Academy of Moral and
Political Sciences of Spain. 1993.
“Economist of the Year” award by the Institute of Contemporary
Studies, Buenos Aires, Argentina. 1992.
“Minister of Finance of the Year” award by Euromoney Magazine.
“Man of the Year” award by Latin Finance Magazine, Santo
“Quality of Research Discovery” award for the monography
entitled Agriculture and Economic Growth in an Open
Economy: The case of Argentina 1940-73, jointly with
Yair Mundlack, by the American Agricultural Economics
“Ten Outstanding Young People of the Year” award. Junior
Chamber of Buenos Aires (1981).
Scholarships from the Organization of American States and the
Ford Foundation for graduate studies at Harvard University
“Premio Universidad” gold medal and honor diploma for best
PUBLIC OFFICE EXPERIENCE
Minister of Economy (March- December 2001)
National Congressman - Representative for City of Buenos Aires (1997 - 2001)
Minister of Economy and Public Works and Services of Argentina (1991-1996)
Minister of Foreign Relations of Argentina (1989-1991).
National Congressman - Representative for the Province of
President, Central Bank of Argentina (1982).
Undersecretary, Ministry of Internal Affairs (1981).
Vice-President, Bank of the Province of Cordoba (1972-1973).
Director, Bank of the Province of Cordoba (1971-1972).
Undersecretary of Development, Province of Cordoba (1969-1971).
Founder of Fundacion Novum Millenium
Publisher of Forbes Global (1998-1999)
Honorary President, Fundación Mediterránea
Visiting professor, Stern School of Business, New York University (1996-97)
Member of the World Bank Research Observer Editorial Board (1987-1988).
Academic adviser, IEERAL (Instituto de Estudios Económicos sobre la Realidad Argentina y Latinoamericana) de Fundación Mediterránea (1987-present)
Director, IEERAL de Fundación Mediterránea (1977-87).
Professor of Economics and Statistics, National University of Cordoba (1969-84).
Professor of Economics, Catholic University of Cordoba (1970-74).
“Pasión por Crear” 2001 . Editorial Planeta
“El Peso de la Verdad” 1997. Editorial Planeta
“La Argentina Que Pudo Ser (los costos de la represión económica)” jointly with Roberto Domenech and Yair Mundlack. 1989. Editorial Centro Internacional para el Desarrollo Económico. Fundación Mediterránea. Ediciones Manantial
“Economía en Tiempos de Crisis” 1989. Editorial Sudamericana
“El Desafio Federal” Joint with Juan A. Zapata. 1986. Editorial Sudamerica/Planeta.
“Volver a Crecer” 1984. Editorial Sudamericana/Planeta