BUENOS AIRES, Argentina -- As night falls over the elegant boulevards of this longing-to-be European capital, the bags of trash piled neatly outside middle-class homes and downtown offices provide the raw materials for a new class of Argentine entrepreneur.
They call them "cirujas," local slang for scavengers.
After a decade as Latin America's poster-child for free-market prosperity, Argentina's economy looks more like it's submerging than emerging, mired in poverty and chaos.
As South America's No. 2 economy slid into economic ruin -- first defaulting on its massive $141 billion public debt, then devaluing its peso by nearly a third -- blame piled on the currency's decade-old, one-to-one peg to the mighty dollar.
The peg killed hyperinflation and brought stability that was a magnet for foreign investment. But that anchor became a millstone when recession hit in 1998 and the overvalued currency made Argentine goods too expensive to export or to fend off imports at home.
But the root causes of Argentina's crisis are unbridled public spending, corrupt politicians, poor tax revenues and widespread disdain for the local currency -- none of which can be remedied by devaluation, analysts say.
What finally pushed Argentina over the edge, they add, was the greed of international investors and bad timing by the International Monetary Fund and the U.S. Treasury.
"Argentina was Washington's star pupil, and Wall Street's best client. The goose that laid the golden eggs," explained Walter Molano, Latin American economist at BCP Securities in Greenwich, Conn.
"The country had an enormous willingness to issue bonds, thus generating fat commissions for everyone. Therefore, why kill the goose?" he asked. But with the Bush administration promoting "tough love," the IMF pulled the plug on a $1.3 billion lifeline on Dec. 5.
Instead of doing what was right for Argentina, "we did what was right for us, and mindlessly pushed 38 million souls into the abyss," Molano said.
Argentina's new face, lined with misery, can be seen nightly as scores of impoverished unfortunates, sometimes whole families, scavenging in streets patterned after Paris, searching for aluminum cans, old appliances, even food.
"Look at us! We now have all these poor, marginalized people we never had before," said Eduardo Curia, a Buenos Aires economist. "People believed we were going to be a First World country, but we ended up in the Fourth or Fifth World."
When former President Carlos Menem took office in 1989, he slew 5,000 percent inflation with the dollar peg and privatized the state sector, attracting nearly $90 billion in foreign investment between 1994 and 2000. He said Argentina would rejoin the world's rich economies.
"And we believed him," said Ana Maria Muchnik, a psychoanalyst from Buenos Aires' well-heeled Recoleta district. "What are we left with? A country of beautiful facades with no substance behind them or foundations beneath them."
While privatizing the economy, Menem failed to shrink bloated government. In Buenos Aires province alone, the government payroll spiraled from 280,000 workers in 1991 to more than 400,000 in 1999.
Once re-elected in 1994, Menem cast aside all pretense of fiscal prudence. Because he couldn't print more money -- the dollar peg prevented that -- he allowed central and provincial governments to ratchet up tens of billions of dollars in debt to finance the economy.
By the time he left office in December 1999, Argentina was saddled with $140 billion in debt. Despite two years of bitter austerity imposed by his successors, the 2001 budget deficit was $11 billion, almost double the target set by the IMF.
Now President Eduardo Duhalde, the fifth leader in two weeks of frenzied unrest, faces a new battle as he deals with price hikes that threaten to whip up inflation. And it's still not clear how much confidence Duhalde can generate; Argentines have learned to be wary of politicians.
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