From Gonzalo Lira:
In late 2001, while everyone was in shock over 9/11, the Argentines were going through a little shock of their own: The "Corralito."
Argentina was bankrupt, a product of a stagnant economy, rampant crony-corruption, and — most important of all — of having its currency fixed to the dollar. This currency peg had created a huge credit bubble, and of course massive capital outflows as a result, eventually leading to the depletion of foreign reserves by the government and an inability to raise more funds on the open markets.
In other words, sovereign bankruptcy.
Coupled to these problems, in the months leading up to the December 2001 crash, people were aware that the country was going bankrupt — so they were quickly converting all their Argentine pesos into dollars, and then sending this money to safe havens overseas.
To solve these problems of sovereign insolvency and massive capital flight, and at the same time to stabilize the situation, on December 1, 2001, the Argentine government imposed the infamous corralito...
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