For this crisis marks the end of a brave but flawed attempt to bring discipline and honest government to Argentina.Argentina's story is one of enormous wealth ceaselessly squandered. It is a country six times the size of France yet with only 37 million people. Its elegant capital is often called the Paris of Latin America. The endless Pampas provides some of the best meat and grain in the world. Further west, closer to the Andes, there is fruit and wine, as well as oil, of which Argentina is an exporter. Argentina was one of the world's richest countries a century ago and ought now to be a Latin American Australia, enjoying wealth in the sun Instead its people have become poorer. Why?Begin with the current crisis, which has its roots in the solution found to the last crisis, a decade ago.

Today one of the clich?is wrong: Argentina has deflation, not hyper-inflation But 10 years ago the clich?itted. Argentina was grappling with its worst inflationary crisis yet: inflation that peaked at over 20,000 per cent. The economy minister of that time, Domingo Cavallo, turned to an extraordinary solution: he fixed Argentina's currency one-to-one with the US dollar and he guaranteed Argentinians that there would always be a dollar for their peso.' What Mr Cavallo sought to do was to go to the root of Argentina's history of instability by stopping the government from printing money for itself when it needed cash. For that is always the source of very high inflation.Mr Cavallo sought, too, to modernise Argentina in other ways.

He campaigned against corruption, he privatised, he sought to reduce bureaucracy and waste. And he did all this as the right-hand man of a charismatic president, Carlos Menem, a Peronist with sideboards, charm, guile and, nowadays, a former Miss Universe half his age as a wife. Mr Menem was in many regards a successor to Mr Peron but not, fortunately, an entirely faithful one. He divided the Peronist movement by cutting jobs in the state sector That divide remains to this day. It is now the other side of it, the old-style Peronists, who are returning to power.In the mid-1990s Mr Cavallo's experiment appeared to be working There was fresh faith in Argentina Foreign investment began to come. But the weakness of Mr Cavallo's policy was its centre-point: the fixed currency Argentina was uncompetitive Its exports did poorly. When Fernando de la Rua of the Radical Party won power in October 1999, the economy had been in recession for a year It has never emerged from it.

And perhaps Mr De la Rua's biggest mistake was to turn to Mr Cavallo in March this year, rather than abandoning the fixed currency that was Mr Cavallo's baby.But there was more to the fall of Mr De la Rua and Mr Cavallo than a mistaken currency policy. For years in the 1990s, the reforms Mr Cavallo wanted for Argentina were blocked, often by a faction of the Peronist party that opposed President Menem and was loyal to the man who now assumes the presidency, Eduardo Duhalde. And once the Radical Party's De la Rua was in power, the Peronists went fully into blocking mode Labour laws were not improved. The scandalously high salaries of provincial politicians and the chronic weakness of the provinces' finances were not tackled Red tape stayed in place. Businesses continued to struggle.When President De la Rua fell, just before Christmas, it was looting that brought it about. It was Mr Peron in the 1940s who spoke of the descamisados, the men too poor to have shirts, as he established his fascistic grip on power Now Argentinian workers have shirts but no jobs. But was the looting incited by unscrupulous politicians? The dubious legacy of President Peron is still strong.