Argentines cling to last pesos

Argentina is suddenly the world's largest laboratory for a cashless society.

Since the Argentine government took the extraordinary step of closing the nation's banking system last weekend, the country's 36 million people have been plunged abruptly into penury. Automatic teller machines are empty. Bank doors are bolted shut. Perhaps for the first time in Argentina's history, lawyers and laborers, models and maids are experiencing a similar hardship.

"People who were planning to go to Europe can't even go to the supermarket now," says Verónica Palmieri, a leading fashion illustrator.

The streets of Buenos Aires are normally teeming with night life. But an eerie quiet has settled on the capital, as diners, theater-goers, and party animals opt to stay home to save their pesos. "This is a disaster," explodes Omar Vlacich, a taxi driver, after hours of vainly trolling the streets in search of a customer. "It's so quiet, it's like the city died."

With no access to cash, Argentina's sophisticated and cosmopolitan middle classes are turning to the country's fastexpanding barter clubs, once the preserve of the jobless and desperate, to survive. The national daily newspaper Clarín ran a cover story recently when a barter club opened in Barrio Norte, one of the most upscale neighborhoods in the capital.

Many saw the event as yet another sign of the death of the middle class. "A new group is emerging from the middle class in Argentina," says Sylvia Baez, a charity worker. "They're hungry, they have inadequate clothing, and they have anguish in their faces. We call them the 'new poor.' "

Until this week, the country's four-year recession has hurt most deeply those on the bottom rungs of society. With the jobless total reaching 20 percent, a currency whose value has plummeted by some 70 percent since January, and a threadbare welfare benefits system, real hunger has appeared for the first time in Latin America's second largest economy.

President Eduardo Duhalde halted all banking operations and foreign-exchange transactions, effectively closing the banks. Yesterday, Argentina's Senate voted to strengthen the banking freeze. Argentines have been going to court to gain access to their money. The legislation will allow the government to appeal any court ruling before the depositor can receive their money.

Mr. Duhalde had hoped the freeze would help prop up the country's banking system, reeling from the outflow of about $100 million a day as depositors sought to withdraw their savings before the value of the Argentine peso plummeted further.

But the move has inflicted hardship on all levels of Argentine society. "Even the privileged are feeling the pain now," says Ms. Baez, the charity worker.

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