Spain, Greece, and Portugal Should Quit the euro. It’s the only way to save their doomed economies.

But when the world economy hit a snag in 2001, trouble emerged for Argentina. Unrelated hidden risks were revealed elsewhere in the global investment landscape and everywhere people got nervous. The foreign capital began to abandon Argentina, reducing investment, employment, and incomes. This in turn sharply reduced the Argentine government’s tax revenues and led to calls for sharp budgetary consolidation. Tax hikes and spending cuts, however, further weakened Argentina’s domestic demand and exacerbated the social crisis. In December of 2001, things came to a head. The IMF refused to release previously agreed-upon bailout funds, arguing that Argentina was welshing on its fiscal commitments. Protesters and rioters took to the streets. President Fernando de la Rua’s party took a beating at the polls. Argentina defaulted on its external debt, broke the rigid linkage between the peso and the dollar, and went back to pursuing an independent monetary policy.