“Cecily, you will read your Political Economy in my absence. The chapter on the Fall of the Rupee you may omit. It is somewhat too sensational.”
—Miss Prism in The Importance of Being Earnest by Oscar Wilde
Poor Cecily, condemned by her governess to study a tedious textbook, is at least spared the driest chapter, on the collapse of an obscure foreign currency. Miss Prism’s notion that such an event could contain any excitement for a healthy ingénue sounds pedantic and absurd. But could she have a point? Certain economic crises, precisely because they occur at an abstract remove, have some of the sickening allure of a horror story, or of a myth in which a merciless god threatens to wipe out a city at some unspecified date in the future. Unlike, for example, hyperinflation—when prices jump so fast that the cost of bread rises by the time you get home from the store, a situation so viscerally unpleasant that even an economic illiterate can grasp its dimensions—this kind of crisis lies sleeping, out of sight. For the time being it may remain safely shut up in the attic; in the end, with luck, it may even prove to have been imaginary. But once awakened it is capable of slipping the lock unnoticed, padding silently down the stairs, and taking a country hostage.
Last December, such a specter began to haunt Mexico. Around the world, from Mexico City, Wall Street, Tokyo, Berlin, and (to pick an example) a retirement home in Florida, where a trusting pensioner was informed that the emerging-market portion of her mutual fund had failed to perform as expected, all sorts of hypotheses have been advanced to explain how this sad situation came to pass. To begin an inquiry at the most concrete—the human—level, let us assume that at a critical moment the people who run Mexico’s economy simply made a mistake. The time of the bogeyman’s appearance on the scene was Monday, December 19. The hapless messenger—the man who had to reassure the public while announcing the government’s suspicion that someone may have jiggled the lock on the attic door—was Mexico’s minister of finance, Jaime Serra Puche.
Serra was new to the job—he had been sworn in on the first of December, the same day that Mexico’s new president, Ernesto Zedillo, took office—but having served as the minister of commerce under the previous president, Carlos Salinas de Gortari, he was not entirely new to power. Signs so far indicated that he and Zedillo would continue, in spirit, the work of a team of bureaucrats who formed an elite reform wing of the political party that has ruled Mexico for sixty-six years, the Partido Revolucionario Institucional (PRI). Now, about these men (yes, they are all men) there has, until recently, been a myth of prowess and accomplishment, as there would be about a team of ace Olympic athletes, and a grasp of this …