BUENOS AIRES - With Greece in danger of tumbling into the economic abyss, it faces the haunting memory of Argentina in 2001, when the South American country defaulted on nearly US$100 billion and was plunged into a crisis it is still battling back from.
Like Greece, Argentina had been living beyond its means for years, dating back at least to the country's 1976 to 1983 dictatorship, when the junta jacked up military spending.
In December 2001, in a bid to stop the run on banks, economy minister Domingo Cavallo ordered nearly US$70 billion in bank deposits frozen.
For a 90-day period, people were barred from withdrawing more than 250 pesos - then worth US$250 (S$330) - a day. That sparked riots and a government crackdown that left 33 people dead.
The Argentine economy returned painfully to growth at the end of 2002, but the hangover lasted far longer.
Two US hedge funds that had bought up defaulted Argentine debt for pennies on the dollar, billionaire speculator Paul Singer's NML Capital and Aurelius Capital Management, sued Argentina in the US courts for full payment and won.
Greece will at least be spared that part of Argentina's travails. The Argentine experience led to the addition of majority clauses to debt contracts, so that investors must accept restructuring deals if they are approved by more than 50 per cent of creditors.
The fallout of Argentina's crisis was relatively limited.
However, that will not be the case if Greece defaults on its debt, said economic analyst Juan Pablo Ronderos of consultancy Abeceb.com.
"A Greek default would have more painful consequences and a definite impact on the euro zone," he said.
"These traumatic exits are never good."