Too big to succeed

On December 20, 1994 Mexico's newly installed president Ernesto Zedillo devalued the currency, the peso, by 15%. As a candidate he had said he would "defend the peso like a dog." That day the peso went from 3.47, where it had been for a year, to 3.95 and the trading floors of Wall Street were filled with the sounds of barking dogs.On that day I was in research working with the emerging markets trading desk of Salomon Brothers. They had invested heavily in Mexico, as had most of the major investment banks. [More]