Yesterday, Mr Clinton abandoned the plan - due to what a White House spokesman described as the "enormously difficult" task of winning congressional approval for the rescue package. The replacement package, backed by the IMF, effectively bypasses Congress.
What went wrong with the loan guarantee plan? Partly it was a problem of leadership: Mr Clinton failed to explain to the American people what he was doing and why.
Partly it was a function of the extraordinary political influence that ordinary Americans have in the current populist climate over matters of government they know little about.
The results of a number of opinion polls consistently showed that more than 70 per cent of Americans were opposed to the bail out. Senator Dianne Feinstein, a California Democrat, who would normally be expected to support her party's president, said: "I know no one in the financial community who is against this. I know no one in my constituency who is for it. "
Another Democratic, Senator Joseph Biden, made the point that "to economists" the loan guarantee might make sense, but "back home, it's not a very neat answer."
Mr Gingrich, the Republican leader of the House of Representatives, reacted with unease to the murmurings on the Democratic benches. He said he was prepared to stick by his word to President Clinton and try and persuade his no less dubious Republican congressional colleagues to vote in favour of the Mexican package - but not if the Democrats were going to overwhelmingly vote against it.
As an exercise in democracy it was impressive. The people spoke, the members of Congress listened and, fearing they might lose their posts the next time they came up for election, tailored their responses accordingly.
But what, if anything, do "the people" know about a subject which, as the American ambassador to Mexico, Jim Jones, said yesterday, is very difficult and complex? Writing in the New Yorker this week, Michael Kinsley, one of America's leading liberal commentators, cited a recent opinion poll by the University of Maryland which showed 75 per cent of Americans thought the United States spent too much on foreign aid.
Asked how big a share of the federal budget went on foreign aid, the average response was 18 per cent. Five per cent, most respondents agreed, would be appropriate.
The truth is that less than one per cent of American taxpayers' money goes on foreign aid.Reuse content