As the Argentine capital grapples with an economic nightmare, it's also awakening to a new vision of itself.

Zapa is a locksmith. A good-hearted country boy, he is duped into opening a safe and then set up for the theft that follows. This being the countryside, where everyone knows everyone, nobody involved wants him to suffer unduly for his naïveté. He is given an out: a bus ticket to the fringes of the big city and a job with the local police.

What happens next is the subject of El Bonaerense, Pablo Trapero's unflinching study of a cop's life in the bleak hinterlands of Buenos Aires that has been filling movie houses across the city. Not incidentally, this story of corruption and quiet desperation is also a metaphor for a country laid waste by economic crisis and losing its bearings under the strain.

Trapero, 31, is one of a new generation of Argentine filmmakers now looking at their disintegrating country with an unsentimental eye, and helping define what it means to be Argentine in the process. The public's enthusiastic response—not just to Trapero's films but to recent endeavors in art, music, and the theater—suggests that porteños, the residents of this most vital and garrulous of cities, are questioning long-held assumptions and searching for a way forward. Such defiance is new for a country that has lurched from crisis to crisis like an inveterate drunk. Whether it will last and where it might lead is anybody's guess.

Buenos Aires is largely a creation of the early years of the last century, when wheat and beef from the pampas fed the world and made the country rich. Argentina's time in the sun was as short and extravagant as a gold rush, ending promptly with the Great Depression. But it sustained an enduring illusion that this great city, with its French architecture and English social trappings, is not Latin American at all but actually part of Europe.

Such exceptionalism proved costly: fixating on a golden past made it hard to deal with an invariably messy present. It allowed the generals who savaged the country during the military dictatorship of 1976 to 1983 to plead that they were protecting civilization from barbarism. And it explains, in part, why Argentina so eagerly embraced the prescriptions of the free-market purists—the so-called Washington consensus—which seemed to confirm that this was, after all, a First World country. That's a notion most porteños laugh at now.

Throughout the 1990's, Argentina was the blue-eyed boy of the international financial community, privatizing nearly everything that moved and throwing open its markets to the world. The country also pegged the peso to the dollar, banishing hyperinflation almost overnight. But the expensive currency priced Argentine products out of overseas markets, and financing the country's fast-expanding debt became increasingly difficult. As the recession that began in 1998 worsened, Argentina edged ever closer to default.

On December 1, 2001, President Fernando de la Rúa froze most deposit accounts to prevent a run on the banks. Five weeks and four presidents later, the government severed the link holding the peso at parity with the dollar and converted most dollar deposits into pesos. Businesses went bust in droves, throwing countless workers onto the street. Unlike the wealthy, who had the means and the experience to park their dollars overseas, much of the middle class was pauperized instantly, its money trapped in the bank and devalued as the peso floated free.

Today, former bank clerks and office workers trade their refrigerators and TV's for food in the barter clubs that have sprung up all over the city, and once-"respectable" families swarm the streets after dark to dig through garbage for any recyclables they can sell. Outside Buenos Aires, some have died of starvation, a fate almost unimaginable in a country this fertile.

On my first visit to Buenos Aires since the seemingly halcyon days of the mid-1990's, the city center still feels enlivened by that mixture of melancholy and hope, romance and cynicism that is the essence of the tango. Elegant women and besuited young men pour out of offices into the damp sheen of evening. In old cafés like the Tortoni or the Richmond, white-jacketed waiters dance meticulous attendance on porteña matrons and elderly gentlemen in three-piece suits and silk foulards. Throughout this most carnivorous of cities, tables are being laid for dinner, steaks readied for a thousand grills.

But if the many bookstores may be full of browsers sizing up Gabriel García Márquez's autobiography or the latest from Isabel Allende, the designer stores and fur emporia draw only window-shoppers, and the entire city seems to be on sale. Pesos are tight and the price of anything imported has quadrupled in the past year. Those carrying dollars come armed like conquistadores, able to commandeer a room at the Claridge Hotel for $100, dine out gloriously for $5, and cart home their weight in leather for a few greenbacks. And crime has become a problem: the farther and the later one ventures from the center, the more wary one must be.

The overall mood has also changed utterly. Politicians are pilloried as corrupt betrayers. Foreign banks, despite their denials, are accused of having spirited away all those Argentine dollars before the boom fell. "Everyone knows now that it was a setup," says one lawyer turned actor. I hear this refrain constantly, and it has a certain justice: the International Monetary Fund continued to urge austerity as the economy plunged into recession.

The gloom on the streets does not necessarily translate into defeatism. As of November, the economic situation had stabilized and there were signs of progress in restructuring Argentina's debt. Where previous crises might have elicited a shrug of the shoulders and a lament for better days, the shocks of the past year appear to have inspired a new sense of solidarity in this city traditionally polarized along class lines.

"There is a realization now that people are lucky or unlucky, not bad or good," Pablo Trapero tells me when we meet in his tiny, cluttered studio in the leafy suburb of Palermo. "Everyone is just trying to survive." He believes this sudden awareness of a common fate has evolved into a determination to confront reality head-on, in film as much as anywhere else. "El Bonaerense"—the name means someone from the province of Buenos Aires, as opposed to a porteño—"is not a movie about dreams, and it is not a commercial movie," he says. "It is about a policeman and police corruption. And yet people are responding in different ways." While some see the film as comedy, Trapero recalls that after one showing, a woman "came up to me with tears in her eyes and said, 'We have to change all this.'"

Trapero grew up during the military dictatorship, which devastated the economy and "disappeared" as many as 30,000 Argentines. He says now that he caught only hints of the "dirty war" going on outside his father's auto supply shop: a brief glimpse of a leftist priest hidden in his church school; a frightening search of his parents' car by heavily armed soldiers looking for guns. But he has always known about crisis. "As a kid, you heard that this was the worst situation ever, but you grew up realizing that it could always be worse. This time is different," he says. "This time it really is as bad as it could be."

Theater sponsorship may have dried up, film financing shriveled, galleries shut down, and international opera singers and rock bands stayed away, but the people of Buenos Aires are flocking to the arts, their arts, as never before. Gabriel Senanes, the newly appointed head of the legendary Teatro Colón opera house, was previously the city's music director. "The paradoxical thing was that in the midst of crisis, people wanted more and more culture. We were putting on more than a hundred and fifty events a month and they were selling out," he says. "This isn't just about economics, it's about identity. Asking ourselves who we are has always been a favorite Argentine sport. Maybe now we are really looking for an answer." On a threadbare budget, Senanes is working to lure the stars back to the splendidly ornate Colón, touting the theater's wonderful acoustics, its fine orchestra, its knowledgeable public.

Orly Benzacar, who runs the prominent Ruth Benzacar Art Gallery, agrees with Senanes: "Argentina is only starting to build an identity. There was always a fiction here that we were closer to Paris or New York or Miami than to Latin America. But this crisis is us as we are, collecting garbage in the streets. It is painful, but it is necessary."

Still, the arts scene is bubbling. "There is a huge cultural effervescence right now," Benzacar says. "A month ago, [the newspaper] La Nación counted a hundred and forty theater productions in the city, from establishment theaters to the courtyards of people's houses. Desperation makes for great creativity." Art historian Laura Batkis talks of young artists using whatever materials they can afford and taking the presentation of their work into their own hands. She points me to alternative galleries above restaurants or in the back rooms of bars. "There is a lot of nationalism here," she says, "a sense that you have to resist, that you must stay and fight."

The old faces still dominate politics, however, backed by entrenched machines that are monuments to self-interest. Though plenty of protest groups exist, there is little sign of a coherent movement emerging from the demonstrations of a year ago. That may be because of a disdain for politics or a fear of the kind of authoritarian backlash with which Argentines are queasily familiar.

Something is happening here all the same. As Jorge Luis Borges famously described the founding of Buenos Aires by the Spanish four centuries ago: "They set up a few tremulous ranches along the coast and fell asleep homesick." It is too early to tell, but perhaps this complex, sophisticated city of immigrants is finally waking up from the uneasy sleep that has been its undoing all these years.

Cost-wise, there is no better time to visit Buenos Aires. Flights from the United States average about $350, hotels are 60 to 70 percent off, and anything made in Argentina is going for a song (but avoid the swanky Recoleta area, where much is priced in dollars). There are good little restaurants around the antiques market in San Telmo, and at Puerto Madero's renovated warehouses a three-course lunch with a glass of wine comes in at $3. As for hotels, even some of the more expensive, like the Four Seasons (1086 Posadas; 800/332-3442 or 54-11/4321-1200;; doubles from $280), will have special offers. You just have to ask.

The city has recently hired multilingual tourist police officers to provide assistance and help deter crime.

Four Seasons Hotel Buenos Aires