Argentina is still in a lot of trouble.
Argentina is still in a lot of trouble.
https://www.youtube.com/watch?v=kR9fpBQ3Fk0
Tag: Argentina
Trump Has a Good Reason to Bail Out Argentina
“Throughout the Greek debt crisis, the overwhelming majority of Greeks wanted to stay in the Eurozone but bridled at the austerity measures required to do so. Today Greece ranks among the top five economic performers in Europe. Unlike Greece, which required international intervention to implement necessary reforms, Argentina took the task upon itself, the voters rebuking establishment parties and taking a chance on a political outsider. If Greece was worth saving, then Argentina is no less deserving of a lifeline.”
https://www.politico.com/news/magazine/2025/10/24/argentina-deserves-its-bailout-00620337
Milei’s Moment of Truth
“Under Milei, inflation has dropped massively. The poverty rate has gone down. Public spending has plummeted, and budget surpluses have appeared. Housing supply in Buenos Aires has totally turned around following the repeal of rent control laws.
…
But “the policy of managing the currency has become a trap,” adds The Economist. “Even after he partially floated the peso in April alongside an IMF [International Monetary Fund] bailout, he has sought to maintain its level artificially high. Defending the exchange rate has cost Argentina billions of dollars in scarce foreign-currency reserves and has pushed interest rates sky-high, creating a drag on growth. Jobs, rather than inflation, are what now worry voters the most.”
Milei had to get a credit swap from the U.S., to the tune of $20 billion (which he must pay back, though the terms of the deal have not been made clear to the public). He secured a similarly massive IMF bailout back in April. He keeps needing emergency credit lines to keep the peso strong, but it’s not clear that this policy is totally working. It makes sense why he would pursue it in the first place: Prices have historically spiraled out of control, and the central bank is not trusted by the people. In order for some of Milei’s less-popular social safety net cuts to be palatable, the people needed to feel like there was some legitimate stability and predictability in their monetary system, lest they revert to favoring Peronism.
…
“Under the exchange rate system that Milei implemented earlier this year, the peso floats freely within a band,” writes Lorenzo Bernaldo de Quirós for the Cato Institute. “When a government tries to maintain a fixed but adjustable exchange rate, it creates perverse incentives. If markets perceive that the currency is overvalued, expectations of devaluation are created, prompting speculators and citizens themselves to take their capital out of the country to avoid losses. To defend the exchange rate, the central bank must use its international reserves, but these are finite.” Reserves are limited; speculators can easily take advantage.”
https://reason.com/2025/10/23/mileis-moment-of-truth/
Trump Wants Higher Beef Prices and Also Lower Beef Prices
“on one hand, the president believes he’s helping American cattle farmers by imposing tariffs on imported beef—particularly beef from Brazil, which is now subject to a 50 percent tariff. (Amusingly, that tariff is officially for “national emergency” reasons, but in reality, it exists simply because Trump got mad at the current government of Brazil for prosecuting his buddy, former Brazilian President Jair Bolsonaro.)
Leave aside the question of whether American cattle farmers are actually happy about this. Let’s just think about the mechanics of what Trump is describing. He says the cattle farmers are “doing so well” because of the tariffs. Presumably, that’s because they can now raise prices. That’s what tariffs do: by making foreign goods more expensive, they benefit domestic producers, largely by allowing them to raise prices in an environment with less competition.
Trump wants cattle farmers to be able to charge higher prices. Well, OK, what he really wants is the cattle farmers to appreciate him for creating the conditions in which they can charge higher prices—but same difference.
But, wait. Trump says he also wants those same cattle farmers to “get their prices down,” because consumers are unhappy about beef prices hitting record highs.
My dude. How is this supposed to work?
I understand that Trump sees tariffs as effectively a magic wand that he can wave around to accomplish literally any policy. But even by that standard, this is a wild set of claims to make in consecutive sentences. The cattle ranchers are supposed to applaud Trump for letting them charge higher prices, and then also save him from the direct consequences of his own policies, I guess?”
https://reason.com/2025/10/23/trump-says-he-wants-higher-prices-and-also-lower-prices/
Bessent inks ‘economic stabilization’ deal with Argentina
“The agreement, which Argentina’s central bank announced Monday, allows for a $20 billion currency swap that’s aimed at propping up the Argentina peso ahead of crucial midterm elections that will determine the political success of President Javier Milei, a staunch ally of President Donald Trump.
…
Beyond the $20 billion of financing for Argentina through the swap, Bessent has said he’s also organizing another $20 billion in financing that will be funded by private lenders or sovereign wealth funds.”
https://www.politico.com/news/2025/10/21/bessent-argentina-economic-deal-00616391
Argentina’s Economy Is Struggling. Why Is the White House Stepping In? | Big Take
Argentina’s Economy Is Struggling. Why Is the White House Stepping In? | Big Take
https://www.youtube.com/watch?v=Bw2YddQ6s18
Milei Raises Government Spending While Pledging Zero Deficit
“The biggest challenge is political. Without a congressional majority, Milei has relied on vetoes to block deficit-boosting bills. By conceding targeted increases, he hopes to blunt those challenges while courting centrists who dislike Peronist populism but remain wary of his radical cures. The October 26 legislative elections will decide whether he grows his foothold in Congress or stays boxed in.”
https://reason.com/2025/09/18/milei-raises-government-spending-while-pledging-zero-deficit/
Trump Is Embracing the Same Economic Populism That Destroyed Argentina
“Aside from his norm-breaking appeal, Milei’s approach is far different than Trump’s. Milei vowed free-market reforms to overturn decades of populist Perónism—a statist ideology that infected Argentina’s politics since Juan Domingo Perón won the presidency in 1946. His authoritarian approach has dominated the country’s politics for 80 years, with Milei beating Perónist opponents.
By contrast, Trump is overturning America’s historical embrace of free markets and free trade. He sets himself up as an all-powerful charismatic leader, inserts the feds deeply into the economy, and expands the reach of police and military forces. Like Perón, he’s doing it in the name of the “working class.” The U.S. Department of State once described Perónism as a “vague concept of social justice in some ways more akin to a religion than a political movement,” which sounds eerily like MAGA.
Perónism is more avowedly leftist than Trumpism, but MAGA’s “right-wing” policies sometimes seem indistinguishable from left-wing ones. Argentina’s populist movement has been successful at one thing: turning one of the world’s wealthiest countries into an impoverished basket case. Americans think of Argentina as a benighted third-world nation. But as economist Dan Mitchell explains, it was the 10th wealthiest nation in the world when Perón took over. It was often viewed as a European nation that happened to be in Latin America.
…
On an unrelated note, Milei isn’t smitten by overseas authoritarians, unlike our president. Overall, Milei is using his power to loosen the government’s grip, whereas Trump—although he occasionally reduces regulations—is centralizing government power. The two men have bad hair and unpredictable temperaments, but beyond that the similarities dissipate quickly.”
https://reason.com/2025/08/22/trump-is-embracing-the-same-economic-populism-that-destroyed-argentina/
Javier Milei’s Free Market Reforms Are Starting To Pay Off
“Argentina’s poverty rate fell sharply in the second half of 2024, according to official data released this week, marking a major milestone for President Javier Milei’s sweeping economic reforms.
According to the country’s official statistics agency, the National Institute of Statistics and Census (INDEC), the poverty rate fell to 38.1 percent between July 2024 and December 2024—down nearly 15 percentage points from the first half of the year. Household poverty also declined by 13.9 percentage points, hitting 28.6 percent. And extreme poverty was cut by more than half, falling from 18.1 percent to 8.2 percent.
It’s a major turnaround from the beginning of Milei’s presidency. When he took office in December 2023, he inherited a poverty rate of 41.7 percent, which quickly surged to 53 percent as his administration launched a “shock therapy” program to end Argentina’s economic misery.
One of the biggest drivers behind the poverty decline is the sharp drop in inflation. Annual inflation, which reached 276.2 percent a year ago—one of the highest in the world—dropped to 66.9 percent last month. Monthly inflation has also dropped, from 25.5 percent in December to just 2.4 percent in February.*
“These figures reflect the failure of past policies, which plunged millions of Argentines into precarious conditions while promoting the idea of helping the poor, even as poverty continued to increase,” Milei’s office said in a statement following the release of the INDEC report. “The current administration has shown that the path of economic freedom and fiscal responsibility is the way to reduce poverty in the long term.”
In other words, Milei’s bet on free market reforms is starting to pay off.”
https://reason.com/2025/04/02/javier-mileis-free-market-reforms-are-starting-to-pay-off/
Argentina Strikes $20 Billion Deal With IMF To Fuel Milei’s Reforms
“But over the past 16 months, the IMF has increasingly praised Milei’s approach, stating that his policies have “resulted in faster-than-anticipated progress in restoring macroeconomic stability.”
Since taking office in December 2023, Milei has rolled out sweeping austerity measures aimed at fixing Argentina’s long-standing economic dysfunction. His administration cut public spending, fired tens of thousands of public employees, eliminated several public ministries, froze infrastructure projects, and slashed subsidies, among other reforms.
The fresh funds are expected to give Argentina some financial breathing room to continue with its reforms. According to the IMF, the latest agreement “supports the next phase of Argentina’s homegrown stabilization and reform agenda aimed at entrenching macroeconomic stability, strengthening external sustainability, and unlocking strong and more sustainable growth.””
https://reason.com/2025/04/09/argentina-strikes-20-billion-deal-with-imf-to-fuel-mileis-reforms/