Milei Or Melee?
Let's be upfront about one thing: Brash politicians peddling quick fixes to intractable domestic problems, and particularly domestic economic problems, are, almost by definition, charlatans.
The tale of the audacious demagogue who exploits widespread domestic disaffection to hijack a nation's politics with combative, incendiary rhetoric is as old as the hills. It's a playbook run again and again by opportunistic firebrands who, more often than not, lead their countries down the road to some ki
We’ve seen this movie before. It plays on a loop. Back when I was on a bank credit committee, I had a international finance textbook with league tables for most sovereign defaults and number of years in default that I used to enjoy bringing to sovereign reviews. Google tells me that Venezuela has now passed Ecuador for number of defaults (11), but that Argentina is working hard to catch up (9, but 3 in this century!). The amazing thing is not that it happens, but that there is occasionally someone who voluntarily gives them new money .
Isn’t the dollar pretty close to being the de facto currency there anyway. Protecting monetary sovereignty is a good idea in principle ….but what monetary sovereignty do they actually have that’s worth protecting ?? Argentina has so many natural and agricultural resources without a large population nor entrenched cultural/relegious conflicts. Whatever socialism they have hasn’t worked. Uleashing the private sector may be worth a try.
Yeah, but you can’t “just dollarize.” There’s an actual process you have to go through to get it done. You can’t just walk out onto the balcony one morning and declare the economy dollarized. Assuming you actually implement it (not easy depending on your circumstances) then you have to deal with it. If your economy and fiscal policy isn’t well suited for it, it’s a recipe for problems. Here: https://heisenbergreport.com/2023/11/20/can-argentina-really-dollarize/
Apart from the dollarisation difficulties, I wouldn’t think “unleashing the private sector” (probably a good idea in Argentina though I am hardly an expert) really requires dollarisation… so why bother vs. “not monetizing government debt/budget deficits”.
+1 on Bill W. point about new money.
But also – that’s a new one, a libertarian against abortion… I can tell philosophical coherence is going to be a low priority for that guy and that doesn’t bode well for his economic program…
There’s precedent for it. It all depends on when the “libertarian” thinks life begins (often with religion-based reasons). Ron Paul was pro-life, for instance. He tried to split the difference though, saying that while he was personally pro-life, abortion policy should be left up to the individual states.
That’s not what libertarian means, though… “abortion policy should be left to the individual” is the correct libertarian position.
The Milei presidency can lead to disastrous results, I will acknowledge that for the reasons you highlight and for many others more specific to life in Argentina. I’m still glad he won, if nothing else for the entertainment value and because it will be an experiment of sorts. And honestly, what choice did Argentinians have? Massa was the economic minister that presided over economic calamity, at some point you need to gamble a Hail Mary pass, it will probably lead to defeat and disappointment but it is what you do in desperate times. I will root for Milei’s success, not just for the benefit of Argentina but also because if he does well it will infuriate Petro in Colombia and Maduro in Venezuela and will counterbalance the recent move to the left in Latin America, which has resulted in more misery than progress since the days of Hugo Chavez, particularly in Venezuela. That alone is enough reason to cheer for the chainsaw mad man in my book…
Argentina ETF jumped 12% today and has greatly outperformed LatAm ETF over the past few years, even while Argentina’s economy has gone from bad to worse to worser than worse. And that’s in USD no less. I don’t know enough about Argentina to understand that, and am not sure it’s not intrinsically beyond me, but it’s a curious thing.
Obvious to me that Argentinians are fed up with previous political elite. Quite right. Maybe you need someone who thinks differently. Having said that, Milei comes across as unhinged – so I hope there is someone near him that ‘guides’ him a la Antony Blinken. What are the chances that Argentina converts any hard assets – i.e. gold, land – to bitcoin? Michael Saylor has tested this idea with Turkey.
I see that Milei is already appointing ex-Wall Streeters and holdovers from the prior administration to his government, and backing away from his campaign bombast.