Ones and Tooze Trump and Latin America
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Sep 26, 2025 The discussion delves into how Donald Trump's policies are reshaping U.S. interactions with Latin America, specifically the economic turmoil in Argentina and Venezuela. The hosts analyze Argentina's crisis under President Milei and the implications of U.S. intervention. They also explore the complex U.S.-Mexico relationship regarding drug wars and military action, contrasting it with Brazil's independence. Additionally, a fascinating segment on AI investment highlights potential bubbles, profitability paths, and the lasting impact of tech hype.
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US Swap Line Is Politically Timed
- The US arranged a $20 billion swap line to Argentina to stabilize the peso and back President Milei politically ahead of elections.
- Adam Tooze calls this an overtly partisan, strategic bailout to prop up an ideologically friendly government.
Austerity Plus Peg Left Argentina Vulnerable
- Milei cut spending and forced deflation to curb runaway inflation but left exchange controls partially in place, creating a fragile pegged exchange regime.
- That mix left Argentina vulnerable to speculative attacks once reserves proved insufficient to defend the peso.
Treat Swap Lines As Temporary Liquidity Fixes
- Treat the swap-line as a liquidity fix, not a structural cure; policymakers should expect ongoing fragility after lending.
- Ensure transparency on collateral and risk sharing to avoid hidden political exposures for taxpayers.