Unhedged Will the US bail out Argentina?
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Oct 23, 2025 
In this discussion, Michael Stott, the Financial Times' Latin America editor, delves into the unusual U.S. proposal to aid Argentina amidst its economic strife. He explores the flamboyant Javier Milei's anarcho-capitalist policies and their implications. The conversation covers Argentina's strained peso, the historical context of Peronism, and how U.S. support might affect domestic politics. They also touch on the broader perspectives of U.S. banks and hedge funds, raising questions about the sustainability of Milei's regime with this potential lifeline.
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Milei's Personality Masked Structural Problems
- Javier Milei is a flamboyant, unconventional president whose shock tactics attracted voters tired of Argentina's chronic mismanagement.
- His style hid the scale of economic challenges that later exposed weaknesses in policy credibility.
Rapid Fiscal Fixes Had Hidden Costs
- Milei quickly cut spending and halted money printing, achieving one of the most drastic fiscal adjustments anywhere.
- Those moves reduced inflation pressure but kept the peso overvalued and depressed economic activity.
Exchange Rate Anchor Drained Reserves
- Milei used an overvalued exchange rate as an anchor to fight inflation, which maintained credibility risks.
- That overvaluation weakened the economy and left Argentina short of dollar reserves for upcoming debt.