It makes a nice change to read scathing critiques of Milei’s disastrous economic program from the right as well as the left.
Argentina is scheduled to hold mid-term elections in a few weeks’ time, and Javier Milei’s government is once again in the spotlight for all the wrong reasons. As we reported a few weeks ago, the economy is back in crisis mode just months after receiving the first instalments of a $42 billion bailout package from the IMF, World Bank and Inter-American Development Bank — a bailout over which high-ranking IMF officials resigned or were fired for refusing to greenlight.
In July, the Argentine peso posted its worst month since Milei devalued it in December 2023. In recent days, JP Morgan Chase has cut its 2025 growth forecast for the Argentine economy for 2025 from 5.3% to 4.7%. That came on the heels of a slowdown in the second quarter of this year. The latest reports suggest that economic activity shrank in July (on a month-by month basis) for the fifth consecutive month.
Another Looming Default?
Ten days ago, the government tried to roll over bonds by offering investors what should have been a mouth watering 69% interest rate, yet only succeeded in rolling over 61% of them. As the Palestinian-Jordanian libertarian economist and prominent Bitcoin advocate Saifedean Ammous notes, the fact that “even a 69% annual interest rate isn’t enough to tempt investors to risk lending to the Milei ponzi… means they either expect a default very soon, or they expect price inflation to exceed 69% over the next year.”
If the peso continues to plunge, inflation could once against surge (it’s still at 36% annually). Meanwhile, unemployment is at a four-year high. Car sales continue to slide while industrial production shows no sign of recovering from Milei’s chainsaw austerity, with output levels at their lowest since 2007.
A new study by the Faculty of Economic Sciences of the University of Buenos Aires suggests Argentina has “lost its lure” among multinational companies and foreign investors. For all the promises of foreign money pouring into the country, the reality has been quite the opposite. Now that the government has lifted capital controls, at the IMF’s insistence, the money is flowing the other way.
Perhaps unsurprisingly, distrust in the government is on the rise, reports Perfíl. According to one survey, almost seven out of 10 (67%) Argentines say they do not believe that the government’s official inflation figures reflect their true cost of living.
Ripping Off the Disabled
That distrust is almost certain to have grown in recent days with the eruption of yet another sordid scandal involving senior Milei officials. Last week, audio recordings leaked to local media purporting to show Diego Spagnuolo, President Milei’s personal lawyer and the head of the country’s disability agency, describing a kickback scheme tied to government health contracts for the disabled that funnelled money to top officials, including Milei’s own sister, Karina.
Other alleged participants in the scheme include Eduardo and Martín Menem, two nephews of the former President Carlos Menem who both hold senior roles in Milei’s government. As readers may recall, Carlos Menem was the man whose neo-liberalisation of the Argentine economy and harebrained one-to-one peg of the Argentine peso to the dollar helped pave the way for Argentina’s 2001 default and resulting IMF bailout.
That, in turn, set the stage for bank runs, the subsequent harsh restrictions placed on bank account withdrawals (in dollars) — the so-called “corralito” — and the inevitable devaluation that ended up wiping out the savings of millions of Argentines. Of course, before the restrictions came into effect, foreign investors, political insiders and Argentina’s business elite were tipped off, allowing them to get their money out of Dodge.
It is not hard to see the same happening in the coming months, probably shortly after the mid-term elections. All the pieces are certainly in place. Once again, an IMF bailout will be used to subsidise capital flight so that Argentina’s wealthiest businesses and citizens can yank their money out of the country before the currency collapses — all on the government’s tab.
Readers may also recall that one of Milei’s campaign pledges was that he would do away with Argentina’s political caste, just as Trump pledged to drain the swamp in Washington. It would be the elite, Milei said, not ordinary working people, who would bear the brunt of the structural adjustments needed to transform Argentina into a viable, flourishing economy.
It was a lie, of course. Many of Argentina’s political elite ended up filling senior government roles in Milei’s government, including Luis Caputo, the former JP Morgan Chase banker who helped create the conditions for Argentina’s 2018 default.
As always, it is the poor and middle classes, particularly those of pension age, that have borne the brunt of the economic pain, all of it applauded by the IMF and Western media…
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Nick Corbishley 