[donavanm]

Its intervening to save a democratic and aligned country from yet-another economic collapse and political crises at their upcoming national elections. Not dissimilar to what the us did for mexico during the peso crisis and revaluation in the 90s.

I dont know why “bail out” is the headline term, it’s closer to a “currency backstop” AFAIK. The us is effectively extending hard dollars in exchange for pesos, allowing the argentine govt to not be destroyed in the open currency markets. If this works the peso would retain (or gain) value as the country recovers (economically, due to the ongoing reforms) and the us could feasibly even profit.

On the USD and peso backstop its important to note that “dollarization” was a big talking point for milei. But argentina never had anywhere close to enough USD reserves or even USD economic flows to make that at all feasible ever. Like many many billions away from plausible. So there was a background theme of trying to catch them out on that as well since the last elections.

Edit: and for context the current run against the peso is effectively because of dumb milei posturing ahead of regional elections, and a strong populist/peronist result. Lots of fear that if its repeated at the upcoming national elections then argentina goes back to kirchner style populism and debt/economic blow up.

[coliveira]

The only people who will benefit from this are the financial elite in Argentina who are selling pesos and getting dollars as quickly as they can, and the hedge funds who invested in Argentina and need a way out. The current government, which is a bad joke, will never win anything else. The economy will continue to go south because this plan doesn't work even in the short term.

[donavanm]

I personally think milei the politician is a clown. And many of his statements are just offensive to anyone who can spark two braincells together. I also thought he was going to burn it all down in a blaze of hubris after his election.

But its hard to argue with arresting the inflation, gdp, and budget surplus numbers. Im not sure how the economy is “going south.” Generously the policies have arrested the slide?

I dont imagine the typical argentine is better off with 200% inflation, 50% unemployment, and a 57% poverty rate. Avoiding that return seems to be quite a benefit for just about everyone?

[watwut]

It is easy to arguw with those. The plan of artificially keeping currency is not a new one and was tried multiple times before.

Each time, you have initial seeming success and then crash.

[Daishiman]

> But its hard to argue with arresting the inflation, gdp, and budget surplus numbers. Im not sure how the economy is “going south.” Generously the policies have arrested the slide?

Sure it is. Public education and science funding is at a historic minimum that is destroying tons of long term scientific and educational initiatives. Roads are falling apart in a gigantic country and what’s left of rail is being scrapped for parts and sold to private entities that will let rails decay just like everywhere else where it was privatized.

Consumer spending continues to go down, industry is not competitive with this fake exchange rate causing a loss of high quality jobs and forcing everyone to take a second job as an Uber driver.

We’ve seen this play out again and again. The government will default, then hyperinflation and social crises until the low prices of everything make the economy competitive again.

This has played out again and again with far more competent governments and we keep being right about it.

[nradov]

The Argentinian government was literally out of cash. There was nothing left and no ability to borrow. So complaining about cuts to education, science, and transportation seems a little silly. How exactly were they supposed to pay for it?

In the long run there are things they can do to raise revenue and cut waste. But when you're stuck in a deep hole the first thing you need to do is stop digging.

[rightbyte]

One way to cover expenses is to raise income. The dude running the gov is a libertarian. I don't think he sees running out of other peoples money as a problem. It might be the point. "Big gov".

[nradov]

I don't think you understand the severity of the cash crunch they were facing. How exactly could they raise government revenue fast? Tax rates were already high and compliance was low. Can't get blood from a stone.

Longer term they could maybe sell off some state assets but it takes time to bring in any cash that way.

[AbraKdabra]

> is at a historic minimum that is destroying tons of long term scientific and educational initiatives.

Education was always shit. I live in Argentina, the PISA results from last exam are demential and I doubt they can get worse, don't lie to people please. There's absolutely no way in the world education can get to today levels in one and a half years of Milei.

> Roads are falling apart in a gigantic country

Roads were NEVER good, either you don't live in Argentina and you definitely can't have an opinion, or you live here and never left your house. Again, please don't lie to people, we have been living in hell for 20 years, nothing breaks like you say in one and a half years.

> and what’s left of rail is being scrapped for parts and sold to private entities that will let rails decay just like everywhere else where it was privatized.

Whoa you have a crystal magic ball? The kukas governed for 20 years, don't tell me all the railroad system decayed exactly when Milei assumed...

[Daishiman]

"Kukas"

Ok, good to know you have no idea what you're talking about.

Everything you're saying is hyperbole. "Things are bad" is not a serious talking point. Things are relative and between the education in Zimbabwe and Denmark there is a huge gap.

[clipsy]

> I dont know why “bail out” is the headline term, it’s closer to a “currency backstop” AFAIK. The us is effectively extending hard dollars in exchange for pesos, allowing the argentine govt to not be destroyed in the open currency markets. If this works the peso would retain (or gain) value as the country recovers (economically, due to the ongoing reforms) and the us could feasibly even profit.

If.

[nocoiner]

No no no, you don’t get it, it’s not a “bailout,” it’s simply a “magic bean repurchase facility” whereby dollars are made available to holders of magic beans. When the magic beans sprout and reach the sky, the profit could be considerable.

[donavanm]

FX is magic beans? I guess if youre of the mind that “fiat is theft”. But in that case Im not sure why youd care if you can always go back to farming (digital) gold.

Although, to be fair, I can see the perspective that argentine _debt_ is magic beans funded by hopes, wishes, and the IMFs argentine refinancing.

[sofixa]

> FX is magic beans?

> Although, to be fair, I can see the perspective that argentine _debt_ is magic beans funded by hopes, wishes, and the IMFs argentine refinancing.

Exactly. FX isn't magic beans. The currency of a country that has defaulted more time than anyone cares to remember is magic beans though.

There is a reason for the old saying "There are 4 types of economies - developed, developing, Argentina and Japan".

[8note]

couldn't the US do better by buying the pesos after the crash, and then when the argentine peso regains its value as part of recovery, the US gets a bigger profit?

[jordanb]

Argentina wouldn't be "destroyed" by a currency devaluation. But Milei wants to keep the Peso strong so his upper/middle class supporters can keep buying electronics and going on international vacations.. at least until the next election.

[durandal1]

Normal productive people doing normal stuff reframed through the lens of pettiness and jealousy.

[Daishiman]

Keeping middle class salaries artificially high while destroying high value industry and increasing debt isn’t pettiness.

Are you Argentinian? Do you even realize this is at least the third or fourth time in the country’s history where this exact scenario has happened?