Argentine peso weakens to fresh low despite US interventions
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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.
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?
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?
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.
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.
Longer term they could maybe sell off some state assets but it takes time to bring in any cash that way.
Seriously, what was the alternative? If you have no money and no one will lend you any money then the only remaining options are to run the printing presses (hyperinflation) or stop spending.
What's been done instead? Open currency markets while intervining to keep the US dollar artificially cheap, losing productivity and competitiveness and thus losing taxable income while funding cheap imports for consumer goods.
There was no technical reason to cut budget to that level. It pure ideological motivation.
You clearly don't. There was 2100% annual hyperinflation on the day Milei assumed. "Specialists" said that cutting inflation to monthly single digits couldn't be done, period.
Milei did it in less than 6 months.
The current predicament is a political one, not an economic one.
He allowed Argentinians to finally experience the freedom of a floating exchange rate. Under normal circumstances, if the Argentinians decided they had enough of the peso and wanted to forcefully commit to the USD, they could do so at whatever rate was offered.
The political problem is that now there's an election this weekend, and he now has to explain why Argentinians (and investors) don't want pesos if the FX goes too high. He should not have put the govt in the position to defend a peso... that Argentinians themselves do not want.
After the election, there will be nothing to speculate against, the currency will find whatever equlibrium was needed, and the "specialists" will go back to their corner, where they hide for being wrong.
Again.
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...
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.
Each time, you have initial seeming success and then crash.
If.
Although, to be fair, I can see the perspective that argentine _debt_ is magic beans funded by hopes, wishes, and the IMFs argentine refinancing.
> 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".
Sometimes it really is that simple.
https://paulkrugman.substack.com/p/bailing-out-bessents-budd...
https://www.nytimes.com/2025/10/09/us/politics/argentina-bai...
https://www.motherjones.com/politics/2025/09/trump-argentina...
Maybe there's some more elaborate way this will enrich certain American cronies. Maybe.
But I tend to think the answer comes if we look back 80 years. A lot of bad evil people needed a friendly state to run to after WWII ended. Today, beyond just being friends-of-an-(evil-doing)-feather together with some other exploitative public-services-destroying extremists, part of me thinks, maybe perhaps: Argentina is being set up as a new exit, a new place to flee too, when justice comes a calling.
> Citrone, the co-founder of Discovery Capital Management, is also a friend and former colleague of Bessent—a fact that has not been previously reported in US media outlets. Citrone, by his own account, helped make Bessent very wealthy.
I think it's simply that Bessent can give his buddy (Citrone), who made him (Bessent) "very wealthy," a bailout at zero cost to any of them. $20 billion is really insignificant for the US government, even if a gross waste of tax dollars, and they know there's not going to be a single repercussion.
> Argentina is being set up as a new exit, a new place to flee too, when justice comes a calling.
I too have been thinking that lately. It wouldn't be ideal for any of them but, from their perspectives, it surely would be better than the alternative.
It's a good thing he didn't give into hyperbole...
https://ph.ucla.edu/news-events/news/research-finds-more-14-...
> Forecasting models predicted that the current steep funding cuts could result in more than 14,051,750 (uncertainty interval 8,475,990-19,662,191) additional all-age deaths, including 4,537,157 (3,124,796-5,910,791) in children younger than age 5 years, by 2030.
https://www.thelancet.com/journals/lancet/article/PIIS0140-6...
Sometimes you have to go by circumstantial evidence which, in this case, is quite clear: Rob Citrone helped Bessent to make a lot of money, Citrone is deeply invested in Argentinian bonds and overall economy; Bessent controls the US purse, we can be very suspicious about this move since it doesn't make any sense for the US to burn money to help bail out Argentina.
If you have a better theory for why this was done it might help reduce the suspicious nature of it. Just calling "there are no sources" doesn't.
So the US lends $40B to Argentina as a backstop to their currency controls.
That seems like a much more reasonable scenario than Bessent convincing Trump to use money to help his investing buddy?
2. What kind of god-king wouldn't reward his friends and allies?
Trump doesn't want Milei's government to fail, he needs successful examples of neoliberal, anti-woke, populist, anti-inmigration governments and Milei is probably his best bet. He's not helping Argentina, he's helping a political ally's party.
Betting on the Peso doesn't make sense. It's a lot of money but it's <1% USA's budget. Trump was probably thinking the American media would not pay too much attention to it but apparently it slightly backfired and they did.
https://sccei.fsi.stanford.edu/china-briefs/chinas-overseas-...
Not compelling at all to say the US just generally has an imperative to buy debt or lend to countries whenever they're least creditable just because China might do it anyway.
Argentina also would not be getting some special treatment. There are far more strategically important and similarly struggling economies in the Americas and elsewhere that the US could choose to assist and is not.
There's just no coherence to this theory.
This is rich guys helping out their rich guy buddies using taxpayer dollars.
Carrot, stick.
> This is rich guys helping out their rich guy buddies using taxpayer dollars.
Almost all foreign aid is this, complete with kickbacks such as donations to the Clinton Foundation, etc. Even domestically, eg, the high percentage of homeless and poverty support disappearing into NGO pockets.
Eg, of the budget in Seattle.
I did say specifically what I was talking about — public funds like Seattle, where $18000/homeless per year disappears through the network into employee pockets while delivering substantially less to those it’s nominally for.
https://www.pacificresearch.org/despite-big-budgets-homeless...
I think you’re being intentionally dense.
Here's another possibility: the problem is much more challenging or more expensive to solve than one would expect from the outset. Or the challenge of the problem just vastly outstrips the talent of the people dedicated to solving it.
I don't know about you, but I encounter unexpectedly hard problems or insufficiently talented problem-solvers probably 1,000 to 10,000 times more frequently than I encounter complex conspiracies to steal money.
I think you need far more evidence than you have to make the claims you're making. Which is why they aren't specific.
The world policeman is doing world policeman things. Luckily things are starting to get worse for the world policeman so those things might happen less.
Actually a lot of this is extremely aberrational, even measured by the United States' own "unique" standards.
In practice, your point is demonstrably false by the fact that IMF is likely backing away from further financing to Argentina while the US is stepping in.
Speculation is that some of Bessent's buddies are financially exposed to an Argentinian default, and that this keeps them safe from losing money on a sovereign default.
https://www.csis.org/analysis/south-americas-lithium-triangl...
That is it.
[0] https://www.bloomberglinea.com/2024/10/18/exclusive-rob-citr...
Disregarding the noise present in all exchanges, the Argentine peso has been continuously dropping, compared to USD, for decades. If it were to have a sustained climb, that would be quite the event, but that aside the question is how fast it is falling, and whether the rate is increasing or decreasing. An extreme one-time rise or fall would be significant, but that hasn't happened.