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Argentina's midterm election hands landslide win to Milei's libertarian overhaul
- zoklet-enjoyer 1y agoDoes this mean we're going to have to bail them out again?
- biggestlou 1y agoDid we bail them out before? From what I can tell, we opened up a currency swap using a Treasury fund (not funded by tax dollars) specifically devoted to currency stabilization.
- throwaway20222 1y agoIf not us tax dollars, how are they funded? Are the backed with full faith of credit of the us government? It’s hard to search for answers on this one.
- biggestlou 1y agoIt's self financing: https://en.wikipedia.org/wiki/Exchange_Stabilization_Fund https://en.wikipedia.org/wiki/Exchange_Stabilization_Fund
- postflopclarity 1y agoA currency swap IS a bailout if the swap occurs at a price above what would otherwise be the market clearing price. "currency stabilization" is just a funny way to say "artificially propping up the peso" > using a Treasury fund (not funded by tax dollars) tell me, where do you think the Treasury gets its dollars...
- AnthonyMouse 1y agoIt would be kind of ironic if they were printing them.
- biggestlou 1y agoNope, it's self financing: https://en.wikipedia.org/wiki/Exchange_Stabilization_Fund https://en.wikipedia.org/wiki/Exchange_Stabilization_Fund
- AnthonyMouse 1y ago> The fund began operations in April 1934, under director Archie Lochhead and financed by $2 billion of the $2.8 billion gold surplus the government had realized by devaluing the dollar. > The ESF can convert SDRs into dollars on its account by issuing certificates against them and selling the certificates to the Federal Reserve,[6] and later repurchase them when it has surplus cash. So they did actually fund it by printing money.
- biggestlou 1y agoThe ESF is self financing. And yeah, sure, it is artificially propping up the peso, the same way we propped up the Mexican peso, the Thai bhat, and others once upon a time.
- bpodgursky 1y agoNo, it means the US just made a profit on the Argentine Pesos it bought to stabilize the currency.
- bix6 1y agoHow did the US profit if the peso has continued to fall?
- bpodgursky 1y agoIt's strengthening tonight. It fell when markets thought he might lose. But then he won.
- flave 1y agoInterestingly, the US made money on the Mexico bailout in the 80s and 90s. That’s only on the interest, not to mention the US economic activity. https://www.piie.com/publications/chapters_preview/43/6iie2717.pdf https://www.piie.com/publications/chapters_preview/43/6iie27... Under “disbursement and repayment”
- sophrosyne42 1y agoActually, they were bailed out because the peso tanked after the peronist opposition won a political victory. The peso has strengthened because the libertarian party there won, so the stability of Argentina has increased. Peronism winning is directly correlated with argentine instability and bailouts
- kragen 1y agoThe overvalued peso makes Argentine products economically uncompetitive abroad—and, now that we are allowed to import things freely, domestically as well. Keeping the peso overvalued is not an especially libertarian position, but rather one on which Milei seems to harmonize with the Kirchners' historical policies, and especially Menem's disastrous 1:1 policies that brought Kirchner to power in the first place. For Argentina to be stable, we would need a stable industrial base. That's very difficult to establish when the state is, in effect, taxing our exports and subsidizing our imports, even if it's less directly than during the Kirchner years. If Argentine output declines and unemployment soars, it will be very hard for Milei or his successor to avoid defaulting on the bailout loans, unless an even larger bailout follows, as it often has.
- sophrosyne42 1y agoThe peso is valued higher. It does not follow that it is overvalued. Most currencies will strengthen if central banks stop inflating their currency, and that is a libertarian position.
- kragen 1y agoThe peso is actually valued lower this month than ever before in history, but we can see that it is still overvalued because our domestic production still isn't competitive with imports. Not even in areas like cars and clothing where we have have a well-developed industry, if one that is shitty in quality. And this deplorable situation is not just a result of the central bank not printing money, which is indeed a perfectly libertarian position. Rather, it is a result of a massive outflow of foreign exchange reserves from the central bank in recent months, the explicit objective being to artificially raise the exchange value of the peso, worsening our uncompetitive situation.
- a_c 1y agoThe had a currency swap. US earns interest from argentina by taking USD$20B worth of pesos. Argentina get USD$20B. By the end of the swap, Argentina "swap" the borrowed USD$20B with their pesos. Argentina has to pay interest (quick googling didn't reveal the exact terms). They both get their own currency in the end.
- xnx 1y ago> They both get their own currency in the end. Unless Argentina defaults, as they have many times before.
- kragen 1y agoThis is a better source than the inaccessible and gratuitously insulting WSJ page linked at https://news.ycombinator.com/item?id=45716359 https://news.ycombinator.com/item?id=45716359. Those comments should be merged here.
- terminalshort 1y agoGratuitously insulting?
- deleted 1y ago[deleted]
- kragen 1y agoThe WSJ's "you have been blocked" page is gratuitously insulting.
- narrator 1y agoBolivia also ended their socialist government recently. The mass exodus out of Venezuela has hurt the reputation of the left in South America.
- etc-hosts 1y agoI'm sure this is going to be used by anarcho capitalist types and the media to say Milei's program of cutting public services is noble and great and here's the proof. I feel like I must be taking crazy pills though. If the Argentinian gov needs 40 billion from the US to continue functioning, how does that mean Milei's policies are working? It's like if I decide to use a car to drive 1000 miles, but I only buy enough gas for 500 miles, but a dude at the midpoint in my journey offers to lend me enough money for the next 500 miles of gas if I kick all Chinese people out of my car in return, and then I return and say see due to my amazing thought leadership my car has double the gas mileage now.
- nine_zeros 1y agoLibertarians and Conservatives can all wish for a smaller government and slash things apart in America - it's not going to change the fact that America is a corrupt socialist country which runs semis, bails out billionaires, subsidizes farmers, and uses taxpayer money to enrich business owners. The only difference between American socialism and Argentinian socialism was that Argentinian socialism pretended to help the poor but America doesn't even pretend to help the poor.
- thankyoufriend 1y agoHow do you define socialism? I don't believe that we the people or the state collectively own the means of production in any major industry. Private ownership by capitalists is still the dominant economic system in the US.
- nine_zeros 1y agoThe US literally purchased shares of Intel - thus owning means of production. The US also bails out a group of people all the time. The group is called the rich. Furthermore, it subsidizes select groups like big ag. Except these, the US is predominantly capitalistic but so was Argentina. Their populace was fed up with the pretense of helping the poor while bailing out oligarchs. America doesn't seem to pretend to help the poor. Poors are undesirables.
- qcnguy 1y agoIt is the same path as Britain under Thatcher. Decades of socialist ruin followed by a financial bailout and a libertarian taking over to fix things up. At first there is pain. Inflation goes up, unemployment skyrockets. The economy is bent out of shape by the socialists and as it slowly moves back to its natural state there's lots of disruption along the way. But then the recovery continues as the bad decision making under socialism gets steadily unwound. If Milei's story arc is anything like Thatcher's it ends with him being stabbed in the back by center-left "wets", who become overly responsive to the most emotional voters. The country doesn't revert to Peronism but does enter another period of slow long term decline as the singular personality who pulled it back from the brink exits the stage. The natural Argentinian socialist worldview reasserts itself as the lessons are never learned. We will have to see if Milei is able to build up a protege and natural successor. Trump seems to be doing it successfully with JD Vance, but so far Milei seems to have nobody waiting in the wings - just like Thatcher.
- soco 1y ago"at first there is pain" indeed and it stayed at that for the most, while a few chaps got richer.
- qcnguy 1y agoThe country got a lot richer after Thatcher. Some jobs went away permanently, because they were not trying to be globally competitive, but that wasn't Thatcher's fault. She just stopped them being fake jobs.
- AnimalMuppet 1y agoI am not convinced that Vance is Trump's "natural successor". First, I'm not sure we have really seen what Vance thinks (on any topic). He takes care to not openly contradict Trump's position, but here and there he hints that his own position may be different. Second, Vance doesn't have anything like Trump's charisma. He's much more wooden. He would have to hold the Trump coalition together through policy alone, and I'm not sure that can be done. (All right, he can also use nostalgia. I'm not sure that will be enough.)
- nemo44x 1y agoI’d expect foreign investment to explode now that investors can feel more secure that the socialists won’t steal them. This landslide will bring some stability and buy-in and now is the time for them to as aggressively advance their objectives.