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One is tempted to say that a Hayekian free market liberation of Argentina after eternal misrule by the Peronist casta would also be a good idea, but that is not what Javier Milei is actually delivering. A year after his landslide victory, Milei is still not letting market forces set the peso exchange rate, and it now looks as if his crawling dollar peg will continue into the middle of next year.  The peso is as overvalued today as it has ever been in Argentine history, or very close.  This has suppressed inflation temporarily to a monthly rate of 2.4pc – so has economic contraction – but has in the process strangled the traded sectors of the textile, shoe and toy industries. Ambrose Evans-Pritchard Telegraph 13 December 2024 https://www.telegraph.co.uk/business/2024/12/13/argentinas-javier-milei-has-made-a-horrible-mistake/ Tillbaka till Rolfs länktips 13 december 2024 https://englundmacro.blogspot.com/2024/12/rolfs-lanktips-13-december-2024.html

 Internal watchdog says fund needs to tackle claims that large loans reflect political pressures Rules for outsized loans to countries such as Argentina, Ukraine and Egypt needed an overhaul as “perceptions of a lack of even-handedness” were affecting the fund’s credibility, the IMF’s independent evaluation office said in a report on Thursday. The fund’s biggest lending commitment is to Argentina, where President Javier Milei is seeking a new $10bn loan, on top of $44bn the country tapped since 2018 under the exceptional access rules. Financial Times 12 December 2024 https://www.ft.com/content/c5d7ec69-7c4a-48f5-ba29-c651e52240cd Argentina, IMF och Lagarde IMF’s record-breaking rescue package for Argentina, with which its outgoing director Christine Lagarde was closely associated. The fund has an unhappy history with Argentina, having agreed more than 20 programmes, most of which ended in failure.  The latest chapter started with a $50bn bailout in June 2018, increased by $7bn...

Argentina’s repudiation of the Brics is more than a minor earthquake in global diplomacy. It has broken the spell of an ever-widening bloc of states pitted against the Western liberal order. Momentum has been all one way since the original quartet of Brazil, Russia, India and China launched the bloc in 2009, later expanded to South Africa, and then Iran, Saudi Arabia, Egypt, Ethiopia and the Emirates at the start of this year.  “The West is in real danger, that is why we have to stick together,” said President Javier Milei. “My priority is to be an ally of the United States. I will not negotiate with communists,” he declared after winning the election in November. To near universal surprise, his actions have been swift, dramatic and fully aligned with his words. The Biden administration can hardly conceal its delight that a country so often in the vanguard of Latin America’s intellectual and political fashion has switched sides.  Ambrose Evans-Pritchard Telegraph 10 May 2024 h...

  Javier Milei has started his libertarian economic experiment to transform Argentina.  President Javier Milei has flawless timing. Argentina’s shale boom has reached industrial take-off just as he embarks on his extreme libertarian experiment: a Hayekian free market assault on the delinquent Peronist state and all its works. The long-suffering nation is swinging very fast from a costly dependence on energy imports, and a chronic leakage of hard currency, to the happier condition of net hydrocarbon exports.  The prolific shale basin of Vaca Muerta is finally delivering. The US Geological Survey estimates that the region holds the world’s second biggest reserves of shale gas, and fourth biggest reserves of shale oil.  Drilling has begun at another shale basin at Palermo Aike in Argentina’s deep south, so the potential could be significantly larger. McKinsey estimates that new fracking technology – smart drills, geonavigation, multi-drilling from the same pad – has cut...

Argentina has never fully dollarized. But in 1991 it tried to tame inflation with a law that was supposed to establish a permanent exchange rate of one peso for one dollar, a commitment backed by a “ currency board ” that was advertised as holding a dollar in reserves for every peso in circulation.  The truth was that pesos were never 100 percent dollar-backed, but this incomplete backing wasn’t the reason the system collapsed.  The problem, instead, was that having eliminated the possibility of using monetary policy to boost the economy when necessary, Argentina found itself stuck in a prolonged, grueling recession.  Also, the currency board didn’t solve the nation’s persistent problem of budget deficits.  Yet when the dollar went up and down, for reasons that had nothing to do with Argentina, Argentina’s currency followed its fluctuations. There was a big run-up in the value of the dollar during the late 1990s, probably reflecting optimism over the technology boom ...

Big News: Argentine will abolish their currency and adopt the US Dollar. Ha! That it was the countries witch adopted the Euro has done. They gave up their printing press.

  Stockholmsbörsen föll för femte dagen i rad och stängde på en ny årslägstanivå. Back  - Next -  Book Home  -  Climate Change Fed’s Jerome Powell Signals Extended Pause in Interest Rate Rises Recent economic figures show “ongoing progress” toward goals, U.S. central bank chair says Fed’s Jerome Powell Signals Extended Pause in Interest Rate Rises - WSJ The price of money. For more than three decades, it was falling. Now it’s going up. For economics wonks, the price of money that balances savings and investment while keeping inflation stable is called the “natural rate of interest,” or r-star. In nominal terms, that means 10-year Treasury yields could settle somewhere between 4.5% and 5%.  https://englundmacro.blogspot.com/2023/10/the-price-of-money-for-more-than-three.html Star September 2023, warmest on record by a large margin The global average surface air temperature was 16.38°C – 0.93°C above the 1991-2020 average for September, according to...

Great-power politics helped keep IMF credit flowing to its top borrower. But with the economy in crisis on the eve of elections, that may not last Over the past five years, the Fund has lent $43 billion in repeated bailouts for the Latin American nation — multiples more cash than anyone else has gotten — with dismal results. IMF doled out another $7.5 billion installment in August, even though Argentina hadn’t met any of the economic targets that were supposed to be conditions for payment. The country’s current debt pile to the IMF  a hangover from the $56 billion credit line — still the biggest in IMF history — handed to then-President Mauricio Macri in 2018 and 2019. https://www.bloomberg.com/news/features/2023-10-06/the-imf-s-43-billion-argentina-problem-is-about-to-get-worse Questions may also be asked about the IMF’s record-breaking rescue package for Argentina, with which its outgoing director Christine Lagarde was closely associated. https://englundmacro.blogspot.com/2019/08...

August 23rd the government persuaded the IMF to release a $7.5bn tranche of its bail-out programme, its only hope of meeting dollar-debt repayments and staving off default.  The imf’s reluctance stemmed not from the fact Argentina is broke—lending to such countries is the fund’s purpose—but from the fact that most of the cash Argentina must repay this year is promised to the fund itself.  Argentina is a rare country with the imf as its biggest creditor, owing the fund a cool $40bn, roughly a third of its external debt.  By providing support, the imf has delayed disaster. It has also prolonged an increasingly absurd situation. Yet Argentina is pushing the model to its breaking point. In 2018 the imf took a gamble and offered the country a bail-out worth $57bn, the fund’s biggest ever.  At the time, many observers thought it was too much for a country with Argentina’s patchy track record. It turned out also to be far too little to fix the country’s economy. Argentina c...

 Oh what a circus, oh what a show.  Javier Milei, the leading candidate to be Argentina’s next president, is a libertarian economist who named his dogs after Milton Friedman, Murray Rothbard and Robert Lucas.  He’s also an avowedly devout Roman Catholic who boasts of his many sexual adventures, and says his first acts in office would include abolishing Argentina’s central bank and sending a bill to Congress to ditch the peso and use the US dollar instead.  He made this gloriously frank assessment:  Central banks are divided in four categories: the bad ones, like the Federal Reserve, the very bad ones, like the ones in Latin America, the horribly bad ones, and the Central Bank of Argentina. Milei’s plan to adopt the dollar is that Argentina tried just such a policy in the past, and it ended catastrophically.  The peso was locked in a one-to-one. Now, it’s worth 350.  Incredibly in hindsight, the Macri government successfully issued a “century bond” in 2...

Argentina struggles to avoid economic collapse To secure final approval from the IMF board this month for the latest $7.5bn instalment of a $44bn bailout package.  Few believe the IMF is ready to pull the plug on Argentina, its largest debtor, so the fresh money will probably come. Financial Times 15 August 2023 https://www.ft.com/content/4171ee2c-a647-47db-a208-7ead73e88b5e “extend and pretend”  When banks have non-performing loans, they sometimes don’t want to admit it. So instead of calling it a loss, because the debtor can’t pay, they simply rewrite the contract so that it has been extended.  This way the debtor is not technically behind in payments and the creditor can pretend that the corresponding debt on their books is worth something.  It’s called extend and pretend, and it’s not new. IMF’s record-breaking rescue package for Argentina, with which its outgoing director Christine Lagarde was closely associated. The fund has an unhappy history with Argentina, h...

Argentina, hasn’t undertaken the structural economic reforms identified as necessary to manage even this newly reduced debt — much less $40bn it owes to the IMF.  Jay Newman and Matthew D McGill FT Alphaville 3 August 2022 https://www.ft.com/content/7e29d3ce-3c03-4b2a-8e5e-f6e7d6e110bc IMF committed a major blunder approving an unprecedentedly large loan to Argentina in mid-2018 Questions may also be asked about the IMF’s record-breaking rescue package for Argentina, with which its outgoing director Christine Lagarde was closely associated. https://englundmacro.blogspot.com/2022/02/imf-committed-major-blunder-approving.html Airbnb strains Buenos Aires' housing market https://www.dw.com/en/argentina-airbnb-strains-buenos-aires-housing-market/video-64931625

By approving an unprecedentedly large loan to Argentina in mid-2018, despite the country's failure to meet basic borrowing conditions, the International Monetary Fund committed a major blunder.  Fortunately, blunders of that magnitude are uncommon. The only comparable misjudgment was the Fund’s $30 billion loan to the Greek government in 2010 (the largest-ever IMF loan at the time), when it was plain as a pikestaff that Greece was headed for a sovereign default, which came in 2012.  The IMF hid behind its preferred creditor status and avoided a haircut on that occasion. It must not do so this time.  Willem H. Buiter Project Syndicate 16 February 2022 https://www.project-syndicate.org/commentary/imf-argentina-blunder-calls-for-debt-restructuring-by-willem-h-buiter-2022-02 Questions may also be asked about the IMF’s record-breaking rescue package for Argentina, with which its outgoing director Christine Lagarde was closely associated. F T 12 August 2019 https://englundmacro...

Fears are growing that Buenos Aires will not be able to meet a $2.8bn repayment in March FT Big Read 10 November 2021 https://www.ft.com/content/ce0d1647-0bd7-4bb4-b787-d1301a8a3bc0 Questions may also be asked about the IMF’s record-breaking rescue package for Argentina, with which its outgoing director Christine Lagarde was closely associated. https://englundmacro.blogspot.com/2019/08/argentinas-48-stock-rout.html

Meanwhile, Italy’s benchmark 10-year bond yield slipped below 0.5 per cent for the first time Last week, Belgium raised €5bn in 50-year debt at a coupon of 0.65 per cent while France sold €7bn in debt of the same maturity in January with a 0.5 per cent coupon. Both deals garnered strong investor demand. FT 9 February 2021 https://www.ft.com/content/5ac65419-76a2-4269-aa84-912378e03cd1 When Argentina issued its so-called “century bond” many held it up as the peak of bull market insanity. After all, what sane individual lends money for 100 years to a serial-defaulter? https://englundmacro.blogspot.com/2018/05/when-argentina-issued-its-so-called.html

"Rich as an Argentine" was once a common phrase, back when the South American nation was one of the wealthiest in the world.  Today, it faces bankruptcy and staggering debt in a saga it can't seem to escape. Deutsche Welle 4 August 2020 https://www.dw.com/en/https-enwikipediaorg-wiki-economichistoryofargentina/a-54310145  https://p.dw.com/p/3fsY5

The second slump was in the 1980s, when a string of countries defaulted on their foreign debts after international interest rates soared. (När Volcker höjde räntan för att  besegra inflationen.) Dictatorships, which had prevailed in the region, yielded to elected democratic governments in eight countries between 1982 and 1989. The Economist 27 July 2020 Volcker startade sedelpressarna, inte Greenspan. Om skuldkrisen i Latinamerika på 1980-talet på min website

62 per cent “haircut” on interest payments worth almost $38bn, as well as a 5.4 per cent reduction in the face value of the debt, worth about $3.6bn.  Argentina must win over the support of the three creditor groups before May 22 if it is to avoid its ninth sovereign debt default FT 4 May 2020 Argentina is Christine Lagarde's latest disaster The bailout of Argentina was meant to be the crowning achievement of her career, but instead the country has plunged into chaos, and will almost certainly have to default on the billions the fund has lent it. Telegraph 30 August 2019

Analysts expect the country to make bondholders an offer they cannot accept “I fear that Argentina may jump into the pool without first making sure there is water in it,” “The result is likely to be a failure of the offer and, hence, default.” FT 12 April 2020

Argentina’s government has said it needs to restructure $100 billion in debt, including $44 billion to the IMF. CNBC 18 February 2020 Argentina defaulted on $100bn of debt in 2001-02, at the time the largest sovereign default in history. FT July 31, 2014