Argentina Just Took a Step Closer to Dollarising Its Economy, And Away from the BRICS

There is a lot riding on the outcome of the upcoming general elections, not just economically but geopolitically, and not just for Argentina but across Latin America and perhaps even the globe.

Amid its worst economic crisis since the the depression of 1998 to 2002, Argentinians went to the polls this past weekend for primary elections, just two months before the generals. The results were, to put it mildly, a shock. Javier Milei, an avowed libertarian with big hair and far-right sympathies who is on a mission to rid Argentina of its political caste, won 30% of votes, more than both the main conservative “Macrista” bloc (28%) and the ruling Peronist coalition (27%).

In a stunning rejection of the two main political blocs that have governed Argentina for the past two decades, voters opted for an unknown quantity. Once again, the opinion polls got the outcome completely wrong.

A Dress Rehearsal

Voting in the primaries is obligatory for most Argentine adults, each of whom gets one vote. As Al Jazeera notes, this effectively makes it a dress rehearsal for the October 22 general election, giving a clear indication of the favourite to win the presidency. And that favourite this time round is Javier “the Wig” Milei, until recently a virtual nobody who can now more or less rest assured that he will at least make it to the second ballot (like France, Argentina has a two-round system of voting for its presidential election.

The two other main candidates are Sergio Massa, the current economy minister who is closely tied to the Clintonite core of the US Democratic Party but is likely to continue to pursue BRICS membership, dedollarisation and the expansion of bilateral trade with both China and Brazil, its two largest trading partners; and Patricia Bullrich, of Together for Change, a pro-US liberal-conservative bloc that helped propel Mauricio Macri to the presidency in 2015. Bullrich was minister of labour, employment and human resources during the disastrous de la Rúa government (2000-01) and in a recent speech in Miami called for the creation of a “NATO of the South” to combat organised crime in Latin America.

Milei’s political party, La Libertad Avanca (Freedom Advances), is only two years old but it could be on the verge of taking power, either on its own or as part of a coalition, presumably with the Macristas. If that happens and Milei is able to form a government and actually honours many of his main campaign pledges and is able to build broad enough support in Congress to enact his reforms (probably the biggest “IF” of all), it will have repercussions not only in Argentina but across Latin America and perhaps even globally.

But before we discuss Milei’s campaign pledges and their broader potential ramifications, let’s first take a look at who he is. What are his political ideas and principles? Does he actually have any? Where did he suddenly sprout from? How did he get from being a political nobody to becoming the presidential front runner in just seven years?

”Politics is the means by which men without principles lead men without memory.” Voltaire (allegedly).

Whether the above quote is Voltaire’s or not, it nicely sums up Milei’s rise to prominence. Not only does he appear to be a man without principle but many of his followers appear to have completely forgotten what happened to Argentina the last time someone made similar promises. Spoiler alert: it didn’t end well (more on that later).

Until seven years ago, Milei made his living as an economist working for and with different organisations, some of which one might think would clash with the libertarian principles he espouses (disclaimer: I myself am not a libertarian). For example, Milei is a member of the World Economic Forum, which serves the global plutocrat class, proudly describes itself as the “international organisation for public-private partnerships” ( i.e, corporatism), and is one of the biggest proponents of centralised, technocratic, top-down governance on the planet.

Milei has also worked as senior economist at the Argentinian subsidiary of HSBC as well as head economist for Corporación America, a conglomerate belonging to Eduardo Eurnekián, one of Argentina’s richest men. The company has virtual monopoly control over the airports of Argentina and other LatAm countries. Again, any genuine, self-respecting libertarian would oppose, with every sinew of their being, the very existence of monopolies and monopolists, let alone work for one for over ten years.

Milei also owes his political career to Eurnekián, who also owns part of Grupo América, one of Latin America’s biggest media conglomerates. When Eurnekián realised that Milei had a certain gift of the gab, Grupo América began inviting Milei on its news and chat programs, where he would rip into Argentina’s then-President Mauricio Macri, with whom Eurnekián had a history of beefs. In effect, Eurnekián and his partners gave Milei an enormous soapbox from which to project his views, which is how he became a media sensation, then an MP and now a presidential candidate with a real chance of becoming president.

Perhaps worst of all, Milei worked for Antonio Bussi, a military general who tortured and killed untold numbers of people during the dictatorship, including a 16-year old girl. After the transition to democracy, in the mid-’80s, all indictments against Bussi were dropped as part of the “full-stop” law (though the charges would be reinstated decades later, leading to a sentence of life imprisonment). A free man in a new world, Bussi ran for governorship of the state of Tucaman and won, becoming the only senior figure of the previous dictatorship to be elected to public office in the democracy that replaced it.

In the mid-’90s, by which time Bussi’s grisly crimes were common knowledge, Milei worked on two contracts for the governor. Asked about it in an interview, Milei said: “I did my work, it came to an end and I left.”

Milei also has ties to the US-based, Koch-funded Atlas Network, which since its inception in 1981 has forged loose partnerships with more than 450 “free-market” think tanks around the world, including many in Latin America. As Lee Fang reported for The Intercept in 2017, the network has operated “as a quiet extension of U.S. foreign policy, with Atlas-associated think tanks receiving quiet funding from the State Department and the National Endowment for Democracy, a critical arm of American soft power.”

A Blast from the Past

Milei’s campaign proposals range from classic neoliberal fare (charging poor people for public healthcare, cutting retirements and pensions, removing currency controls and “taking a chainsaw to public spending”) to more radical proposals such as “blowing up” the central bank (which I suppose is one way of forestalling central bank digital currencies); selling off all public assets; abolishing the Argentine peso and adopting the US dollar as the official currency; to the outright macabre, such as legalising human organs sales.

“If you want to end the scam of monetary emission to cover for the treasury and end inflation, given that Argentine politicians are thieves, the only way is to close down the Central Bank and, at least at the beginning, dollarise [the economy],” Milei tweeted a few months ago.

By contrast, the outgoing Alberto Fernández government, like many governments not fully aligned with the US, has been trying to reduce its dependence on the dollar by dedollarising Argentina’s trade with China and Brazil, its two largest trading partners. But Milei wants to take the country in the exact opposite direction, with potentially disastrous consequences, as I noted in my May 23 article, Could Argentina Become the Next Latin American Country to Dollarise Its Economy?:

Currently, 11 foreign nations and non-US overseas territories use the dollar as their official currency of exchange. Six of them are in Latin America and the Caribbean: Ecuador, Panama, El Salvador, the British Virgin Islands, Turks and Caicos, and Bonaire. Milei would like Argentina to be the next.

The idea enjoys support among certain US economists [but is]… opposed by roughly 60% of voters, but has gained traction among a certain segment of the population as Argentina’s currency crisis deepens….

Argentina’s economy is already heavily dollarised given the Argentine peso’s more-or-less uninterrupted fall in value over the past 23 years. At the beginning of the century it was fixed by law at parity with the dollar but is now worth less than half a cent in US dollar terms. As El País puts it, “Argentina is a country with two currencies that keeps whatever dollars it can get under the mattress.” Not only are savings kept in dollars; many real estate transactions are conducted in the US currency. Even rentals and smaller transactions often require greenbacks.

But there is a huge difference between having a dual-currency regime — as is the case with many emerging market economies with weak local currencies — and abandoning your national currency altogether. Many see dollarisation as a quick fix to resolving Argentina’s chronic financial and economic troubles, pointing to Ecuador’s history of relatively low inflation since adopting the dollar in 2000. But many other countries in Latin America, including Mexico, Brazil, Peru, Paraguay and Bolivia, have also managed to keep inflation in check without having to eliminate their currency and adopt the dollar. In fact, both Brazil and Mexico’s inflation rates are currently below the EU average.

“Argentina is not in a position to undertake dollarization because this requires Central Bank dollar reserves it doesn’t have,” said economist Julián Zícari, who wrote a book on the history of Argentina’s economic crises, adding that “trying to [dollarize] would cause a complete evaporation of wages and pensions.”

It would also mean the end of any semblance of Argentinean sovereignty, as the South Korean economist Ha-Joon Chang warned during a recent visit to the country:

If you want to adopt dollars as your official currency you should apply to become a colony of the United States of America because that’s what it makes you. This means your macroeconomic policies will be written in Washington DC…

This is a lesson that Ecuador is learning the hard way. Since adopting the USD as its official currency, Ecuador has suffered periodic social and economic crises that have come to a head since 2019. To what extent this is due to dollarisation is impossible to gauge, but one thing that is clear is that it significantly hampers any crisis response. When a crisis begins, the State’s hands are almost completely tied. It cannot distribute income and has limited capacity to protect or promote domestic industries. What’s more, the decision to tie oneself to the dollar, once made and acted upon, is difficult to reverse.

“They forget that any medicine has side effects that can be much more serious than the primary problem. Such is dollarization,” former Ecuadorian President Rafael Correa said in a recent interview with the Argentine publication Perfil. “Dollarisation controls inflation and nothing else. But there are other problems, such as unemployment and industrialisation. It solves one imbalance, in this case inflation, but it generates others, such as (limiting our ability) to fight unemployment or industrialise, which are basic for development, which should be our long term goal.”

Adopting the dollar also implies tying Argentina’s fate to that of the US, just as the decline of US hegemony is accelerating. It also bears striking echoes of the steps taken by former President Carlos Menem (1989-1999) to fix the Argentine peso at a wholly artificial and unsustainable value of one U.S. dollar. This gave the country a false illusion of prosperity while making the economy uncompetitive and depriving the state of having an independent monetary policy. It ultimately paved the way to the financial crisis and currency devaluation of 2001, from which Argentina’s economy has never properly recovered.

Milei himself describes Menem as Argentina’s best ever president. He has also described Menem’s economy minister, Domingo Cavallo, as “the best economy minister in all of Argentina’s history.” Cavallo not only implemented the one-to-one currency peg that would end up destroying the economy; in his second stint as economy minister during the resulting crisis (2000-1), he oversaw one of the biggest tax rises in Argentina’s history, largely at the behest of the IMF, as well as the outright theft of the savings of millions of Argentinians in the so-called Corralito.

Potential Geopolitical Implications of a Milei Presidency

A Milei government would also probably try to take Argentina in a very different direction geopolitically, also probably with major repercussions. In an interview a few months ago with Andres Oppenheimer, the US-Argentine editor and syndicated foreign affairs columnist with The Miami Herald, Milei announced that his “strategic partners” in “opening up” the Argentine economy would be the West, specifically the US and Israel.

He also said that a Milei government would endorse and apply the Collective West’s sanctions against Russia, adding: “I would never support an autocratic government like Russia’s.”

As readers well know, most governments in Latin America may have condemned Russia’s invasion of Ukraine in the UN but they have steadfastly refused to endorse US or EU sanctions against Russia. Just last month, a majority of Latin American leaders refused to condemn Russia’s actions in the final declaration of the EU-CELAC Summit. Even Brazil’s right-wing populist Jair Bolsonaro refused to endorse sanctions during his presidency.

As such, if Milei were to endorse and apply the US-EU sanctions, it would represent a major shift in policy in the region that would no doubt be celebrated in Kiev, Washington and Brussels.

Milei also said he would “never” pursue any agreements with communist countries where there is no freedom, including, of course, China. Again, this could have major repercussions.

Argentina is one of 21 countries that have formally applied to join the BRICS alliance. Its application has apparently already received Beijing’s blessing and its membership may be officially confirmed at the coming BRICS Leaders’ Summit this weekend. On the economic front, the Alberto Fernández government is also looking eastward. In April, it unveiled plans to start paying for Chinese imports in yuan rather than dollars. In the same month, it renewed an $18.2 billion currency swap arrangement with Beijing, which enables the Central Bank of the Argentine Republic (BCRA) to receive yuan from the PBOC in exchange for an equivalent amount of (rapidly devaluing) Argentine pesos.

These funds have enabled Argentina to continue servicing its $44 billion loan package from the IMF, thus avoiding yet another default, as it grapples with an acute dollar shortage after a historic drought caused total agricultural losses of €17.6 billion, or 3% of Argentine GDP.

In June, Argentine Economy Minister Sergio Massa and Central Bank Governor Miguel Pesce visited Beijing, where they signed a cooperation plan to jointly promote the construction of the Belt and Road Initiative, in yet another sign of deepening bilateral economic and trade cooperation between the two countries. Massa was also informed by New Development Bank President Dilma Rousseff that the road was clear for Argentina to join the entity and thus be able to obtain financial backing in the near future.

A Milei government, of course, could jeopardise all of that. But he still needs to win the election first, which is far from guaranteed. Even if he does, there are serious doubts about whether he he will be able to take such sweeping actions. For a start, his political grouping is unlikely to secure anything like majority control of congress or the necessary broad-based political support to enact such reforms. Plus, if Milei were to walk away from all the agreements and deals the current government has signed with China, how would his own government be able to pay back the debt Argentina owes Beijing? After all, the US and Europe are unlikely to be such generous paymasters as China has been in recent years.

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  1. icancho

    I well remember when the Menem-Cavallo régime introduced the Convertibility Program (1991-2002), pegging the peso to the US dollar. The results were not one bit pretty for most folk— poverty, unemployment, and inequality all increased. But if you were rich enough, convertibility made travel abroad and the purchase of goodies far easier. Meanwhile, the budget deficit increased, which was then covered by loans, of course denominated in foreign currencies. Finally, the dollar peg massively over-valued the peso, thus hobbling Argentina’s international competitiveness. Milei’s policy enthusiasms show in whose behalf he wishes to govern. I can only hope that enough of the Argentine electorate have long enough memories and that they resoundingly repudiate this profoundly regressive policy.

    1. Colonel Smithers

      Thank you.

      I wrote a masters dissertation on central bank independence from 1994 – 5. The concept gained traction as basket cases like Argentina and my country, the UK, struggled with persistent high inflation, anaemic growth, currency and interest rate volatility etc, and ever decreasing productivity, and the European monetary union required such institutional autonomy, to mask the seizure of the commanding heights of the economy by bankers and for bankers, ranks I was to join not long after.

      At that time, I was stunned to hear Argentine policymakers boast of Argentina meeting the criteria to join the single currency and even shadowing that in the decades ahead. It was as if the comprador class wanted to emulate gringos in every way possible.

      A decade later, at a Canning House event addressed by Hugo Chavez and supported by my employer, HSBC, I came across a Venezuelan comprador heckle Chavez. On our way out, I asked the youngster, who had just completed an MBA at London Business School, sigh, what was all that about. He explained. I suggested that he stopped paying attention to neoliberals and learn how firms and economies really work. He was surprised that there were left wingers and Chavez sympathisers in big finance.

      1. icancho

        And thank you in turn, Colonel.

        You say “It was as if the comprador class wanted to emulate gringos in every way possible.“. I would suggest that there is and was no “what if” about it at all: many of those of the comprador class like to think of themselves as ‘Europeans who just happen to live in South America’, distancing themselves from the disregarded criollos of the interior.
        There is a telling metaphor that expresses a dimension of this divide that one might hear in Argentina’s criollo hinterland: “Argentina es la mate, Buenos Aires, la bombilla” —Argentina is the mate gourd (that contains the mate tea), Buenos Aires is the tube through which the mate’s contents are extracted.

        1. Colonel Smithers

          Thank you.

          I like mate, courtesy of my time in Argentina.

          I know what you mean as my family is from a colonial society. I’m a Mauritian Creole.

          1. Petter

            We had an apartment in Buenos Aires -on Guido in Recoleta. When we first bought it the breakfast Americano at La Biela was26 pesos, two years later it was 52 (3 and 6 pesos to the dollar.)
            My wife checks what’s happening there through BA expats and told me the “blue” rare hit either 690 or 700, a day or two ago, somewhere around there.
            We sold – didn’t own it that long (way too far away) but had to wait until the lifted capital restrictions.

  2. DJG, Reality Czar

    Today’s Fatto Quotidiano adds that Milei likes to sport a leather vest, along with the big hair, as a remnant of his “precedente e poco gloriosa carriera da cantante rock.”

    FQ also reports his tenure at HSBC, which makes the statements reported above by Nick Corbishley about China even more odd. Presumably, Milei knows the history of the Hong Kong and Shanghai Banking Corp.

    A basic question. (I have to admit that my study of Latin American has, for years, focused on Brazil, which is much different from Spanish-speaking Latin America.) What is it about Argentina that produces these periodic financial disasters? So far as I can tell, since Perón and the 1940s, fiscal policy is a disaster, which has regularly led to rumblings from the country’s unsavory armed forces.

    Argentina was once one of the richest countries in the world. Its agriculture was renowned. Now, it’s Evita and Milei. What happened?

    1. Colonel Smithers

      Thank you.

      I worked for HSBC from 1999 – 2006, including in Argentina (HBAR, formerly Banco Roberts). I don’t recall or know of Milei and will ask former colleagues.

      As you may expect, the group assisted with capital flight, including from, ahem, growers and distributors, from Latin America, often through the Caymans. The Latin American local entities operated branches in the Caymans and would transfer funds to the Cayman branch of HSBC Europe / UK.

        1. Colonel Smithers

          Thank you.

          Yes. He probably helped the credit risk and investor sales teams with advice.

          One of the HSBC economists has been there for over 20 years and has the same family name as me, not Smithers. We’re not related, but are friends. She’s often on tv. She does not recall Milei.

    2. The Rev Kev

      Maybe the Monroe Doctrine? Countries always have long term objectives and policies that carry over from not only government to government but also generation to generation and even century to century. Thus a permanent policy of England was to keep Ireland weak so that it could never be a strong power off their coastline. So I would say that it is permanent policy in Washington to help ensure that you never have a powerful, independent country arise in South America which could be the core of a major power block. Just having an independent Cuba off their own coastline nearly led to WW3 and certainly DC has been using the IMF to wreck country after country in this region on purpose.

    3. ChrisRUEcon

      > What happened?

      Morning DJG. I think the erstwhile Voltaire quote above is probably the best and most pithy summarization of why this happens over and over with Argentina. If a managed peg brings your country to balance-of-payments (abbreviated as BoP) crisis (massive currency devaluation), then going whole hog (using the USD officially) is like turning potential economic ruin “up to 11”. To wit:

      “Argentina is not in a position to undertake dollarization because this requires Central Bank dollar reserves it doesn’t have …”

      So what’s going to happen? Remember the poor Greeks and the Troika? What was the upshot of that? German and other foreign companies now control Greek ports and so on. A fire sale on Argentine state assets is what is likely to ensure. Hence Ha Joon Chang’s warning:

      “If you want to adopt dollars as your official currency you should apply to become a colony of the United States of America because that’s what it makes you.”

      But to address you question more directly, what is responsible for this “loss or memory” that allows miscreants like Milei run the same playbook again and again?! Well, there are entities in place to help sow the kind of cognitive dissonance and goldfish-brain-ery we have seen manifested so successfully here in the US. Whether it’s some Koch-aligned think-tank or the NED or the OAS or whomever, there are people whose jobs it is to aid the ascent of politicians like Milei. And as Lambert lamented on a recent Water Cooler (albeit with respect to COVID19 minimization): those people … are really good at what they do.

      1. DJG, Reality Czar

        ChrisRUEcon: Thanks for your explanation. Linking the results to what we saw in Greece also is helpful to me, given that I was in the commentariat here as we all learned from Yves Smith what was going to happen to Greece and why.

        Yet: I keep wondering if it has to do with something demographic or geographic. Is Buenos Aires too big for the rest of the country? Is there a center / periphery rivalry that causes structural / economic problems? Or is it the unfortunate result of long-standing authoritarian tendencies mixing in with faith-based economic ideas? See: Turkey and its problems.

  3. Wukchumni

    A fellow numismatist used to go down to South America on buying trips (there was no selling any aged round metal discs into the local markets for the most part-everybody was a net seller) in the early 80’s when hyperinflation got going good, and I remember him telling me one of the ploys that worked great, was to book a hotel room for a couple months in Buenos Aries at the rate set the first day, and by the end of his stay it might have been a quarter of what it was in Yanqui $’s

    Like every South American country, Argentina changed the name of the currency a number of times thinking that’d be the magic touch-and all it did was hyperinflate even harder, and then for about 10 years from the early 90’s to 2001 their Peso was valued @ 1 USA $, bringing stability to things, but it wouldn’t last and just after the turn of the century things went a cropper once again in the southern basketcase bastion, now up to just under 300 Pesos to equal 1 measly greenback.

    The Dollar doesn’t look that bad when you consider what they’ve been through, but it’d just be their luck to have the almighty buck turn into more yuck.

    1. ChrisRUEcon

      There is a great Argentine flick, “Nueve Reinas” (“Nine Queens”, via Wikipedia) about an Argentine con man who tries to sell fake stamps to a Spanish philatelist just as a run on the banks is about to go down due to Argentine peso devaluation.

      1. Nick Corbishley Post author

        I second that recommendation. One of my favourite Latin American films, with Ricardo Darin in one of his first big roles. In fact, the film was so good that Hollywood decided to make a mediocre English-language remake of it, which is generally a reliable sign of quality.

          1. Nick Corbishley Post author

            Another great film, Chris, though not quite as good, IMHO, as Leon, arguably the best French film ever made in the US.

            Another Argentinian film, also starring Ricardo Darín, that was remade by Hollywood and is a genuine work of art is El Secreto de Sus Ojos (The Secret in Her Eyes).


            It actually picked up an Oscar for best foreign language film. Saw it for the second time last week and I think I enjoyed it even more than the first. Haven’t seen the remake, starring Nicole Kidman and Julia Roberts, but then why would I?

            That said, there are a select few Hollywood remakes that are actually as good, if not better, than the overseas originals upon which they are based. Martin Scorsese’s The Departed and Terry Gilliam’s 12 Monkeys are a couple that spring to mind.

  4. The Rev Kev

    Well you know what they say – when your economy depends on another’s currency… This guy Milei sounds like he could really run Argentina into a helluva mess and cause chaos in the lower half of South America. Was he selected to run by the same people who chose Italy’s Meloni? If he got into power, the other South American States may have to make plans for a possible failed State in their midst. But one thing that I can see happening if he gets elected and switches Argentina to the US dollar. Biden and his gang will say that as you are using our currency pal, then we demand that you send weapons plus a coupla billion to the Ukraine as you have a lot that you can send-

  5. Luciano Moffatt

    Hi, I am a long reader of NakedCapitalism and I only commented a couple of times, one regarding a previous Argentinian episode in 2015.

    I am an Argentinian citizen and I was aghast with the election results. One correction, as today (97% recount) Milei got 30% (not 32%), a small but significant difference. Cristina Kirchner predicted this outcome in a TV interview in May by saying that this will be an election of “tercios” (thirds), so there are only 3 points between Peronism party and Milei and it is highly likely that we will get into the general election.

    But the point that force me to comment is the following. I know that this site promotes the notion that producing a new currency is extremely difficult and that a dolarization would be irreversible.

    I challenge this notion
    (Of course, I agree that dolarization is a terrible idea, thou)

    During the 90’s, Argentinian provinces were subject tight money and they have huge difficulties to pay salaries.
    The solution? Several provinces emitted their own currencies! (the most famous was the Patacon, from Province of Buenos Aires). They used those currencies to pay province employees salaries and they accept them for payment of province taxes (MMT people would love that!!). They were accepted more or less by commerces, of course with some discount.

    I know that we have a more sophisticated system now than in the 90’s but cryptocurrencies somehow thrive in this environment too, so I challenge the notion that it is “impossible” to reintroduce a currency once it is removed. In Argentinian we did it several times!! Of course people hated them, but salaries were paid, so in the end it was a solution for an problem of seemingly impossible to solve.

    One of the demands of IMF was the removal of those currencies that challenge the common notion of
    classical economics.

    1. jo6pac

      Thank You and please keep us on NC informed of how it’s really going. To others thanks for the history lesson.

    2. hk

      I’ve heard of such expedients in US, too, during the Great Depression, albeit on a very local scale. Curious if others can offer deeper insights.

  6. Expat2uruguay

    Nick, thank you very much for the report. I had been hoping that Masso would be the next president and that the connections with China and BRICS would deepen and improve the situation in Argentina. Oh well, at least I can take some hope from your final paragraph: that Milei will not have anything like a governing coalition in Congress.

  7. Nick Corbishley Post author

    Plus ça change, plus c’est la même chose” (The more things change, the more they stay the same). Jean-Baptiste Alphonse Karr

  8. Goat_Farmers_of_the_CIA

    “This is a lesson that Ecuador is learning the hard way. Since adopting the USD as its official currency, Ecuador has been in a state of almost perpetual social crisis, with at least one massive explosionk of public anger and violence each year.”

    This is wrong. Ecuador adopted USD in 2000, after an economic and financial crisis that led to a run and bank holiday. What is ironic is that it was the reverse of Argentina’s own crisis from around the same time, as Ecuador left a deeply devalued Sucre to adopt USD, while Argentina devalued its Peso.

    The “perpetual social crisis” the author mentions started since about 2019, when Correa’s successor, the oh-so aptly named Lenín Moreno went down the austerity path, and started focusing on saving USD on a central bank Swiss account, for the purpose of paying interest and often buying up deeply discounted sovereign bonds at nominal rates, a policy the current lame duck president, Lasso, a banker (surprise, surprise!) continued. Whatever his flaws (mostly due to his arrogance, which led to his being surrounded by corrupt opportunists like Moreno), Correa’s administration (2007-2017) was marked by relative prosperity and social stability, though growth slowed and unemployment increased from 2015 on due to the collapse in oil prices after Ukraine’s civil war in 2014.

    1. Nick Corbishley Post author

      Point taken, Goat_Farmers_of_the_CIA (love the handle). It was sloppy on my part. Have reworded the paragraph and included a couple of recent quotes from Correa himself on the issue of dollarisation. Thanks.

  9. michael hudson

    Sorry to be a late commentator, but I’ve had a busy day.
    Dollarizing the peso is simply a vehicle for capital flight. The wealthy will use their dollars to move whatever they can liquify out of Argentina.
    Corporations and groups will borrow to the hilt and move their money out.
    As I’ve mentioned before, I found out in 1989-90 that nearly all of Argentina’s foreign dollar debt was owed by Argentina’s! The rest was owned by Brazilians.
    Neither American nor European investors would go near Argentine foreign debt at that time.
    There can be no change without freeing Argentina from its ruling class. That isn’t on the horizon.
    I wonder what China will do with the Argentine currency that it’s holding from the recent swap that enabled Argentina to pay the IMF in RMBs.

  10. dandyandy

    I am surely way out of the time window I know but for posterity one needs to have a record what this issue looks like in a different universe,

    Britishness is now defined by our MSM by not only how much you can spit on our German and French neighbors and as a bonus the assortment of lowlife bongo countries, but much more importantly the enthusiasm for our collective head insertion into the rectal areas of our overseas master.

    Pathetic doesn’t even start to describe it.

Comments are closed.