The Duran Podcast - Milei needs a US bailout

Episode Date: September 28, 2025

Milei needs a US bailout

All right, Alexander, let's do an update on Malay and Argentina. It looks like Malay needs a bailout, and it looks like the United States is prepared to give him a bailout. He's already got money coming in from the IMF, so any money that is given to him by the United States is going to be attacked on to the money that has been given or that will be given to Argentina. So what happened to Malay? Indeed. Well, can I say, first of all, that the amounts of money that the US is giving are not insubstantial. We're talking about $20 billion, apparently, which is equal to the current reserves of the Argentine Central Bank. And this is surprising in some ways, because as you absolutely rightly said, it is not as if Argentina, since Malay became president, has not been getting assistance from the higher mayor from other financials.

institutions. Now, I get to say this, I have never been convinced by Millet up from the moment that he became president. Before he became president, I thought that he might be saying and doing some things that could perhaps be different. But the moment he became president, it became immediately clear that he was very closely aligned with an earlier Argentine president, President Macri. Apparently, the finance minister in Relay's government is the same finance minister that President Macri had. Macri is a billionaire and is very much part of the business elite of Argentina. Macri's period as president was not, I think, especially successful. And despite all of that, the policies that Millet has followed have been very similar to those which Macri followed,

and which before Macri were followed long ago, not so long ago, actually, by an earlier Argentine president, President Carlos Menem, who, by the way, was a president who came from the Peronist Party, and whose appearance, general appearance, you know, side whiskers and all of that, Millet seems to want to copy. So the idea is basically borrow money, lots of money on the international markets. Use that money to try and to stabilize the peso at a particular exchange rate to the dollar. Use that to bring down inflation in Argentina because that way you hope that people will start to use pesos more and they will also be able to buy things.

cheaper using their pesos. Inflation will that way begin to come down, which for a time works. But the cost that comes from this is that the pears all very quickly becomes overvalued because it is not able to adjust to market movements. The export industries in Argentina become uncompetitive. Imports start to flood the country. That creates deficits and structural problems. And eventually, of course, the pezo crashes. When it crashes, that leads to a chain of bankruptcies across the economy because one other

effect of having pezzal at a certain level. is that people are encouraged to take out dollar loans, which they can't then repay because they're using the overvalued pezzles. They exchange the pezzles into dollars to pay off those loans. So there's usually a financial crash, and then inflation again begins to take off. So it seems to me that we're seeing this whole thing play out all over again. We saw that with men, we saw that to a lesser extent, admittedly. With Makri, we are now seeing it play out in exactly the same way. With Millet, Argentina has deep-rooted structural problems, simply closing down a couple of ministers,

sacking a lot of civil servants. I'm not saying that's a bad thing, by the way, and fixing the exchange rate. is not going to be anywhere near enough to solve. Yeah, walking around with a chainsaw. It's a good gimmick, but, yeah. It's a good gimmick. You need a proper plan with strong technocrats, which a plan that needs at least 10, 20 years.

And if you do that, well, over time, and before those 20 years are up, you will start to see not just gross return to the economy. Argentina has managed periods of rapid growth. I mean, it did so under the kitcheners for a time. People were achieving, Argentina at that time, was it achieving 8% annual growth. We were getting 8% growth under Millet. But growth that sucks in imports and increases the structural imbalances of the economy and increases

the debt load. And that is another major structural problem now, because debt loads is constantly rising in Argentina, which is one of the reasons why the country defaults repeatedly. That kind of growth ultimately isn't the sort of growth Argentina needs. If it gets 3 or 4 percent growth, but it's really steady, organic growth, based not on quick fixes, but on a genuine effort to restructure and modernize the economy, well, that might changed the situation dramatically, but that needs a very strong government. It needs people who know what they're doing. It needs good technocrats. It needs strong relations with stable

trade partners. It needs, in other words, an approach very different from the one that you see in Argentina and from the one that President Malay has been taking. So the United States is now on the hook to take care of Argentina. Is that what we're seeing? Because there's this MAGA alliance? Yes. I mean, is that one of the main drivers for the United States now to say, okay, now we've got to pour whatever money we can into Argentina? Argentina was going to be part of bricks.

Yeah. But now it seems like it's now under the U.S. United States' responsibility. It's the United States' responsibility. I don't have another way to say it. It would have been a problem, stabilizing Argentina, would have been a problem that maybe Bricks would have tried to solve, but now the United States has to try and help it. I get to say it's straightforwardly. I think Maga has massively over-invested in the personality of Millet. I mean, Millet has presented himself as this libertarian revolutionary who was going to transform Argentina. And he talks a lot of the things that I think some people in MAGA, especially the sort of

of more business side of MAGA, people like, well, Elon Musk at one time, like to hear, you know, take the chainsawed, the government, cut down government, cut taxes, all of those things. this is all going to by itself create growth by some means of spontaneous combustion. The trouble is, I remember Argentina going through the identical period before. When Carlos Menom was president of Argentina, he got incredibly well with all sorts of people in the United States, very similar people. And again, the Americans were very entranced by Menem and were supporting Menin in all kinds of ways. Of course, ultimately, that all led to the kind of financial crash that we're seeing play

out in Argentina today. Actually, it was much worse in Meninstein because this thing in Argentina has come nowhere close, it's my opinion, to its end point. But anyway, I think misunderstand the realities of Argentina's problems. and they think that they are capable of much more straightforward and easy solutions than they really do. As I say, Argentina is not a problem that can be sorted out in a year or two. It needs 10, 20 years to sort out with a very, very different government from the one that Millet is providing. Or, by the way, now, I want to say this.

I mean, I'm not an expert on Argentine. and domestic politics. But what I have seen of the Argentine opposition doesn't vastly impress me either. I think one of the problems Argentina has is that it doesn't have a very strong and very stable political system, which is throwing up people with the kind of competences that Argentina needs in order to stabilize the situation. And I think if I was Packer or if I was advising the people in Maga, I would tell them stay well away. You're just throwing good money after ban.

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