1 00:00:02,720 --> 00:00:15,960 Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. 2 00:00:18,680 --> 00:00:21,600 Speaker 2: Hello and welcome to another episode of the Odd Thoughts podcast. 3 00:00:21,720 --> 00:00:23,120 Speaker 2: I'm Tracy Alloway. 4 00:00:22,800 --> 00:00:23,960 Speaker 3: And I'm Joe Wisenthal. 5 00:00:24,320 --> 00:00:27,160 Speaker 2: Joe, we are in Washington, DC. Do you know who 6 00:00:27,200 --> 00:00:28,880 Speaker 2: else is in our nation's capital? 7 00:00:29,680 --> 00:00:32,560 Speaker 3: Lots lots of people are in our nation's capital. Yes, 8 00:00:32,640 --> 00:00:34,479 Speaker 3: right now. I could go on and on. There's a 9 00:00:34,520 --> 00:00:36,479 Speaker 3: lot of people live there permanently, but also a lot 10 00:00:36,520 --> 00:00:38,640 Speaker 3: of people visiting this week, like we are true. 11 00:00:38,680 --> 00:00:41,640 Speaker 2: Okay, So one person in particular is visiting who is 12 00:00:41,720 --> 00:00:45,360 Speaker 2: of note for this particular podcast, and that is Javier Milay. 13 00:00:45,560 --> 00:00:48,879 Speaker 2: He is the President of Argentina and he's meeting with 14 00:00:48,920 --> 00:00:53,160 Speaker 2: Trump today. They're supposed to finalize like the twenty billion 15 00:00:53,200 --> 00:00:57,480 Speaker 2: dollars swap that Argentina just got from the US Treasury. Basically, 16 00:00:57,640 --> 00:01:01,880 Speaker 2: Argentina is getting there like a teenth bailout. I tried 17 00:01:01,880 --> 00:01:03,600 Speaker 2: to count all of them, but then I stopped because 18 00:01:03,640 --> 00:01:07,120 Speaker 2: I was like, I have a life. But normally a 19 00:01:07,120 --> 00:01:09,479 Speaker 2: lot of those bailouts come from the IMF. This one's 20 00:01:09,520 --> 00:01:12,199 Speaker 2: coming from the Treasury, so it's fairly unusual. It also 21 00:01:12,280 --> 00:01:15,360 Speaker 2: comes with a lot fewer terms than some other deals. 22 00:01:16,000 --> 00:01:18,640 Speaker 2: But this is a good time to talk about Argentina 23 00:01:18,760 --> 00:01:22,160 Speaker 2: and why it seems to constantly be in financial trouble 24 00:01:22,280 --> 00:01:24,720 Speaker 2: and either defaulting or on the verge of a default. 25 00:01:25,040 --> 00:01:28,960 Speaker 3: You know, I'm like traumatized by Argentina topics. Right, Wait, what, Well, 26 00:01:29,000 --> 00:01:31,399 Speaker 3: I've probably said it once or twice before on the podcast, 27 00:01:31,480 --> 00:01:33,440 Speaker 3: but you know, well, the first time I applied for 28 00:01:33,480 --> 00:01:36,880 Speaker 3: a job in New York City was with Brad Setzer. 29 00:01:38,000 --> 00:01:39,960 Speaker 3: He was like, and in the middle of the interviews, like, 30 00:01:39,959 --> 00:01:42,160 Speaker 3: how would your character this is two thousand and six, 31 00:01:42,200 --> 00:01:45,000 Speaker 3: maybe it's like, how would you characterize the struggles of Argentina? 32 00:01:45,040 --> 00:01:47,000 Speaker 3: And I just totally blanked. I like literally didn't get 33 00:01:47,000 --> 00:01:49,040 Speaker 3: a word out and I didn't get the job obviously, 34 00:01:49,200 --> 00:01:51,800 Speaker 3: So I've sort of this is a huge blind spot 35 00:01:51,840 --> 00:01:53,760 Speaker 3: for me, and it's almost like a blind spot I'm 36 00:01:53,800 --> 00:01:56,320 Speaker 3: afraid to revisit. But we have to dive in. I 37 00:01:56,360 --> 00:01:59,120 Speaker 3: have to learn more. Eventually, one more bailout. This one's 38 00:01:59,120 --> 00:02:00,840 Speaker 3: gonna work, right, this one's. 39 00:02:00,600 --> 00:02:04,200 Speaker 2: Going to be the last one more lane bro Yes. So, 40 00:02:04,520 --> 00:02:06,760 Speaker 2: And you know, the other interesting thing about this is 41 00:02:06,840 --> 00:02:11,280 Speaker 2: Malay was he was initially praised for reducing inflation. I 42 00:02:11,280 --> 00:02:13,760 Speaker 2: think it was something like over two hundred percent, and 43 00:02:13,800 --> 00:02:16,399 Speaker 2: it got down to thirty three percent, which by US 44 00:02:16,480 --> 00:02:19,079 Speaker 2: standards is still pretty high. But he did that by 45 00:02:19,120 --> 00:02:23,320 Speaker 2: slashing government spending and selling Argentina's FX reserves to prop 46 00:02:23,400 --> 00:02:26,640 Speaker 2: up the peso. And now fast forward a little bit 47 00:02:26,639 --> 00:02:30,239 Speaker 2: of time and that approach doesn't seem to be working anymore. 48 00:02:30,360 --> 00:02:32,640 Speaker 2: So again, there's lots to talk about. 49 00:02:32,760 --> 00:02:35,720 Speaker 3: There's so much about Argentina that confusies me, including like 50 00:02:36,280 --> 00:02:38,520 Speaker 3: why is it like this? Because there are lots of 51 00:02:38,560 --> 00:02:41,919 Speaker 3: countries that have institutional struggles of various sources. Yeah, a 52 00:02:41,960 --> 00:02:43,720 Speaker 3: lot of countries that are poor. There are a lot 53 00:02:43,720 --> 00:02:45,960 Speaker 3: of countries that whatever. I can't think of any other 54 00:02:46,040 --> 00:02:49,560 Speaker 3: country that just is always always at the travel like this. 55 00:02:49,800 --> 00:02:51,440 Speaker 3: It is not that poor of a country, et cetera. 56 00:02:51,520 --> 00:02:55,079 Speaker 3: I don't really understand why this is this persistent thing 57 00:02:55,240 --> 00:02:56,320 Speaker 3: distinct to this country. 58 00:02:56,360 --> 00:02:59,000 Speaker 2: All right, our first question will be why is Argentina 59 00:02:59,200 --> 00:03:00,040 Speaker 2: like this? 60 00:03:00,200 --> 00:03:01,040 Speaker 3: Argentina like this? 61 00:03:01,120 --> 00:03:03,280 Speaker 2: And then after we record this interview, you can write 62 00:03:03,320 --> 00:03:05,799 Speaker 2: a little essay for Brad Setzer and send it to him. 63 00:03:05,840 --> 00:03:08,200 Speaker 3: Forge job, Yes, okay, hire me. 64 00:03:08,480 --> 00:03:10,480 Speaker 2: All right, Well, I'm very happy to say that we do, 65 00:03:10,600 --> 00:03:12,680 Speaker 2: in fact have the perfect guest. We are going to 66 00:03:12,720 --> 00:03:15,800 Speaker 2: be speaking with Gregory Makeoff. He is the author of Default, 67 00:03:15,960 --> 00:03:19,520 Speaker 2: the landmark court battle over Argentina's one hundred billion dollar 68 00:03:19,600 --> 00:03:23,399 Speaker 2: debt restructuring. I read this book when it first came out. 69 00:03:23,639 --> 00:03:27,440 Speaker 2: It was absolutely fantastic, And even though it's about, you know, 70 00:03:27,480 --> 00:03:31,480 Speaker 2: a very complex court proceeding, it's it's a page turner 71 00:03:31,560 --> 00:03:34,560 Speaker 2: and there are lots of really interesting anecdotes and lots 72 00:03:34,560 --> 00:03:37,720 Speaker 2: of interesting personalities as well. So, greg thank you so 73 00:03:37,800 --> 00:03:39,160 Speaker 2: much for coming on the podcast. 74 00:03:39,360 --> 00:03:40,280 Speaker 4: Thank you for having me. 75 00:03:40,840 --> 00:03:43,280 Speaker 2: So uh, I guess I should start with that first question, 76 00:03:44,040 --> 00:03:45,640 Speaker 2: what's up with Argentina. 77 00:03:46,080 --> 00:03:51,360 Speaker 4: Well, for the history, they start from the very they 78 00:03:51,400 --> 00:03:55,280 Speaker 4: spend too much, Okay, but lots of countries spend too much. Well, 79 00:03:55,520 --> 00:04:02,800 Speaker 4: they've they're particularly politically divided and do have a reform effort. 80 00:04:03,240 --> 00:04:07,280 Speaker 4: Countries have a crisis than they reform. Hopefully they embed 81 00:04:07,320 --> 00:04:11,480 Speaker 4: the reforms and they graduate to a certain level of stability. 82 00:04:12,000 --> 00:04:14,720 Speaker 4: But whereas the Mexicos and the Brazils and the Perus 83 00:04:14,720 --> 00:04:19,680 Speaker 4: and the Columbias and the Panamas did succeed in the 84 00:04:19,800 --> 00:04:23,479 Speaker 4: nineties and their Brady programs and have not defaulted since, 85 00:04:24,200 --> 00:04:28,640 Speaker 4: Argentina and Venezuela have been distinct in not reforming and 86 00:04:28,760 --> 00:04:33,560 Speaker 4: massively over spending. That's the big difference. There's no magic 87 00:04:33,720 --> 00:04:34,760 Speaker 4: or no mystery here. 88 00:04:34,880 --> 00:04:37,560 Speaker 3: Well, can you explain, maybe just I think this might 89 00:04:37,600 --> 00:04:40,640 Speaker 3: be helpful for me. What is it about the political 90 00:04:40,839 --> 00:04:44,360 Speaker 3: environment of Argentina, which is not the poorest country in 91 00:04:44,400 --> 00:04:46,159 Speaker 3: the world by any stretch. What is it about the 92 00:04:46,160 --> 00:04:50,440 Speaker 3: political environment of Argentina such that it's never been able to, 93 00:04:50,640 --> 00:04:54,320 Speaker 3: as you put it, embed reforms in the ways that 94 00:04:54,640 --> 00:04:57,200 Speaker 3: other countries that struggled in the nineties. 95 00:04:56,760 --> 00:05:01,159 Speaker 4: Were able to machine politics coronism. 96 00:05:01,520 --> 00:05:04,640 Speaker 2: So all I know about Argentina comes from basically your book. 97 00:05:04,800 --> 00:05:06,720 Speaker 2: I covered the New York court case a little bit 98 00:05:06,720 --> 00:05:09,200 Speaker 2: when I was at the ft, but also all my 99 00:05:09,279 --> 00:05:13,120 Speaker 2: knowledge comes from andre Lloyd Webber's musical Ivida, which is 100 00:05:13,200 --> 00:05:16,520 Speaker 2: fantastic and I highly recommend. But can you explain what 101 00:05:16,600 --> 00:05:17,359 Speaker 2: paronism is? 102 00:05:17,600 --> 00:05:21,560 Speaker 4: Yeah, Paronism is kind of a shape shifter, but it 103 00:05:21,640 --> 00:05:26,440 Speaker 4: goes back historically to one Parone who was the president 104 00:05:26,560 --> 00:05:29,320 Speaker 4: or dictator for a while in the fifties, and he, 105 00:05:30,240 --> 00:05:34,880 Speaker 4: in the post war world, was aligned with labor forces 106 00:05:35,160 --> 00:05:39,640 Speaker 4: and cut the country out from the outside world. Nationalistic. 107 00:05:40,600 --> 00:05:44,640 Speaker 4: It became a political machine that controlled apparatus of government 108 00:05:44,960 --> 00:05:50,200 Speaker 4: and the unions and everything, so it embedded itself. Carlos Mennem, 109 00:05:50,240 --> 00:05:54,880 Speaker 4: the president in the nineties who were formed, was a Proonist. 110 00:05:55,279 --> 00:05:58,040 Speaker 4: He had the political machine, but he was a reformer, 111 00:05:58,520 --> 00:06:02,520 Speaker 4: an imperfect reformer. Broke down in two thousand and one. 112 00:06:03,360 --> 00:06:07,960 Speaker 4: But then the Kirchners were also Prohists, and they have 113 00:06:08,080 --> 00:06:12,680 Speaker 4: a particularly virulent version of Pronism, which is really what 114 00:06:12,760 --> 00:06:17,440 Speaker 4: we're talking about here is Kirchnerism. So pironas come in 115 00:06:17,560 --> 00:06:21,080 Speaker 4: many different flavors, and when we're talking about the current situation, 116 00:06:21,680 --> 00:06:26,480 Speaker 4: it's really the Kirchner version of pronism versus the Milai 117 00:06:26,680 --> 00:06:29,680 Speaker 4: version of let's finally balance our budget. 118 00:06:30,000 --> 00:06:33,599 Speaker 3: I want to get to Malay obviously, but just go 119 00:06:33,680 --> 00:06:36,880 Speaker 3: into this a little bit more machine politics. Again, not 120 00:06:37,040 --> 00:06:41,440 Speaker 3: something that's alien to other countries in the world. That's 121 00:06:41,480 --> 00:06:45,720 Speaker 3: fairly common talk about the sort of application or every 122 00:06:45,720 --> 00:06:48,320 Speaker 3: country is some kind of machine politics. What makes that 123 00:06:48,680 --> 00:06:52,080 Speaker 3: Kirchnerism et cetera so powerful and difficult to dislige? 124 00:06:52,120 --> 00:06:56,279 Speaker 4: How is it operationalize the way the cash moves Okay, 125 00:06:56,760 --> 00:07:00,960 Speaker 4: in that if you get a bailout check during you 126 00:07:01,040 --> 00:07:04,440 Speaker 4: get it from the federal government in the mail. In 127 00:07:04,480 --> 00:07:07,720 Speaker 4: the two thousand and one crisis, some of the emergency 128 00:07:07,839 --> 00:07:13,040 Speaker 4: money that was allocated, even from international institutions, was given 129 00:07:13,080 --> 00:07:17,840 Speaker 4: to Argentina, who was given to party operatives to hand 130 00:07:17,840 --> 00:07:22,960 Speaker 4: out in the barrios. You literally get checks from party 131 00:07:23,040 --> 00:07:28,400 Speaker 4: operatives or in regions, from the party governor under a 132 00:07:28,400 --> 00:07:31,240 Speaker 4: picture of the governor in paron. So in many cases 133 00:07:31,320 --> 00:07:35,160 Speaker 4: the cash flow looks like a gift from the leader 134 00:07:35,240 --> 00:07:38,720 Speaker 4: and the party. And then when the leader says, oh, 135 00:07:39,040 --> 00:07:42,480 Speaker 4: there's a Peronist rally in Buenos Aires, we'd like you 136 00:07:42,560 --> 00:07:45,840 Speaker 4: to get on a bus, the people who depend on 137 00:07:45,960 --> 00:07:49,320 Speaker 4: them for the check say, I guess I gotta go. Wow. 138 00:07:49,480 --> 00:07:53,640 Speaker 2: I had no idea that happened. Okay, So Millay campaign 139 00:07:53,680 --> 00:07:57,720 Speaker 2: on a platform of massively reducing government spending in order 140 00:07:57,760 --> 00:08:00,760 Speaker 2: to bring down inflation and all types of austerity. It 141 00:08:00,800 --> 00:08:05,040 Speaker 2: wasn't necessarily IMF style reform, but it was supposed to 142 00:08:05,080 --> 00:08:09,720 Speaker 2: be a reduction in spending. And yet here we are 143 00:08:09,960 --> 00:08:13,800 Speaker 2: and Argentina is getting its twenty billion dollar bailout do 144 00:08:13,920 --> 00:08:17,920 Speaker 2: the politics of economic pain. I guess the idea of 145 00:08:18,440 --> 00:08:21,760 Speaker 2: people no longer handing out checks in the barrios and 146 00:08:21,800 --> 00:08:27,240 Speaker 2: stuff like that. Does that make serious spending reductions just 147 00:08:27,440 --> 00:08:29,760 Speaker 2: untenable in Argentina. 148 00:08:29,960 --> 00:08:33,520 Speaker 4: We should back up a bit and get a bit historically, 149 00:08:34,120 --> 00:08:38,880 Speaker 4: because the people voted in twenty twenty three for Mila, 150 00:08:38,920 --> 00:08:44,120 Speaker 4: because they were in such economic chaos. They voted for 151 00:08:44,200 --> 00:08:48,559 Speaker 4: a complete outsider with a very particular message that had 152 00:08:48,600 --> 00:08:52,880 Speaker 4: a lot of truth for them, and his promise was 153 00:08:53,600 --> 00:08:58,880 Speaker 4: pain now, success later. Let's finally have reform and sustain 154 00:08:58,960 --> 00:09:02,880 Speaker 4: it to stop the two hundred years of boom bust 155 00:09:02,920 --> 00:09:08,320 Speaker 4: evaluation in default. Now, the context of this, just from 156 00:09:08,360 --> 00:09:11,760 Speaker 4: two thousand and one is the country, the program of 157 00:09:11,800 --> 00:09:16,400 Speaker 4: the ninety of men falling apart and facing a devaluation 158 00:09:16,520 --> 00:09:19,120 Speaker 4: in default, one hundred billion dollar debt default. As I 159 00:09:19,240 --> 00:09:23,160 Speaker 4: talk about in my book, the people were in the 160 00:09:23,200 --> 00:09:27,600 Speaker 4: street screaming they all must go, and they were banging 161 00:09:27,679 --> 00:09:32,760 Speaker 4: pots and pans clink, clink, and the president left in 162 00:09:32,760 --> 00:09:38,280 Speaker 4: a helicopter from the top of Casa Rizata. And they 163 00:09:38,800 --> 00:09:42,600 Speaker 4: had a reform program. They ran a very tight budget, 164 00:09:42,840 --> 00:09:46,640 Speaker 4: tighter even than mille is running between three and oh five. 165 00:09:47,960 --> 00:09:51,679 Speaker 4: But then they didn't sustain the reform, and after twenty 166 00:09:51,840 --> 00:09:54,920 Speaker 4: ten they've been in the boom, then the bust in 167 00:09:55,040 --> 00:10:00,280 Speaker 4: default from twenty ten to twenty three. So again they 168 00:10:00,360 --> 00:10:03,840 Speaker 4: voted for Milay because they were saying they all must go. 169 00:10:04,600 --> 00:10:08,640 Speaker 4: The rest of the political class who couldn't deliver must go. 170 00:10:08,840 --> 00:10:14,080 Speaker 4: We want stability. Now. The brilliance of Milay is he said, 171 00:10:15,520 --> 00:10:19,760 Speaker 4: we spent too much, we print too much money, we 172 00:10:20,640 --> 00:10:25,480 Speaker 4: have inflation. And that was true, and he symbolized it 173 00:10:26,160 --> 00:10:29,280 Speaker 4: with a chainsaw, right, because it was the problem in 174 00:10:29,360 --> 00:10:33,400 Speaker 4: the solution. I've seen pictures of him at a rally. 175 00:10:33,880 --> 00:10:36,400 Speaker 4: He's not even talking, he just holds it up. 176 00:10:36,840 --> 00:10:37,720 Speaker 3: That's really powerful. 177 00:10:37,800 --> 00:10:40,480 Speaker 2: And he lent that chainsaw to Elon Musk as well. 178 00:10:40,559 --> 00:10:41,040 Speaker 1: Oh he did. 179 00:10:41,160 --> 00:10:43,320 Speaker 2: Yeah, that was that was Malay's change. 180 00:10:44,200 --> 00:10:45,480 Speaker 3: Wait, what happened to that other guy? 181 00:10:45,600 --> 00:10:45,640 Speaker 2: Was? 182 00:10:45,720 --> 00:10:48,079 Speaker 3: Is there some guy that around twenty sixteen or twenty 183 00:10:48,120 --> 00:10:51,040 Speaker 3: seventeen that all the international community loved that thought he 184 00:10:51,120 --> 00:10:53,400 Speaker 3: was going to be the great neoliberal reformer there? 185 00:10:53,640 --> 00:10:54,319 Speaker 4: That was Macri? 186 00:10:54,559 --> 00:10:56,280 Speaker 3: Oh yeah, Macri right, what happened to that guy? 187 00:10:56,400 --> 00:11:02,560 Speaker 4: Well, the people were tired of the chaos of Christina 188 00:11:02,600 --> 00:11:05,800 Speaker 4: Fernandez de Kirchner, who was present for two terms after 189 00:11:05,880 --> 00:11:10,120 Speaker 4: her husband Nestor was present for one term. He died 190 00:11:10,280 --> 00:11:12,520 Speaker 4: after her first term. He was going to run again, 191 00:11:13,120 --> 00:11:16,560 Speaker 4: so she had two and things were bad, including on 192 00:11:16,600 --> 00:11:20,120 Speaker 4: the bond default and all the litigation, and Macri is like, 193 00:11:20,160 --> 00:11:22,840 Speaker 4: I'm going to bring a normal country, and he did 194 00:11:22,880 --> 00:11:27,840 Speaker 4: some great things at first, but his program fell apart, 195 00:11:28,120 --> 00:11:36,760 Speaker 4: which brought back an even worse Peronist administration with Alberto Fernandez, 196 00:11:36,960 --> 00:11:39,720 Speaker 4: who had been the chief of cabinet for Nestor Kirchner, 197 00:11:40,280 --> 00:11:44,880 Speaker 4: with Christina Fernandez de Kirchners the vice president, and COVID hit. 198 00:11:45,280 --> 00:11:49,200 Speaker 4: They did default again and they handed over the reins 199 00:11:49,240 --> 00:11:53,600 Speaker 4: to Milley with like one hundred and fifty percent annualized inflation. 200 00:11:54,880 --> 00:11:58,800 Speaker 4: So there was an urge to reform under Macri, but 201 00:11:58,960 --> 00:12:04,400 Speaker 4: he had such a bad imbalance of too much monetary 202 00:12:04,400 --> 00:12:08,200 Speaker 4: emission in the local market, he couldn't get out from 203 00:12:08,200 --> 00:12:11,400 Speaker 4: it fast enough. He tried to slow walk it and 204 00:12:11,520 --> 00:12:14,040 Speaker 4: be gradualistic, and he couldn't make it through. 205 00:12:30,000 --> 00:12:34,400 Speaker 2: So Malay took a chainsaw to government spending in Argentina. 206 00:12:34,440 --> 00:12:37,800 Speaker 2: It seems inflation did come down. Why do they need 207 00:12:37,800 --> 00:12:41,079 Speaker 2: a bailout now? Their umpteenth bailout? Actually I should ask you, 208 00:12:41,080 --> 00:12:43,320 Speaker 2: you might actually know how many times Argentina has been 209 00:12:43,320 --> 00:12:43,760 Speaker 2: bailed up. 210 00:12:44,000 --> 00:12:48,120 Speaker 4: I have the number and how many defaults. Okay, the bailouts, 211 00:12:48,160 --> 00:12:51,720 Speaker 4: we'd have to check the number. But first of all, 212 00:12:52,040 --> 00:12:57,360 Speaker 4: I would term the treasury support is not a surprise 213 00:12:57,400 --> 00:12:59,840 Speaker 4: and was always in the cards from that I am 214 00:12:59,840 --> 00:13:03,560 Speaker 4: a program in April. The IMF program, for what it 215 00:13:03,720 --> 00:13:08,000 Speaker 4: was doing in the negative reserve position they inherited from 216 00:13:08,040 --> 00:13:11,319 Speaker 4: the prior government, was always too thin. They were always 217 00:13:11,440 --> 00:13:15,040 Speaker 4: vulnerable to a speculative attack. They were always vulnerable around 218 00:13:15,080 --> 00:13:19,439 Speaker 4: the midterm elections and a speculative attack occurred, and as 219 00:13:19,840 --> 00:13:24,160 Speaker 4: Treasury hint they would, they stood behind the IMF. This 220 00:13:24,240 --> 00:13:26,920 Speaker 4: is nothing new. This is not a failure of the program. 221 00:13:27,320 --> 00:13:32,360 Speaker 4: This is completely predictable. The way it unfolded in the 222 00:13:32,480 --> 00:13:37,320 Speaker 4: speed leaves a bad impression. But as an observer for 223 00:13:37,360 --> 00:13:42,360 Speaker 4: a long time, this was no surprise. And Besson's word, 224 00:13:42,559 --> 00:13:45,840 Speaker 4: we really need to have an orderly election here this 225 00:13:46,040 --> 00:13:49,600 Speaker 4: is true. The people have to choose. Are we going 226 00:13:49,640 --> 00:13:55,320 Speaker 4: to sustain reform and stop defaulting, or are we going 227 00:13:55,400 --> 00:13:57,640 Speaker 4: to go back to the other way and go back 228 00:13:57,679 --> 00:14:02,240 Speaker 4: to overspending money, printing to value inflation and default. There's 229 00:14:02,280 --> 00:14:07,320 Speaker 4: a very stark difference between what the kissel Off leadership 230 00:14:07,400 --> 00:14:10,160 Speaker 4: of the party will lead the country to and what 231 00:14:10,240 --> 00:14:14,200 Speaker 4: a continued leadership by Mila and a center right coalition will. 232 00:14:14,240 --> 00:14:17,040 Speaker 3: Can you actually explain a little bit further? Reform is 233 00:14:17,040 --> 00:14:20,040 Speaker 3: a nebulus term. Sounds good, but I do know what 234 00:14:20,080 --> 00:14:23,920 Speaker 3: it means. What substantively have we seen from the current 235 00:14:23,960 --> 00:14:28,560 Speaker 3: administration in terms of either spending cuts or so called reforms, 236 00:14:28,880 --> 00:14:30,000 Speaker 3: what's been done so far? 237 00:14:30,920 --> 00:14:35,440 Speaker 4: This single number to focus on is the primary surplus. Okay, 238 00:14:35,800 --> 00:14:38,880 Speaker 4: it's kind of like the free cash flow for a company, 239 00:14:39,360 --> 00:14:43,320 Speaker 4: but it's your net cash flow before your debt payments, 240 00:14:43,560 --> 00:14:49,000 Speaker 4: your revenue in minus your expenses and your debt does 241 00:14:49,040 --> 00:14:53,520 Speaker 4: not stabilize unless that's positive and positive enough to pay 242 00:14:53,560 --> 00:14:58,120 Speaker 4: off your existing debt at a reasonable pace. Countries like US, 243 00:14:58,200 --> 00:15:03,200 Speaker 4: the US, we're running negative primary surplus, which means we're 244 00:15:03,560 --> 00:15:06,920 Speaker 4: incurring more debt and we're refinancing maturing debt with more 245 00:15:06,960 --> 00:15:10,680 Speaker 4: and more, which has debt going up. Argentina, to stabilize 246 00:15:10,720 --> 00:15:13,200 Speaker 4: the situation has to run a primary surplus of let's 247 00:15:13,200 --> 00:15:17,960 Speaker 4: say three percent. Under Minister of Economy Lavagna, who was 248 00:15:18,000 --> 00:15:20,800 Speaker 4: a great reformer from two thousand and two to two 249 00:15:20,840 --> 00:15:24,040 Speaker 4: thousand and five who Encouragedner fired him for being too tough. 250 00:15:24,600 --> 00:15:28,760 Speaker 4: They were running a five percent primary totally stabilized the economy. 251 00:15:29,440 --> 00:15:34,240 Speaker 4: Miller's program is carefully calibrated to stop monetary emission in 252 00:15:34,320 --> 00:15:38,080 Speaker 4: stabilize the economy. There's nothing arbitrary about it. It is 253 00:15:38,200 --> 00:15:42,320 Speaker 4: the kind of macroeconomic stabilization that you have to do. 254 00:15:43,440 --> 00:15:47,640 Speaker 4: It makes sense, and moreover, it is done sensitively. They 255 00:15:47,680 --> 00:15:51,520 Speaker 4: protected the basket of money available to the poorest households, 256 00:15:52,040 --> 00:15:54,800 Speaker 4: so where are they cutting. They adjust a lot of 257 00:15:54,840 --> 00:15:59,760 Speaker 4: different things. Most importantly, they did things like you don't 258 00:15:59,760 --> 00:16:02,560 Speaker 4: get free buses anymore, you don't get free trains, so 259 00:16:02,600 --> 00:16:05,800 Speaker 4: they moved the costs of those things up to a 260 00:16:05,880 --> 00:16:11,280 Speaker 4: market rate. And utilities, because the Kirchers they also defaulted 261 00:16:11,360 --> 00:16:13,560 Speaker 4: on all the utility contracts in two thousand and one, 262 00:16:13,680 --> 00:16:17,280 Speaker 4: they never normalized utility rates. So one of their fiscal 263 00:16:17,400 --> 00:16:21,440 Speaker 4: problems around after twenty ten is they were subsidizing the 264 00:16:21,480 --> 00:16:24,800 Speaker 4: power bills for everyone, which was costing four percent of 265 00:16:24,920 --> 00:16:28,560 Speaker 4: GDP a year. That's why you have a primary deficit, 266 00:16:28,960 --> 00:16:31,760 Speaker 4: and they said, we can't do that. So they corrected 267 00:16:31,800 --> 00:16:40,040 Speaker 4: those popular household subsidies and they did some adjustments including 268 00:16:40,080 --> 00:16:45,640 Speaker 4: to the indexation of pension, and that's a next level 269 00:16:45,920 --> 00:16:50,440 Speaker 4: topic in terms of what the Kirchiners did to reindex 270 00:16:50,480 --> 00:16:51,400 Speaker 4: the whole society. 271 00:16:52,480 --> 00:16:56,640 Speaker 2: So we've been very focused on what Argentina itself is 272 00:16:56,720 --> 00:16:59,240 Speaker 2: doing and why it seems to be in a perpetual 273 00:16:59,360 --> 00:17:03,440 Speaker 2: financial predicament. But maybe we could talk about the role 274 00:17:03,600 --> 00:17:07,600 Speaker 2: of external actors a little bit more so in your 275 00:17:07,680 --> 00:17:12,680 Speaker 2: book again fabulous story of the big court case over 276 00:17:12,840 --> 00:17:16,400 Speaker 2: Argentina debt. But one of the criticisms of this whole 277 00:17:16,440 --> 00:17:21,240 Speaker 2: process is that every time you successfully work out default 278 00:17:21,240 --> 00:17:24,480 Speaker 2: to debt or every time you reach a settlement, the 279 00:17:24,520 --> 00:17:27,600 Speaker 2: country can just return to market fairly quickly, right, So 280 00:17:27,800 --> 00:17:32,080 Speaker 2: it's never really punished that much or enough to make 281 00:17:32,119 --> 00:17:35,960 Speaker 2: it seriously think about reducing its debt. Is there some 282 00:17:36,119 --> 00:17:39,359 Speaker 2: truth to that? Are there things that external actors, like 283 00:17:39,440 --> 00:17:42,040 Speaker 2: the court system or the IMF should be doing to 284 00:17:42,400 --> 00:17:44,080 Speaker 2: stop this from repeatedly happening. 285 00:17:44,600 --> 00:17:48,520 Speaker 4: I really think the question you ask is the most 286 00:17:48,560 --> 00:17:52,359 Speaker 4: important one, But it's really about the soul of the 287 00:17:52,520 --> 00:17:58,480 Speaker 4: Argentine people. Have they had enough pain to insist their 288 00:17:58,600 --> 00:18:05,560 Speaker 4: government follows robust financial policies. They either elect people who 289 00:18:05,600 --> 00:18:08,359 Speaker 4: will be straight with them about what they can afford 290 00:18:08,920 --> 00:18:13,000 Speaker 4: and set up policies they will follow, like Gordon Brown's 291 00:18:13,240 --> 00:18:16,479 Speaker 4: Golden Rule and things like that, or they will elect 292 00:18:16,520 --> 00:18:19,800 Speaker 4: politicians who say, oh, I'll make it easier on you. 293 00:18:20,600 --> 00:18:25,720 Speaker 4: And so the people shocked me in twenty twenty three 294 00:18:25,880 --> 00:18:28,919 Speaker 4: on finishing my book. I was depressed. I saw no 295 00:18:29,040 --> 00:18:34,040 Speaker 4: way out of perpetual chaos. And then Milley came and 296 00:18:34,080 --> 00:18:37,199 Speaker 4: they voted for him because the people said, please, we 297 00:18:37,320 --> 00:18:39,879 Speaker 4: want to be in an orderly country. Now we're at 298 00:18:39,960 --> 00:18:44,280 Speaker 4: the midterm, put aside the last six weeks of chaos. 299 00:18:44,840 --> 00:18:47,919 Speaker 4: You're asking the people, will you stick to the plan 300 00:18:48,440 --> 00:18:51,080 Speaker 4: to get to the finish line, or you're going to 301 00:18:51,160 --> 00:18:53,680 Speaker 4: say we're tired, we don't want to try so hard. 302 00:18:53,680 --> 00:18:57,240 Speaker 4: And again they may very well go from Millay and 303 00:18:57,280 --> 00:19:00,640 Speaker 4: Macri and say we do want to complete it where 304 00:19:00,760 --> 00:19:03,440 Speaker 4: we didn't like this blow up that happened. We don't 305 00:19:04,040 --> 00:19:08,160 Speaker 4: want to go there, or they're gonna do something else. 306 00:19:08,200 --> 00:19:11,840 Speaker 4: So no outside party can tell a sovereign nation what 307 00:19:12,040 --> 00:19:16,320 Speaker 4: to do. No judge. The judge makes it worse that 308 00:19:16,400 --> 00:19:19,880 Speaker 4: imf It has to come internally. 309 00:19:20,440 --> 00:19:23,240 Speaker 3: Is the problem democracy? I mean, we've talked about for real, 310 00:19:23,280 --> 00:19:27,159 Speaker 3: like we've talked about this in the context of Fritz 311 00:19:27,240 --> 00:19:31,760 Speaker 3: Bartel wrote a book The Triumph of Broken Promises, similar 312 00:19:32,280 --> 00:19:37,000 Speaker 3: story with the post Soviet states and how they ultimately 313 00:19:37,000 --> 00:19:40,320 Speaker 3: broke apart from the Soviet Union because of this sort 314 00:19:40,359 --> 00:19:43,800 Speaker 3: of difficulty that they had and making difficult decisions and 315 00:19:43,840 --> 00:19:47,760 Speaker 3: these attempts to impose austerity or and live within their means, 316 00:19:47,760 --> 00:19:50,440 Speaker 3: et cetera. And they finally like it didn't work anymore. 317 00:19:50,560 --> 00:19:53,480 Speaker 3: And yet and in the early eighties somehow the UK 318 00:19:53,680 --> 00:19:55,840 Speaker 3: found a way to, you know, sort of do an 319 00:19:55,920 --> 00:19:58,800 Speaker 3: internal adjustment. But these things are like really hard in 320 00:19:58,800 --> 00:20:02,040 Speaker 3: a democracy. They're really hard in a system in which 321 00:20:02,359 --> 00:20:05,400 Speaker 3: every two years there's a referendum on how it's going. 322 00:20:05,440 --> 00:20:07,680 Speaker 3: And if it is painful, I understand why people don't 323 00:20:07,720 --> 00:20:10,439 Speaker 3: want to continue with it, even though maybe long term 324 00:20:10,560 --> 00:20:14,919 Speaker 3: it's beneficial. Like I'm not really proposing this, but like 325 00:20:15,040 --> 00:20:18,000 Speaker 3: in your view, does someone like a Mulay need like 326 00:20:18,000 --> 00:20:20,600 Speaker 3: a nice like ten year or twenty year runway where 327 00:20:20,600 --> 00:20:22,800 Speaker 3: he doesn't have to face the voters. You know what 328 00:20:22,800 --> 00:20:24,960 Speaker 3: I'm saying, like, is this the issue is that these 329 00:20:25,000 --> 00:20:27,560 Speaker 3: difficult things keep coming up for a vote over time, 330 00:20:27,600 --> 00:20:29,240 Speaker 3: and in the middle it's like what are we getting here? 331 00:20:29,320 --> 00:20:32,680 Speaker 4: Yeah, And somebody wrote a book a Black Rock manager 332 00:20:32,760 --> 00:20:34,800 Speaker 4: gave me. He says, Greg, this is the best book. 333 00:20:35,160 --> 00:20:38,919 Speaker 4: It's called A Free Country Deep in Debt. About the 334 00:20:39,040 --> 00:20:41,560 Speaker 4: histories of countries getting in debt is that you don't 335 00:20:41,600 --> 00:20:43,679 Speaker 4: need to know any more than that. But there's this 336 00:20:43,800 --> 00:20:49,800 Speaker 4: challenge between democracy and running a balanced budget. But populations learn. 337 00:20:50,920 --> 00:20:54,240 Speaker 4: And I heard I think it was a Moody's analyst 338 00:20:54,320 --> 00:20:56,520 Speaker 4: or a Fitch analyst last year talking about the debt 339 00:20:56,600 --> 00:20:59,480 Speaker 4: trajectories in Europe. He said, France is going up, in 340 00:20:59,480 --> 00:21:01,480 Speaker 4: this country going up, in the UK is going up, 341 00:21:01,800 --> 00:21:05,439 Speaker 4: but you know what, Greece is going down, in Spain 342 00:21:05,520 --> 00:21:08,199 Speaker 4: is going down, and Italys is going down because the 343 00:21:08,320 --> 00:21:12,320 Speaker 4: crisis country. People don't want to go through the disaster again. 344 00:21:12,840 --> 00:21:16,800 Speaker 4: So when you have people like Argentina who dealt with hyperinflation, 345 00:21:17,480 --> 00:21:19,719 Speaker 4: they don't want to be lied to. They know the 346 00:21:19,800 --> 00:21:25,520 Speaker 4: cost of no pain now and suffering later. Now Americans, 347 00:21:25,560 --> 00:21:29,200 Speaker 4: we don't know. We're willing to have the government massively 348 00:21:29,240 --> 00:21:33,400 Speaker 4: overspend because we want low taxes now and more benefits now, 349 00:21:33,880 --> 00:21:36,760 Speaker 4: and we don't know what it. Imbalanced budget mean. You 350 00:21:36,760 --> 00:21:39,840 Speaker 4: can go forever, but when you've been in Argentina and 351 00:21:39,840 --> 00:21:43,040 Speaker 4: you've suffered it. You want a government who says I'm 352 00:21:43,040 --> 00:21:47,080 Speaker 4: not going to overspend because you've lived the cost. Countries, 353 00:21:47,760 --> 00:21:51,959 Speaker 4: the people embed that knowledge and their voting behavior and 354 00:21:52,480 --> 00:21:55,600 Speaker 4: they can sustain it year after year. That's called graduating. 355 00:21:56,080 --> 00:21:59,280 Speaker 4: That's the point of this election this midterm. Did the 356 00:21:59,440 --> 00:22:02,840 Speaker 4: Argentine people get the message and they are now going 357 00:22:02,880 --> 00:22:05,960 Speaker 4: to sustain the path because they understand the costs, or 358 00:22:06,000 --> 00:22:08,439 Speaker 4: are they going to just say I'm tired of it, 359 00:22:08,560 --> 00:22:11,120 Speaker 4: let's go back. We don't know the answer. We will 360 00:22:11,160 --> 00:22:14,639 Speaker 4: know on the twenty sixth of October after they vote 361 00:22:14,640 --> 00:22:19,439 Speaker 4: on the twenty seventh. And it's an incredible historical moment 362 00:22:19,520 --> 00:22:34,240 Speaker 4: that we're facing. 363 00:22:36,240 --> 00:22:40,480 Speaker 2: Okay, so the new bailout that's getting finalized today in 364 00:22:40,600 --> 00:22:42,000 Speaker 2: DC between Trump and. 365 00:22:42,040 --> 00:22:44,680 Speaker 3: We're recording this the fourteenth. Oh yeah, October fourteenth. 366 00:22:44,680 --> 00:22:48,880 Speaker 2: I should have said October fourteenth. So the new bailout 367 00:22:49,040 --> 00:22:51,439 Speaker 2: does have direct US involvement. I know you said it 368 00:22:51,480 --> 00:22:55,160 Speaker 2: was part of the earlier IMF agreement, but still people are, 369 00:22:55,240 --> 00:22:57,679 Speaker 2: you know, talking about the US doing a twenty billion 370 00:22:57,680 --> 00:23:02,960 Speaker 2: dollar bailout of Argentina. Do you think that involvement changes 371 00:23:03,160 --> 00:23:06,400 Speaker 2: maybe creditor debtor dynamics in the future. 372 00:23:07,160 --> 00:23:11,760 Speaker 4: I think in the short term right now, it's a 373 00:23:11,800 --> 00:23:15,840 Speaker 4: big bazukah to stop a run on the bank. There 374 00:23:15,920 --> 00:23:20,439 Speaker 4: is a speculative attack on the Argentine Peso at the 375 00:23:20,480 --> 00:23:25,400 Speaker 4: worst possible time, and the piranhas start amping it up. 376 00:23:26,240 --> 00:23:29,320 Speaker 4: Christina Fernandez da Kirchner. I think it was October first, 377 00:23:29,440 --> 00:23:31,760 Speaker 4: is on x saying oh, he's going to devalue right 378 00:23:31,840 --> 00:23:36,679 Speaker 4: after the election, and okay, poor more speculative attacks on 379 00:23:36,800 --> 00:23:40,200 Speaker 4: that's kind of a behavior towards your own country, and 380 00:23:40,359 --> 00:23:45,000 Speaker 4: so Treasury is responding by putting a huge bazuka. It's 381 00:23:45,119 --> 00:23:47,880 Speaker 4: very expensive to be short, and so this should put 382 00:23:47,920 --> 00:23:51,159 Speaker 4: all those shorts out of business. They have an orderly election. 383 00:23:52,000 --> 00:23:54,760 Speaker 4: And you don't even know the extent that these sort 384 00:23:54,760 --> 00:23:58,919 Speaker 4: of external things nobody understand really affects behavior. They're living 385 00:23:59,040 --> 00:24:03,320 Speaker 4: their life, are worrying about their bills. There know their 386 00:24:03,400 --> 00:24:07,879 Speaker 4: local stories about what's happened, what Millie has done and 387 00:24:08,000 --> 00:24:10,560 Speaker 4: hasn't done, and what people are saying. This is just 388 00:24:10,600 --> 00:24:15,040 Speaker 4: another piece of noise in a complicated picture. External creditors, 389 00:24:16,000 --> 00:24:19,479 Speaker 4: that's a different question. This is perceptionally very important. Bonds 390 00:24:19,520 --> 00:24:23,280 Speaker 4: started rallying because you have people likewis at Bob Citron 391 00:24:23,320 --> 00:24:25,359 Speaker 4: and said he immediately bought a lot of bonds and 392 00:24:25,400 --> 00:24:29,679 Speaker 4: they went up, and he's saying, oh, Treasury is backing Argentina. 393 00:24:30,320 --> 00:24:32,719 Speaker 4: You buy long term bonds because of short term bawl out. 394 00:24:32,800 --> 00:24:35,240 Speaker 4: That's a risky thing to do, but it's pro Argentina. 395 00:24:35,480 --> 00:24:40,679 Speaker 4: It helps stabilize the situation. But the market is so 396 00:24:41,160 --> 00:24:46,720 Speaker 4: afraid of kiss a Off in particular, so not just Parrohnism, 397 00:24:46,840 --> 00:24:50,720 Speaker 4: which I explained it had reformer menim in early Nester 398 00:24:50,840 --> 00:24:56,200 Speaker 4: Kirchner was quite reformist, but it has this kissal off 399 00:24:56,440 --> 00:25:03,199 Speaker 4: Christina Fernandez to Kirchner version of Poni which involved notorious 400 00:25:03,200 --> 00:25:09,800 Speaker 4: defaulting and Kissilov was directly involved with the nationalization of 401 00:25:10,000 --> 00:25:12,879 Speaker 4: YPF in twenty twelve, which you know led to the 402 00:25:13,240 --> 00:25:16,720 Speaker 4: sixteen billion dollar judgment in the court because the way 403 00:25:16,760 --> 00:25:21,640 Speaker 4: minority shareholders were treated, the non payment of some GDP 404 00:25:21,880 --> 00:25:24,480 Speaker 4: warrants that were due i think in twenty thirteen which 405 00:25:24,560 --> 00:25:26,760 Speaker 4: led to a one point five billion judgment in the 406 00:25:26,880 --> 00:25:31,320 Speaker 4: UK court, and was deeply involved with Christina Frendanez da 407 00:25:31,359 --> 00:25:34,639 Speaker 4: Kirchner in the redefault under the Perry passu threat. In 408 00:25:34,720 --> 00:25:38,479 Speaker 4: twenty fourteen, Kissilov went to New York and failed to 409 00:25:38,560 --> 00:25:42,359 Speaker 4: negotiate in a deal which was basically on the table 410 00:25:42,880 --> 00:25:45,600 Speaker 4: slightly better than what Macri took two years a year 411 00:25:45,600 --> 00:25:48,880 Speaker 4: and a half later, but wouldn't take it or couldn't 412 00:25:48,920 --> 00:25:54,000 Speaker 4: figure out how to take it. And so foreigners see 413 00:25:54,040 --> 00:25:58,560 Speaker 4: this ghost of default passed as coming back into power. 414 00:25:59,080 --> 00:26:03,240 Speaker 4: So if they see any big chance of kiss A 415 00:26:03,240 --> 00:26:06,760 Speaker 4: Loov coming back, they're going to run. So that's how 416 00:26:06,920 --> 00:26:09,680 Speaker 4: the bond holders buying dollar bonds in New York think 417 00:26:10,160 --> 00:26:13,800 Speaker 4: they're very happy when Treasury comes. But we should talk 418 00:26:13,800 --> 00:26:16,919 Speaker 4: for a minute about the election and what success means. 419 00:26:17,280 --> 00:26:19,480 Speaker 2: Can I ask one more question before we talk about that? 420 00:26:20,400 --> 00:26:23,800 Speaker 2: Why do investors keep buying Argentina bonds? 421 00:26:24,560 --> 00:26:28,040 Speaker 4: I should play you this tape the Second Circuit in 422 00:26:28,040 --> 00:26:31,840 Speaker 4: one of their two hour and a half hearings. Judge Pooler, 423 00:26:31,960 --> 00:26:37,320 Speaker 4: Rosemary Pooler, who was the nice judge, in very kindly voice, 424 00:26:38,200 --> 00:26:40,840 Speaker 4: at the end of a hearing, look to Argentina's council 425 00:26:40,920 --> 00:26:44,320 Speaker 4: Jonathan Blackman. It said, can I ask you a question 426 00:26:45,359 --> 00:26:49,600 Speaker 4: sort of off the record? He says sure, She says, 427 00:26:49,840 --> 00:26:53,399 Speaker 4: why would anybody who can read ever buy a bond 428 00:26:53,720 --> 00:26:54,639 Speaker 4: from Argentina. 429 00:26:54,840 --> 00:26:55,240 Speaker 3: That's right. 430 00:26:55,920 --> 00:26:59,000 Speaker 4: Jonathan Blackman had the best answer. He's like, they didn't 431 00:26:59,000 --> 00:27:03,000 Speaker 4: default arbitrary. They were suffering a crisis worse than the 432 00:27:03,040 --> 00:27:07,040 Speaker 4: Great Depression. It was like Weimar Germany with middle class 433 00:27:07,080 --> 00:27:10,760 Speaker 4: people selling their furniture on the street. Like he was 434 00:27:10,840 --> 00:27:14,679 Speaker 4: brilliant in that spontaneous answer to the question. But I 435 00:27:14,800 --> 00:27:19,080 Speaker 4: keep thinking of that question, and we're back there. But 436 00:27:20,080 --> 00:27:24,320 Speaker 4: Milley and the Pro Party with macriamiformist, they don't need 437 00:27:24,359 --> 00:27:28,199 Speaker 4: a lot at this election in this sense, with thirty 438 00:27:28,280 --> 00:27:33,600 Speaker 4: three percent of the lower House, they continue to lead 439 00:27:33,640 --> 00:27:36,520 Speaker 4: o legislation they don't like and rule by decreean things. 440 00:27:37,080 --> 00:27:41,040 Speaker 4: So the chance that the Pronas completely take over the 441 00:27:41,119 --> 00:27:45,240 Speaker 4: legislative branch is really low. We're just facing a more 442 00:27:45,840 --> 00:27:50,240 Speaker 4: bigger picture, perceptional question, which direction is the mind of 443 00:27:50,240 --> 00:27:53,320 Speaker 4: the voter going and leading to the next presidential election. 444 00:27:53,800 --> 00:27:56,520 Speaker 4: Are they really tired of Mille and they're going to 445 00:27:56,520 --> 00:28:00,239 Speaker 4: go back to Kisseloff as their leader, or are they 446 00:28:00,280 --> 00:28:03,919 Speaker 4: going to stick in the reformist direction with some complaints 447 00:28:03,960 --> 00:28:05,840 Speaker 4: and demands for readjustment of direction. 448 00:28:06,520 --> 00:28:08,720 Speaker 3: So what should we watch? So, okay, tell us a 449 00:28:08,760 --> 00:28:10,840 Speaker 3: little bit about what date is the election again. 450 00:28:11,119 --> 00:28:12,120 Speaker 4: Twober twenty six? 451 00:28:12,240 --> 00:28:14,760 Speaker 3: Okay, so what should we be watching for on that 452 00:28:14,920 --> 00:28:16,840 Speaker 3: day so that we can be smart and I can 453 00:28:17,040 --> 00:28:19,280 Speaker 3: you know, post a tweet that's inside Force something that. 454 00:28:19,520 --> 00:28:25,199 Speaker 4: So it's first the percentage that Mille's party gets, okay, 455 00:28:25,600 --> 00:28:31,520 Speaker 4: plus the percentage that Macre's party gets, plus then the 456 00:28:31,640 --> 00:28:37,320 Speaker 4: percentage that other center reformists center right parties get. And 457 00:28:37,840 --> 00:28:42,760 Speaker 4: you want to know they have blocking minority, a veto 458 00:28:42,800 --> 00:28:46,840 Speaker 4: proof minority in each house. That's the minimum, but you 459 00:28:46,880 --> 00:28:51,560 Speaker 4: would hope that they get a majority as a coalition. 460 00:28:51,880 --> 00:28:54,760 Speaker 4: And let's say the lower chamber. So there's between the 461 00:28:54,800 --> 00:28:58,479 Speaker 4: best case and the lower case. What the markets, the 462 00:28:58,520 --> 00:29:01,720 Speaker 4: bondholders in New York would fear is a sort of 463 00:29:02,280 --> 00:29:06,120 Speaker 4: blowout for the paronist and a strong message from every 464 00:29:06,120 --> 00:29:07,040 Speaker 4: corner of the country. 465 00:29:07,160 --> 00:29:07,600 Speaker 3: The name of. 466 00:29:10,120 --> 00:29:14,200 Speaker 4: It keeps changing its name, so right now they often 467 00:29:14,240 --> 00:29:16,800 Speaker 4: set up a newly a vehicle for every single election, 468 00:29:17,000 --> 00:29:19,280 Speaker 4: so the name changes so much, so I kind of 469 00:29:20,040 --> 00:29:21,120 Speaker 4: avoid the names. 470 00:29:21,200 --> 00:29:22,640 Speaker 3: Okay, but it's party. 471 00:29:22,760 --> 00:29:22,960 Speaker 1: Yeah. 472 00:29:23,360 --> 00:29:27,600 Speaker 4: Now what they're calling themselves is Force, a Patrea like 473 00:29:27,640 --> 00:29:28,760 Speaker 4: Homeland party. 474 00:29:28,640 --> 00:29:32,880 Speaker 3: Got it? I see? So were the reason these anxieties 475 00:29:33,000 --> 00:29:36,160 Speaker 3: kicked off? Is because there were some small regional elections 476 00:29:36,200 --> 00:29:38,760 Speaker 3: in which they did well, which got people in the 477 00:29:38,840 --> 00:29:41,200 Speaker 3: minds of thinking, oh, they might have a really good midterms. 478 00:29:41,280 --> 00:29:43,160 Speaker 4: Oh no, it's far more fun than okay good, and 479 00:29:43,200 --> 00:29:44,160 Speaker 4: there's a lot of history. 480 00:29:44,280 --> 00:29:44,760 Speaker 3: Okay good. 481 00:29:45,920 --> 00:29:49,080 Speaker 4: It was not as small regional election. It was the 482 00:29:49,080 --> 00:29:53,480 Speaker 4: biggest region of Buenos Aires, who had an off cycle 483 00:29:53,800 --> 00:29:58,040 Speaker 4: early election for provincial offices, and it was a deliberate 484 00:29:58,080 --> 00:30:03,840 Speaker 4: political ploy to bring down Milay. Here's the history. Twenty nineteen. 485 00:30:04,840 --> 00:30:08,280 Speaker 4: In the presidential election, they had the primary and let's 486 00:30:08,280 --> 00:30:13,360 Speaker 4: say July August, the presidential elections in October. The weirdest 487 00:30:13,400 --> 00:30:17,960 Speaker 4: system ever called the passo, is the primary where you 488 00:30:18,000 --> 00:30:20,800 Speaker 4: don't vote by party for your candidate within the party, 489 00:30:21,120 --> 00:30:25,600 Speaker 4: everybody votes for all the candidates, and those who run 490 00:30:25,640 --> 00:30:28,280 Speaker 4: for a party are those who ran better. But it's 491 00:30:28,360 --> 00:30:30,720 Speaker 4: kind of like an early vote on who's going to win. 492 00:30:31,240 --> 00:30:37,040 Speaker 4: And Alberto Fernandez, with the former president Kirchner running as 493 00:30:37,080 --> 00:30:42,080 Speaker 4: his vice president, did so well that the markets tanked. 494 00:30:42,880 --> 00:30:48,080 Speaker 4: It was a self fulfilling prophecy that macris people can 495 00:30:48,160 --> 00:30:51,080 Speaker 4: barely make it to the finish line because the currency 496 00:30:51,120 --> 00:30:54,959 Speaker 4: and local interest rates and bonds were exploding, and so 497 00:30:56,680 --> 00:31:00,239 Speaker 4: that lesson meant. Millay in February said, we do not 498 00:31:00,280 --> 00:31:02,280 Speaker 4: want to have a paso. We don't want to have 499 00:31:02,320 --> 00:31:06,120 Speaker 4: a primary. We just want to have the election in October. 500 00:31:06,480 --> 00:31:08,320 Speaker 4: So they got the Senate to agree to take the 501 00:31:08,360 --> 00:31:12,440 Speaker 4: paso off the table. But then kissel off, where the 502 00:31:12,480 --> 00:31:15,800 Speaker 4: strength of Parnasm is in the Buenos Aires province, where 503 00:31:15,840 --> 00:31:19,160 Speaker 4: a lot of poor people are, he said, oh, let's 504 00:31:19,200 --> 00:31:24,560 Speaker 4: have our provincial election six weeks or whatever before, because 505 00:31:24,600 --> 00:31:28,040 Speaker 4: we know we'll do well. And they anticipated Milley would 506 00:31:28,320 --> 00:31:30,840 Speaker 4: pound his chest, I'm going to get the majority, and 507 00:31:30,920 --> 00:31:33,680 Speaker 4: he might fail, and he did fail. And even though 508 00:31:33,680 --> 00:31:36,760 Speaker 4: we got let's say thirty five percent, which nationally would 509 00:31:36,760 --> 00:31:40,000 Speaker 4: be his veto proof minority that he minimally needs to 510 00:31:40,040 --> 00:31:44,280 Speaker 4: continue to rule, it was less than he said he'd get. 511 00:31:44,720 --> 00:31:48,320 Speaker 4: So he did not manage the perceptions well and his 512 00:31:48,480 --> 00:31:51,600 Speaker 4: political team got stung by that, and he admitted it 513 00:31:51,640 --> 00:31:54,480 Speaker 4: wasn't handled well. So there was a lot of history 514 00:31:55,280 --> 00:31:59,680 Speaker 4: in this early vote being engineered. And as far as 515 00:31:59,720 --> 00:32:04,320 Speaker 4: the Parona Star concern, it was a perfectly executed attack 516 00:32:04,360 --> 00:32:07,720 Speaker 4: on the stability of his program. So the speculative attack 517 00:32:08,360 --> 00:32:11,880 Speaker 4: is not a failure of the program. It was really 518 00:32:12,000 --> 00:32:16,680 Speaker 4: a deliberate political process ahead of an important vote. 519 00:32:17,120 --> 00:32:20,680 Speaker 3: I have a question actually about mile You know, he 520 00:32:20,720 --> 00:32:24,160 Speaker 3: has this whole vibe, sort of a colorful character. I 521 00:32:24,160 --> 00:32:27,320 Speaker 3: think he quotes like Austrian economists and stuff like that, 522 00:32:27,840 --> 00:32:31,400 Speaker 3: call himself a libertarian, sort iconoclastic and all that. But 523 00:32:31,880 --> 00:32:35,080 Speaker 3: setting all that side, look, would you characterize his economic 524 00:32:35,120 --> 00:32:42,200 Speaker 3: program as like fairly normy IMF style regular economics. 525 00:32:42,440 --> 00:32:48,840 Speaker 4: Yes, And you have to separate the political character from 526 00:32:48,840 --> 00:32:54,800 Speaker 4: the policy. And you have behind him. Remember he got elected. 527 00:32:54,880 --> 00:32:59,160 Speaker 4: He did well in the Passo the primary in twenty 528 00:32:59,240 --> 00:33:02,440 Speaker 4: twenty three, I don't know if it was thirty five percent, 529 00:33:03,280 --> 00:33:06,200 Speaker 4: and he beat out Macre's candidate. So Mackrie said, I'm 530 00:33:06,200 --> 00:33:09,080 Speaker 4: going to support you. So he got to fifty five percent, 531 00:33:09,320 --> 00:33:14,400 Speaker 4: trouncing the Pronus opposition with Macre's support. But part of 532 00:33:14,440 --> 00:33:21,200 Speaker 4: the deal was that Millay then took the superstars, the 533 00:33:21,280 --> 00:33:26,080 Speaker 4: financial superstars of Macrey's administration, Caputo and Basili, to be 534 00:33:26,160 --> 00:33:30,840 Speaker 4: his Minister of Economy and his head of his central bank. Already, 535 00:33:31,240 --> 00:33:36,080 Speaker 4: Milay had chosen Federico Sturzenegger, Harvard professor had worked in 536 00:33:36,120 --> 00:33:39,040 Speaker 4: the Macre government too to be. His head of reform 537 00:33:39,400 --> 00:33:42,280 Speaker 4: has been churning out pages and pages of reforms to 538 00:33:42,320 --> 00:33:47,000 Speaker 4: make the country more efficient. He has the tightest, best 539 00:33:47,240 --> 00:33:52,520 Speaker 4: technical team behind him, great economists negotiating with the IMF, 540 00:33:52,840 --> 00:33:57,040 Speaker 4: making sure the execution of the plan is perfect, which 541 00:33:57,080 --> 00:34:00,600 Speaker 4: is not something Argentina has ever seen. Having looked at 542 00:34:00,960 --> 00:34:04,120 Speaker 4: thirty years of history, this is an amazing type team. 543 00:34:04,600 --> 00:34:08,439 Speaker 4: They work together as a team. Mille completely supports them, 544 00:34:08,760 --> 00:34:11,640 Speaker 4: but on top of them, he says, all kinds of 545 00:34:11,680 --> 00:34:15,279 Speaker 4: wild things. He's kind of a trumpy character like that. 546 00:34:15,440 --> 00:34:18,759 Speaker 4: So you have to separate the sort of wild things 547 00:34:18,800 --> 00:34:21,040 Speaker 4: he says, from the policy. 548 00:34:21,600 --> 00:34:24,920 Speaker 2: So if I could ask you to put your betting 549 00:34:25,000 --> 00:34:27,600 Speaker 2: cap on, if you have one, how do you think 550 00:34:27,640 --> 00:34:31,200 Speaker 2: this plays out? Does Mille retain the majority and Argentina 551 00:34:31,440 --> 00:34:36,520 Speaker 2: is now on a path to non default after many, 552 00:34:36,560 --> 00:34:40,640 Speaker 2: many many years, or are things going to go sideways again? 553 00:34:41,239 --> 00:34:43,680 Speaker 4: I think they'll be fine. I think the events of 554 00:34:43,719 --> 00:34:48,160 Speaker 4: the last few weeks will be noted in the history book. 555 00:34:48,400 --> 00:34:53,640 Speaker 4: But the people want normalcy. Argentina can always surprise you, 556 00:34:54,160 --> 00:34:57,840 Speaker 4: but having looked at what they've lived through, they understand 557 00:34:57,840 --> 00:35:04,040 Speaker 4: what's happening. And I'm hopeful that this shocking instability has 558 00:35:04,120 --> 00:35:08,320 Speaker 4: reminded them of what's gonna happen if they don't stick 559 00:35:08,320 --> 00:35:08,839 Speaker 4: with the plan. 560 00:35:09,880 --> 00:35:13,840 Speaker 3: You mentioned that the Malay character is sort of Trumpian 561 00:35:15,000 --> 00:35:18,600 Speaker 3: Trump himself is he Milayian? 562 00:35:18,960 --> 00:35:19,320 Speaker 1: Whatever? 563 00:35:19,440 --> 00:35:19,680 Speaker 4: Is it? 564 00:35:19,760 --> 00:35:19,880 Speaker 2: Like? 565 00:35:20,000 --> 00:35:23,000 Speaker 3: We're like, well, if you saw it, like, okay, was Trump? 566 00:35:23,040 --> 00:35:26,720 Speaker 4: Who does he remind you of an Argentina Perona? Okay, 567 00:35:26,840 --> 00:35:31,160 Speaker 4: It's totally ironic. They're total opposites. I've written pieces about this. 568 00:35:31,760 --> 00:35:36,839 Speaker 4: You have two characters who bind that an emotional political 569 00:35:37,040 --> 00:35:41,239 Speaker 4: character level, one of whom is massively overspending in the 570 00:35:41,320 --> 00:35:46,280 Speaker 4: United States, another one is running the most disciplined reform ever, 571 00:35:46,960 --> 00:35:49,520 Speaker 4: and they're best friends. And then we have this bailout. 572 00:35:49,600 --> 00:35:53,480 Speaker 4: You can't make this up so nonfiction? Who needs fiction 573 00:35:53,680 --> 00:35:54,839 Speaker 4: when you have Argentine? 574 00:35:55,120 --> 00:35:55,160 Speaker 2: No? 575 00:35:55,320 --> 00:35:55,720 Speaker 3: Indeed? 576 00:35:55,760 --> 00:35:58,200 Speaker 2: All right, Greg, thank you so much for coming on 577 00:35:58,239 --> 00:36:01,520 Speaker 2: odd Lots. The book is Default, the landmark court battle 578 00:36:01,560 --> 00:36:05,040 Speaker 2: over Argentina's one hundred billion dollar debt restructuring, And if 579 00:36:05,040 --> 00:36:07,600 Speaker 2: you're interested in this topic, definitely go pick it up. 580 00:36:07,920 --> 00:36:09,399 Speaker 2: That was fantastic, Thank you so much. 581 00:36:09,440 --> 00:36:10,400 Speaker 3: Thanks Greg. That was great. 582 00:36:10,600 --> 00:36:24,279 Speaker 4: Thank you, Joe. 583 00:36:24,280 --> 00:36:27,799 Speaker 2: That was very interesting, very timely. Do you feel like 584 00:36:27,840 --> 00:36:30,800 Speaker 2: you could write a little answer essay for Brad Setzer. 585 00:36:30,920 --> 00:36:34,160 Speaker 3: Now, I mean, look for a job interview, and I'm 586 00:36:34,239 --> 00:36:37,839 Speaker 3: twenty five for twenty six, I could probably maybe come 587 00:36:37,920 --> 00:36:40,120 Speaker 3: up with I literally had it was so embarrassing. I 588 00:36:40,200 --> 00:36:42,400 Speaker 3: like it just like you open your mouth and no 589 00:36:42,480 --> 00:36:44,120 Speaker 3: words come out. That's what happens. 590 00:36:44,200 --> 00:36:45,360 Speaker 2: Yeah, painful. 591 00:36:45,680 --> 00:36:49,960 Speaker 3: What I'm really interested in the still is why the 592 00:36:49,960 --> 00:36:54,239 Speaker 3: political environment is as messed up as it is or 593 00:36:54,280 --> 00:36:56,640 Speaker 3: messed up as it seems to be, and what is 594 00:36:56,680 --> 00:37:01,040 Speaker 3: it about Argentina specifically that somehow other countries like the Mexicos, etcetera, 595 00:37:01,120 --> 00:37:05,080 Speaker 3: didn't fall into that trap. But also like you know, 596 00:37:05,160 --> 00:37:08,040 Speaker 3: if it gets going, say, I don't know, I worry, 597 00:37:08,400 --> 00:37:12,719 Speaker 3: I worry about worry about all kinds of things, but corruption, debt, 598 00:37:12,719 --> 00:37:14,879 Speaker 3: et cetera, it seems like you can fall into some 599 00:37:15,320 --> 00:37:18,760 Speaker 3: very bad, very bad cycles that are hard to escape from. 600 00:37:18,800 --> 00:37:21,440 Speaker 2: Well, it also feels like there's a tension between what 601 00:37:21,520 --> 00:37:24,640 Speaker 2: Greg was saying about. You know, the Argentinian people need 602 00:37:24,680 --> 00:37:27,680 Speaker 2: to decide if they've had enough of you know, being 603 00:37:27,719 --> 00:37:30,880 Speaker 2: serial to falters and high inflation and if they're willing 604 00:37:30,920 --> 00:37:33,880 Speaker 2: to trade that for austerity. But on the other hand, 605 00:37:34,120 --> 00:37:36,600 Speaker 2: you know, having someone come out to the barrio and 606 00:37:36,680 --> 00:37:39,320 Speaker 2: hand you a check for a bunch of cash. Sounds 607 00:37:39,360 --> 00:37:43,040 Speaker 2: really good. So yeah, it does seem to be a 608 00:37:43,160 --> 00:37:44,240 Speaker 2: decision for sure. 609 00:37:44,719 --> 00:37:47,359 Speaker 3: Yeah, it seems really difficult. And there's just the you know, 610 00:37:47,440 --> 00:37:51,000 Speaker 3: there's just the reality that Okay, you can get by 611 00:37:51,160 --> 00:37:54,279 Speaker 3: without help from abroad, but then you might have to 612 00:37:54,680 --> 00:37:57,800 Speaker 3: deal with sort of a massively reduced standard of living 613 00:37:58,000 --> 00:38:00,640 Speaker 3: devalue peso, etcetera. No, no easy options. 614 00:38:00,760 --> 00:38:04,320 Speaker 2: Yeah, I'm also still kind of wondering who is buying 615 00:38:04,400 --> 00:38:07,879 Speaker 2: Argentina bonds all the time? 616 00:38:08,200 --> 00:38:10,799 Speaker 3: I mean, havenything done? Well? Don't they always, like you know, 617 00:38:10,880 --> 00:38:12,960 Speaker 3: they end up with a bond in a yacht or 618 00:38:12,960 --> 00:38:15,880 Speaker 3: something like that. Don't they end up they get a ship? 619 00:38:15,960 --> 00:38:17,000 Speaker 2: It was bigger than a yacht. 620 00:38:17,000 --> 00:38:17,120 Speaker 4: Ok. 621 00:38:17,160 --> 00:38:18,600 Speaker 2: Yeah, all right, shall we leave it there. 622 00:38:18,640 --> 00:38:19,359 Speaker 3: Let's leave it there. 623 00:38:19,440 --> 00:38:21,800 Speaker 2: This has been another episode of the aud Lots podcast. 624 00:38:21,880 --> 00:38:25,040 Speaker 2: I'm Tracy Alloway. You can follow me at Tracy Alloway. 625 00:38:24,800 --> 00:38:27,400 Speaker 3: And I'm Jill Wisenthal. You can follow me at the Stalwart. 626 00:38:27,440 --> 00:38:30,240 Speaker 3: Follow our guest Gregory Maycoff, He's at g may Coff. 627 00:38:30,480 --> 00:38:33,840 Speaker 3: Follow our producers Carmen Rodriguez at Carmen armand dash Ol 628 00:38:33,840 --> 00:38:36,920 Speaker 3: Bennett at Dashbot and Cale Brooks at Kilbrooks. 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All you need 639 00:39:03,040 --> 00:39:05,600 Speaker 2: to do is find the Bloomberg channel on Apple Podcast 640 00:39:05,680 --> 00:39:08,120 Speaker 2: and follow the instructions there. Thanks for listening.