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Joseph Polito's avatar

Excellent analysis. Connections to inflation, and supreme court are terrific. I think austerity and the Paradox of thrift will also be the result of this political change.

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JS's avatar

Hi Dougald,

Irrespective of how we classify Milei, the economic analysis you offer is, with all due respect, rather superficial. Argentina has a perennial problem with debt, because most of it is used to finance government operating expenses and not capital investments that would support the economy. The tax to GDP ratio is out of whack, Argentina's government debt accounted for 80.3 % of the country's Nominal GDP as of March of 2023 (Canada sits at 68%), import payments were frozen, and there were at least 4 differential exchange rates in an attempt to enforce capital controls.

A pragmatic approach would reduce the debt-to-GDP, shift government spending from a bloated civil service to core services (health, education, food security for citizens below the poverty line), unify the exchange rate, and hopefully stabilize the Peso.

The lawsuit with Singer and others was the product of a giant default, not many countries around the world issue debt in whatever currency and then decide to ask for a deep haircut. While Argentina has a solid track record of disappointing everyone, let's see if Milei can reign in spending and start retiring debt.

Have a great Christmas!

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