They are more and more voices critical of the bailout of the US Treasury to the government of Javier Milei. One of the last to join was Bloombergone of the most important media specialized in economics and finance in the world. In an opinion column by its editorial board, the North American newspaper stated that although “there are plausible arguments to intervene” in Argentina, they added that “Unfortunately, Washington’s approach could backfire”.
Bloomberg argued that US interventions of this type “they are not unknown, and they are not doomed to failure”. In this sense, they cited the case of the rescue of Mexico during the crisis that triggered the Tequila effect in 1995.
“It worked in part because The aid arrived after Mexico gave up defending its currency and in part because Washington’s commitment to the initiative was credible: the United States had an urgent and undeniable interest in stabilizing its neighbor’s economy,” they detailed.
However, they clarified that the current situation is different. “Argentina continues to defend the peso. (A large devaluation and an increase in inflation expected just before the elections would not help Milei). And the promise of US support is much more ambiguous.”
On that point, they added that “investors suspect that the United States is helping Argentina for short-term political reasonsand not because it is committed to a long-term revival.”
Bloomberg’s proposal and his warning
“It would have been better from the beginning if the United States, in collaboration with its partners, had allowed the International Monetary Fund (IMF) reformulate its current program for Argentina, offering sufficient additional support on the condition that its government (whoever runs it) submit to oversight, push for economic reform and let its currency float,” Bloomberg said.
In his opinion, “this would have increased the chances of success and, in the end, would have been less expensive.” However, they clarified that “That strategy called for orderly international cooperation under U.S. leadership, an approach this administration has largely renounced.“.
And they concluded: “Let’s hope it’s not too late to follow that path. Otherwise, Prepare to see Argentina sink back into failure, with the United States in trouble“.
Critical voices join
It is not the first economic newspaper in the United States to criticize the decision of the North American government. A week ago, The Wall Street Journal published an opinion column titled “Argentina: right country, wrong bailout,” where they argued that “Javier Milei needs US help, but his country really needs dollarization.”
They maintained that “if Milei makes his free market reforms an economic and political success, the lesson will extend to the rest of Latin America and beyond,” although they clarified that “for these reforms to be successful, confidence in the Argentine currency is required. That will not happen with the peso, so dollarization is the correct and now essential political alternative.”
For its part, the think tank Peterson Institute for International Economics (PIIE) published a recent analysis entitled “Will Argentina become Trump’s financial quagmire?There, it was stressed that “Argentina’s history of financial crises is nothing like those experienced by any other country.”
And they commented that it is “only a matter of time before critics of the (US) Congress start questioning why the US government is lending Argentina tens of billions of dollars while cutting health and other national priorities, the main cause of the Government shutdown stalemate.
Source: Ambito
