Toxic finance: the “Carry Trade” again threatens to put Argentina in check

In the midst of an international crisis that can change the international geopolitical and economic direction, Argentina is about to commit the same slip, with the same protagonists, and under the same excuses. We already saw it before; Nominal rates of interest in pesos above the evolution of the weight depreciation rate, opening, fast entry of speculative capital leverage by the IMF disbursement and others, imports subsidized by the field, short -term euphoria … and then, brutal crisis. The carry trade model -The famous “financial bike”– Not only tries to return, but it comes to improve in terms of perversity; Now it disguises stabilization, covering 3.7% inflation in March, which warns inflation rates of about 5% in April and May.

The unusual thing is that those responsible for this scheme – which exploded in 2018 – today are again in power. Luis Caputo, the brain of the “Debt Festival” during the macrismo and the current government, was responsible-until before entering the next US $ 43,100 million announced, of 43% of the Argentine public debt, is repeating the recipe step by step, while Javier Milei celebrates it with his financial team as if it were a success. If you do not stop in time, the result will be worse than ever; Extravagant indebtedness, capital leakage, overflowing inflation, fiscal insolvency on the prowl, eventual default, and a new generation condemned to impoverishment.

The logic of Carry Trade is not new. It was implemented with devastating effects during the military civic dictatorship (1977-1981), Convertibility (1991-2001), and more recently between (2016 and 2018) under the administration of Mauricio Macri. In (2024) this government repeated the strategy, beating all records of speed and size of financial damages. In each of the aforementioned periods the effects were similar; Overvaluation of the weight, massive bend income and IMF funds, increased quasi -iscal deficit or financial deficit, external and internal accelerated indebtedness, and finally exchange crisis.

The worrying thing is not just that the same mistakes are being repeated. The alarming thing is that The same officials who starred in the previous collapse returned in just 5 years to the key places in economic driving. Luis Caputo -which headed the fastest indebtedness process of the last decades (2016-2018)-surpassed himself in 2024, is in the center of the scene, this time with President Javier Milei, together they will try to repeat the wreck for the second time in 16 months. Remember, for 2024 and the first 2025 bimester, Argentina took debt in an accelerated and inconceivable way, also statue the monetary regulation instruments and made them debt of the Treasury, adding around US $ 94,000 million for any concept (Source: Secretary of Finance). The dessert strawberry is that the IMF is a significant privileged creditor. It is extravagant that the IMF will replace the BCRA as a creditor.

“The most expensive bicycle” in the history of humanity

From December 2023 to November 2024, Argentina became the most profitable market in the world for Carry Trade operations, even with really negative real interest rates that were covered by inflationary shock, but strongly positive in dollars. According to private calculations cited per scope, the dollar gains of these strategies came to exceed the 45% in eleven months, minimum. Simulations with real bank rates and leverage in financial assets such as bank actions, even talk about three -digit profitability.

These figures are not sustainable or casual. They are generated from a financial valorization model that postpones productive development, concentrates income, and condemns the real economy to the recession. As in previous cycles, in this second stage of the same government, due to the fire shooting, the growing rates will cause credit strangulation (secondary money), they will intensify the artificially intervening exchange delay intervening and will amplify the veiled financial deficit. All this will end in the same place: abrupt devaluation, selective default and/or moratorium with the IMF, detonated inflation, real salary falls, retirement and informal income.

In my document – “Carry Trade and Argentina: Analysis and consequences” * – I expose with historical evidence and international bibliography how this practice is harmful to emerging countries with high volatility, such as ours. Complementarily, in the article “The last stage of the financial homeland”I rebuilt the Argentine case 2016-2018, and I warn about the dangerous similarities with the current situation.

Today, as then, the country is in a situation of increasing external vulnerability. The financial stability mirage created by a new capital entry of the IMF and others, at some point it will be fatal. When positions are disarmed, a financial crisis proceeds, and the social and economic consequences are devastating.

It is not about rejecting external financing or isolating the country. It’s about not repeating policies that have already failed. To avoid building stability with mud feet. To abandon a logic that favors financial sectors at the expense of employment, industry and social fabric.

Those who conduct the Argentine economy, vilified before now by President Milei, never paid accounts for the results of their previous management. The repetition of their recipes -and demonstrated as failed – It is not just a technical error, it is political irresponsibility. And recent history reminds us that these mistakes end up paying the whole society.

We are in time to avoid a new collapse. But for that, it is urgent to challenge the actors, calling the minister and the president of the BCRA to explain his actions in the Nation Congress. They were given extraordinary support to negotiate, it is time to verify how much, how, and how new disbursements will be used?

The danger is not hypothetical. It is already underway. This model, far from being an exit path, is a deadly trap. Argentine history demonstrates it clearly; Every time the IMF was reached, when easy capital income was prioritized over productive investment, the outcome was a deep crisis. Now it is difficult to believe that the IMF is not a partner to ensure a new experience. Remember that the IMF financed the exit of speculative capital in 2018 with US $ 44,500 million. We are literally repeating the same steps. The most serious thing is that, when the bomb stops -because at some point it will explode -, beneficiaries and those responsible will go with their dollars and their lives to another part, the consequences will remain again on the shoulders of most Argentines.

Director of Esperanza Foundation. Postgraduate professor at UBA and private universities. Master in International Economic Policy, Doctor of Political Science, author of six books.