Why Argentina Needs Bailout After Bailout After Bailout

SPEAKER_2 (0:02)

Bloomberg Audio Studios, Podcasts, Radio, News.

Tracy Alloway (0:18)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:22)

And I'm Joe Weisenthal.

Tracy Alloway (0:24)

Joe, we are in Washington, DC. Do you know who else is in our nation's capital?

Joe Weisenthal (0:30)

Lots of people are in our nation's capital right now. I could go on and on. There's a lot of people living there permanently, but also a lot of people visiting this week, like we are.

Tracy Alloway (0:38)

True, okay, so one person in particular is visiting, who is of note for this particular podcast, and that is Javier Milei. He is the president of Argentina, and he's meeting with Trump today. They're supposed to finalize the $20 billion swap that Argentina just got from the US. Treasury. Basically, Argentina is getting their umpteenth bailout. I tried to count all of them, but then I stopped because I was like, I have a life. But normally, a lot of those bailouts come from the IMF. This one's coming from the Treasury, so it's fairly unusual. It also comes with a lot fewer terms than some other deals. But this is a good time to talk about Argentina and why it seems to constantly be in financial trouble and either defaulting or on the verge of a default.

Joe Weisenthal (1:24)

You know I'm like traumatized by Argentina topics, right?

Tracy Alloway (1:28)

Wait, why?

Joe Weisenthal (1:28)

Well, I've probably said it once or twice before on the podcast, but you know, the first time I applied for a job in New York City was with Brad Setzer. And he was like, in the middle of the interview, he was like, how would you character, this is 2006, maybe, he's like, how would you characterize the struggles of Argentina? And I just totally blanked. I like literally didn't get a word out and I didn't get the job, obviously. So I've sort of, this is a huge blind spot for me, and it's almost like a blind spot I'm afraid to revisit, but we have to dive in. I have to learn more eventually. One more bailout. This one's going to work, right? This one's going to be the last.

Tracy Alloway (2:01)

One more lane, bro. Yes. So, and you know, the other interesting thing about this is Milei was, he was initially praised for reducing inflation. I think it was something like over 200% and it got down to 33%, which by US standards is still pretty high, but he did that by slashing government spending and selling Argentina's FX reserves to prop up the peso. And now fast forward a little bit of time and that approach doesn't seem to be working anymore. So again, there's lots to talk about.

Joe Weisenthal (2:32)

There's so much about Argentina that confuses me, including like, why is it like this? Because there are lots of countries that have institutional struggles of various sorts. There are a lot of countries that are poor. There are a lot of countries that whatever. I can't think of any other country that just is always, always at the trough like this. It's not that poor of a country, et cetera. I don't really understand why this is this persistent thing distinct to this country.

Tracy Alloway (2:56)

All right, our first question will be, why is Argentina like this?

Joe Weisenthal (2:59)

Yeah, why is Argentina like this?

Tracy Alloway (3:01)

And then after we record this interview, you can write a little essay for Brad Setzer and send it to him for his review.

Joe Weisenthal (3:06)

And then I'll get the job, yeah.

Tracy Alloway (3:07)

Yes.

Joe Weisenthal (3:07)

And then he'll hire me.

Tracy Alloway (3:08)

All right. Well, I'm very happy to say that we do in fact have the perfect guest. We are going to be speaking with Gregory Makoff. He is the author of Default, The Landmark Court Battle Over Argentina's $100 billion Debt Restructuring. I read this book when it first came out. It was absolutely fantastic. Even though it's about a very complex court proceeding, it's a page-turner and there are lots of really interesting anecdotes and lots of interesting personalities as well. Greg, thank you so much for coming on the podcast.

Greg Makoff (3:39)

Thank you for having me.

Tracy Alloway (3:41)

I guess I should start with that first question. What's up with Argentina?

Greg Makoff (3:46)

Well, for the history, they-

Joe Weisenthal (3:48)

Start from the very beginning. Start from wherever you want.

Greg Makoff (3:51)

They spend too much.

Joe Weisenthal (3:52)

Okay. But lots of countries spend too much.

Greg Makoff (3:55)