Milei Faces Pivotal Moment in Midterm Election

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00:00What is at stake for the elections?

00:04Good morning from Buenos Aires, Matt and Danny. So there's a lot going on in these midterm elections

00:09on Sunday in Argentina. This is really going to be a referendum on Javier Millet's economic policies

00:14beyond the relatively low profile candidates that are on the ballot. You could really argue that in

00:21effect, voters will also be casting ballots for Millet's pro-market economic agenda, his austerity

00:28policies that have really had a major impact on the cost of living here. And of course, the $40

00:33billion rescue package from the Trump administration that President Trump himself has conditioned on

00:39Millet's party winning this midterm election on Sunday. So really what was a relatively normal

00:45midterm election heading into this race has turned into something that's really going to be a make or

00:50break moment for Millet's policies and this rescue package from the U.S. Well, I mean, I was listening

00:55to Greg Makoff on Odd Lots. He wrote the book Default, the landmark court battle over Argentina's

01:01hundred billion dollar debt restructuring. And he painted this as a make or break moment for the

01:05country, saying that this is, you know, the people's chance to vote for whether or not they want to

01:10continue reforms and fix the problem that has so long dogged Argentina or just go back to the cycle

01:20of, you know, devaluations and defaults. Do you see it that way as well?

01:25Well, clearly fiscal deficits have plagued Argentina for years because it's resulted in high inflation

01:32deficits and eventually sovereign defaults. So Millet has tried to address the root problem of so many of

01:38Argentina's crises, but it's painful. Austerity is painful. If you think about the ordinary Argentine

01:44utility bills have quadrupled in the last two years. So salaries have not kept up. Economic

01:50activity is losing momentum. Retail sales have been down for six straight months. So we are seeing

01:55the economic impacts of harsh austerity policies, but they have achieved much lower inflation, much

02:02lower poverty. So it really is. There's been a lot of risk and a lot of reward. But voters are losing

02:09patience, it seems, with Millet's austerity. So how much does a $40 billion rescue package

02:15from the United States of America change the game, Patrick? Well, I think it's really interesting,

02:21Danny, in the sense that, you know, there's a $20 billion currency swap line that the U.S. and

02:25Argentina have signed. We haven't seen it put into action yet. There's also the U.S. is trying to line

02:31up about a similar amount, another $20 billion in Wall Street financing. And really the most interesting

02:38pillar of this rescue package so far is that the U.S. Treasury is buying Argentine pesos. They've been

02:44doing that almost every day for the past two weeks. This is coming after Millet, who campaigned as a

02:50president on dollarizing Argentina, has now convinced the U.S. to buy Argentine pesos. This has helped to

02:56be somewhat of a temporary, you know, short-term support for financial support for Millet. But the U.S.,

03:03excuse me, Argentina has a long history of Washington bailouts, whether from the U.S.

03:09government or from the IMF. And I think there's a lot of weariness because they usually come with

03:14concessions that aren't revealed in the beginning. And we still don't know what concessions

03:18Argentina has made in exchange for this extraordinary support from the U.S. A long history of

03:23so that a long history, Patrick, of corruption as well. What role does Millet's sister play

03:28in this election? Well, certainly, I think another issue that's disappointed voters is that Millet

03:35came into office with this outsider image. And so far this year, Millet has faced three corruption

03:40scandals. There was a cryptocurrency scandal earlier this year. His sister is facing bribery allegations.

03:46And Millet's top candidate had to drop out of the race just a few weeks ago because he had ties to

03:51a drug trafficker that is now being extradited to the United States. So Millet's drain the swamp image

03:57and anti-corruption sort of campaign has really been dismantled because of these corruption

04:04scandals. And I think that's definitely going to have an impact Sunday in the polls.

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