Argentina: austerity never works

Argentina is in financial trouble. Not long after everyone was celebrating Milei's austerity measures as a miracle for the economy, things have taken a turn for the worse, and now the country is looking at one of its biggest bailout packages ever. Who could've guessed that austerity could actually make an economy shrink!? After seeing what happened in Greece, it seems like some folks just didn't get the memo.

Wait, didn't the IMF grant them a $20 billion bailout some 6 months ago? To be honest, that man always seemed to me like one of those who do not live in reality, but in a world of his own, and such politicians are not the ones who can do miracles in an economy that is in obvious huge problems. I am not familiar with how things work in South America in terms of how Argentina's bankruptcy would affect the rest of the continent in the context of what happened in Greece some ten years ago. Greece is a member of the EU and the Eurozone and should not have been allowed to go bankrupt because that would shake the whole EU, but they are paying a high price for that help considering that they are under constant surveillance and will not repay that debt for at least another three decades.

80 years of Peronism and less than two years of austerity is what you think has screwed up Argentina? Argentina has been screwed up for much longer than that, with people emigrating en masse because non-austerity created a nation of poor people dependent on the state, with one of the most inflationary currencies in the world. Let's see if you understand that the lack of austerity you defend is paid for by devaluing the currency at a tremendous rate, thereby making everyone poor (except the political elite). Argentina had the highest GDP in the world at the end of the 19th century and remained among the richest nations at the beginning of the 20th century. Spaniards emigrated to Argentina before Peronism came to power, which achieved the opposite, impoverishing the population on a massive scale and causing them to emigrate.

Yes, there probably never was such a rapid decline in Argentina's history . Partly disfunctional economy at certain past periods? Yes. But a collapse the likes of what Milei's policies have caused could rarely even be observed in a developing country going through war, let alone Argentina, an educated and developed country in a period of peace. Trump approved another $20b: https://moderndiplomacy.eu/2025/10/07/the-20-billion-question-why-did-trump-bail-out-argentina/ The cost letting the Argentinian economy collapse under Milei would be big to Trump's image it seems so they rushed to bail the government out in very favourable terms.

Fastest decline in history? Are you pulling that out of your arse or what? Argentina's economy has improved across all indicators, and the only decline has been since Milei's party suffered a crushing defeat in early September in Buenos Aires. I will provide you with sources of articles in Spanish, translating the titles into English. The Argentine economy brings good news for Javier Milei despite the global slowdown Milei's chainsaw is working better than expected: inflation is falling more than anticipated in Argentina, reaching its lowest level since 2020. Milei's economic miracle in Argentina is very real: inflation “plummets” to 1.5% and hits lows not seen since 2020. Milei's success with rents: after deregulating the market, supply has risen by 280% and prices have fallen. I could list hundreds more.

Yes mate, stats don't lie. The biggest debt crisis in Argentina spiraled with Milei. His austerity made the debt even more unsustainable. Inflation hit record highs, the Peso also hit record lows against other currencies and debts keep rising in spite of the inflation. Usually when a country has inflation it can make the debt more manageable because the debt becomes smaller in relation to the economy's size which can grow with inflation. But now Argentina is also stagnant as an economy thanks to inflation. Inflation calmed down a bit after loans were promised by the IMF and the USA gov, but still inflation is at historic high levels and the peso remains in the gutter. The peso is down over 50% since Milei's election. That's not even 2 years yet! Historically Argentina has had very big inflation, but even past the 2008 global financial crisis, the peso never had experienced such a rapid fall. The numbers just speak for themselves in terms of how catastrophic austerity can be. We had austerity forced on us here in Greece after being pressured from the IMG and the European Union states who had facilitated loans to the government. More than 10 years later our economy has yet to recover from austerity. Austerity always fails and Milei surely is the kind of person who can't understand modern economics on the state-level. Even the EU and IMF admitted their mistakes in Greece. But Milei doesn't seem like the one who could learn a lesson.

I doubt that it is austerity what created the mess. My bet is that maintaining his sister in government is a bigger fish to swallow. Abolishing the central bank he had planned, what now?

I don't know much about Argentina's economy but to the best of my knowledge, Argentina has been facing financial crisis since 2001 so am not surprised that they have now gone bankrupt. Of course, austerity can make a country's economy to drop drastically because imagine when the cost of governance is being reduced yet they impose high taxes up to 100%, so tell me why such economy will not shrink when there is no way they can generate revenues to run the government other than borrowing money from IMF. I learnt that Argentina is currently incurring the highest debt from the IMF so tell me why they won't go bankrupt.

With how politicians easily burn up funds I am not surprised that they are in this bankruptcy mess even after getting $20 billion. Politicians are quick to go for loan from international bodies but they don't have any strategic plan to make use of the loan or any plans to repay the loan, so long as they can just leave their successors with the loan debts they are cool.

HAHAHA! This fucking hooligan, who takes any piece of totally biased information to try to confirm what he already thinks. If things have gotten worse recently, it's because the market, since the defeat in early September, is afraid that the communists will return to power in Argentina. But how can you make such a fool of yourself and brag about it?  Everyone can see that inflation began to rise before Milei took office in December 2023 and peaked a few months later, which is normal, as economic measures take time to take effect. What he has achieved is to bring it down to a minimum. Look, from Reuters, which has the same chart: Argentina inflation seen at 31-month low of 3.9% in August Yes, numbers speak for themselves in terms of cutting public spending, reducing regulations, and lowering taxes always works. What doesn't work is for lazy people who expect the government to give them money without working.

I love you so much FMC, what would I do without you on this forum? I miss long-winded arguments like in the old days so much If the FREE MARKETS agreed with you the peso wouldn't be experiencing its biggest drop throughout any 3 years of a presidency in Argentina. Argentina is experiencing some of the world worst stagflation right now. It's up there with Iran and Venezuela. Also, how free markety is Trump carving a $20b bailout package for the Argentinian gov? It's simple economics really. Reduced government spending causes the economy to contract. The numbers on that metric also don't lie. The Argentinian economy has yet to expand from 2017 numbers in USD and even contracted 2% from 2023 to 2024. Given the ongoing economic collapse caused by Milei, Argentina's government needs yet another cash injection to keep even its basic functions afloat. It's clear Milei's plan doesn't work. No matter how many times austerity is attempted it will not work. There's however a way to see things under which Miley would have been considered wildly successful. If Milei's plan was to fast track a complete collapse of the state and make himself obsolete in the process, he would have been surprisingly successful. Funnily enough he would have been faster at making a full government apparatus collapse than any south American revolutionaries. Even the Cuban revolutionary war lasted more than 5 years while Milei's collapse would have been less than 3 years from taking power. Sadly or not he now gets a lifeline to stay in power with Trump's bailout.

There is no doubt that he won't get that money just like that, but that the Nobel laureate who ended 7 wars has his own interest in it. However, such warm mutual relations should be viewed through the lens of US efforts to expel China from the region in which it had significant investments. Either way, it will take far more than $20 billion to keep Milei in power.

Funny that now China has stopped buying US soy bean and just did massive pre-orders from Argentina. Soy was a massive pillar for the agricultural economy in many US states. Now the faming industry in Argentina is held up from collapse thankks to US taxpayer dollars all while many US farmers are going bankrupt while the government is shutdown.

Argentina used to be a great country with the best economic growth, but all that has changed 100% which has led to Argentina experiencing the worst and worst economy recently. This is not without reason and it didn't just happen. There is a definite reason why Argentina carries out budget savings which always end in failure, the reason is political instability and loss of investor confidence in the Argentine government, one of the negative impacts on the economy. Another reason is excessive debt and ongoing deficits in the state revenue and expenditure budget, in addition to high inflation, plus the impact of mass poverty thus making the Argentine government always fail in its budget savings discourse, this situation will be the worst thing in the economic sector, especially for Argentina.

Austerity is usually caused by overspending and the need to rein in debts. If you have a pretty mediocre economy and not enough exports to sustain yourself then it can become an inevitable reality. Lots of politicians like to spend money because it is a way of buying votes, but it's not always the responsible course of action and can place the country into a very dire place. At a certain point a responsible leader has to try and balance the books, so the country does not end up in a Zimbabwe hyper inflation type of situation where the currency becomes completely worthless. Unfortunately that means difficult decisions and sometimes the effect hits people very close to you.

How to be fooled by democrat propaganda!   Graph from NYTimes: Actual graph: Anyone with a fucking working brain would understand something, you plant stuff that you know you're going to sell, so if A+B+C produce 1000 tons and X+Y+Z need 1000 tons of soy it doesn't fucking matter if X stops buying from A and buys from B because then it means others buy the difference! Who was buying before soy from Argentina? Somebody obviously did because why would they plant it otherwise! Now, if Argentina sells that soy to China, the guys who bought from Argentina will need somewhere else to buy, right? Use your brain, don't be a brainwashed democrat!

OP, what kind of leftist propaganda is this? Do you suggest that overspending and drowning in more debt is what makes an economy grow? Austerity in Argentina is necessary in order to get out of the national debt crisis, lower inflation and get foreign loans out of the International Monetary Fund. Actually the IMF wanted more austerity in order to give Argentina a loan. IMF won't help leftist governments, who keep spending. Greece is also doing fine right now and they are paying back their national debt. Yes, their economy had to shrink, but economies that rely too much on debt and overspending are bloated and have to shrink.

In situations like this, politics plays a key role, those austerity measures that was put in place was to help curtail some of the expenditure of the government, however economic transformation does not stop at that point, there must be a political will on the side of the government to make sure that they make the economy a productive one. Why I can easily relate to this is that during the 80s, my country also went through austerity measures, it still did not help the economy because there was no political will on the side of those who are in authority to actually make the economy productive, when there is a will, there is always a way.

I live in a country, where our new right wing government wanted to use austerity measures as a tool to "fix the economy". And because of them, unemployment is now all time high, prices are rising, but there's no index adjustment of any kind which basically stopped people for using money for anything but essentials. And somehow cuts aren't targeted for the richest, but to middle class and most poorest. We are technically still doing pretty well, but new government seems to want to wreck the whole system, just that they can say that "look, system isn't working". Argentina should be seen as example on where austerity leads to. We haven't been paying enough attention.

Yes but not in record time. How many years kirchnerism reigned? vs How many years/month are the free market rules in place? I can tell you: 23 years vs 9 to 15 months, with congress working against him most measures were vetoed. https://www.cato.org/blog/milei-has-deregulated-something-every-day Now there are no excuses any more.