President Milei Has Made Amazing Progress But Faces an Economic Crisis

Argentine’s President Milei has done exactly what was right for the economy except when it came to the currency. He now has a problem and the US is willing to help him out of it. Treasury Secretary Bessent is working with him. He brought the economy back from impending default but overvalued the currency. Now, the market is doing poorly and the peso is crashing due to lack of confidence.

The elections are coming up in October and his election is not a done deal.

His Successes Include Housing & Inflation

President Milei has promoted and helped liberalize the rental market in Argentina.

According to official data and recent studies by economists Martin Elfert and Stephan L. Thomsen in the paper, The Impact of Chainsaw Unlocking on the Housing Rental Market in Buenos Aires, (SSRN), the supply of rental housing has increased by 88% and prices have fallen by between 13% and 29%, marking a historic turning point after years of state intervention.

The inflation rate which is still horrendous is beginning to come down.

The Currency Problem

The “Radical Libertarian” President is turning that country around. He was elected in 2023 on a platform to fix the economy, and was making spectacular progress. He brought inflation down, cut spending and reduced the deficit. He began to implement structural reforms.

However, Milei is currently dealing with a currency crisis that has seen the peso in free fall and it’s hurting him. the midterms didn’t go well.

US Treasury Official, Mark Sobel:

“The latest Argentina peso crisis was triggered by lost market confidence in Milei’s ability to perform well in upcoming elections after a number of political setbacks,” said Mark Sobel, a former longtime U.S.Treasury official. Sobel is currently the U.S. chairman of the Official Monetary and Financial Institutions Forum.

“Milei’s program of tough fiscal and monetary tightening has been the right medicine to stop Argentina’s habitual over-borrowing, which had caused decades of hyperinflationary bouts and serial defaults,” Sobelk added.

“Milei’s weak spot was the peso’s overvaluation due to a stubborn unwillingness to let the peso find a market-clearing level,” Mr. Sobel said. “That glaring weakness has now come home to roost.”

President Trump discussed a bailout with him. The US Treasury will back him.

President Trump endorsed him.