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April 5, 2024 15 mins

Argentina’s president Javier Milei has made waves since taking office in December. From his plans to abolish his country’s central bank and replace its peso with the dollar, to his efforts to reverse previous administrations’ moves to build closer ties with China, Milei is charting a perilous – and untested – new course for a country long-rankled by inflation and economic instability.

Today on the Big Take podcast, Bloomberg Editor-in-Chief John Micklethwait sits down with host David Gura to discuss his exclusive interview with the Argentine leader.

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Speaker 1 (00:03):
Bloomberg Audio Studios, podcasts, radio news. Argentina's new president is
taking radical steps to get the country out of a crisis.
Annual inflation is around two hundred and seventy five percent.
That some of the highest inflation in the world. And
to put that in perspective, a coffee you paid five

(00:24):
dollars for in January would cost almost twenty dollars one
year later. The effects of this kind of high inflation
are devastating. People's life savings go up in smoke, rent soares,
and so do food prices. Argentina's economy has been spiraling.
It was in the midst of this crisis that Javiermulay
was elected president last year. Melay is a staunch libertarian,

(00:47):
and his campaign promised drastic reforms would turn the country around.
He called for burning down the country's central bank, and
Malay wielded a chainsaw to illustrate how he was going
to cut through government spending. He also dressed up as
general and cap that's short for a narco capitalist. Malay

(01:09):
wore spandex and a mask, waived a trident and sang
about fiscal policy. But there's another side to Malay. He
was an economist by profession, widely published, and about one
hundred days into his term, Melay has softened some of

(01:31):
his positions a bit.

Speaker 2 (01:32):
You know he is. I think the word eccentric would
be an extraordinary.

Speaker 1 (01:39):
This week, John Micklethwade, Bloomberg's editor in chief, sat down
with Argentina's president to talk about the radical reforms he's
made so far. Today on the show Argentina and Javier
Malay's plans to shock that country's economy. I'm David Gura,
and this is the big take from Bloomberg News. Javier

(02:01):
Mile became the President of Argentina just over one hundred
days ago. He made headlines with his extreme politics and
his flair for political theater after Bloomberg editor in chief
John Micklethwaite interviewed him. This week in Buenos Aires, I
caught up with John and I asked him to describe
the challenges Argentina faces today.

Speaker 2 (02:21):
I think the easiest way to explain Argentina to pretty
much everybody outside Argentina is you take everybody else's problem
and you multiply it by about ten. So in Argentina,
it's a great success to reduce inflation to thirteen percent
per month, when most other people would worry if you
had one percent inflation per month. You look at the
numbers in terms of what is happening as this rather

(02:46):
amazing figure begins to enact as reforms. You see consumer
spending diving by twenty five percent in a month, pensions
thirty percent below what they were last year, fifty seven
percent of people living in poverty, salaries down fifty percent
over x amount of years. You could go on and on,
and you look at the amount of fuss that happens

(03:06):
in other countries when things change by two or three percent,
and the way we write about those, And then you
come to Argentina.

Speaker 1 (03:14):
His path to the presidency was paved with promises. He
said he was going to put in place thousands of reforms.
How happy does have your malay seem with the progress
that he's made so far?

Speaker 2 (03:23):
I think the answer is a mixture between bravado mixed
with bits of realism.

Speaker 3 (03:29):
So face with this.

Speaker 4 (03:30):
Scenario, scenario unprecedented fiscal adjustments in the history of humanity.

Speaker 2 (03:39):
I mean, the Bravado is, yes, the most incredible thing
in the history of humanity. It's almost kind of trumpion
in its sense of Hubris, But it is, as I
pointed out, by most people's standards, it is a fairly extraordinary,
subtainly the most extraordinary economic experiment going on in the
world at the moment. What's happened to him is that
he's come in with all these ideas hired by Milton

(04:01):
Friedman and people like that. He is furious with the
central Bank for printing money, and so he once he
came in saying that he wanted to get rid of
the Central Bank, and he wanted to get rid of
the peso and replace it with the dollar, so that,
in other words, the currency would be taken out of
the hands of the criminals, as he sees it, and

(04:23):
given to somebody he trusts slightly more.

Speaker 1 (04:25):
John, you asked him about his plans to demolish the
central bank, and I was struck by his rhetoric.

Speaker 4 (04:33):
Wills they make it a crime, I guess humanity?

Speaker 1 (04:36):
And if he didn't hold back in the way that
he talked about economic policy makers, he threatened prison time
for a policymaker who would print pasos in the future.
What did you make of just the way that he
talked about the central bank in the interview?

Speaker 2 (04:53):
Firstly, it's extraordinary. That thing about inflation is really important.
If you talk to people in the street in in Argentina,
some of them adore Mela. A lot of other ones
just say, look, I voted for him because I just
I know the other lotter useless. But the one number
that they really all look at is inflation, because that
has been ruining their lives for years. So if he

(05:15):
can begin to bring that down, then that gives him
a bit of credibility with them.

Speaker 1 (05:22):
The inflation situation in Argentina is so dire, and money
loses its value so fast that the moment people get paid,
they raise to black market money changers to convert their
Argentine pesos to US dollars. Kevin Simoucci is a reporter
in our Buenos Aires bureau.

Speaker 3 (05:39):
So we're here in the streets of Buenos Aires. It's
a normal Thursday afternoon during lunch hour, interspersed throughout the streets.
Throughout the small size streets, there are several individual money
exchange and come your cameo.

Speaker 4 (05:56):
Here on.

Speaker 3 (05:59):
Night, and this is basically a way for every day
Argentines to have access to the dollar.

Speaker 1 (06:11):
After the break, we'll hear from someone who voted for
Hobvier Milay, hoping the radical reformist would make life better
for him and his young family. And we'll hear from
lay on his timetable for change. High inflation has made

(06:31):
life brutal in Argentina. It's put millions of Argentines out
of work, and right now more than half the population
lives below the poverty line. One of them is Samir
Santa Cruz, a twenty two year old who lives in
Buenos Aires.

Speaker 2 (06:45):
Buen Ataires, Membresendo so is Sameir Santa Gruz bo and Nacandina,
Buenos Aires God.

Speaker 1 (06:55):
Santa Cruz worked as an upholsterer, but when he and
his partner had a baby daughter, they moved in with
his parents to save money. He's now found a new gig,
delivering food by bike. Money is tight and skyrocketing prices
have only made things harder. To make sure his daughter
has everything she needs, Santa Cruz and his partner started
skipping meals, tiding themselves over with mate tea. Don't say

(07:26):
breakfast is mate, Lunch is mate, A snack is mate.
He and his partner eat only one meal per day.
Santa Cruz says it's hard to eat so little, especially
when he's riding his bike for hours every day. It's heavy,
he says, but the sacrifice is worth it because it
gives his daughter three meals a day, and she is

(07:47):
the most important. Santa Cruz and his partner want a
better life for their daughter. They don't want her to
go through the same hardships and insecurity that.

Speaker 2 (07:56):
Denis.

Speaker 1 (08:01):
That's why they both voted for Maulay. Santa Cruz hopes
the future will unfold like Melais says it will, and
that Argentina will be a great country again, one of
the best Basincina. This is a country full of people

(08:21):
struggling like Samir Santa Cruz, which makes Javier Malay's job
very daunting. It's something Bloomberg editor in chief John Micklethwaite
asked the president about how much patience do Argentines have.

Speaker 2 (08:33):
I've just looked at the statistics. They're quite frightening. The
average salary in Argentina is at lowest level since two
thousand and three. Fifty seven percent of Argentine's live in poverty.
Consumer spending dropped twenty three percent in February so far.
The interesting thing is your support has stayed high at
fifty percent. But do you accept that there is a

(08:55):
time limit on how much pain Argentines can keep can
take to take these reforms? All right?

Speaker 4 (09:07):
The first thing is the way we see it. There
has been a cultural change in Argentina and most Argentines
have understood that the solution is not populism. Losarios today
a miserable not through our own is due to twenty

(09:34):
years of populism.

Speaker 1 (09:35):
Mickelthwaite says, Mile has maintained a lot of popular support,
and one way he's done that is by drawing a
stark contrast between him and his predecessors and the policies
they implemented.

Speaker 2 (09:46):
I think everyone knows that that. You know, the reason
why Argentina is in the pickle that it is is
not because of him. You know that there are so
many things to fix, and if you can just hang
onto that idea of endlessly saying, look, I've been defeated
by what he calls the cast the blob. I suppose
someone else will call it the The establishment is fighting me.

(10:09):
They're stopping me to being able to do these things.
You know, I'm the person who's getting rid of free
croissants in the state. I'm the person who's giving away
my salary. I'm the person who's doing all these things
they never did. Then if he can get to the
mid term elections, which in next year, and he can
do well, then then he can begin to push through
even bigger reforms.

Speaker 1 (10:29):
It's bound to be a difficult path right now. President
Malay may have a lot of popular support, but he
has far less political support. Congress blocked Malay's so called
Omnibus bill, which was full of even more reforms. In
his interview with John, President Malay said he's hoping the
political landscape will change.

Speaker 4 (10:49):
Reforms that I can't push through today are will pushed
through after.

Speaker 2 (10:56):
So really the biggest reforms could come after you at
a majority in the midterms.

Speaker 1 (11:03):
Except the Mulay, the former academic economist, is learning about
the challenges of governing.

Speaker 2 (11:10):
John says, So it's a mixture between talking very tough
and actually being pragmatic. And if you want a very
sort of easy example of that, it would be China.

Speaker 1 (11:24):
On the campaign trail, Mulai took a hard line against
communist countries. As a candidate. He told Bloomberg that he
would not promote relations with any communist countries, including China.

Speaker 2 (11:35):
But one of the things he's discovered when he's in
power is actually, not only did the Chinese I'm quite
a lot of money into the Argentine economy. There's also
an eighteen billion dollar swap line current, which effectively is
a big portion of Argentine's reserves. So for all the Bravura,
you know, they hold part of the Argentine economy in

(11:57):
their hands, and that means he has to compro a bit.

Speaker 1 (12:01):
Argentina's political and economic problems are very entrenched, and John
knows this well. The interviewed one of Mela's predecessors, Carlos
Menem in the nineteen nineties, at a time when the
country was also battling high inflation. I wonder, being back,
sort of what you've noticed about what's changed and what
hasn't about the place? What stood out to you on

(12:22):
this return vision.

Speaker 2 (12:23):
I think the thing that stands out about Argentina is
the gradual accumulation of problem, the kind of full storms
it really is. You know that there is no other
country in the world that you can say has fallen
as far down the ladder over the past one hundred years.
You know, it's you should always remember this. In Argentina
was the I think the fourth richest country in the

(12:45):
world one hundred years ago. It was a place where
if you were an immigrant or you wanted to emigrate
from the old world to the new, you would seriously
have looked and tried to work out whether Argentina or
California was a better bet. And many, many people chose
Argentina because it is one of the world's most fertile places.
If you have anything to do with agriculture, this is

(13:07):
an amazing place. It has many, many, many advantages, right
the way down to the world's best soccer team. There
are still elements of a middle class life in Argentina
which are fantastically attractive to people. This is still a
place which many people here see themselves as kind of
the European part of Latin America. But I think it's

(13:27):
very difficult think of any other country which has had
that long and almost semi perpetual element of always choosing
the wrong person. And there have been bits. Carlos Menhim
was a very obvious example. Menim came in and he
sort of, as I remember, he reduced inflation from even
larger numbers. That what Mille is now facing. But gradually

(13:50):
things began to go wrong again then, and there were
elements of corruption, there were elements of outside forces coming
to bear and all those sort of things. But this
element whereby Argentina has sort of tried everything except sort
of confronting some real issues to do with productivity and
all those sort of things, and those are now coming back.

(14:11):
So yes, when you walk around here there is still
amazing things of charm. It feels like the same place
only slightly older, and it has not economically has not
got better, So that that I think is the kind
of that's the reason why Millet is so interesting. It's
partly because of what he's trying to do, the extremness,

(14:33):
the extraordinaries of with that, but it's also partly there
is this amazing country of enormous charm potential with some
very highly educated people that should be a kind of
load star in this region. And this is, you know,
more than even before. It feels a bit like a
last chance.

Speaker 1 (14:55):
This is the big take from Bloomberg News. I'm David Gera.
This episode was produced by David Fox. It was edited
by Stacy Vanick Smith and Danielle Balby. It was mixed
by Alex Sugira. It was fact checked by Adriana Tapia,
Julia Press, Thomas lou and Sarah Holder. Our senior producers
are Naomi Shaven and Elizabeth Ponso. Nicole Beemster bor is

(15:15):
our executive producer. Sage Bauman is our Head of Podcasts.
Special thanks to Jilda Decarli, Kevin Simoucci, Ignacio OLIVERA Dole
and Patrick Gillespie. Thanks for listening. Please follow and review
The Big Take wherever you listen to podcasts. It helps
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