Argentine President Javier Milei at the Inauguration
of US President Donald Trump on January 20th, 2025
"Tale Of Two Disruptors"
by Bill Bonner
From the ranch at Gualfin, Salta Province - "When we last wrote, the ranch hands threatened to settle scores the old-fashioned way - with fists and knives. The one who felt most aggrieved - accused of rape, banned from visiting his family… and now cuckolded by another of the gauchos - was about to go to war.
Fortunately, our lawyer was able to talk him out of it…pointing out that another run-in with the law would go very badly for him. He then said he was leaving. As of this morning, we have no further word. Maybe it will blow over? So, let us turn to the bigger, wider, and even wackier world beyond the Calchaqui Valley.
For there we are witness to one of the most remarkable phenomena in economic history. One nation is headed down in classic style - by spending too much and trying to impose its will far beyond its borders. Another country is going the other way…making a comeback after seven decades of relative decline. Catching up on what happened since Friday morning…even Trump’s own party couldn’t stand his Big Beautiful Bill. Reuters: "Republicans Reject Trump Tax-cut "ill."
"WASHINGTON (Reuters) -U.S. President Donald Trump's sweeping tax bill failed to clear a key procedural hurdle on Friday, as hardline Republicans demanding deeper spending cuts blocked the measure in a rare political setback for the Republican president in Congress. As written, the bill would add trillions of dollars to the federal government's $36.2 trillion in debt over the next decade. In addition to extending the 2017 tax cuts that were Trump's signature first-term legislative achievement, it would eliminate taxes on some tips and overtime income, boost defense spending and provide more funds for Trump's border crackdown.
Then, Moody’s decided it was time to cut America’s credit rating: "The agency said it did not see a real effort by the government to cut spending and that it expected the U.S.'s fiscal performance to deteriorate compared with other highly developed economies. It said the nation's long-term growth will be significantly hurt by tariffs and that it expected the U.S.'s federal debt burden to rise to about 134% of GDP by 2035."
Republicans then went back to work on Sunday. The Wall Street Journal reports: WASHINGTON - House Republicans pushed President Trump’s “big, beautiful” tax-and-spending bill past a key hurdle late Sunday night, but the last-minute grappling has them colliding with a stark reality: The plan won’t reduce federal budget deficits and would make America’s fiscal hole deeper." In other words, more of the same…
South of the Rio de la Plata, meanwhile, Argentina had its debt rating upgraded by Fitch. The Buenos Aires Times: "The change comes against a backdrop of bullishness toward Argentina as President Javier Milei pledges to restore economic growth with an extensive reform agenda. The country’s debt was one of the best performing investments in emerging markets last year.
Democracy, autocracy…any kind of crazy you want…the pattern is always the same. An elite gains control of a government. It tightens its grip and becomes more corrupt and incompetent, as well as further removed from ‘The People’ it is meant to serve. Usually, it takes a catastrophic event - war, bankruptcy, plague, revolution or hyperinflation - in order to have a reset.
But no genuine catastrophe beset the pampas. It was merely the victim of 70 years of bad government. Like Donald Trump, Javier Milei won election as President, nearly 18 months ago, as a ‘disruptor.’ Since the 1940s, Argentina slipped further and further behind other rich, developed nations. Voters were tired of it. They elected him to fix things; he’s doing it. Unlike Trump, Milei went to work on the drive train, not just the upholstery.
Donald Trump did not make cutting spending a priority. Mr. Milei did. The Buenos Aires Times reports the results so far: "Argentina’s poverty rate dropped to 38.1 percent of the population in the second half of last year – a decline of almost 15 points from the preceding half-year. Extreme poverty, meanwhile, fell to 8.2 percent of the 47-million-strong population, down from 18.1 percent in the previous semester. Overall, the number of those considered to be poor declined 14.8 percentage points from the middle to the end of last year – a massive advance despite the economy entering recession." More to come…"
No comments:
Post a Comment