Argentina's Macrisis: $20 billion bailout sought from U.S.
Following a surprisingly strong rebuke at the polls on Sunday, Argentine President Mauricio Macri is reportedly in talks with U.S. Federal Reserve officials for a loan of at least $20 billion.
The loan, if granted, would follow an already-record, $57 billion IMF bailout following the collapse in April 2018 of a Macri-sponsored carry-trade debt bubble known locally as the "financial bicycle."
U.S. President Donald Trump has signaled staunch support for the right-wing Macri, with whom he shares both ideology and a 35-year friendship.
The news, reported this morning by Marcelo Bonelli, chief economist at the pro-Macri TN cable news, comes after a steep selloff in the Argentine peso and stocks following Macri's decisive loss in the first round of presidential voting on Sunday.
Amid high turnout, Macri lost by 15.6% to center-left opposition candidate Alberto Fernández - outperforming polls, and making the pragmatic Fernández the likely winner of a second round on October 27.
Macrisis
Fernández has pledged to pay debts but curb financial speculation, which many blame for the ongoing crisis - the deepest since Argentina's 2001-02 crash, which followed similar financial deregulation and free trade policies.
The dollar climbed 23% on Monday, from 46.55 to a record 57.30 pesos - its sharpest since Macri's own, December 17, 2015, devaluation just a week after taking office. The dollar rose today to 58.33.
Hoarding has been reported since Monday's devaluation, expected to push inflation from 2.7% monthly in June to 14% in August - the highest in 28 years.
“With 80% of Argentina's debt denominated in foreign currency,” the Financial Times noted today (up from 40% when Macri took office), “a continued devaluation would put further pressure on the country's debt and increase the likelihood of another Argentine sovereign default.”
'Operation Fear'
Macri reaped criticism for refusing to intervene in local currency markets, allowing the dollar to climb to 62 pesos before intervening at 1:30 p.m. with around $150 million in dollar sales, and a similar amount on Tuesday - well within the $250 million daily limit set by the IMF (which routinely grants Argentina waivers).
Opposition leaders have slammed the administration for both creating the current debt crisis, as well as for their relative inaction over the past two days.
“It's obvious that (Macri) is creating an 'operation fear' by using the markets,” Sergio Massa, one of Fernández's leading allies, said.
“The Central Bank did not intervene. The government had a 'goalie' (the Central Bank) who had the obligation to act - but instead let two goals through.”
At: https://translate.google.com/translate?hl=en&sl=es&tl=en&u=https%3A%2F%2Fwww.eldestapeweb.com%2Fnota%2Fel-gobierno-pidio-un-prestamo-por-u-s20-mil-millones-a-ee-uu-para-contener-al-dolar-hasta-diciembre--201981312200
A billboard outside a Buenos Aires currency exchange advertises Monday's intra-day record of 63 pesos per dollar; it closed today at 58.33.
Argentina's deepening debt crisis - and Sunday's first-round victory by center-left challenger Alberto Fernández by 15.6% - have made President Mauricio Macri's second-round defeat all but certain this October.
Macri is reportedly hoping to capitalize on his friendship with U.S. President Donald Trump by seeking a $20 billion U.S. Federal Reserve bailout to boost his slim chances.
The idea of a direct U.S. bailout - on top of a record $57 billion from the IMF - was first broached last September by Trump's National Economic Council Director Larry Kudlow.
But many now question Trump's policy of propping Macri up with more debt - and in vain.
“By October,” Latin America analyst Siobhan Morden at Amherst Pierpont Securities said, “the next government could inherit an unmanageable crisis.”
