Bloomberg interviewed Treasury Secretary Scott Bessent in Buenos Aires yesterday. Bessent visited to support Argentina's President Javier Milei's leading his country "back from the precipice."
Milei had gone to Mar-a-Lago the week before after President Trump set the economic globe on fire with his optional tariffs. Milei gifted DOUGEBAG Chief Elon Musk a special chainsaw at CPAC.
Back to the Bessent Bloomberg interview where the Treasury Chief talked about Argentina's three adjustments. The first fiscal adjustment involved large government budget cuts.
...reductions included capital spending (-80%), transfers to provinces (-70%), public sector wages (-26%) and pensions (-23%)The second adjustment was a significant reduction in monetary supply. Bessent was there for the third adjustment which allows the Argentinian peso to float within a range. Citizens saw an immediate 10% loss of purchasing power.
Bessent also talked about "unfair trade" arrangements and illuminated five things to look for.
The interviewer used the word "combat" in a question on China. Bessent quickly noted that to be "an aggressive word." Investment legend Warren Buffett called tariffs "an act of war to some degree." It's becomes more aggressive when the U.S. mischaracterizes a trade deficit as "ripping us off."
The last two items on Bessent's unfair trade practices are subsidization of labor and facilities. That is a regular thing in San Angelo. Most local economic development efforts involve some form of subsidy for labor and/or facilities.
Red Team Virginia Governor Glenn Youngkin subsidized Armed Forces Brewing in summer 2023. The state beat out Maryland and Florida.
The brewery opened in early 2024 and after a year of operation announced it would relocate.
Note every economic development deal works out but state and local governments subsidizing labor, equipment and facilities are not rare events in the U.S. Beware the log in your eye, Mr. Bessent, when you point out the stick in another's.
Trump's optional tariff regime has also been framed as an adjustment. I hope the Donarch is not using Argentina as a model. The point is to avoid third-world "imploded economy" status, not imitate it.
Update 4-16-25: Naked Capitalism's story on Bessent's trip to Argentina is excellent and worth the read.
Update 4-22-25: Bessent referred to the current trade situation with China as "unsustainable" and "an embargo."
