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It’s starting to look like the ballyhooed bailout of Argentina’s troubled currency is a deal not working in our favor. Perhaps someone should donate a copy of Mr. Trump’s self-help book to the negotiators involved?<\/p>\n
According to a photo of a private text on the phone of Treasury Secretary Scott Bessent, Argentina responded to the treasury secretary\u2019s $20 billion bailout by turning around and removing its export taxes on soybeans and striking a huge new deal with China. That diminished the price of U.S. soybeans and weakened U.S. trade leverage with China, which immediately pulled out of its existing arrangements with soybean farmers in America\u2019s heartland.<\/p><\/blockquote>\n
Think we have all seen the headlines about the China purchased leaving US farmers high and dry. Details have been a bit scanty.<\/p>\n
\nThe photo taken by Angelina Katsanis for the Associated Press last week shows Bessent reading a text that appears to be from Agriculture Secretary Brooke Rollins.<\/p>\n
\u201cFinally\u2014just a heads up, I\u2019m getting more intel, but this is highly unfortunate,\u201d the text said. \u201cWe bailed out Argentina yesterday and in return, the Argentine\u2019s [sic] are removing their export tariffs on grains, reducing their price, and sold a bunch of soybeans to China, at a time when we would normally be selling to China. Soy prices are dropping further because of it. This gives China more leverage on us.\u201d<\/p>\n<\/blockquote>\n
So the Argies negotiate a currency bailout in which we buy $20,000,000,000 of their currency to shore up their economy (and current administration), then turn around and essentially screw us? Am I reading this right?<\/p>\n
Last week, Bessent outlined on X a plan to financially support Argentina following extensive talks between longtime allies President Donald Trump and Argentine President Javier Milei, a libertarian economist with a populist, Trump-like appeal, known for wielding a chain saw and cloning his enormous mastiff dogs.\u00a0\u00a0Fortune<\/a><\/p><\/blockquote>\n
China booked over $7 billion in soy bean purchases in a couple of days. With Argentina, not us. Well, I am thinking with all those Chinese renminbi, yuan,or whatever you want to call it – there’s not much need for our $20 billion, is there?\u00a0 I’d normally be a bit torqued at China on this, but they are just going where the best deal is – and right now WE have enabled the Argies to make their deal a better one. Why are we doing that?<\/p>\n
Well, at least one allegation says that while American farmers are taking it right up the old combine, there is a bright spot in this. Rob Citrone.<\/p>\n
However, Bessent\u2019s announcement had massive economic benefits for one American: billionaire hedge fund manager Rob Citrone, who has placed large bets on the future of the Argentine economy. Citrone, the co-founder of Discovery Capital Management, is also a friend and former colleague of Bessent\u2014a fact that has not been previously reported in US media outlets. Citrone, by his own account, helped make Bessent very wealthy.<\/p><\/blockquote>\n
Hasn’t hurt Discovery, either, whose return was 52% last year, investing heavily in Argentina. Then the austerity measures hit, and Discovery started to suffer too. But wait –<\/p>\n
In early September, days before Bessent\u2019s announcement, Citrone\u00a0purchased more Argentine bonds.<\/p>\n
Bessent\u2019s personal and professional relationship with Citrone has spanned decades. In a\u00a0May 14\u00a0appearance on the \u201cGoldman Sachs Exchanges\u201d podcast, Citrone revealed how he delivered a financial windfall for Bessent. They were both working for investor George Soros in 2013 when Citrone convinced Bessent and Soros to bet on the US dollar against the Japanese yen.<\/p><\/blockquote>\n
Oh, and this isn’t Argentina’s first rodeo – in April the IMF gave them $20 billion as well. So if at first you don’t succeed, throw more money at them – courtesy of the US Government. And in one sense it is working:<\/p>\n
Bessent\u2019s September 24\u00a0announcement, thus far, has had the desired impact, increasing the value of Argentine assets, including bonds, stocks, and the peso. \u201cIt has helped tremendously that the US has come in to support Milei, and it will pay dividends for the US strategically,\u201d Citrone\u00a0said\u00a0in an interview with Bloomberg<\/em>.<\/p>\n
Whether the US improves the prospects over the long term is a separate question. Propping up the value of the Argentine currency beyond what the market will support with yet another influx of foreign currency gives wealthy Argentines an opportunity to cash out. The Argentine elite now have the ability to convert their peso assets into dollars and move them abroad. This phenomenon, known as \u201ccapital flight,\u201d is why the previous IMF bailout package proved insufficient.\u00a0\u00a0MotherJones<\/a><\/p><\/blockquote>\n
Care to enumerate those strategic dividends? “Keeping me and my Argentine cronies solvent” is not what I would regard as ‘strategic’ – at least not for the US.<\/p>\n","protected":false},"excerpt":{"rendered":"