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 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, 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 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 his positions a bit.
You know he is. I think the word eccentric would be an extraordinary.
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 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.
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
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 in other countries when things change by two or three percent, and the way we write about those, And then you come to Argentina.
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?
I think the answer is a mixture between bravado mixed with bits of realism.
So face with this.
Scenario, scenario unprecedented fiscal adjustments in the history of humanity.
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
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 given to somebody he trusts slightly more.
John, you asked him about his plans to demolish the central bank, and I was struck by his rhetoric.
Wills they make it a crime, I guess humanity?
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?
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 can begin to bring that down, then that gives him a bit of credibility with them.
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.
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.
Here on.
Night, and this is basically a way for every day Argentines to have access to the dollar.
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 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.
Buen Ataires, Membresendo so is Sameir Santa Gruz bo and Nacandina, Buenos Aires God.
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 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 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.
Denis.
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 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.
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 time limit on how much pain Argentines can keep can take to take these reforms? All right?
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 years of populism.
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.
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. 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.
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.
Reforms that I can't push through today are will pushed through after.
So really the biggest reforms could come after you at a majority in the midterms.
Except the Mulay, the former academic economist, is learning about the challenges of governing.
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.
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.
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 their hands, and that means he has to compro a bit.
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 this return vision.
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
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 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 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 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. 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, 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.
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 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 new listeners find the show. We'll be back Monday