World Courant
President-elect Donald Trump and Argentine President Javier Milei at Mar-a-Lago on November 14, 2024
Courtesy of the Presidential Workplace of Argentina
Argentina’s self-proclaimed anarcho-capitalist President Javier Milei grew to become the primary overseas chief to go to newly elected President Donald Trump since he received a second time period. He arrived in Florida on Thursday to attend a gala dinner at Trump’s Mar-a-Lago resort, the place Milei was a VIP speaker.
“The world is a a lot better place, and the winds of freedom are blowing a lot stronger” now that Trump has been elected, Milei stated.
He referred to as Trump’s victory on November 5 “the best political comeback in all of historical past, defying the political institution even on the threat of his personal life.”
Milei additionally checked the identify of one other participant within the gala viewers: Tesla and SpaceX CEO Elon Musk.
“I wish to thank the good Elon Musk for the good work he has performed to avoid wasting humanity,” Milei stated by means of an interpreter.
Milei’s presence in Florida on Thursday, and his heat phrases for Trump and Musk, supply a glimpse of what’s an evolving and vital dynamic between the 2 American billionaires and a frontrunner who has promised to avoid wasting Argentina’s long-struggling economic system by means of of ‘shock operations’. remedy” – deep cuts and drastic laws.
Musk and Milei are already large followers of one another. They’ve met a number of instances and Milei has been to the Tesla manufacturing facility and posted photographs of the 2 collectively.
A photograph Milei posted in September reveals Musk carrying a “darkish MAGA” hat, whereas Trump’s marketing campaign emblem is written in black on black.
Images from the Thursday gala posted to social media confirmed Musk, Milei and Trump collectively, all smiling.
Musk has spent the previous week at Mar-a-Lago, appearing as considered one of Trump’s closest advisers because the president-elect fills his Cupboard with sudden picks — a number of of whom have pledged to supply their very own model of shock remedy to federal companies they handle. have been chosen to steer.
Trump additionally introduced that Musk and entrepreneur Vivek Ramaswamy will lead a Division of Authorities Effectivity, which can be devoted to drastically slicing the federal finances.
The announcement fulfilled Trump’s marketing campaign promise to offer Musk a significant position in advising his administration authorities expenditure. Regardless of the identify, the DOGE is not going to be a federal company, however will as an alternative act as an exterior advisory panel to the White Home Workplace of Administration and Funds.
But Musk claims he can save $2 trillion from the US finances of roughly $6.75 trillion. The one place the place cuts on this scale have been carried out in recent times is Argentina, below Milei.
“All authorities spending turns into inflation or direct taxes. The Division of Authorities Effectivity goes to resolve that,” Musk stated on the Trump rally at Madison Sq. Backyard final month.
To know the origins of Musk’s concept to chop the federal finances by a 3rd, we have to take into account what Milei achieved.
Since taking workplace in December final 12 months, Milei has downgraded Argentina’s shares federal spending by 32%This was reported by the Middle for Argentine Political Financial system (CEPA).
In a rustic the place annual inflation has exceeded 300% and destabilized the nation, Argentina’s inflation price reached its lowest degree since 2017 in October: 2.7%
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A lot of Milei’s agenda comes right down to eliminating federal spending. And in keeping with Milei, Musk has turned to Argentina’s management to learn how.
“The US has seen and is following our lead,” Milei stated at a Meta Day Argentina convention in Buenos Aires on Tuesday. “Musk speaks with (Deregulation Secretary) Federico Sturzenegger about how you can decontrol the U.S. economic system.”
In Argentina, Milei diminished the variety of ministries by 13, leaving solely 9. Greater than 30,000 public sector workers have been laid off. He stopped all infrastructure initiatives.
The drastic cuts have had equally drastic penalties, pushing the Argentine economic system right into a deep recession. Argentina’s GDP fell by greater than 5% within the first quarter of 2024.
Nevertheless, the World Financial institution estimates that the worst is over and that the entire contraction can be round 3.5% by the tip of the 12 months. The financial institution additionally predicts that Argentina’s GDP will develop by 5% in 2025.
To be honest, cuts of this magnitude will doubtless be far more tough to implement in America than in Argentina. For starters, Argentina’s nationwide finances is far smaller than that of the US at about $101 billion, which is lower than New York Metropolis’s finances.
However in contrast to Milei, it isn’t clear whether or not American voters have given Trump a mandate to chop spending, as Argentine voters have given their president.
Chopping the federal finances was Milei’s largest marketing campaign promise; Throughout his marketing campaign, he usually carried a chainsaw with him, symbolizing his dedication to cease bloated authorities spending.
Milei received his election final 12 months by 10 factors, indicating {that a} vital majority of voters supported his plan.
Trump, in the meantime, campaigned on securing the border and enhancing the economic system, however primarily by means of tax cuts and tariffs. Funds moderation didn’t play a distinguished position in Trump’s marketing campaign platform.
This actuality has not gone unnoticed by the markets.
Since Trump’s election, there was a notable rise in US long-term rates of interest, signaling a potential return of the so-called bond vigilantes.
The time period “bond vigilantes,” coined by Ed Yardeni of Yardeni Analysis in 1983, refers to the concept that if fiscal and financial authorities can not management their spending, the bond market will, by imposing a lot larger borrowing prices.
