Argentina' Chainsaw Massacre

Argentina’s chainsaw massacre FT author Edward Luce US National Editor and Columnist ‌ ‌ PREMIUM October 10 2025 The speed of Javier Milei’s reversal of fortunes has been brutal. A few months ago, Argentina’s libertarian president was hailed as an economic miracle-worker and a lodestar for the global populist right. It was Milei who donated that infamous chainsaw to Elon Musk a couple of weeks after Donald Trump took office. At that point Milei was seen as a populist iconoclast who had scythed his way through bureaucracy to deliver inflation-beating austerity. This he had pulled off in terminally ill Argentina of all places. He had also written the road map for Musk’s so-called Department of Government Efficiency (Doge). It was not just Musk, Trump, JD Vance and other Maga figures who hailed Milei’s magical touch. Centre-left leaders such as Britain’s Keir Starmer, also felt obliged to pay their compliments. So complete was Milei’s status as the populist right’s foreign darling that America’s conservative CPAC gathering was held in Buenos Aires last December. This put him on a par with Hungary’s Viktor Orbán, who also played host to the conference. “We could call ourselves a rightwing international,” Milei told the audience. “In the hands of Trump, [El Salvador’s Nayib] Bukele and us here in Argentina, we have a historic opportunity to breathe new winds of freedom into the world.” A couple of months later Milei told the Economist, “I am today, one of the two most relevant politicians on planet earth . . . I find it fascinating that the chainsaw has become an emblem of a new golden era of humanity.” Pride goeth before the fall but in Milei’s case Trump is trying to catch him first. The irony of the libertarian nationalist who opposed foreign handouts now turning to Trump for urgent assistance is lost on no one. Those who want to explore the balance of payments challenges Milei faces should read this exemplary Alphaville note by Brad Setser and Stephen Paduano. Their assessment of whether Trump’s $20bn credit swap line will stem the Argentine peso’s fall is technical, so for those in a hurry, here is the gist. Milei slashed inflation from more than 160 per cent when he was elected in 2023 to 32 per cent by ending the use of central bank money printing to finance government spending and propping up the peso with Argentina’s dollar reserves. This kept import prices down and curbed inflation. But the impact on incomes of a high peso and sharp spending cuts was severe. When Milei’s party did badly in local elections last month, an-all-too familiar run on the peso was triggered. Having run through most of his reserves trying to prop it up, Milei had little choice but to turn to Trump (the IMF already gave Milei a $20bn soft loan earlier this year). The US Treasury secretary, Scott Bessent, obliged with an unconditional $20bn swap line on the softest terms possible. As was reputedly said by another South American strongman, Oscar Benevides, “For my friends everything; for my enemies, the law.” Either way, Setser and Paduano doubt if Trump’s help will be enough. “The problem with Milei is you eventually run out of other people’s money,” they quip. Argentina’s midterm elections later this month poses Milei’s most critical political test. If the opposition Peronists do well, Milei’s strategy could become untenable and the peso’s slide would continue. It is hard to imagine Trump throwing good money after bad. To be clear, and as history repeatedly tells us, the Peronists’ familiar expansionist recipe would be an inflationary cure worse than the disease. Milei’s exceptionalist moment may nevertheless be over. This means he and Musk still have a lot to talk about. I’m turning this week to my colleague Ciara Nugent, the FT’s Southern Cone correspondent, in Buenos Aires. Ciara, we haven’t met but I’ve enjoyed your coverage of Milei’s rollercoaster ride. I know he is the latest among several economic Wunderkinder that Argentina thrown up over the last few decades — though with a uniquely Trumpian flavour. My question is whether he has now exhausted Argentina’s libertarian option for another few years or does he still have scope to rebound? Recommended reading ‌ ‌