Earlier this month, shortly after some depressing results in a regional election in Argentina, I was interviewed by Patrick Young.

In this clip, I express concern Argentine voters will backslide to Peronism.

As one might expect, some people are concerned the Peronist victory in the Buenos Aires regional election could be a harbinger of bad news for October’s mid-term elections.

And if Milei’s party does not do well, that not only takes away the likelihood of further good reforms, it could mean a return to deficit spending, inflation, and the other economic ills that plagued the nation during the post-World War II Peronist era.

Which explains why financial markets are now very uneasy. And it’s why the Trump Administration is now trying to help Argentina.

Here’s a look at the exchange rate between the U.S. dollar and the Argentine peso. You can see the immediate deterioration after the Peronists won the regional election on September 7. And you can see when the U.S. government intervened to strengthen the peso.

But it’s not just the peso that was affected by the Peronist victory.

Here’s a chart showing the MERVAL Index, Argentina’s version of the Dow Jones Industrial Average.

Once again, it’s very easy to see the immediate loss of confidence after the September 7 election, with a modest bit of improvement following the Trump Administration’s intervention.

There are two big issues.

We’ve already discussed one of those issues, namely the way that the threat of a Peronist comeback is spooking financial markets and hurting investor confidence.

Now let’s address the second issue, which is why the Trump Administration is intervening. A Washington Post report by David Lynch has the details. Here are some excerpts.

President Donald Trump’s decision to give Argentina a $20 billion financial lifeline has stirred anger… The president’s customary allergy to using taxpayer money to help other nations makes the Argentine rescue especially noteworthy. …But the administration last week showed no hesitation about saving Argentina from its latest economic misfortune. …Trump is a fan of Argentine President Javier Milei, a libertarian whose attacks on government spending and red tape have made him a folk hero to the American right. This month, however, Milei’s party was trounced in provincial elections in Buenos Aires, raising doubts about his ability to retain a legislative majority in Oct. 26 midterm elections. Treasury Secretary Scott Bessent says Milei needs “a bridge to the election” so that he can win a renewed mandate for reform. …Since the Sept. 7 balloting, the Argentine stock market has dropped 10 percent. …Argentina’s real importance may lie more in the power of example. If a MAGA-style economic makeover succeeds in pulling the country out of its century-long torpor, other struggling nations could be inspired to follow Milei’s lead and validate his Trumpist assault on the public sector.

The article is quite fair. Milei gets credit for pulling Argentina out of an economic tailspin.

And the reporter is definitely right that Trump has suddenly decided that it’s okay to help another country simply because he and Milei have a personal connection.

But I have to nitpick on two points.

• First, the article refers to Milei’s “legislative majority,” but that’s not the case. The Peronists still control the legislature. Milei’s party only has 10-15 percent of seats, and even if you include parties that sometime vote for his initiatives, there’s definitely not a majority.
• Second, the article refers to a “MAGA-style economic makeover” and a “Trumpist assault on the public sector.” But this is only partly right. It’s certainly true that Milei has an amazing track record on reducing the burden of government. But government in the U.S. under Trump has expanded.

In other words, Milei backs up his rhetoric with action. Trump, by contrast, has a few symbolic victories, but is largely MIA when it comes to the key issue of entitlement spending.

I’ll close with the observation that Milei may have made a tactical mistake by not immediately “dollarizing” after taking office. That would not have prevented a decline in the MERVAL Index, but at least he wouldn’t have to worry about the Peso falling.

P.S. I could add this column to my list of libertarian quandaries. I very much want Milei to succeed, but I also oppose foreign aid. The bottom line is that the Trump Administration’s intervention (a form of foreign aid) may be necessary for Milei’s party to do well next month. After all, if the U.S. government did not intervene, the Argentinian currency probably would have continued to lose value and the MERVAL Index probably would have dropped more. Perversely, voters may have blamed Milei and his party for the economic damage, even though the bad news was caused by the Peronists winning in Buenos Aires!

P.P.S. In the long run, the only way to save Argentina is to turn bad voters (who have a long history of mooching) into good voters (who believe in economic freedom and self reliance). Put simply, Milei has to reverse the order of these two cartoons.