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Argentina’s Recurring Nightmare

Argentine President Mauricio Macri seems almost certain to lose his country’s presidential election next month, after committing the same kinds of economic-policy mistakes that so many of his Peronist predecessors made. It is a tragic and catastrophically disappointing denouement.

LONDON – Argentina has done it again: inflation is up, growth is down, and the peso has lost two-thirds of its value. Depositors have been rushing to withdraw their money from local banks, and a debt default looms. While Argentines suffer the consequences, the world emits a collective sigh of disbelief: wasn’t this time supposed to be different?

It was. President Mauricio Macri’s inauguration in December 2015 unleashed high expectations. Macri recruited an all-star team of technocrats and made encouraging noises about economic reform. After years of corruption and mismanagement under Peronist administrations, the only way was up – or so it seemed.

Instead, the government spent too much, taxed too little, borrowed excessively, failed to discipline its own monetary policy, and eventually was the victim a massive market panic. Macri’s likely political defeat in the presidential election on October 27 thus will have been caused by the same types of mistakes made by his Peronist predecessors. It is a catastrophically disappointing denouement.

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