$LIBRAtarians

Milei's meme coin misadventure and what it could mean going forward...

(Libra scales balancing cash with thin air. Substack Image Generator)

“Let the high muse chant loves Olympian;
We are but mortals, and must sing of men.”

~ Mary Ann Evans (a.k.a. George Elliot), Middlemarch (1871)

Joel Bowman with today’s Note From the End of the World: Buenos Aires, Argentina...

Imagine if you will, dear reader, a land of calm and tranquility, where one day follows the next more or less as expected, where folks mow their lawns in cheerful unison on a Sunday and life’s cookies line up patiently for the cutters...

The economy is stable... markets plod reliably along... and the murky realm of politics is the furthest thing from the public’s untroubled minds.

Now turn your pretty picture upside-down, outside-in, and imagine the exact opposite.

Behold, Argentina!

$LIBRAtarians

When we left you last week, Javier Milei’s administration was riding a wave of positive economic news. The monthly inflation print had just come in lower than expected (at 2.2%)... poverty was down nearly 20 points (from 52% to 34%)... and the country’s falling Risk Index was beginning to signal to investors that “all’s calm on the southern front.”

Indeed, the scales appeared heavily tilted toward hope and optimism... then came $LIBRA... and a swift rebalancing. Here’s Crypto Briefing with the tilt:

Argentina's president faces fraud charges over $LIBRA token promotion

Argentine President Javier Milei faces criminal fraud charges following his promotion of the $LIBRA token, which surged to a $4.5 billion valuation before crashing.

Argentine lawyers filed the charges in criminal court on Sunday, claiming Milei’s social media promotion of $LIBRA constituted an illicit association to commit fraud, according to the AP.

The plaintiffs, including Baldiviezo, lawyer Marcos Zelaya, engineer María Eva Koutsovitis, and former Central Bank president Claudio Lozano, characterized the incident as a “rug pull.” They argue that it violated Argentina’s Public Ethics Law.

Spurned speculators swiftly began circulating the story on X, using the hashtag #MileiEstafador (Milei Swindler).

Opposition leaders, recognizing a good corruption story when they see one, immediately began calling for impeachment. Milei himself, meanwhile, demanded a full and transparent inquiry into the story to determine whether anyone in his government – including himself – broke any laws.

For his part, Milei denies any wrongdoing and even appeared on national television last night to defend his actions, reiterating that although he shared news of the token, as he does “hundreds of other projects,” he was not personally involved in the project nor was he in any way invested in it.

“I have nothing to hide and I have no problem coming forward and showing my face,” he said in the interview with the local Todo Noticias channel. “Those who entered there voluntarily knew what they were getting into. As volatility traders, they understood the risks involved.”

Milei later added, “It is a problem between private parties, because the State does not play a role here.”

(The KIP Protocol, the entity that created the $LIBRA token, released a statement on Friday guaranteeing that Milei was not involved with the project itself.)

The Plot Thickens

The story broke, irony of ironies, just days after Milei’s administration notched a minor congressional victory with the passage of the “Ficha Limpia” (“Clear Record”) bill through the Lower House (essentially Argentina’s equivalent of the House of Representatives). The bill would prevent anyone convicted of corruption from holding office and was clearly aimed at Milei’s political nemesis, the twice-convicted former president, Cristina Fernández de Kirchner.

The bill looked unlikely to garner the necessary votes to pass the Senate... but that was before Milei’s meme coin debacle, which might well inspire opposition senators to rethink their position, essentially handing Milei his own noose from which to hang. Of course, that would mean kicking the stool from underneath their own dear leader, too, an improbable kind of Pyrrhic victory.

If this all sounds a bit dramatic, we would gently remind the incredulous reader that such twisted narratives are considered par for the course down here at the End of the World, where scandals of this magnitude are commonly referred to, with a roll of the eyes and a shrug of the shoulders, as “T.I.A.” (“This Is Argentina”).

Remembering that politics is in large part pol-optics, we listened outside our window last evening to the all important court of public opinion. Known as a “cacerolazo,” Argentines sometimes bang pots and casserole pans on their balconies to express their discontent with the “political caste.”

A few lonely pots and spoons sounded off... but soon faded into the warm summer night. A regular “Gooooooool!” scored during a weekday football match would have comfortably drowned them out.

For now, at least, most people appear either unaware or unperturbed by something which is, after all, fairly esoteric in nature. Our best guess – subject, of course, to the future’s mischievous caprice – is that, for the vast majority of the population who remain crypto-illiterate, this event will fade into the familiar white noise that typically attends this kind of story.

On Time, Under Budget

More important to the man on the street are prices at the grocery store... the value of his wage after inflation... his general employment opportunities... crime in his neighborhood… local poverty levels, etc. ... all of which is measurably improving under the current administration.

Virtually unreported amidst all the meme coin commotion, for example, was last month’s twin budget surplus, delivered by Milei’s administration as promised. Noted the Ministry of Economy yesterday:

In January of this year, the National Public Sector recorded a primary surplus of $2,434,865 million and a financial surplus of $599,753 million, maintaining the fiscal balance promised to the Argentine people.

Zooming out, here’s a chart of the progress since President Milei took office in December, 2023:

In the end, we have no idea whether Milei’s $LIBRA chapter will be remembered as stupidly criminal or criminally stupid... whether both… or neither. But he would surely do well to stick with what he knows in future, which is to say wielding his trademark chainsaw and liberating his countrymen from the oppressive overreach of their Bureaucracy Gone Wild.

It would be a shame to see so much real world good go to waste because of a meme coin meltdown.

Then again, sometimes that’s life. You finish washing your car... just in time to feel the first drops of rain. You take a satisfied stroll across your fresh cut lawn... only to step on an upturned rake. You remember the chilling champagne right when you hear it pop... in the freezer.

If you want stable... reliable... predictable... maybe try Switzerland. For everything else, there’s Argentina.

Stay tuned for more Notes From the End of the World...

Cheers,

Joel Bowman

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