Caputo’s ‘buy ‘em up champ’ and Milei’s ‘Epstein moment’

Donald Trump is facing a revolution within his core base. The MAGA movement — the “Make America Great Again” crew who have become loyal militants of the President of the United States and his worldview — is in open revolt over the case of disgraced financier Jeffrey Epstein, a convicted child sex offender who died in his cell in 2019 in a prison in New York City. While Epstein was found hanging in an apparent suicide, the high-profile nature of his guests who visited his multiple properties, airplane, and social soirées sparked rumours of a hidden “client list” the convicted paedophile kept in order to blackmail potential enemies. 

Trump and his MAGA base fed on conspiracy theories surrounding the Epstein case, along with other wild hypotheses about elites that controlled the world through the “deep state” and certain background financial channels. The Clintons – a favourite of the MAGA conspiracy cults that include the whole QAnon and Pizzagate branches – had ties with Epstein, particularly former president Bill Clinton, who flew multiple times on the financier’s private jet and frequented the same social circles. 

Things went from bad to worse when the US Justice Department put out a memo indicating it hadn’t found the controversial client list that Attorney General Pam Bondi had said she was reviewing and would release and that there was no evidence contradicting the version that Epstein had committed suicide. To make matters even more suspicious, it released a 10-hour video purporting to prove nobody went in or out of Epstein’s cell, yet it showed clear digital evidence of editing, switched aspect ratios and was missing a full minute of tape. Initially cleared from suspicions, Trump himself is now being questioned due to his alleged long-term friendship with Epstein, leading some – like former ally Elon Musk – to suggest the “client list” is being hidden because the current US president is on it.

While Trump was already suffering from relatively weak polling figures, the Epstein saga has continued to push him into negative territory, according to RealClearPolling, while 69 percent of those polled by Reuters/Ipsos said in a recent poll that they believed the US government is hiding information about the sex offender’s case. 

The backlash regarding the Epstein conspiracies is a cautionary tale of the ephemeral nature of political construction in a polarised and hyperconnected world, particularly when one of the pillars of support is built on such shaky ground. In the same way as rebellious outsiders with a solid command of the (social) media spotlight can overtake traditional political parties and win the presidency, a betrayal of core values — even if those include a belief in conspiracy theories — have the potential to unravel a movement built on synthetic power.

In Argentina, a few of the pillars of Javier Milei’s political construction are under threat. Economy Minister Luis ‘Toto’ Caputo taunted the market a few weeks ago, mockingly telling a crowd of businessmen that if the peso-dollar exchange rate was overvalued, then it would be a great opportunity to buy cheap dollars. “Comprá campeón,” he said, which roughly translates into “buy ‘em up, champ.” The peso-dollar went on a tear but in the opposite direction, as market participants dismantled peso-denominated positions and flocked to the dollar. Macroeconomic stability, portrayed by lowering and contained inflation, is a key pillar of this government’s popular support. This implies keeping the peso-dollar exchange rate under control. Yet doubts as to the sustainability of the economic model, particularly the overvalued peso, have surfaced as of late, forcing the Milei-Caputo administration to once again intervene in the market to keep things from getting out of control.

The market is testing Caputo, indicating a certain loss of credibility ahead of the turbulent electoral period. “The caste” is testing them too, as Congress built up its courage and passed a series of bills hitting at the heart of the economic narrative: Milei’s all-important budget surplus. A “governor’s revolt” saw Argentina's Congress pass a bill forcing the national government to distribute ATN Treasury funds (Aportes del Tesoro Nacional) in what has become a tug-of-war between the provincial and the central government for control of the budget. There was also an increase to pensioners and retirees monthly payments, along with subsidies for the handicapped. Milei launched an all-out war against his Vice-President Victoria Villaruel for supposedly aiding the opposition in their battle against his “chainsaw” austerity measures but in the end is demonstrating some level of political fragility, just at the moment he needs to show authority in order to overcome a certain depletion in confidence.

While markets and the political ecosystem are testing the Milei administration, another key pillar of their political construction has to do with differentiation from “the caste.” Milei has built his narrative on the back of “draining the swamp,” accusing the political class of leeching on society for their own benefit, generating corruption and inefficient bureaucracy making life worse for everyone, except them. Accusations of corruption against Milei and his inner circle are therefore extremely damaging in political terms. The ‘$LIBRA’ cryptocurrency case, which is still far from resolution, continues to haunt the Casa Rosada, where even Karina Milei, the president’s sister and chief-of-staff, is under fire.

Now, the “libertarian suitcases” case relating to the alleged arrival of unchecked luggage continues to erode the Milei administration’s credibility as an anti-caste movement – much like Trump’s anti-deep state stature is harmed by the Epstein drama. Investigators are moving much quicker in this case than in the $LIBRA probe – as of now, prosecutors Claudio Naval Rial and Sergio Rodríguez have publicly released their progress, including photographs showing 10 pieces of luggage, single passenger Laura Belén Arrieta and the plane’s crew cruising through Aeroparque Jorge Newbery airport without inspection. 

The information is of note. Arrieta, seemingly a key node in the construction of a regional CPAC conservative think tank that often brings together Trump and Milei, is given the VIP treatment after arriving in a private jet from a still undetermined location in Florida. One of the pilots voluntarily said several of the elements were his, including his carry-on, a small suitcase filled with footwear, a printer, an inflatable, a backpack with wheels for his son, a guitar for a friend and a suitcase filled with clothes. He’s the same controversial pilot recovering from a scandalous debut flight for the new presidential plane under the Alberto Fernández administration. He is also an employee of Leonardo Scaturicce (as is Arrieta), a businessman with deep ties to Argentina’s unscrupulous spy underworld and controversial political advisor Santiago Caputo.

As prosecutors push forward with their investigation, new bombastic details will likely emerge. Scaturicce is said to have been instrumental in staffing the DGI (Dirección General Impositiva) tax directorate which remains under the operational control of the younger Caputo, as does the SIDE spy agency. The US-based entrepreneur got major government contracts and recently acquired low-cost airline FlyBondi. Scaturicce is also an instrumental part of the Milei administration’s relationship with the Trump White House. If the investigations uncover information that those suitcases contained something illegal, whether it is cash in physical or digital formats, hardware or software used for espionage or anything else that is fishy, it could mark a major turning-point in the public’s perception that Javier Milei is in politics, just for the glory of a macroeconomic triumph. It could well be Milei’s “Epstein moment.”

Together, Caputo’s market-taunting “champ” comment and the “libertarian suitcases” join a growing series of economic and political obstacles the Milei administration is facing in the heat of the campaign. The President is banking on a “purple wave” which will sweep through the country in October’s national midterms to consolidate Milei’s weak government and renew its mandate for the second two years in office. Still, Milei’s La Libertad Avanza coalition will have to seek alliances in Congress even in the most optimistic scenarios, while constructing macro-economic stability which is sustainable in the medium term. This requires credibility, first from the core base followers, and then from other socio-political actors. 

The current modus operandi may take them all the way to October but something will have to change after the election for the plan to be successful.