You Can’t Say That!You have to hand it to him, ever the outsider, Paul O’Neill does have a remarkable knack of uttering the jarring truths which those amoral sophisticates in the salons of the Globalized Plutocracy wish to remain unspoken. Having told us last year that American workers should not be asked to bail out a failed foreign political class in Argentina, he now has the temerity to tell their Brazilian brethren that they can only expect help if the monies do not all mysteriously vanish from local accounts, to nestle safely and anonymously amid the verdant uplands of Switzerland. What was he thinking of? Does he not know that the whole IMF-US Treasury carpet-bagging strategy of full-spectrum dominance is based on promoting unproductive government-led indebtedness abroad, at increasingly usurious rates of interest, and then – either before or, more often these days, after, the point of default – bailing out the Western banks who have been the agents provocateurs of this financial Operation Overlord, with newly-minted dollars, to the detriment of the citizenry at home? Is he not aware that, subsequent to the collapse, these latter-day Reconstructionists must be allowed to swoop and to buy controlling ownership stakes in resources and productive capital made ludicrously cheap by devaluation, or outright monetary collapse? Does he not understand that he must simultaneously coerce the target nation into sweating its people to churn out export goods in order to service the newly refinanced debt, in addition to piling up excess dollar reserves as a supposed bulwark against future speculative attacks (usually financed by the same Western banks’ lending to their Special Forces colleagues at the macro hedge funds) – thus ensuring the reverse mercantilism of Rubinomics is maintained? How else does he think US consumers will be flooded with cheap tradable goods and so come to turn a blind eye to the rising service prices and deteriorating standards which the Fed’s monetary incontinence promotes (Look, Ma! No inflation!)? How else will foreigners put both licit and illicit dollars to work propping up those same, now-uncompetitive US consumers’ debt burdens by buying their paper, as well as in funding the New Economy CEO’s Ponzi schemes and so boosting their stock prices beyond all sanity – again creating the illusion that all is well? So come on Paul! If the local political and financial elite are not to get a mess of pottage in the course of all this – often washed through the bond market, or through their very own version of the Great IPO Pump’n’Dump scam in the IMF-mandated privatization of banks (Gracias to our compadres in the Money Trust) and utilities (greatly helping the likes of the dearly departed Enron in their own shell games) – what other incentive do they have to surrender their own peoples’ birthrights in order to prop up the decaying Anglomercantile financier class and their political stooges? Of course, the diplomatic telegrams to Brazil were flying furiously after O’Neill’s gaffe, in a desperate attempt at damage limitation, though there was no word whether or not he had been booked into an emergency weekend indoctrination session at the Council for Foreign Relations to set him back on the straight and narrow. The Real, as a result, had fallen as low as 3.60 to the US Dollar, marking a near 60% drop in just the past three months to record lows. Can you imagine that, only as recently as 1993, there were $217 to the Real?! Meanwhile, the stock index – or BOVESPA – dropped by a third and the premium the government had to pay to borrow soared more than threefold from 6.9% over US Treasury yields to a crippling 24.3% (and, no, that is NOT a misprint) before O’Neill could say his Mea Culpas and arrange for a $1.5 billion payment of Danegeld to Uruguay – which, with delicious irony is widely dubbed the ‘Switzerland of South America’!! Really, you couldn’t get this stuff past the scriptwriting on ‘The Young and the Restless’! Thus, the biggest economy in Latin America stands on the verge of default and its foreign lenders – on the hook for a cool $135 billion, more than twice the size of the pile at stake when neighbouring Argentina blew up in January – will be chewing anxiously at their fingernails. Just so you know whose bank is likely to be begging its government to bail it out of this latest triumph of Dollar Imperialism, US lenders are on the hook for $31 billion (one Robert E. Rubin’s new shop for around 40% of that), the Spanish are in for $24 billion, the Dutch and British for around $15 billion each, and the Germans for $11 billion. Now, Western banks, you may, think have enough on their plates – what with nearly one in four Telecom junk bonds and one in ten of all other speculative grade securities having exploded this year – implying who knows what, in addition, for the actual worth of the loans which supplement these. With concerns also rising about the tottering US power sector, together with commercial real estate to worry about, not to mention shaky airlines and the suspect condition of most of the giant car companies, adding Brazil to this Bonfire of the Vanities might seem a little superfluous therefore, but, never fear. At least all this provides us with the spectacle of a pupil outdoing his master for, if the self-aggrandizing One World speculator and soi-disant philosopher king, George Soros, famously cost the Bank of England several billion pounds – and much loss of face – by spearheading the 1992 assault on the UK’s peg to the Deutschemark, his protégé Arminio Fraga, latterly the head of Brazil’s ineffably poor central bank, will have caused even greater losses by the time the mob clamours against the railings of the presidential palace for his resignation – and the Carlyle Group cleans up once more. August 6, 2002 Sean Corrigan [send him mail] writes from London on the financial markets, and edits the daily Capital Letter and the Website Capital Insight. Copyright © 2002 LewRockwell.com
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