"When sorrows come, they come not single spies, But in
battalions," said Hamlet. If President Bush has time left over from defusing
a war between India and Pakistan, and preparing a plan for Mideast peace, he
best take a quick glance south. From Tijuana to Tierra del Fuego, democratic
capitalism is in deepening peril.
Some 500 maquiladora plants in Mexico have moved to Asia, taking
250,000 of Mexico's best jobs, in search of 25-cents-an-hour Chinese labor.
The global race to the bottom is on.
Mexico's stock market has lost one-seventh of its value in three
months, and the peso has lost 10 percent of its value against the dollar.
Finance Minister Francisco Gil Diaz compares Mexico to Argentina. While it
has been selling off national assets to cover budget deficits, you can only
sell the family silver once. "At some point, we are not going to have
anything more to sell," said Gil.
In Colombia, the war with the narco-guerrillas goes on and on,
as Venezuela seems headed for another coup. In Peru, President Toledo's
popularity has plummeted to below Nixon-at-Watergate levels; two cabinet
ministers resigned last week, and riots erupted in Arequippa to protest
plans to privatize two electric generators.
Last Friday, Uruguay let its peso float and it lost almost 30
percent on local markets, as the IMF rushed in $1.5 billion. Uruguay is in
its fourth year of recession, with GDP down 17 percent -- a depression. But
it is in South America's giants where the crisis is deepest.
On Friday, Brazil's currency fell to a record low against the
dollar. Second only to Argentina, Brazil is the riskiest place on earth to
invest. The spread between Brazilian and U.S. bonds is similar to that
between Russian and U.S. bonds before Moscow's default. Fears that Brazil
may follow Argentina into default have soared as the old radical Luis
Ignacio Lula da Silva is running 2-to-1 ahead of the incumbent party's
candidate for president in the October election.
Argentina, once the most promising nation in Latin America, is
becoming a failed state. Last year, an Argentine peso was worth a dollar.
Today, it is closer to four to the dollar. By tens of thousands, Argentine
professionals are fleeing their country, and First World companies are
following. Wendy's, Home Depot and Sky TV are gone. Airlines have cut back
on flights to Europe and America. Foreign newspapers and magazines are
disappearing from newsstands.
On Friday, Argentina's central banker, Mario Blejer, resigned.
With spreading social unrest and a dead economy, Buenos Aires may resort --
as Berlin did in 1923 -- to printing-press money. If Argentina does not get
another bailout from the IMF in June, it may be forced to default on its old
loans to the IMF. Then the rot in the Global Economy will be visible to all.
Many factors make this crisis in Latin America more serious than
1998. Most Latin countries have already sold off their prized national
assets -- telephone and utility companies, banks, major state enterprises.
There is little left to be pawned at the Casbah of Global Capitalism.
Some Latin nations are so mired in debt it is ridiculous to ship
them new IMF loans, so they can make payment on the old IMF loans. And
unlike 1998, the U.S. economy is not robust -- the U.S. merchandise trade
deficit is running at $480 billion a year. Our manufacturing base has been
gutted, and our current account deficit is near 5 percent of GDP. Even the
free-trade-uber-alles boy are moving to protect America's farms and
factories from floods of cheap foreign imports.
Economic nationalism is on the way back.
Across Latin America, leftist politicians are demanding an end
to U.S.-style "neo-liberal" economics, and Latin peoples are searching for
someone to lynch for having robbed them. There is little doubt at whom
corrupt and incompetent Latin politicians will point the finger: the Big
Banks, the IMF, the transnational companies that bought up their national
assets for a song -- and the Bush administration, for playing Dutch Uncle to
their desperately demanded new IMF loans.
Three things keep the great fraud of the Global Economy going.
Endless U.S. taxpayer bailouts of bankrupt regimes through the IMF and World
Bank, a $480 billion U.S. merchandise trade deficit that sells off America's
manufacturing base to pay for consumer and capital goods not made in the
U.S.A., and foreign aid forever.
The day this triple-looting of America ends, the house of cards
comes down. Until then, a prediction: President Bush and Treasury Secretary
Paul O'Neill will emulate Bill Clinton and Bob Rubin, and get into the
bailout business, big-time -- as Dick Cheney would say -- because no one
wants to be the one left standing there when the music stops.
