What does it take to drive grandmothers into the streets in protest to be whipped and trampled by mounted police? If you know anyone from Argentina you’ll get an answer. It is said that history has a way of repeating itself. People in the United States will do well to understand Argentina’s banking failure in December 2001.
Here are two primers:
Timeline: Argentina’s Road to Ruin
Timeline: Argentina’s economic crisis
Argentina Crisis Documentary
Fernando Solanas made the following brilliant documentary: Memorias del saqueo. He is a very outspoken critic of the Menem government which drove Argentina into financial collapse. Solanas was shot and wounded in 1991 a day after he publicly criticised Argentina’s elite. This was way before the peak of their financial crisis and riots in 2001. The complete video series can be found here. Listen to his warning:
Raid the Pensioners
Today in the United States there are many grandmothers wondering about their future and if they will have any money left to live out the remainder of their lives. Many pensioners in Argentina were wiped out. Again, remember Enron and how people were convinced to jump on board based on a giant lie. In Argentina they were told to trust Citigroup and JPMorgan Chase. One of the concepts to understand is how we are manipulated by international corporations and central banks. They force governments (and wage slaves) to borrow heavily to curb inflation, drive themselves into major debt, credit is then squeezed to pay the debt, and the economy collapses. Then they really own you. The credit squeeze was so severe for Argentina the country sold its prime assets often at 10% of fair value. Sound familiar?
The market was crashed then monopolized. The same thing is happening in the US right now. Twenty-six corporations owned 60% of Argentina’s wealth. In a deregulated environment they were able to produce triple the profits of similar companies outside Argentina. All at the expense of the citizenry, half of them driven out of their jobs. This is crime on a massive scale that causes thousands of poverty related deaths a year. None of the men prosecuted for these crimes were found guilty.
Meet Domingo
One of the men responsible was Domingo Cavallo. Like Bernanke he is a Harvard educated economist turned crisis manager. He belongs to the Group of Thirty along with Bernanke’s mentor Stanley Fischer and the NY Fed’s president Timothy Geithner. Cavallo was President of the Central Bank of Argentina, and Minister of Economy during the 2001 collapse. He instituted the policy of corralito which limited bank cash withdrawals to $250/week. He also increased the debt Argentina owed the IMF which drove the country further into misery. After he resigned and got out of jail for international weapons trafficking he came to the US to teach economics at Harvard University.
While at Harvard, in the Spring of 2004, he wrote a really fascinating article for the Council on Foreign Relations. Here are some amazing excerpts from Argentina and the IMF During the Two Bush Administrations:
My intention in writing this article is to point out how damaging the current US vision of the world and style of leadership in international affairs can be, not only for the climate of friendship and sense of alliance between the USA and its southern neighbours, but also for the well-being of the people of Latin America…
I do support the view that the policies of the administration of George H. W. Bush (‘Bush 41’) created incentives for countries that wanted to embrace the US-led new world order and offered a window of opportunity to solve crises and renew economic growth…
Nonetheless, I do support the view that the lack of commitment of the administration of George W. Bush (‘Bush 43’) with the new world order and the lack of US leadership in international finance contributed more than any other factor to discredit Market Capitalism, and pushed the country back into the ideas and practices of Nationalism and Statism…
The origins of the Argentinian crisis that became virulent in 2001–02 can be traced back to the long lasting recession that started in the second half of 1998. This recession was the result of the combination of domestic phenomena and foreign shocks.
The main domestic phenomenon was the lack of fiscal discipline of the Argentinian provincial governments and their heavy borrowing from the domestic banking system. This problem became acute in 1998 as a consequence of the internal race for the Peronist Party presidential nomination for the elections that would take place in 1999. In addition, there was a growing perception of corruption regarding Menem’s ways, which started to create uncertainty in relation to the continuity of the economic reforms…
By July 2001 what Argentina needed and expected from the US government was political support for an orderly process of debt restructuring. Unfortunately, the vision and style of leadership in international affairs of President George W. Bush prevented his administration from delivering this support.
As a counterfactual guess, I would argue that, if President George W. Bush had had the same vision and style of leadership in international affairs as his father, the outcome would have been completely different. Argentina and Argentinians would not be blaming market capitalism and the IMF for their suffering. Moreover, the climate of friendship and alliance of the 1990s in the bilateral relationship between Argentina and the USA would not have been reversed…
But we became alarmed and started to worry about what could be a significant change of vision and style of leadership in international affairs when, in July 2001, Paul O’Neill stated that ‘Argentines have been off and on in trouble for 70 years or more. They don’t have any export industry to speak of at all. And they like it that way. Nobody forced them to be what they are.’ A few days later he added: ‘And Argentina is now, after the $41 billion intervention, in a very slippery position. We’re working to find a way to create a sustainable Argentina, not just one that continues to consume the money of the plumbers and carpenters in the USA who make $50,000 a year and wonder what in the world we’re doing with their money.’
Blame Joe or the NWO?
So the concept of Joe the Plumber has been around for a while. Does it seem incredulous that Cavallo is blaming the very system he supports? He is essentially saying Argentina’s banking system failed because it was designed to be supported by the US which is an ally of the NWO. Some will argue the United States is pushing forward a New World Order. Don’t be mistaken. The plans of the NWO are based on a globalized banking structure that has no national allegiance. This is key to understanding the potential collapse of the US banking system. American money won’t disappear, it will be redistributed to the Elite. What will disappear is our standard of living, but not theirs.
Here is an incredible footnote from that document:
See the Report of the International Financial Institutions Advisory Commission, March 2000. Available at http://www.house.gov/jec/imf.ifiac.htm. In page 27 it says: ‘1994–95: The Mexican Crisis. The 1994–1995 Mexican crisis is seen by many as a watershed in the history of the ‘‘new’’ international monetary system and the ‘‘new’’ IMF. It raised important questions about the effectiveness of IMF assistance in preventing such crises. Mexico had been the largest single recipient of IMF credit during the six years leading up to the crash of the Mexican peso in December 1994. With its loans it received frequent advice, conditions, and visits by IMF officials and staff. After the crisis, the IMF approved an eighteen-month standby credit worth $17.8 billion, the largest financial package ever granted a member state and one clearly beyond the borrowing limits that the IMF had always maintained. The US Treasury offered to provide up to $20 billion in additional funds through its Exchange Stabilization Fund and the Federal Reserve’s swap network. According to the General Accounting Office (GAO), Mexico eventually used some $13 million of IMF money and $13.5 billion of US official funds. The Mexican program established several bad precedents. Congress had shown that it opposed a large expenditure to aid Mexico. The Treasury used the Exchange Stabilization Fund to circumvent the Congressional budget process. And the IMF circumvented established procedures for approving loans and limiting their size in relation to the borrower’s IMF quota. The IMF and the US Treasury view the Mexican bailout as a success.
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