Chapter 71 Wall Street's old tricks repeat

Schultz's big statement at the UN was crafted to counter López Portillo's speech at the UN and other Latin American heads of state.To anyone not involved in the negotiations between creditor banks and debtor countries, what happened next is almost unbelievable. López Portillo fails to bring Latin America together after UN speechIn any case, he became an expiring president who was due to step down in two months.Meanwhile, U.S. officials and others have visited Brazil and Argentina in quick succession, extorting an extraordinary amount of blackmail from them, pressuring them to prevent them from joining the collective solution to the debt crisis that the Mexicans are demanding.

Henry Kissinger formed a more influential consulting firm, Kissinger Consultants, whose handpicked board members included Chairman of the Aspen Institute, oil magnate Robert Anderson, members of the Thatcher government Lord Carrington, former foreign secretary, and Lord Rolle, governor of the Bank of England and Warburg Bank.Kissinger Consulting, along with New York bankers and those in Washington government circles, has imposed on debtor countries "one by one" the most burdensome debt recovery clauses since the Versailles reparations. After Secretary Schultz's September 30 UN speech, powerful private banking interests in New York and London dismissed all reasonable arguments.They managed to get the Federal Reserve, the Bank of England, and most importantly the International Monetary Fund to serve as international "policemen," and thus produced the most coordinated, organized gang of pillagers in modern history, far surpassing those of the 1920s. doing.

Contrary to the cautiously publicized impressions in the media in Western Europe and the United States, in order to repay the debts of the loan sharks in New York and London, the debtor countries had to shed blood or even "cut their flesh", and their repayments were already several times higher than the principal. The situation was different after August 1982, when the big third world debtor countries refused to repay.Under pressure from the International Monetary Fund, debtor countries were put "to the head" into agreements with private banks that bankers euphemistically called "debt schemes."Most of their leaders are Citigroup and Chase Manhattan Bank.

After October 1982, there were several distinct stages in the campaign against debtor countries.The first critical stage is when private banks in New York and London "socialize" their debt crises.Through a large number of interviews with the media, the international banking system was warned that the consequences of delaying debt repayment would be serious. The banking industry received unprecedented support from the international community for debt repayment policies. Elaborately concocted by Ed Bank et al. These powerful private interests took advantage of the crisis to shift the power of public institutions to the service of a small elite—the minority interests of the creditor banks.That autumn, in Ditchley Park, England, the private banks held an internal meeting and formed a de facto creditor cartel of major banks in New York and London that came to be known as the Institute of International Finance. ’, or informally known as the ‘Ditchley Group’ [the Ditchley Group’s first meeting was at Ditchley Park in London in May 1982.Called by Harold Lever, the purpose at the time was to control fiscal and financial policy in the United States and to call on the IMF to control the central banks of all countries. In January 1982, representatives of the 36 largest banks in the world met at the Vista Hotel in New York to discuss basic work; in October, these people met again and reported an implementation plan at the meeting, which is to promote the United States. Senate legislation that made the IMF the controller of U.S. fiscal policy by 2000. ——Translator].They continued to exert influence, a phenomenon described by one observer as a special form of "banker socialism."In this case, private banks socialize the risk of their lending, passing the risk on to public taxpayers, while keeping the profits private.Despite the crisis, this profit is considerable.

These bankers conspired with their friends in the Reagan administration, such as Treasury Secretary Donald Reagan, to intimidate President Reagan by deliberately exaggerating the seriousness of the situation. The IMF draws up a plan to impose strict "conditions" on each debtor country.The Americans also proposed that the IMF and their conditionalities be part of the debt negotiations.In fact, these conditions were the harsh Dawes plan used by New York bankers to deal with Germany and other European countries after 1919. From 1923 to 1924, the Allied International was chaired by the American banker Dawes (1865-1951). Commission of Experts' reparation plan for Germany.It was officially adopted by the London Conference of the Allied Powers on August 16, 1924, and entered into force on September 1 of the same year.After the end of the First World War, the Treaty of Versailles stipulated that Germany, the defeated country, should pay huge war reparations. In 1923, the German economy was on the verge of collapse, a "reparations crisis" occurred, and the political situation was precarious.In order to prevent the disintegration of bourgeois Germany and the expansion of the socialist revolution to the west, as well as to prevent the indemnity and debt from disappearing, the powers of the Allied Powers formulated the Dawes Plan to ease the difficulty of German indemnity at that time.A replica of the various conditions that were also used in the later Younger schemes.

From 1929 to 1930, the Allied International Committee of Experts chaired by the American entrepreneur and banker Young (1874-1962) formulated a new compensation plan for Germany.It was finally adopted by the Hague Reparations Conference in January 1930. After the implementation of the Dawes Plan formulated in 1923, although the German economy devastated by the First World War has been restored, the exploitation of German laborers has been strengthened, the victorious powers have strict control over Germany and Germany's foreign capital especially The heavy dependence on American capital determines that the foundation of German economic development is very fragile.From 1927 onwards, various contradictions in the German economy intensified rapidly, some symptoms of economic crisis appeared one after another, and payment of reparations became a problem again.As a result, the Allied Powers formulated the Younger Plan as a continuation of the Dawes Plan.tried in .

The IMF's conditionalities, as well as the debtor country's agreement with the IMF, were all part of the plan of Irving Friedman, first a U.S. government official and later working for the IMF .He landed a top job at Citibank for his work on debt. At the end of 1988, Friedman once talked to an interviewer about his thoughts at the beginning of the debt crisis: My idea is to use the resources of the International Monetary Fund as a bait for these countries.It starts by giving you a dire sense of the state of the country's economy, and then you get to the root of the problem and what needs to change.

The IMF's prescription, the "restrictive" prescription, is the same.They start by telling the debtor countries that if they want to get even a small amount of loans from foreign banks, they must slash domestic imports and slash state budgets, especially government subsidies for food and daily necessities.Second, in order to stimulate the industrial countries' interest in the debtor country's export products, it is necessary to devalue the currency, which can make its exports "attractive" to the industrialized countries, while making advanced industrial products unaffordable.Allegedly, these measures can win hard currency to repay the debt.No doubt even Parson Malthus would have laughed from his grave knowing the process.

The IMF's structural adjustment plan is only the first step; for some eligible candidate countries, it will also implement the second step of the plan - signing "restructuring" external debt repayment plan agreements with creditor banks, or adjusting external debt The main content of the repayment plan.In the second step, the banks signed a contract to obtain a huge future interest from the debtor country, and they turned the interest on the overdue arrears into the total amount of debt owed. In 1982, after numerous debt adjustments, the end result was that debtors owed ever greater amounts to creditor banks, when in fact Latin America received nothing during this period.According to Swiss Re, the total amount of all external debt of developing countries, both long-term and short-term, rose steadily from just over $839 billion in 1982 to almost $1,300 billion in 1987.In fact, new debt is all new borrowing to pay off old debts that cannot be repaid.

Under the IMF regime, Mexico was forced to slash subsidies for medicines, food, fuel, and other necessities.People, often infants, were killed for lack of the most basic imported medicines. The IMF then forced a series of devaluations of the Mexican peso to "encourage exports". In early 1982, before the first 30% devaluation, the peso was 12:1 to the dollar.By 1986, one dollar appreciated to an incredible 862 pesos, and by 1989 this value was as high as 2,300 pesos.But at the behest of New York banks and their Washington allies, the vast majority of Mexico's foreign debt was transferred from the private sector to the government.By the end of 1985, total external debt had risen from about $82 billion to nearly $100 billion.Mexico soon followed in the footsteps of Germany in the early 1920s.

This process took place in Argentina, Brazil, Peru, Venezuela, most of Africa including Zambia, Zaire, and Egypt, and much of Asia.The IMF has become the global "policeman" by forcing these countries to accept the worst austerity policies in history, forcing them to pay back usurious loans.The International Monetary Fund is firmly in the hands of the Americans and the British. This institution has become the implementer of British and American financial and economic interests on a global scale. This is unprecedented.It is not surprising that victimized countries tremble when they learn that the International Monetary Fund is coming to visit.In fact, the Anglo-American banks, the largest lenders to Latin America, threatened Western European and Japanese banks to "stand in solidarity" with the Anglo-Americans or lead to the collapse of the international banking system. In the years after 1982, such threats were not alarmist.No one dared to challenge it, and the banks of all creditor countries rallied closely around the Bank of New York in support of Kissinger's "tough" approach to the debt problem.The Washington and New York banks and their friends in London are hyping this up and the debt is entirely the "mistake" of corrupt, irresponsible third world governments. This time around, banks in New York and London were so confident they refused to even increase their loan-loss contingency reserves to cover default losses on Third World debt.In the early 1980s, Citibank and Chase Manhattan Bank also paid out handsome dividends to their shareholders and publicly claimed to have achieved "peak profitability" as if nothing extraordinary had happened. They have complete leverage over the US government and have IMF debt collection.What could be more secure than this? As one debtor country after another was forced to compromise with the IMF and the creditor banks of the Ditchley Group, a large amount of funds flowed in reverse.According to World Bank statistics, during the period from 1980 to 1986, for 109 debtor countries, the interest paid to creditor countries alone reached 326 billion U.S. dollars; In the beginning, the figure was $430 billion.In addition, in 1986, these 109 countries owed a total of $882 billion to creditor countries.It's a spiral of unsustainable debt.This is the miracle of rolling interest and floating interest rates. The more shocking aspect of the "debt crisis" of the 1980s was the fact that vast amounts of money never left banks in New York or London at all.Former Peruvian Energy Minister Pedro Pablo Kukkinski, who held a well-paid position at Credit Suisse First Boston and was a direct participant in the scheme, wrote: Most of the money never made it to Latin America. Between 1976 and 1981, Latin America received nominally $270 billion in funds, but we found that they actually received only 84 percent in cash—money that was intended for productive investment.The rest of the remaining funds were still in the bank and never made it to Latin America, only changing the numbers on the books. Debtor countries have been caught in a debt trap, and the only way out of the trap offered by creditor banks in New York and London is to surrender their countries' economic sovereignty, especially the right to extract important resources, such as Mexican oil.The policy, which bankers call a “debt-for-equity swap,” aims to gain control of the debtor country’s resources, making it more attractive to creditor banks. Research by a Danish economist, commissioned by the Danish Committee for UNICEF, sheds light on this process. In 1979, a total of $40 billion in net financial flows flowed from the rich North to the poor South.The flow reversed in 1983.That year, some $6 billion in funds instead flowed from less developed countries to industrialized countries.Since then, that number has grown dramatically, to roughly $30 billion a year, according to United Nations statistics.However, if the resource transfer factors caused by the fall of raw material prices throughout the 1980s are also taken into account, then at least 60 billion U.S. dollars flowed from less developed countries to industrialized countries every year.If you add black money flight to the list... The study by Hans Rasmussen points out that what has actually happened since the early 1980s is that wealth continues to flow out of the capital-poor third world, while the main inflows are for the third world The US is financing the deficit, followed by the UK.Rasmussen estimates that in the 1980s, transfers from all developing countries to the United States alone totaled $400 billion.In effect, this funded the largest ever deficit policy of the Reagan administration in peacetime, but was hypocritically hailed as "the longest lasting peaceful recovery in the world". With the increase of US interest rates, the continuous appreciation of the US dollar, and the security guarantee of the US government, in the 1980s, the US budget deficit as high as 43% was actually funded by plundering capital from debtor countries, and these Debtor countries are all developing countries.After World War I, through the Versailles reparations, Anglo-American bankers saw debt as merely a means of exercising economic control over all sovereign states.These arrogant New York bankers think they have nothing to worry about the weak Latin American or African countries.After all, business is business.In addition, the annual report of the United Nations, the economic survey of Latin America also provides some useful data; you can also refer to Kuczinski's 1988 article on behalf of the British Independent Television, which published a very good article, which has a very insightful comment on the debt crisis. In May 1986, a study prepared for the Joint Economic Committee of the US Congress entitled "The Impact of the Latin American Debt Crisis on the US Economy" noted some surprising aspects of the Reagan administration's handling of the problem.The report documents the devastating losses in U.S. jobs and exports as the IMF's austerity measures forced Latin America to effectively shut down industrial and other imports to service its debts.The author pointed out: Now, things are gradually becoming clearer.Government policies have gone far beyond the need to protect banks from failure.The management of the debt crisis by the Reagan administration was actually a reward for certain institutions that played a role in contributing to the debt crisis, and it was also a punishment for those institutions and industries that did not participate in creating the debt crisis. However, this research report was quickly hidden. According to the calculations of the Morgan Trust Company in New York, in the ten years to 1985, the outflow of funds from the Third World totaled more than 123 billion US dollars, and these funds mainly flowed to the so-called "safe havens" - the United States and other countries.More than one New York bank and investment firm has set up offices in Latin American cities such as Bogota, Medellin and elsewhere to help and profit from dirty dollar money leaving the countries.The rising period of drug use in the industrial cities of the United States and Western Europe (which, oddly enough, coincided with the third world debt crisis that began in the early 1980s) and the rising amount of illegal dollars "laundered" in South America The timing was right on the clock, with astonishing consistency, and the money laundering process was done through elaborate operations by people like Donald Regan's old employer, Merrill Lynch.The client is nicknamed "high net worth individual". In his study of capital flight in Latin America, University of California professor Joe Fryk pointed out that facilitating the flight of funds for customers has become one of the most profitable businesses of the major US banks in the debt crisis of the 1980s.He pointed out that, in addition to the approximately $50 billion in annual interest payments that the governments of debtor countries are forced to pay, big banks such as Citibank, Chase Manhattan, JPMorgan Guaranty, and Bank of America have also required brutal domestic austerity measures in debtor countries to "stabilize "Currency, the resulting flight of funds is about 100 billion to 120 billion US dollars.For these banks, it has become stealthier and more lucrative. Banks in New York and London maintain strict secrecy about the annual rate of return they make on operations that help Latin American money flee, averaging 70 percent, according to reliable reports.Says one private banker: "Some banks are desperate to get a deal like this." That's a milder way of saying it. In 1983, the "Financial Times of London" reported that the most profitable part of Citibank's banking business in the world undoubtedly came from Brazil. If anything, Africa has suffered more than Latin America as a result of the Anglo-American debt strategy.Since colonial times in the 19th century, the continent has been ruled by the British, French and Portuguese, with the exception of a recalcitrant South Africa.Africa has long been considered a major producer of raw, untapped, cheap raw materials. In the 1960s and 1970s, the "anti-colonialism" wave of independence did not bring significant improvements to Africa's economic conditions. But the oil shock, the ensuing 20% ​​interest rate shock, and the collapse of world industry in the 1980s dealt a fatal blow to almost the entire African continent.Until the 1980s, 90% of Africa still relied on raw material exports to raise development funds. Since the early 1980s, cotton, coffee, copper, iron ore, and sugar have been falling in dollar prices for almost all international raw materials.By 1987, raw material prices had fallen to their lowest levels since World War II, matching levels reached in 1932, the worst recession in the world. If export prices for these raw materials remained stable, even if only at 1980 levels, Africa could have gained an additional $150 billion in the 1980s.In 1982, when the "debt crisis" first began, the total debt owed by these African countries to countries such as the United States, Europe and Japan was about $73 billion.By the end of the 1980s, after debt “rebalancing” and various forms of IMF intervention in their economies, that figure had more than doubled to $160 billion—in short, these added Debt is almost equal to export earnings under stable prices. The facts about debt that the average citizen of Western Europe and the American city reads every day in the newspapers are one thing, and in reality quite another. In the 1980s, powerful British and American multinationals began to emulate banks and set up child labor sweatshops on the Mexican border with the United States.These low-skilled processing and assembly plants employ Mexican child laborers aged 14 to 15 at wages of 50 cents an hour to produce products for General Motors or Ford Motor Company or several American electrical companies.They were allowed by the Mexican government because they could "earn" the dollars necessary to service their debts.