Compounding Folly With Farce
August 13, 2001
President Bush continues to dream of a free trade zone from Pantagonia to Prudhoe Bay. But he's not ready to let the gods of the free market favor who they will when it comes to our prospective partners.
While opponents preoccupy themselves with trade deficits and wage suppression, we're already paying for the hemispheric pipe dream. In a quiet development lost to those who don't mine the financial pages, Mr. Bush is signing the first of many support payments for dependents we did not parent, entrusting disbursement to a guardian he once deemed unfit -- The International Monetary Fund.
On August 3, with the U.S.'s blessing, the IMF announced that it would extend a $15 billion line of credit to Brazil. No matter that since Brazil's 1998 infusion of $41 billion, its currency has declined 25% against the dollar, its financial markets have plumbed record lows, and just last week its credit outlook was downgraded from "stable" to "negative." The globalist solution is always the same: more money.
Now it's Argentina's turn to nose to the trough. On Friday, a delegation from Buenos Aires arrived in Washington with outstretched hands. Their market's in meltdown. Just eight months after a $40 billion financial "armoring," currency reserves have slipped 40%, and locals have so lost faith that banks are bleeding $223 million daily. Yet prospects for returning with full pockets should not have been favorable.
Earlier this summer, when asked about Argentinian loans, National Security Advisor Condoleezza Rice rejected the IMF's usual prescription. "This is a problem the Argentines can resolve, and they are taking the right steps to do so," she said. "They have a plan, it's a workable plan, and now they have to cut spending and put policies in place that will attract investment. Nobody can do those things for them."
What a difference a month makes. Candidate Bush expressed undisguised disdain for the IMF, but President Bush has apparently realized he will never sell Congress on a hemispheric market merge if the Latin American economies aren't dragged back from the brink. Cue 180-degree policy pirouette.
The IMF's failings are numerous, and though he may no longer admit it, the President knows. The Fund isn't bailing out impoverished populations; average Argentinians aren't big bond buyers. Rather, per usual, the IMF is riding to the rescue of Western bankers with a taste for risky business. Long ago, Wall Street's finest learned they could play the stratospheric interest rates of emerging markets with no threat of losing their custom-tailored shirts. When the glory days faded, they could fiddle to the last ember while counting on IMF cash to save their faces and their portfolios.
Rather than blowing down this house of cards by cutting off the cash flow and allowing the debtor nations to default, the President is shoring it up - not for the benefit of the banks, but for the sake of a trade deal we should never make. In so doing, he fortifies a defunct agency, lashes his nation to unstable economies, and expects American taxpayers to pick up the tab. Such is the farce of international "lending" and the folly called free trade.
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