Did International Money lenders destroyed Argentina 2001 and Latvia 2009?
Is Latvia making the Argentinean mistake? Are there any similarities?
By Lech Alex Bajan Washington DC
Workers Self-Management in Argentina
The Shock Doctrine: The Rise of Disaster Capitalism
7/5/09 Gerald Celente on Fox News: Obamageddon is coming
Cold winds are blowing through Latvia. The sun might be shining on the beautiful beaches along the Baltic Sea in this small European Union state, but the temperature of the economy is plunging below zero.
The global financial crisis has hit Latvia hard. Gross domestic product has fallen by 18% percent on an annual basis. As a response to the crisis, public- sector wages have already been lowered by 20% or more. Many schools and hospitals will be shut. The consequences are also political: Latvia's elections to the European parliament on 6 June 2009 showed increased support for the opposition.
The prime minister Valdis Dombrovskis on 9 June secured proposals for even tougher spending cuts amounting to 500 million lats ($9.92 million). This follows demands from international lenders, including the International Monetary Fund (IMF) and the European Union, for state budget cuts to be reduced by an additional 10%.
Andres Borg, the Swedish finance minister, welcomed the news and - while attending a meeting of European finance ministers in Luxembourg - made clear what he expected of his Latvian colleagues: "We are pleased with a more responsible fiscal policy from Riga...now we need equally strong credibility. (The Latvian government) must do exactly what they say and the effects must be exactly what they say."
NOW this is my post from 2007 You can check?
Is Latvia making the Argentinean mistake? Are there any similarities?
It was a few years ago when corporate TV stations showed a terrible situation in Argentina – a country of a stormy past, but in a pretty good shape since the introduction of global economy. Crowds of people protesting in the streets, soldiers shooting at them. Smoke, squibs, fire and unemployment surpassing 22 per cent. In 2001 Argentina was on the bottom of an abyss, from which – according to Western economists – there was no escape.
Globalists, industrialists and bankers were massively leaving the country taking away with them whatever still could be taken. The media were ordered to forget about that country and its sheer existence. In December 2001 Argentina fund herself in an economical hole into which it was pushed by its elites and globalism. The banks stopped paying out the money. Nobody was able to control the economy of the country. President Carlos Menem, previously in power, an industrialist chosen for the post in 1989, had promised Argentineans beautiful women and Ferrari cars. But through the back door he would sell out the country’s assets to foreign hands for ridiculously low prices. He borrowed large sums of money from the World Bank and International Monetary Fund. The citizens of Argentina, which thanks to the borrowed money was prospering like never before, cheered for their President and declared him a genius of the free market. The idyll ended when they had to start paying back the borrowed money. In 2001 the gross domestic product went down as much as 11 per cent. However, the country did not receive any additional funds or any concrete pieces of advice from the IMF. The history of Argentina is full of unsuccessful uprisings, sudden upheavals, protests and wars. It is also full of poverty of masses and unimaginable richness of a small group of the chosen ones. It is full of corruption, horrible torture and fascist prisons. But by the end of 1990s the whole world was left speechless. What was going on the streets of Argentina was a warning and a prophecy for the enthusiasts of global economy. In private the journalists were wondering how it was possible to ruin a whole country in such a short time. How was it possible that no one noticed that and no one counter-reacted? Such questions were circulating in the Internet and in private conversations. But newspapers and TV bulletins were chasing for sensation and blubbering about fiscal irresponsibility on a large scale.
Average Argentineans and the new president, De la Rua, were soon to be blamed for everything. Argentina was alive and kicking, but corporate media did not want to let the public know about it. In 1999, when De la Rua was chosen President and the country had already been in recession for 3 years, conniving CNN would announce that Menem had not been re-elected because he could not enter for election for the third time, according to the constitution. However, he said that he would enter the election in 2003. Menem belonged to Peronists party, the biggest political power in Argentina. He was closely linked with the USA, globalism and free market.
The new President of Argentina had almost no move. Peronists were still in power and they attacked him from the very beginning. De la Rua asked his countrymen in his speeches: ‘Please, understand how important is unity. I want to be the President of all Argentineans.’ When economic crash came, International Monetary Fund was the first to wash their hands. Its experts claimed that Argentina spent too much Money although the country’s budget was much smaller than the budget of the USA during the Great Depression. When the economists ridiculed such an explanation, the lawyers of IMF began their attack. They claimed that Argentina had had such rights to distribute the loans to which the Fund had to adjust and which made normal economical functioning impossible. It means that the Fund wants us to believe that poor Argentina dictated them the conditions. All that show was supervised by the elites of the USA. For the last 55 years, during the whole existence of the International Monetary Fund, the voice of the United States has been decisive. Other rich member countries could easily oppose the USA in voting and win, but by some strange coincidence they never did. When we take a closer look at IMF we will find out that in fact it is only a group of lenders ruled by the American Treasury. We should not be surprised then that the American government (and the obedient American and Western media after them) unanimously stated that Argentina must be submissive to the rules imposed on her by the IMF.
Economical analysis Today we know already why Argentina’s economy collapsed, although the media do not want to say it. I am begging here for a special attention of the readers in Poland. In 1991 Menem based the country’s economy on a ‘higher’ currency which was the American dollar. A stable exchange rate of 1:1 between the dollar and the Argentinean peso was introduced. Menem hoped that the dollar would soon become the circulating currency in Argentina. It was quite a good idea at first, but soon it turned out that the value of the dollar was overrated. Automatically the value of the Argentinean peso was also overvalued. Let us pay attention how the euro is functioning in Poland. At the moment when investors figured out that the value of the peso is overrated they started fearing that it would fall. That is why they began demanding higher and higher interest rates on everything. Also on private and government loans. It caused a huge debt.
The interest rate was raised to 40 per cent. To keep up the parity on the American currency, the Argentinian government had to have adequate amount of American dollars in the banks. The more the crisis developed the more American dollars the government had to buy for a significantly overrated price. More and more people demanded transactions in cash. This process pushed Argentina into a debt of 140 billion of dollars. In December 2001 the Argentinian government announced to the world that they are not able to pay anything.
Argentina became the pariah of nations. To keep up the overrated value of the peso, International Monetary Fund gave Argentina huge loans. Only in one year to the country’s Treasury were sent 40 billion dollars as a package organised by many lending institutions. Only one basic requirement that was to guarantee that these loans would be paid off was to maintain zero budget deficit. Which meant that Argentina had to oscillate on 100 per cent of the budget. It is impossible during a recession to keep 100% of a budget, besides it takes some painful operations like serious cuts in the budget, which in turn cause high level of unemployment eventually leading to street fighting on a big scale. How did that process look like from the point of view of an average, hard-working Argentinian? At the beginning of the 1990s Argentinians were encouraged to buy almost everything.
Companies were privatized and incorporated into conglomerates.
People were encouraged to build houses by giving them low-mortgage loans. People were asked to set up their own companies and those who were laid off were given compensation packages. Luxury cars were shown to the middle class and sold for very low down-payments for high-percentage loans and long-term payments. The media shouted out that the situation is so good, that everybody would be able to afford to pay off the loans on cars or houses. ‘You can have everything now – you will pay off later!’. The Argentinians – like Poles today – enjoyed the prosperity not knowing that a trap had been set up for them. After 40 years of poverty and wars they could at last have in their gardens or garages what so far they had seen in American films. With the Western capital came the people whose task was to watch its flow.
They taught Argentinians what the free market and global economy is about. Soon they had such huge influence on Argentina’s administrating structure that the country, practically speaking, lost its independence. In the situation when the American dollar was bought with the peso at the rate of 1:1, everything that was produced in Argentina (as well as services) was too expensive to be exported. The whole country – just like Poland and other countries – was literally choked to death. Import of goods was much cheaper than their production. In that way almost 10% of gross domestic product was destroyed. Mass privatizations at the beginning of the 1990s of almost all national assets for a fraction of its market value had already caused unemployment on a big scale. Mainly electricity, municipal and telecommunication companies were privatized. Globalists know very well how to do it. You start privatizing from the chosen key sectors. After that, other co-operating sectors become incompatible. Then there is no way out but to privatize all other sectors in the structure upwards. When the spiral of privatization went up, the spiral of dismissions from work went down. At the bottom there was a bigger and bigger number of unemployed people ending up with no means of living. On the scale of the country, the spiral movement up was balanced by the movement down. Finally more and more people stopped doing their shopping and the money stopped circulating. So did the taxes. Poor Argentinians did not pay taxes because they had nothing – instead, they started buying rifles. When the money stopped circulating, now privatised companies laid off more and more people to keep up the economy of their firms. Those three inter-related crisises (taxes, unemployment, overrated value of the currency) get the Argentinian government to beg IMF for help or advice. International Monetary Fund, after long negotiations, made their decision. ‘Argentina is too much in debt. We can’t help. Let us leave that country in the state of free falling into an abyss.’
Also, during many military councils the decision was made how to cut off Argentina from the outside world if the expected rebellion of armed Argentinians was to spread across the borders. This decision by IMF get the Argentinians (who foresaw the fall of the value of the peso) to rush to the banks to pay out their savings. The banks were closed, the salaries in many sectors of the country’s economy were held up. In desperation, the President declared that Argentina stopped paying off her debts. The press foretold that in the country there would be hair-raising scenes and after that they lost their interest in the matter.
The Argentinian miracle It seemed that there was no retreat for Argentina. The rats began to leave the sinking ship. President Menem left for Chile. The businessmen and their international advisors were leaving for their countries. Even small investors, whose parents had come to Argentina in search for a better life, frantically tried to get entry visas to their mother countries. Whole factories with full machinery equipment were left behind – it was not profitable to produce there anything any more. The workers were laid off with nothing. Beautiful residences with swimming-pools were left abandoned, as well as whole office blocks lined out with marble. Those who had led to that crisis were moving like locust on other fields which could still be eaten up. ’Time’ magazine was wondering: ‘What can President De la Rua do now? This is a million-dollar question. Whether alone or in a coalition, he immediately needs a plan to ease the crisis. He has to help his countrymen to fill their stomachs and, maybe, to revive economical growth. The problem is that – to ease the results of the crisis concerning poor people – the government has to spend millions of dollars on food and basic needs. And this will cause a further escalation of the financial crisis. Something must happen…’ And it did happen!
The Argentinians trusted their President who broke the negotiations with international financiers. The army, police and ordinary people lined up in support. They claimed that Argentina belonged to Argentinians, not to international financial mafia. The Argentinian government, left alone, made a decision which get the White House and international bankers furious. Against their recommendation, the exchange rate of the peso was freed. Minister of Economy, Roberto Lavagna, stated: ‘Having competitive prices of currency exchange will help our export and enable fulfillment of the country’s needs.’ They also decided to end the free market policy to which the country’s economy was a prisoner.
An economical co-operation with Brazil and China was established. Some capital started to flow to the country. The central bank began to buy the dollar again, but only as much as necessary to keep up the economic growth. When Argentina announced that after 3 years from the moment of separation from degenerated ideas of globalists she was able to pay 30 cents for every dollar of her debt and keep up her unprecedented economical growth, at first nobody believed her. Then the media were strictly forbidden to inform about it. We should not be surprised as it is a palpable proof how quickly an economy of a given country and life of its citizens can improve when they forget about globalist absurdities. In December 2004 the British ‘Guardian’ wrote: Three years ago, in December, Argentina was in crisis. The economy was rolling down uncontrolled into an abyss, banks closed their door to the investors, company presidents changed every week. Today the common opinion among the economists in Buenos Aires are that the country has left the worst behind. Yes, Argentina is still fighting with a complicated process of reconstruction of her debt, but the economy has undergone incredible changes.’
Like Phoenix, the economy has risen from the ashes. After an 11-per-cent fall in 2002, in 2003 the domestic product rose almost 9% and it will rise another 8% this year*. The government carefully announces that GDP will rise 4% in 2005, but most experts in economy believe that in fact the growth will be 5%. The assumptions of ‘free market’ were bad for jobs and employment. In 2002 the unemployment reached its peak with 22%. Now it is 12%. Whether you are faithful believers or not, some commentators say about the rise of Argentina as of a miracle which Rodrigo Rato, the director of IMF, could not cause. The hand of God turned out to be more powerful than the hand of International Monetary Fund. Now nobody is cheating any more. Another thing which is hidden by the media was the fact of absolute unification of the working class with the management class. When the factory owners closed their firms and fled to other countries, their workers and directors occupied nearby cafes and park benches. When they were sitting idly on the streets, they were discussing how to improve their life and situation of their country, doomed to fail. The employees of such abandoned factories as Zanon looked at the gates melancholically. They spent most of their lives in those factories. Finally they made up their minds. They entered the grounds of their empty and devastated factories, started the machines and began production out of the materials which were still in the warehouses. The authorities and the army looked at that almost communist-like behaviour of the people in a friendly manner. Soon department managers, office clerks and economic directors joined the turners, polishers and warehouse men. In the record-breaking time sales and export were initiated.
There were no fixed hours of work. The decisions concerning their factories were taken by the people during short production meetings. It turned out that the production is profitable and needed. What had not been profitable for globalists started to be such for common people without the help from banks and financial cartels. Soon production and sales reached their record levels in some factories. The people shared the profit with one another. They had never earned such sums of money before. So, they started to spend them. Thus building industry and other branches of industry got moving. All that happened so quickly that America did not even have enough time to declare Argentina a communist country.
The Movement of Unemployed Workers (MTD) was established. Soon this organisation had the power to influence politics. And that was yet another mystery of the Argentinian miracle. The rats come back The situation of Argentina began to improve. Globalists and factory owners began to come back and demand a return of their factories taken over by the people. Those who had left the country on the verge of a civil war 3 years before, now have some claims quoting international laws. Does that remind the Poles of something? MTD, which was created almost literally on the streets, is strong. The organization is threatening with mass demonstrations. The ceramics factory, Zanon, the first one to be taken over by its workers and revived to the state of a profitable works, has become a symbol of the new and better, like Gdansk Shipyard used to be for Poles. MTD is considered by CIA and other similar organizations as a group which managed to create the most modern strategies and solutions how to unite and defend people from capitalism. The returning rats from international financial circles are fighting back. Because Argentina constitutes a serious threat to the whole global economy, we should assume that if the USA wasn’t involved in Iraq now, the American soldiers would be defending their oil under the Argentinian grass in the name of democracy, or would be defending the freedom of their country there. Kirchner, new President of Argentina, demands the extradition of the ex-president Carlos Menem, who is in Chile. Menem is wanted by the Argentinian authorities for corruption and bringing the country to ruin. He planned to enter for the presidential election in 2007 and used to promise the factory owners to return their property. Of course, that is why he enjoys the support from international financiers and can afford to laugh at the orders and decisions of Argentinian courts of law. In January 2005 international bankers agreed to the proposal from the Argentinian government to be paid 25 cents for every dollar of the debt. An unseen thing happened – Argentina declared a war to IMF and several other globalist organizations and won. Argentina, protected by her own army, not only blackmailed the globalists, but also refused any negotiations with 700,000 holders of the state bonds. Argentina has an open way to be accepted back to the community of international societies from which she had been thrown away before. And she did it on her own conditions, as a full member, making decisions on her own. Many bankers and international investors accuse Argentina of totalitarism and cheating investors and lenders. It caused quarrels among big financiers, Italian and American among others, who claim that if it was not for 9/11, they would be talking to Argentinians in a different manner. Three months later IMF again began demanding a full payment of the debts. But Argentina was already strong enough being in economic co-operation with Brazil and China to show the bankers from Wall Street ‘the middle finger of her right hand’. Argentina started to prove to the world that about half of the creditors had already made a considerable profit on the Argentinian debts and that it was not fair that they should demand any more.
This opinion was exposed by Chinese and Indian media. By the way, Argentina showed in black and white how some people tried to bring the country to bankruptcy and what it meant in practice. The British ‘Guardian’ writes: ‘Three things worked for the benefit of Argentina. First, Kirchner’s card was strong thanks to the strong economy. Secondly, the truth about IMF was being revealed, that is why they wanted a quick settlement. Thirdly, Wall Street left Argentina just before the crisis and the negotiations were led by European banks. So the American Treasury was not pressed to play hard with Argentina. Also, they did not want Kirchner to make friends with a strong populist, President of Brazil, Lula. Now many indebted countries may follow Argentina’s footsteps – and show the globalists their behind. Including Poland. And that is what the financial circles fear most. A precedence was created. A relatively non-significant country, held up against the wall, defied the wide-spread slogans of democracy, law and free market. And she won – at least so far. There has emerged a big chance for other countries. Now, when the American army is involved in Iraq, they can get rid of the yoke. You only need to want it and go for it. Just like the citizens of Argentina did, regardless of their social function, possessions and education.
Alex Lech Bajan RAQport Washington DC mailto:firstname.lastname@example.org