Are the Days of Wine and Roses Over?

by Patrick J. Buchanan – January 2, 1998

While Treasury Secretary Robert Rubin is winning applause for
shoveling $10 billion into South Korea to avert a default, it is
clear neither he nor the IMF saw this crisis coming. Their soothing
assurances have about them a ring of hollowness and trepidation…

As 1997 ends, even William Jefferson Clinton’s severest critics must concede the man leads a charmed life.

Another year of revelations about his unorthodox private life, tawdry Asian friends and crass exploitation of the Oval Office has not diminished his popularity. Americans have concluded they have a charming rascal for a president, a condition they can live with, so long as the economy is humming. But here is where the signs seem ominous — and not simply for Mr. Clinton.

While Treasury Secretary Robert Rubin is winning applause for shoveling $10 billion into South Korea to avert a default, it is clear neither he nor the IMF saw this crisis coming. Their soothing assurances have about them a ring of hollowness and trepidation.

Already, we have seen declines in Asian stock markets of 40 percent to 60 percent, and commensurate collapses in currency values in Thailand, Malaysia, the Philippines, Indonesia and South Korea. These losses will translate into business bankruptcies, bank failures, job layoffs in the millions and Asian factories auctioned off at fire-sale prices to U.S. bidders — a splendid formula for an anti-American nationalist backlash.

Mr. Clinton notwithstanding, what is happening is not just “glitches along the road.”

Consider but several of the many crises.

Indonesia: This nation of 200 million, fourth most populous on Earth, has been hit perhaps hardest. President Suharto’s health is uncertain. Unlike Korea, there is no good news from Jakarta.

China and Hong Kong: The collapse of Free Asia’s currencies have made their goods more competitive against Chinese goods in the U.S. market, China’s coveted source of hard currency. If China and Hong Kong devalue, Beijing surrenders its claim to great-power status.

But if China and Hong Kong resist pressure to devalue, they lose market share. Already, there are reports of a gathering economic storm spreading across the Mainland.

Japan: The bank situation is critical, many times the magnitude of America’s S-and-L debacle. With Japan’s stock market 65 percent below its peak, and real-estate prices down dramatically, the assets of Japan’s banks no longer cover their liabilities. As the businesses they support go belly up, and the Asian loans they made go sour, it is to hard to see how Japan’s banks survive, absent a massive government bailout.

The United States: What seems remarkable is how unaffected America has thus far been. The stock market may be off from its high, but predictions of happy days persist. Yet, a crunch is coming. Desperate for dollars, all Asia is going to be exporting ferociously. These exports will swamp American markets, drown factories, put downward pressure on wages and prices, and squeeze the profits of U.S. companies. This has to be reflected in the ’98 stock market.

Politically, a clamor for protection is going to hit Congress, as the U.S. merchandise trade deficit races toward $300 billion. Query: How can a White House that just OKed $125 billion in U.S. tax dollars and IMF bailout money to protect Korean banks and Wall Street investors deny protection to American workers?

The Republican Party, too, is going to face a moment of truth. Today’s IMF is an insult to party philosophy. Its bailouts are done in secret; they force higher taxes and currency devaluations, violate sovereignty and trample on the GOP principle that those who made the profits take the loss — that markets, not elites, decide winners and losers. But will the GOP have the courage to deny Mr. Rubin tens of billions in new IMF bailout money, when the president threatens to blame Congress for any global financial collapse if it defies him?

If a Republican Congress yields to Mr. Rubin’s demand for vast new sums for the IMF to enable globalist bureaucrats to dictate the destiny of Free Asia, the party will have lost its soul.

Russia: This may be the most serious crisis of all. For Russia is a defeated nation and mighty nuclear power; and here the IMF has presided over the disaster. In 1991, America was Russia’s role model. Today, U.S.-style “reforms” are blamed for the suffering; Yeltsin’s popularity has fallen to single digits; his health is failing; and the Russian government’s debt is astronomical. Default looms.

For seven years, Americans have enjoyed a post-Cold War prosperity. But three things are now clear: Something is horribly amiss with a Global Economy created by and for the transnational elites; there is not enough money left to cover all the disasters and blunders the elites have wrought; the world needs a new vision.

Mr. Clinton’s luck (and ours) may run out.