What Weirton Does Not Know

by Patrick J. Buchanan – November 17, 1998

In the tiny West Virginia town of Weirton, population 22,000, thousands marched last week to save Weirton Steel, the heart of their community. If the steel plant goes under, and its 4,400 workers lose their jobs, the town dies. It is as simple as that.

What is threatening Weirton Steel and every other steel plant in the USA? In a word, imports, which in August equaled 35 percent of U.S. steel consumption, up 50 percent from a year ago.

Who is dumping into our market to save their steel industries by killing ours? Japan, South Korea, Russia, Indonesia and Brazil.

Yet, as those folks marched through Weirton to petition their government for help, our government was racing to rescue — Brazil. That’s right. As the president was clucking his sympathy for U.S. steelworkers, Treasury Secretary Robert Rubin was wrapping a ribbon around a $41.5 billion bailout of a bunch of wastrel politicians in Brazil.

Even more than Moscow’s rip-off of the International Monetary Fund, this Brazilian bailout reveals the corruption and fraud that are now essential to maintaining the fiction of a Global Economy.

Look at the agencies coughing up the bailout billions. The U.S. Exchange Stabilization Fund, created to defend the U.S. dollar, not Brazil’s currency, is in for $5 billion. The World Bank and Inter-American Development Bank have put in $9 billion, though they are supposed to fund development projects, not bail out bankrupt regimes.

The IMF, established to defend an exchange-rate system that died in 1971, is in for $18 billion. Each of these institutions is being corrupted and perverted so a global corporate and political elite will not have to face the consequences of its own malfeasance.

The fraud here is monstrous. With Brazil’s Fernando Cardoso running a deficit of 8 percent of gross domestic product, and his central bank pegging interest rates near 50 percent to keep money from fleeing the country, the markets have declared Brazil a terrible risk. Investors got the message and have pulled out $30 billion of Brazil’s hard currency since July.

Why would the United States and the IMF drop $41.5 billion on a regime on the precipice of devaluation and default? Answer: to keep the free market from doing its work, lest bankers and investors who pumped all that money into Brazil lose their Turnbull & Asser shirts.

The folks marching through Weirton don’t know it, but they are being sacrificed to the gods of the Global Economy. Their taxes are backing $160 billion in loans to Indonesia, South Korea, Russia and Brazil, even as those countries dump steel into the U.S. market and kill the jobs of the men and women who work in Weirton.

The Treasury Department and the IMF defend the Brazilian bailout by insisting that Cardoso has a tough austerity plan to slash the deficit. But a glance at Cardoso’s plan shows it is mostly blue smoke and mirrors.

It is based on a budget that projects growth, but thanks to those 50 percent interest rates, Brazil is headed into recession. The tax hikes proposed will only deepen that recession and expand the deficit, and the proposed budget cuts will never pass Brazil’s leftist Congress.

As in the Russian bailout, where Boris Yeltsin’s “reformers” lied to the IMF and the IMF knew they were lying, both sides here know exactly what is going down. The Brazilians know that if the IMF is given some political cover, the money will be on the way, because it isn’t Brazil that is the real beneficiary of the $41.5 billion. The real beneficiaries are the global investors whose huge gamble in Brazil was in imminent danger of being wiped out.

To most Americans, these bailouts have nothing to do with them. After all, the U.S. economy is perking along, and the Dow is back near record territory. So, who cares?

But around the world, it is dawning on people who it is who is growing rich and who is being sacrificed to keep the global casino going. And nations are beginning to act in their own interests.

Moscow is walking away from billions in debt and printing money to pay back Russians, not Western banks. In Indonesia, mobs of unemployed are rioting. Malaysia is imposing capital controls. Many Third World regimes have simply stopped servicing debts. When a U.S. trade official last week accused Japan of trying to export its way out of recession, the Japanese told her to get lost.

Nations in trouble look out for themselves first, and it is only America’s elite that still seems enthralled by a globalist ideology.

One day, American workers will wake up and realize that their jobs, factory towns have been sacrificed — to save the bacon of the “investment community.”

When they do, the day of reckoning will be at hand. As for this latest $41 billion bailout, it has only postponed that day.