By Patrick J. Buchanan
Would Congress bail out D.C. if the city faced fiscal collapse? Rep. Dick Armey was asked in late December. Armey’s tough reply “Shucks, no. I’m still sore about New York City and Chrysler.”
No bailout for D.C. No bailout for Orange County. That was the policy line of our brawny new fiscal conservatives. Up until last week, that is.
Then, suddenly, Bob Dole and Newt Gingrich were desperately anxiously to help Bill Clinton get $40 billion in loan guarantees down to Mexico.
Why! Why, when we sit by and watch U.S. towns go belly up are we rushing loan guarantees to Mexico City?
Answer: What’s going down is not just a bailout of Mexico, but a bailout of Wall Street. Clinton and Congress are rushing to recoup for Wall Street bankers and brokers their enormous losses from the plunderings of ex-President Carlos Salinas and friends.
Those loan guarantees are about saving the fannies, faces and fortunes of morons who, for the second time in a generation, plunged vast slices of America’s wealth into Latin regimes — only to be fleeced and burned like country bumpkins.
Here is how the loan guarantee scheme will work:
That $28 billion in reserves Mexico had last January is gone. She cannot now pay back the $21 billion in loans coming due this year.
If Mexico doesn’t find tens of billions soon to pay off it’s creditors, she faces, de facto, default. U.S. creditors will be ruined, their balance sheets gutted, their reputations lost, their careers at an end. Clients will curse them to the end of time.
So, the Wall Street boys have hatched a brilliant scheme. Working with old buddies Alan Greenspan and Robert Rubin, they are going to bail themselves out — by bailing you and me in.
Here is how it works: Clinton and Congress, with their media auxiliaries, clamoring for action to “save our neighbor in trouble,” will stampede the loan guarantees through, before America catches on. After the vote, Mexican President Zedillo and his finance minister phone New York, to borrow the $40 billion.
The New York bankers then write out billions in new loans to Mexico. Zedillo then takes the new loan money, and hands it right back to the banks to pay off the old loans. Now, instead of holding rotten loans worth 30 or 50 cents on the dollar, the banks have fresh Mexican loans guaranteed, 100 cents on the dollar, by the U.S.A. If Mexico defaults on the new loans, the banks get paid off — by U.S. taxpayers.
Every member of Congress who votes for these loan guarantees will vote to take Wall Street off the hook and put U.S. taxpayers on.
No one rescued the old folks who did not check to see if their life savings in Charlie Keating’s S&L were federally insured.
We are told by Treasury Secretary Rubin that the loan guarantees are necessary to restore “confidence” in Mexico. But this is not the first time Mexico has defaulted. In 1982, Mexico declared it could not pay $100 billion in foreign debts. We bailed them out.
This time, President Salinas and successor Ernesto Zedillo lied about the value of the peso, and lied about their vanishing reserves. Why should anyone have “confidence” in this crowd?
Where did all the investment money go? Check it out. In 1987, Mexico had one billionaire, according to Forbes. By 1994, she had 24, giving this Third World country the fourth highest number on Earth.
If America is not to end her own days scrounging around for loan guarantees, this endless looting of America has to stop. We financed World War I, World War II, the rebuilding of Europe, the Cold War, Korea, Vietnam, and threw in a trillion dollars in foreign aid. Enough is enough. For once, let the idiot-bankers of Wall Street and their duplicitous Mexican clients bail themselves out. If accountability is good for welfare mothers, why isn’t it good for Wall Street?
For years now as American workers pleaded: “Don’t take our jobs overseas; don’t destroy our communities,” Wall Street has told them: “You just don’t understand dynamic capitalism. You just don’t understand how a ‘global economy’ works. America’s not where the action is. The action is in Latin America! The action’s in Asia!”
Well, our corporate and financial elites pocketed the profits from squandering America’s seed corn in the ’emerging markets’ of the Third World. Now, let them live with the consequences of their blunders, just as the rest of us have to live with ours.