Nightmare on Wall St.

Nothing gives Wall Street the willies like the folks on Main Street paying attention to economic policy. Ordinarily the Wizards of Wall Street like to reserve the high-dollar game of international finance to themselves while mom and pop worry about their penny-ante concerns at home. But several years of watching factories close down and move across the border into Mexico or overseas to East Asia has got mom and dad looking into this global economy and wondering what the heck is going on.

The public's concern over global trade helped derail "Fast Track" in November. Now a critical eye is being cast on the bailout of the bankers who financed the flight of manufacturing jobs out of the United States over the past decade. There is plenty of cause for suspicion and there is reason to take constructive action.

In the early 1990s we heard how the North American Free Trade Agreement was going to open up the Mexican economy. When the deal went down in 1993, the United States had a trade surplus with Mexico of $1.7 billion. Two years of aggressive growth led to a peso in 1995 that devastated Mexico's economy, doubled unemployment and wiped out its middle class. The U.S. trade surplus with Mexico turned into a deficit of $16.2 billion in 1996.

The only ones who made any money off that turn of events were the multinational corporations who were prepared to move goods whichever direction they needed to make a profit. And the International Monetary Fund made sure the banks got their money.

Since the approval of the General Agreement on Tariffs and Trade, which was supposed to open markets worldwide, we have been hearing how the Asian tigers were the wave of the future. The Dow Jones Average soared along with corporate profits as multinationals moved their manufacturing operations from the United States to East Asia, where they could find plenty of compliant employees working for even less than the Mexicans.

The Asian tigers were the wave of the future right up to the time when their economies collapsed in the past few months. Six key U.S. banks were stuck with $19.2 billion in outstanding loans in Indonesia, Thailand, South Korea and the Philippines.

The Clinton Administration rushed in to help the IMF arrange more than $120 billion to bail out the overheated East Asian economies. Now Clinton wants Congress to rush through a supplemental appropriation of $18.5 billion for the IMF. The new money is not earmarked for Asia, but it could enable the IMF to carry out similar bailouts in the future.

The IMF originally was supposed to help countries bridge temporary balance-of-payments problems, but in the past couple decades the IMF has extended its mandate to compel Third World countries to restructure their economies to produce exports that will earn "hard currency" such as the dollar and allow them to pay off their foreign debts. Some analysts believe the austerity measures imposed on the Asian nations could push the trade gap to $300 billion and cost 1 million American jobs.

Rep. Bernie Sanders, the independent from Vermont, has been instrumental in putting together a congressional coalition of the left and the right to oppose the bailouts.

"Its amazing to me that at the same time as many in Washington have told us that we have to cut back on Medicare, Medicaid, veterans' programs, affordable housing and children's needs, and that in the near future we may have to cut back on Social Security, that we can move forward with lightning speed to provide some $15 to $20 billion dollars in loans to Indonesia, Thailand, the Philippines and South Korea," he said.

Sanders also opposes U.S. taxpayer dollars being used to bail out banks who made bad investments in Asian countries. "Should these banks, which screwed up royally and made very ill-advised loans to Asian concerns who were unable to pay them back, really get 100 cents returned to them on the dollar -- despite their bad judgment and unsound business practices?

"If you're a family farmer in Vermont, or a small businessperson in California, you can work 70 hours a week, lose money and see your family suffer -- and nobody cares. But if you're a profitable, multi-billion dollar bank which pays its CEOs tens of millions a year -- and you screw up -- it's apparently okay to go running to the taxpayers of this country and ask for a handout. That's not right. That's socialism for the rich and the powerful, and free enterprise for the middle class and the poor."

Sanders has particular scorn for the $20 billion earmarked to bail out the notoriously repressive regime in Indonesia. He contends it violates the Sanders-Frank Amendment, which he and Barney Frank, D-Mass., got Congress to enact in 1994. It instructs the U.S. government to use its "voice and vote" to encourage borrowing countries to guarantee worker rights as set forth by the International Labor Organization.

If the matter of worker rights ever came up in IMF negotiations with Suharto, it apparently was not taken seriously. Suharto's regime is responsible for massacres in East Timor, the systematic smashing of Indonesia's independent labor movement and the harassment of journalists. The heroic leader of the nation's independent labor federation, Muchtar Pakpahan, remains in prison, charged with "subversion," a capital offense.

Sanders concluded, "Even if the bailout was legal, which it is not, I would oppose it. Not only is it morally wrong for the United States to provide political and economic support for an illegitimate, authoritarian government, such as the Suharto regime, but it is totally absurd -- given the fact that General Suharto and his family are one of the wealthiest families in the world. It is an outrage that the taxpayers of this country, many of whom are struggling hard to keep their heads above water, are being asked to bail out a corrupt, undemocratic government led by General Suharto who, according to Forbes magazine, is himself worth $16 billion."

As journalist Bill Greider says, progressives should be proclaiming a message of optimism with an agenda for positive action. "The defeat of fast track shows the way. Once people win a few victories, the global problems will not seem insurmountable, the established powers will no longer seem invincible," he wrote in The Nation of December 15. So call your congressional representative or senator toll-free 1-800-522-6721 or write them c/o the House or Senate, Washington, DC 20515 and tell them:

* No more money for IMF bailouts until it agrees to promote worker rights as well as health, safety and environmental standards.

* No more trade deals unless they respect those same standards so that trade is fair as well as free.

* Enact a financial transaction tax on stock, bond and currency exchanges to make the speculators pay for their own damages. A tax of one-fifth of 1 percent of the value of each transaction in the United States would raise $20 billion to $30 billion a year, Kevin Phillips wrote recently. "The same tax, globally, would raise something like $100 billion, paid by precisely those people and interests who profit from the IMF's de facto international insurance."

Wall Street won't like it, and a public rejection of the status quo in international finance might puncture Dow Jones' balloon, but the route to global prosperity starts and ends on Main Street. We must build democracy with a strong working class not only in the United States but also in Mexico, Jakarta, Seoul, Manila and throughout the Third World.

That'll give the Wall Street Wizards a chill. And they deserve it.

-- Jim Cullen

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