THE TEQUILA TRAP: THE REAL STORY BEHIND THE ILLEGAL ALIEN INVASION

Here’s an excerpt from The Web of Debt. A nice refresher into what happened in Mexico, and good to keep in mind when we want to blame “them” for our economic problems when in fact they were manufactured by our own government.

By 1994, Mexico had restored its standing with investors. It had a balanced budget, a growth rate of over three percent, and a stock market that was up fivefold. In February 1995, Jane Ingraham wrote in The New American that Mexico’s fiscal policy was in some respects “superior and saner than our own wildly spendthrift Washington circus.” Mexico received enormous amounts of foreign investment, after being singled out as the most promising and safest of Latin American markets. Investors were therefore shocked and surprised when newly-elected President Ernesto Zedillo suddenly announced a 13 percent devaluation of the peso, since there seemed no valid reason for the move. The following day, Zedillo allowed the formerly managed peso to float freely against the dollar. The peso immediately plunged by 39 percent.⁵

What was going on? In 1994, the U.S. Congressional Budget Office Report on NAFTA had diagnosed the peso as “overvalued” by 20 percent. The Mexican government was advised to unpeg the currency and let it float, allowing it to fall naturally to its “true” level. The theory was that it would fall by only 20 percent; but that is not what happened. The peso eventually dropped by 300 percent – 15 times the predicted fall.⁶ Its collapse was blamed on the lack of “investor confidence” due to Mexico’s negative trade balance; but as Ingraham observes, investor confidence was quite high immediately before the collapse. If a negative trade balance is what sends a currency into massive devaluation and hyperinflation, the U.S. dollar itself should have been driven there long ago. By 2001, U.S. public and private debt totaled ten times the debt of all Third World countries combined.⁷

Although the peso’s collapse was supposedly unanticipated, over 4 billion U.S. dollars suddenly and mysteriously left Mexico in the 20 days before it occurred. Six months later, this money had twice the Mexican purchasing power it had earlier. Later commentators maintained that lead investors with inside information precipitated the stampede out of the peso.⁸ These investors were evidently the same parties who profited from the Mexican bailout that followed. When Mexico’s banks ran out of dollars to pay off its creditors (which were largely U.S. banks), the U.S. government stepped in with U.S. tax dollars. The Mexican bailout was engineered by Robert Rubin, who headed the investment bank Goldman Sachs before he became U.S. Treasury Secretary. Goldman Sachs was then heavily invested in short-term dollar-denominated Mexican bonds. The bailout was arranged the very day of Rubin’s appointment. Needless to say, the money provided by U.S. taxpayers never made it to Mexico. It went straight into the vaults of Goldman Sachs, Morgan Stanley, and other big American lenders whose risky loans were on the line.⁹

The late Jude Wanniski was a conservative economist who was at one time a Wall Street Journal editor and adviser to President Reagan. He cynically observed of this banker coup:

There was a big party at Morgan Stanley after the Mexican peso devaluation, people from all over Wall Street came, they drank champagne and smoked cigars and congratulated themselves on how they pulled it off and they made a fortune. These people are pirates, international pirates.¹⁰

The loot was more than just the profits of gamblers who had bet the right way. The pirates actually got control of Mexico’s banks. NAFTA rules had already opened the nationalized Mexican banking system to a number of U.S. banks, with Mexican licenses being granted to 18 big foreign banks and 16 brokers including Goldman Sachs. But these banks could bring in no more than 20 percent of the system’s total capital, limiting their market share in loans and securities holdings.¹¹ They wanted the whole enchilada. By 2004, all but one of Mexico’s major banks had been sold to foreign banks, which gained total access to the formerly closed Mexican banking market.¹²

The value of Mexican pesos and Mexican stocks collapsed together, supposedly because there was a stampede to sell and no one around to buy; but buyers with ample funds were sitting on the sidelines, waiting to pick over the devalued stock at bargain basement prices. The result was a direct transfer of wealth from the local economy to international money manipulators. The devaluation also precipitated a wave of privatizations (sales of public assets to private corporations), as the Mexican government tried to meet its spiraling debt crisis. In a February 1996 article called “Militant Capitalism,” David Peterson blamed the rout on an assault on the peso by short-sellers. He wrote:

The austerity measures that the U.S. government and the IMF forced on Mexicans in the aftermath of last winter’s assault on the peso by short-sellers in the foreign exchange markets have been something to behold. Almost overnight, the Mexican people have had to endure dramatic cuts in government spending; a sharp hike in regressive sales taxes; at least one million layoffs (a conservative estimate); a spike in interest rates so pronounced as to render their debts unserviceable (hence El Barzon, a nation-wide movement of small debtors to resist property seizures and to seek a rescheduling of their debts); a collapse in consumer spending on the order of 25 percent by mid-year; and, in brief, a 10.5 percent contraction in overall economic activity during the second quarter, with more of the same sure to follow.¹³

By 1995, Mexico’s foreign debt was more than twice the country’s total debt payment for the previous century and a half. Per-capita income had fallen by almost a third from a year earlier, and Mexican purchasing power had fallen by well over 50 percent.¹⁴ Mexico was propelled into a crippling national depression that has lasted for over a decade. As in the U.S. depression of the 1930s, the actual value of Mexican businesses and assets did not change during this speculator-induced crisis. What changed was simply that currency had been sucked out of the economy by investors stampeding to get out of the Mexican stock market, leaving insufficient money in circulation to pay workers, buy raw materials, finance loans, and operate the country. It was further evidence that when short-selling is allowed, currencies are driven into hyperinflation not by the market mechanism of “supply and demand” but by the concerted action of currency speculators. The flipside of this also appears to be true: the U.S. dollar remains strong despite its plunging trade balance, because it has been artificially manipulated up by the Fed. (More on this in Chapter 33.) Market manipulators, not free market forces, are in control.

Fingertip biometrics at Disney turnstiles: the Mouse does its bit for the police state

http://www.boingboing.net/2008/03/15/fingertip-biometrics.html

Posted by Cory Doctorow, March 15, 2008 3:27 AM | permalink

Today in my ongoing series of photos from my travels, this shot of the fingerprint reader at Walt Disney World’s turnstiles. These machines (which, I’m told, capture the shape of your fingertip instead of your fingerprint itself) are used to keep Disney World customers from sharing or re-selling their admission tickets, and are part of a general and growing police-state climate at the parks that includes routine bag-searches at each park entrance.The readers aren’t very effective at stopping admission cheats. You can choose not to register your fingertip, and to use photo ID for admission instead (I’m thinking of having a random piece of photo identification made with the words “OFFICIAL BOGUS SECURITY IDENTIFICATION FOR HOTELS, THEME PARKS AND OTHER JUNIOR G-MEN” printed on it). So it would be very easy to share your pass: the person named on the pass enters with his ID, and the person with whom he’s sharing the card uses a fingertip — you could visit with your sister’s family and half of you could use the tickets in the morning while the other half hung around the pool and relaxed, then switch at lunch: the morning crew uses fingertip, the afternoon uses ID.

What these readers are effective at is conditioning kids to accept surveillance and routine searches and identity checks without particularized suspcion. One morning at Epcot Center, as we offered our ID to the castmember at the turnstile and began to argue (again — they’re very poorly trained on this point) that we could indeed opt to show ID instead of being printed, a small boy behind us chirped up, “No you have to be fingerprinted! Everybody has to be fingerprinted!”

To all those parents who worry that Disney will turn their kids into little princesses, it’s time to get priorities straight: the “security” at the parks is even more effective at conditioning your children to live in a police state. Link

Today We’re All Irish: Debt Serfdom Comes to America

http://www.globalresearch.ca/index.php?context=viewArticle&code=BRO20080315&articleId=8349

By Dr. Ellen Brown

Global Research, March 15, 2008

webofdebt.com

March 17 is St. Patrick’s Day, when people of all national origins raise a glass and declare, “Today we’re all a bit Irish!” This may be truer than we know. The Irish were driven to America by debt, and they are leading the Western world in household debt today. The London Daily Telegraph reported on March 13, 2008 that household debt in Ireland has reached 190 percent of disposable income, the highest in the developed world; and that the Irish banking system is suffering such acute strains from the downturn in the housing market that it may have to nationalize its banks.1 The same may soon be happening in the United States, and for much the same reasons. Debt Drives the Irish to America A short review of the history of the Irish in North America reveals that few were here before 1845, when a disease struck the potato crops of Ireland, wiping out the chief or only source of food for many poor farmers. Famine continued for the next five years, killing over 2.5 million people. “God put the blight on the potatoes,” complained the Irish farmers, “but England put the hunger upon Ireland.” Farmers who were heavily in debt were shipped to England to pay the rent owed to their landlords. Impoverished Irish immigrants saved what little money they could to send family members across the Atlantic, traveling on overcrowded ships on which many died of disease or hunger on the way. When they arrived, the Irish men had to fight – often physically – to get labor jobs involving long hours and low pay; while the women worked mainly as servants (called “Brigets”) to upper-class families. Despite their very low wages, they managed to send a bit of money back to their families, until other family members had enough to buy the ship tickets to America. In the American South (mainly New Orleans), the Irish lived in swamp land infested with disease. Here, Irish men were looked upon as actually lower than slaves. As one historian put it, if a plantation owner lost a slave, he lost an investment; if he lost a laborer, he could always get another. Because the Irish workers were plentiful and expendable, they were often sent in to do dangerous jobs for which the slave-owners were reluctant to send their valuable slaves.2 “Debt Slavery” Replaces Physical Slavery This form of “debt slavery” or “debt peonage” was not just an accidental development of history. It was a deliberately-planned alternative to the slave arrangement in which owners were responsible for the feeding and care of a dependent population, and it is still with us today. Although European financiers were in favor of an American Civil War that would return the United States to its colonial status, they admitted privately that they were not necessarily interested in preserving slavery. They preferred “the European plan”: capital could exploit labor by controlling the money supply, while letting the laborers feed themselves. In July 1862, this ploy was revealed in a notorious document called the Hazard Circular, which was circulated by British banking interests among their American banking counterparts. It said: Slavery is likely to be abolished by the war power and chattel slavery destroyed. This, I and my European friends are glad of, for slavery is but the owning of labor and carries with it the care of the laborers, while the European plan, led by England, is that capital shall control labor by controlling wages. This can be done by controlling the money. The great debt that capitalists will see to it is made out of the war, must be used as a means to control the volume of money. To accomplish this, the bonds [government debt to the bankers] must be used as a banking basis. . . . It will not do to allow the greenback, as it is called, to circulate as money any length of time, as we cannot control that.3 A system of “debt peonage” is inextricably linked to a banking system in which money is issued privately by bankers and lent to the government rather than being issued as “greenbacks” by the government itself Today the “European plan” has evolved into the private central banking system, and it has come to dominate the economies of the world. A private central bank creates money simply by printing it or entering it as an accounting entry, then lends it to the federal government in exchange for government bonds or debt. Private commercial banks create many more dollars in the same way, advancing money created as accounting-entry loans without even incurring the cost of a printing press. Except for coins, the entire U.S. money supply is now created as a debt to private bankers.4 Banks create the principal but not the interest necessary to pay back their loans, so more money is always owed back than was put into the money supply in the first place. More loans must therefore continually be taken out to cover the interest, spiraling the economy into increasing levels of debt and inflation, in a futile attempt to repay principal and interest on a debt that is actually impossible to repay. The result is “debt peonage,” and it has systematically reduced the people to working for the company store, bound to their corporate masters for the food, shelter and health care formerly provided by slave owners under the old physical-slave system. The Colonial Alternative: The Pennsylvania System of Benjamin Franklin’s Day This is not the only way to run an economy. Until 1913, when the Federal Reserve Act was passed, the European system of debt peonage competed with what was called “the American system” – debt-free government-issued dollars generated by provincial governments to pay their expenses. This “greenback” system was not actually used in the United States after the American colonies became a nation, except during the Civil War; but the “American system” flourished for decades in colonial America. Paper money was issued by local provincial governments not only to pay their own expenses but as commercial loans. The most effective and efficient of these government-issued money systems was in Pennsylvania, where a publicly-owned bank issued paper notes and lent them to farmers. Since this money returned to the government, it did not inflate the money supply; and since the government issued and spent an additional sum of money on public works, enough money was kept in the system to pay the interest on the loans and prevent the debt spiral afflicting the private banking system. The Pennsylvania system worked so well that it completely funded the provincial government without taxes or inflation. Benjamin Franklin and others maintained that the chief reason for the American Revolution was that Parliament forbade the colonies from issuing their own money. Paper money issued by the Revolutionary government got the colonists through the Revolutionary War, but the British heavily counterfeited this money as a deliberate war tactic, and by the end of the war it had been inflated so much that it was nearly worthless. Fear of inflation led the Continental Congress to completely omit paper money from the Constitution, which does not say who can issue paper money or under what circumstances. The private banks filled the breach, and by 1913 the United States had the same private central banking system that England had. Today, the pyramid scheme of lending 10 dollars and requiring 11 back has resulted in the very inflationary spiral the Founding Fathers feared. The money supply is inflated with more and more debt, shrinking the value of the dollars paid to workers and propelling larger and larger portions of the population into debt peonage. If the government were to issue its own money rather than borrowing from banks that issued it, and if this money were used to pay for real goods and services (roads and bridges, sustainable energy development, health services, and the like), demand and supply would remain in balance and inflation would not result. A government with a properly designed and monitored system of publicly-issued money could fund itself without taxes, inflation or debt. Publicly-owned banks are also called “national” banks or “nationalized” banks – the very thing that threatens the private banking system in Ireland today. We have come full circle: a system of national banks is what used to be called “the American system.” This may be what we actually need – a public banking system operating for the benefit of the public. The private European system of debt peonage has failed. On this 2008 St. Patrick’s Day, we the modern-day Irish of all persuasions can raise a glass to the possibility of being freed from the debt peonage that has kept us wage-slaves for most of our national history. Notes 1. “Irish Banks May Need Life-support as Property Prices Crash,” www.telegraph.co.uk (March 13, 2008).   2. “Irish in America,” www.essays.cc. 3.”Hazard Circular,” 1862, quoted in Charles Lindburgh, Banking and Currency and the Money Trust (Washington D.C.: National Capital Press, 1913), page 102.   4.See Ellen Brown, “Dollar Deception: How Banks Secretly Create Money,” www.webofdebt.com (July 3, 2007). Ellen Brown, J.D., developed her research skills as an Attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her eleven books include the bestselling Nature’s Pharmacy, co-authored with Dr. Lynne Walker, which has sold 285,000 copies. Her websites are www.webofdebt.com  and www.ellenbrown.com.