Ibero-American News Digest

The Laws of the Old System No Longer Work

Oct. 28 (EIRNS)—Finance and Foreign Ministers and Central Bank chiefs of the ten South American nations participating in the Common Market of the South (Mercosur), held an emergency meeting yesterday in Brasilia to discuss the global financial crisis. The meeting was held at the insistence of the Argentine government, whose Foreign Minister Jorge Taiana told reporters that his government had been calling for a new international financial architecture for six years. The International Monetary Fund is among those responsible for the global crisis, he reiterated.

The meeting in the Brazilian capital went on for three hours longer than planned. "Some countries" believe the crisis is beginning to stabilize, but others believe it will get worse," Brazilian Foreign Minister Celso Amorim reported afterwards.

All participants agreed on "the necessity of a profound and all-encompassing reform of the international financial architecture." But aside from a proposal for "prudent" regulation of capital markets, no one had anything specific to say about what the reform should look like. The only "consensus" was on the increasing regional trade and integration, and activation of the Bank of the South "as soon as possible," as measures to defend the region.

The open brawl came over Argentina's proposal that Mercosur adopt common protectionist measures against cheap imports flooding the region. Chilean Foreign Minister Alejandro Foxley reacted with fury: "The worst thing that could happen would be to use this crisis as an excuse to return to the policies we had in the 1960s, to build an old-style protectionism that generates barriers in our economies and only accentuates the crisis," Foxley told the press.

Brazil's Amorim hedged his bets, however. The Argentine proposal was not adopted, but it might have to be implemented anyway, he said. "On these questions, we have to be very vigilant, because we are in a totally new situation. And it is as if we were in outer space, where we cannot apply the law of gravity as on Earth."

Without the PLHINO, Mexico Faces Chaos

Oct. 31 (EIRNS)—Carlos Villanueva, president of the World Association of Mexicans Abroad, estimates that 1.5 million Mexicans will leave the United States and return home before the end of this year, due to the economic crisis which has left them jobless and/or homeless.

They are heading home to impoverished Mexican states which are incapable of offering them jobs, education, homes, or services—a catastrophic scenario that Lyndon LaRouche has warned can only be avoided through a commitment to build the Northwest Hydraulic Plan (PLHINO) in Mexico, along with cross-border infrastructure projects that can productively employ both Mexicans and Americans.

Quoted in today's El Universal, Villanueva reports that since August, an estimated 150,000 Mexicans have returned home, while 550,000, who are legal U.S. residents, have lost their jobs, as well as close to 600,000 who are in the U.S. illegally. Members of this latter group are largely poor and live in precarious conditions, and are preparing to return to Mexico.

For Mexicans living in the U.S., the situation is dire, Villanueva warns. "Each person has his own living hell. The American Dream is no more." The construction industry has collapsed, along with significant portions of the hotel and restaurant industries, in which many Mexicans were employed. He cites cases in which eight people lived in a home and contributed to the mortgage payment, but now there are only two people, who can't meet the payments, and are about to lose the house.

New York Judge Defends London's Vulture Funds

Oct. 31 (EIRNS)—New York Federal Judge Thomas Griesa acted Oct. 30 on behalf of London's predatory vulture funds, and froze $553 million of the U.S. investments held by Argentina's private pension funds, known as AFJPs. On Oct. 20, President Cristina Fernández had announced that she intended to nationalize the AFJP system, which was modeled on the system that fascist dictator Augusto Pinochet set up in Chile in 1981.

Griesa's ruling is the latest incident in the escalating financial warfare waged against Fernández by the City of London and Wall Street, who are enraged that she and her husband, former President Néstor Kirchner, have snubbed the bankers' demands

Griesa accepted the argument presented by lawyers for the three speculative funds (Aurelius Capital Partners, Blue Angel Capital, and Aurelius Capital Master), that since Fernández intended to nationalize the AFJPs—worth $26 billion—these funds will become the "immutable" property of the State, and are therefore subject to embargo. Griesa's ruling ignores the fact that the AFPJ nationalization hasn't yet been approved by the Congress, or that the funds belong to private citizens, not the State.

Almost as soon as Griesa issued his ruling, Standard & Poors lowered Argentina's foreign debt rating to B-, implying that Argentina is close to default and is seizing the pension funds to pay debt coming due in 2009.

In reality, the financial oligarchy is hysterical that Fernández dared to touch the AFPJ system at all, accusing it of "looting" its enrollees for its own financial gain. The AFPJs were no more successful than their Chilean counterparts, and now, London is nervously eyeing the remoralizing effect that the Argentine President's actions have had inside Chile, where trade unionists and pension reform activists say it is time to dump Pinochet's private system altogether.

Chilean Workers: End Pinochet's Private Pension System Now!

Oct. 31 (EIRNS)—Chile's labor federation, the CUT, announced on Oct. 30 that it is launching a "labor and social offensive" to bring down the private pension system imposed by fascist dictator Augusto Pinochet, and his infamous "Chicago Boys," in 1981. In its place, the CUT is demanding a state-run social security system.

To date, under pressure from the CUT and allied political forces, President Michelle Bachelet had agreed to consider setting up a single pension fund affiliated with a State-run bank or institution, which workers thought would be more reliable than the privately run, for-profit AFPs (Pension Fund Administrators). But the CUT is rejecting even this option, arguing that "with the current rules of the market, it wouldn't really serve the workers."

"As a representative of the State," the CUT said, "the government has the obligation to offer an option, so that workers can decide whether they wish to remain in the private system, or enter a [state-run] social security system." The private system was supposed to offer development and higher living standards for Chileans, the CUT said, "but after 27 years, the profit-oriented private system has proven a disaster, and it will be the workers who will have to pay for it."

Since July 2007, Chile's private pension system of $110 billion has lost $32 billion, or 26%, due to investments in speculative derivatives instruments abroad. The CUT now demands that the private system "explain where their funds are invested," and exactly how much they have lost.