World Economic News
Financial Predators Rampage Against Argentina's Kirchner
Unable to accept the reality that Argentina successfully concluded its operation to restructure $82 billion in defaulted debt with 76% bondholder participation, the International Monetary Fund (IMF) and its allied financial predators are on a mad rampage against the government of President Nestor Kirchner. They cannot tolerate a President who dares say, as Kirchner did on March 15 to Fund Managing Director Rodrigo Rato, that "we are an independent nation which knows how to govern itself," and doesn't need IMF "tutelage."
Now up against the April 1 deadline on which Argentina is scheduled to officially start swapping its defaulted bonds for new ones, the financial predators have resorted to last-ditch legal maneuvers and crude threats in an attempt to force Kirchner into reopening the bond swap, or alternatively, to halt the process altogether.
On March 21, lawyers for NML Capital Ltd., an offshore branch of the notorious Elliott Associates vulture fund, went before New York Federal Judge Thomas Griesa to demand the freezing of $7 billion in defaulted Argentine bonds deposited at the Bank of New York, the government's clearing agent in the restructuring. Even though the $7 billion far exceeded Elliott's claim of $300 million, Griesa granted the motion, raising Argentina's fears that he might freeze similar large amounts for other vulture funds that would make the April 1 swap impossible.
On March 29, Griesa lifted the freeze on the $7 billion in bonds, but then stayed his own ruling so that Elliott could appeal it, thus ensuring a delay in the April 1 completion of the swap. The New York judge baldly asked Argentina's lawyers what kind of offer the government would make to those bondholders who had refused to participate in the restructuring. The same day, the IMF announced that it would review its policy of lending to Argentina, should Argentina not make concessions to those bondholders.
Mahathir on Dollar Collapse: Seek an Alternative
Addressing an international conference of 650 chief executives from 30 countries in Kota Kinabalu, Malaysia, former Prime Minister Mahathir bin Mohamad said the U.S. dollar is facing an imminent collapse, and indicated a gold standard currency was the best alternative for international trade, the Malaysia Star reported March 30.
Dr. Mahathir told the conference that the only reason the dollar was retaining any value was because of fears of a global economic catastrophe were it rejected as the currency of trade.
His keynote address was titled: "Leadership in the Age of Uncertainties; the Effect of Global Events in Business." He warned: "The catastrophe will come one day, because even the most powerful country in the world cannot repay loans amounting to US$7 trillion. The uncertainty is with the timing, not whether it will collapse."
Noting that the dollar had been devalued by as much as 50% against the yen, he said it was doubtful that the greenback could recover to its old strength; rather, it would continue to slide, as the present American administration under President George W. Bush did not consider deficits worth reducing.
Dr. Mahathir said that due to America's huge deficit, the U.S. currency had no backing, but continued to be in use because some people still accepted payments in dollars.
"Unless they [the Americans] change their President and have a more responsible President who will try to reduce the deficit, they will have serious trouble with the U.S. currency," he said.
On whether Malaysia should reject the use of the greenback for trade, Mahathir said it was up to the government to decide.
Decimated Zimbabwe Economy Beginning to Improve
Zimbabwe's economy is improving, Reuters reported March 22. "Things have improved and the economy is set to expand in 2005 after six years of recession, but it is still 30% smaller than it was in 1999." And two-thirds of the workforce is believed to have left the country over the last five years.
The collapse resulted from the virtual elimination of the European-run commercial farming sector during the process of land distribution, and also from the trade embargo imposed by the Anglo-American powers, in retaliation for the seizure of land in the hands of Europeans.
"[The government] says a revamped monetary policy has seen bigger inflows of foreign currency through legitimate channels, while improved fuel supplies have eased the plight of industry and motorists," according to Reuters. Annual inflation has subsided to 134%.
Whether this process will continue after the recently held parliamentary elections, is unclear.
World Bank to Finance Africa Electricity Project
The World Bank will finance a project to provide 500 megawatts of electricity from Inga Dam in D.R. Congo, to Uganda, Kenya, and Tanzania, consistent with the plan of the New Partnership for Africa's Development (NEPAD) to modernize some infrastructure. The bank announced in Kinshasa March 25 its decision to support the project to refurbish the Inga Dam hydroelectric plant for this purpose, to the extent of $177 million. Most of the generators of the plant are no longer functioning after many years of neglect. Inga 1 first came on line in 1972; Inga 2 in 1982.
There is already a power line that runs from Ingawhich is downstream from Kinshasa on the Congo Riverto Kinshasa, and thence 2,000 km to Kolwezi in Katanga Province in the far south, where power requirements for mining are great. The World Bank plan is to transmit power from there to Tanzania, Uganda, and Kenya through the grid of adjoining Zambia. The connection to the Zambian grid is part of the $177 million project.
The power will be used to take advantage of cheap labor, especially for textile manufacture for the world market.