From Volume 7, Issue 43 of EIR Online, Published Oct. 21, 2008

Ibero-American News Digest

Reality of Global Breakdown Begins to Hit Home

Oct. 15 (EIRNS)—A gathering of 20-30 government and other economists from 17 countries—Venezuela, Ecuador, China, South Korea, and others—met in Caracas, Venezuela Oct. 8-11, and issued an alarmed, dramatic call to defend their nations from the global financial meltdown with emergency measures, and by "helping to build a new international financial architecture."

"A most violent financial shock is to be expected in the very short term," they warned, despite "the initial expectation that Latin America might not be hit by the crisis and that it was protected." It is now clear that "an enormously serious international crisis ... can overwhelmingly punish the peoples of the world, especially the most unprotected and left-behind sectors."

Among the featured speakers were Venezuela's Foreign Minister Nicolás Maduro, and Ecuador's Minister for Economic Policy Coordination Pedro Páez, who on Oct. 6 engaged in a dialogue with U.S. statesman Lyndon LaRouche, on Ecuadorian radio.

Although falling into many of the familiar ideological traps of Third World radical nationalists—e.g., not distinguishing between Britain and the U.S., and calling for regional common currencies—the document does call for governments to "adopt measures that guarantee the welfare and the rights of our people ... and not come to the rescue of the bankers who are responsible for the crisis, as is occurring in Europe and the U.S."

Among the measures they call for are:

* Governments must take over their national banking systems, and shut down all off-shore bank branches.

* "Prevent capital flight" with "immediate exchange controls" and control over capital movements.

* "Consider the suspension of payment of the public debt."

* Take emergency measures to insure "food and energy sovereignty," and defend migrant populations being expelled by other countries.

IMF Backs Mexican Plan To Hand Over Pemex

Oct. 11 (EIRNS)—IMF officials today endorsed Mexican President Felipe Calderón's slavish proposal of Oct. 8 to address the country's life-and-death economic crisis by saddling the state oil company Pemex with the government's off-balance-sheet "Pidiregas" debt of $176 billion, and then turning Pemex into a PPP. Anoop Singh, director of the IMF's Western Hemisphere Department, also held up Calderón's included announcement that Mexico would use its foreign exchange reserves to immediately pay off chunks of the Pidiregas debt, as an example for others. "Countries have high foreign exchange reserves, and it's natural that they should now start using them," Singh insisted.

Singh did not address the fact that the Mexican government, over the last 72 hours, already burned through 11% of its $84 billion in foreign exchange reserves, in a failed attempt to stop the free fall of the Mexican peso, which plunged 17% in one week. Among the panic purchasers of dollars were a handful of major Mexican companies which were reportedly caught with enormous derivatives exposures that they couldn't cover. The retail giant Comercial Mexicana filed for bankruptcy on Oct. 8, after admitting to $2 billion in derivatives debts that it could not pay.

Brazil Learns 'It's the Derivatives, Stupid!'

Oct. 16 (EIRNS)—Two hundred Brazilian companies suffered as much as $28 billion in losses in currency derivatives markets this week. Against the backdrop of the crashing Bovespa stock index, which dropped 11% on Oct. 15 alone, some of Brazil's most prominent companies are announcing huge third-quarter losses on derivative contracts, and several are expected to go bankrupt.

So much for President Lula da Silva's assertion that there was no such thing as a "casino economy" in Brazil.

The Biofuels Bubble Is Also Bursting!

Oct. 14 (EIRNS)—Maximiliano Londoño, president of the Lyndon LaRouche Association in Colombia, was as a speaker at a conference on biofuels organized by the magazine Virtual-Pro, reminding the audience that last year he had warned them that biofuels were a bubble that would disintegrate, just like the financial system is disintegrating today.

Last year almost everyone was infatuated with biofuels. Not so this year.

President Álvaro Uribe's representative on biofuels, Arturo Infante, who spoke after Londoño, noted that the government could not continue to subsidize biofuels indefinitely, and acknowledged that the whole biofuels scam is not financially viable [also scientifically absurd—ed.]. Operating a 100-ton biodiesel plant requires $25 million, and the crops necessary to feed the plant cost $100 million, on top of the costs of the land and labor. If the price of oil falls below $50 a barrel, he said, it would not be competitive to produce a barrel of palm oil, which currently costs $46-47.

Malnutrition in Region Highest in Decades

Oct. 16 (EIRNS)—Today, World Food Day, José Graziano of the UN's Food and Agriculture Organization (FAO) for Latin America and the Caribbean reported that 51 million Ibero-Americans are officially classified as "malnourished," an increase of 6 million over the 2003 figure. Graziano blamed high food and fuel prices for the increase, noting that the last time Ibero-America had 51 million malnourished people was in 1990. And, he added, the current global financial crisis will undoubtedly make it worse.

Soros Launches Attack on Colombian President

Oct. 17 (EIRNS)—George Soros's hit-squad yesterday issued a broadside against Colombia's Álvaro Uribe, the one Ibero-American President who is insisting that legalized "personal" drug consumption must be reversed, because it is a cover for increasing drug mob activities. Soros's Human Rights Watch/Americas held a press conference in New York City to release a report alleging that Uribe is covering up links between his administration and the paramilitaries. BBC-TV played up the report for all it is worth.

Soros's attack on Uribe occurs in the context of the Nazi-trained speculator's drive to induce the Ibero-American nations to adopt the same legalized drug consumption policies which have turned major European cities into drug havens. Soros founded the Latin American Commission on Drugs and Democracy, headed by former Presidents of Brazil, Colombia and Mexico, in April 2008, to lead that drive.

The Commission held its second meeting in Bogota on Sept. 4-5, closeting itself behind closed doors with Soros's personal drug lobby strategist, Ethan Nadelmann. Within weeks, governments fell in line. On Oct. 1, Mexican President Felipe Calderón sent legislation to Congress, to legalize "personal doses" of narcotics of all types (cocaine, heroin, and the synthetic killers). On Oct. 13, Honduran President Manuel Zelaya capitulated, too, telling a regional meeting of top anti-narcotics officials, that consumption of "chemical, synthetic, and natural" drugs should be legalized, and abusers "educated" on lowering their use. If Argentina's Justice Minister has his way, Argentina will follow.

Uribe, however, refuses to buckle on this, pointing out that the legalization of "personal doses" has increased drug consumption and provided impunity for the traffickers.

Argentine Minister Rams Through Soros Drug Plan

Oct. 17 (EIRNS)—In his keynote to the First National Conference on Public Drug Policy held in Buenos Aires on Oct. 9, Argentine Justice Minister Anibal Fernández insisted that it was urgent to legalize drugs for personal consumption, especially among youth.

With the immoral irrationality typifying his Boomer generation, Fernández argued that drug consumption for personal use is part of the "second generation of human rights." Between 70% and 75% of drug consumption in Argentina is recreational, he said, and kids will be kids. He demanded that Argentina follow the Europeans in permitting special "coffee shops," or dens where drugs can be legally consumed.

Also participating in the conference were the ministers of health, education, labor, social development, and foreign policy, most of whom echoed Fernández's "harm reduction" theme. While endorsing the policy in general terms, Argentine President Cristina Fernández de Kirchner is reported to be under enormous pressure from the Soros crowd to back the policy more aggressively.

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