From Volume 7, Issue 44 of EIR Online, Published Oct. 28, 2008

Ibero-American News Digest

Brazil's Lessa Slams Derivatives, Calls for Exchange Controls

Oct. 25 (EIRNS)—Prof. Carlos Lessa, one of Brazil's only voices of sanity in the current financial breakdown crisis, stated on Oct. 20, that the explosion of the global derivatives bubble was the cause of the crisis on international markets.

In an Oct. 20 speech on, "The crisis in the USA and its repercussions in Brazil and the world," delivered before the Brazilian Press Association (ABI), the former president of the National Economic and Social Development Bank (BNDES) presented an analysis which contains elements which will be familiar to readers of Lyndon LaRouche's writings on the subject.

"Professor Lessa traced the history of the current turbulence in the international economy to the 1971 end of the parity between the U.S. dollar and gold," journalist Julio Cesar de Freixo Lobo reported, noting that Lessa explained that "the problem is that the emission of paper, or derivatives, exceeds the total actual wealth of the countries of the world by a factor of ten. 'To give you an idea: the estimation is that the world's GDP is $67 trillion, whereas the total paper assets issued is about $600 trillion, and now that speculative bubble has exploded,' " Freixo Lobo quoted Lessa as saying.

"According to the professor, there is a movement of countries such as France and Russia to try to diminish the effect of the crisis," Freixo Lobo wrote, which Lessa welcomed because, "We could also have what is called an economic depression in the world, like what happened in the years following 1929 with the collapse of the New York Stock Exchange."

"Lessa stated that the country has a vulnerable economic policy, in light of the free trade in currencies and goods. He noted that the country's dollar reserves [$202 billion] could disappear in a little more than a month, due to capital flight by foreign investors trying to cover their negative positions abroad." The article quotes Lessa repeating his earlier call for Brazil to adopt exchange and capital controls: "I propose a centralization and control of currency exchange by our monetary authorities."

In November 2005, when he was dumped as head of the BNDES, Lessa distinguished himself by his blistering attack on Brazil's ruling elites. The problem in Brazil, he charged, is a national elite which wants nothing to do with the Brazilian people, an elite which maintained slavery for as long as possible [until 1888], and which throughout Brazil's history, has crushed every attempt to form a counter-elite committed to the development of the people.

This is the deep-seated oligarchical outlook against the poor in Brazil which LaRouche has repeatedly pointed to, as the reason Brazil is the hardest country on the continent to change, even though it is the most powerful in potential. Recalling his 2002 trip to São Paulo, LaRouche has spoken of the favelas (giant urban slums) where even the police don't dare venture, contrasted with the indifference of the wealthy who live behind walled estates.

Fidel Castro Wraps Himself in the British Flag

Oct. 21 (EIRNS)—In an article entitled "The Uncommon," Cuba's Fidel Castro wrote on Oct. 16 in the daily Granma that, "On the 14th, [the Spanish daily] El País runs an article under the heading, 'Gordon has done it right,' with some ideas that deserve to be literally reproduced."

Castro repeats El País's assertion that British Prime Minister Gordon Brown's approach to the global financial crisis (which includes destruction of the United States) is the correct one.

"The British government has gone directly to the root of the problem and acted with astonishing speed to solve it.... We still don't know if those measures will work ... [but] that clear view had to come from London and not from Washington." U.S. Secretary Treasury Henry Paulson's original proposal "was distorted by ideology." And finally: "Luckily for the world economy, what Gordon Brown and his ministers are doing makes sense. And perhaps they have shown us the way out to overcome this crisis."

By quoting El País, the wily Castro found a way—at arm's length—to openly endorse the British Empire's final solution—establishing a bankers' dictatorship, not to resolve the global financial breakdown, but for ridding the world of Britain's greatest nuisance, the United States.

Argentine President Re-Nationalizes Pension System

Oct. 22 (EIRNS)—On Oct. 21, Argentine President Cristina Fernández de Kirchner announced the renationalization of the private pension system that was imposed on the country in 1994. This was a partial privatization, which financier interests had eventually hoped to complete, just as was done in Chile by the fascist Pinochet dictatorship in 1981. The bankers were horrified then, when Fernández accused the ten private funds, known by the acronym AFJP, of carrying out "a policy of looting," and asserted the State's constitutional right to take control of them on behalf of the general welfare. People come before banks, she warned.

The President's action unleashed howls of rage from the City of London and allied quarters, whose mouthpieces ranted that Argentina's sovereign action had actually caused the sharp decline of stock markets around the world! "Concern about a second Argentine default in a decade rattled investors in emerging markets," Bloomberg reported. And the Daily Telegraph's Ambrose Evans-Pritchard complained today that the President and her husband, former President Néstor Kirchner, were stealing the $29 billion in private funds in order to meet 2009 debt obligations. Argentina has become a "Latin Iceland," he claimed.

In Buenos Aires, police conducted raids on several AFJP offices today. Anticipating that the renationalization was about to occur, the AFJPs had dumped massive quantities of state bonds on the market, causing their value to drop sharply, while at the same time, buying up large amounts of dollars, driving the value of that currency so high that it destabilized the exchange rate.

Government prosecutors say the AFJPs action had caused "serious and irreparable harm ... not only to its affiliates but also to the nation-state." The government is pursuing legal action that could land fund managers in prison.

Chilean Fascists Unnerved by Argentine Pension Nationalization

Oct. 23 (EIRNS)—Financial controllers and defenders of Chile's private pension system, imposed by fascist dictator Augusto Pinochet in 1981, are going berserk over Argentine President Cristina Fernández's re-nationalization of her country's private pension system, announced on Oct. 21. They are frantic that Chile's private system might also be in jeopardy.

One of the most vocal opponents is José Piñera, the architect of Chile's private pension system, whose backers include George Bush's godfather, George P. Shultz, and "get LaRouche" hit man, investment banker John Train.

Piñera charged today that Fernández's action was a "blow" to the workers enrolled in that system, constituting outright theft. The Harvard-trained economist, who imposed the private system while serving as dictator Pinochet's labor minister, sneered that Chilean President Michelle Bachelet, whom he described as "Cristina [Fernández]'s best friend," couldn't do the same in Chile "despite the demagogy of her [2005 Presidential] campaign."

In fact, it was pressure and threats from Piñera's friends among Chile's Pinochet-loving financial oligarchy that prevented Bachelet from carrying out the sweeping reform of the private pension system that she had promised during her Presidential campaign, forcing her to settle for something more modest.

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