***Top executives of the already-bankrupt Citigroup
announced on Aug. 1 that they would now meet regularly to calculate how to "mitigate losses" in Brazil. Citigroup lost $2.2 billion in Argentina, but had, as of March 2002, nearly $13 billion to lose in Brazil. European exposure is even greater than American in Brazil, with Spanish interests guaranteed to go down when Brazil goes, because of enormous exposures in energy, telecommunications, and above all, banking.
On July 30, Uruguay, the "Switzerland of Ibero-America" whose economy largely revolves around its role as an international offshore banking center, was forced to declare a bank holiday, its first in 70 years. The expected next step: an Argentine-style bank deposit freeze.
Two countries in South America—Argentina and Uruguay—now have no banking system to speak of. Paraguay's system could blow tomorrow; Bolivia just suffered a damaging run on its banks. The bonds of every country in Ibero-America collapsed in the final week of July, as did many currencies, including Mexico's peso. No fewer than seven Ibero-American countries are now lining up, hat in hand, for urgent talks with the IMF.
Fools are running around calling this "contagion." It is, rather, a systemic blowout. Speaking on June 13 in São Paulo, Brazil, at a luncheon hosted by that city's Commercial Association, Lyndon LaRouche prophetically warned Brazilians of what has since happened, the explosion of their system under them. "Governments must act to put the system into bankruptcy reorganization. If you do not do it, you have the worst possible result," he told them. "Brazil, like every other nation on this planet, including Japan, is the victim of an Anglo-American dictate to try to perpetuate that bankrupt system. If we continue, this will blow up, and this could probably happen in the next two to three months. What is happening in Argentina is a warning."***
larouchepub.com |
