Losses in Latin Amer Big Worry for Finance Capital Via NY Transfer News Collective * All the News that Doesn't Fit ------------------------- Via Workers World News Service Reprinted from the November 13, 1997 issue of Workers World newspaper ------------------------- LOSSES IN LATIN AMERICA ARE BIG WORRY FOR FINANCE CAPITAL By Gary Wilson Some of the heaviest losses in the October market crash were in Latin America. Over four days, Brazil's stocks plunged about 24 percent. Several Brazilian banks suffered virtual collapse; they were quickly bailed out through takeovers. On Oct. 27, Mexico's stock index fell 13.3 percent. The peso suffered its biggest drop since 1995. Argentina's stock index fell 13.5 percent on its worst day. "There is panic across Latin America," a manager at Wall Street's Merrill Lynch told the Oct. 28 New York Times. "Being most sensitive to the global environment, the Latin markets are reacting the most." The plunge in Latin America hit Wall Street's biggest banks the hardest. The Oct. 31 New York Times reported: "Most banks have declined to discuss how well they are faring in those markets. ... Many large banks with exposure to Latin America and other emerging markets helped lead the stock market lower yesterday." The big banks that lost billions of dollars in the Latin America market crash include Chase Manhattan, BankBoston, BankAmerica, Citicorp and J.P. Morgan. There is a difference between the investments in Latin America--which are mainly speculative finance capital from the United States--and those in the Asian "tiger" countries like Thailand and Malaysia. Most of the Asian investment has been direct investment for long-term development of new industries and services. This has mostly been done through loans from Japan. These are the markets that crashed in what appears to be a crisis of overproduction. That is the crash that quickly spread around the globe. The U.S. funds flowing into Mexico, Brazil and Argentina are almost exclusively short-term speculation. Wall Street's investments in Latin America have focused on making quick profits. This has mostly been done by getting control of privatized industries that were state-owned. Others are shut down or restructured under orders from the finance capitalists who've taken over. Often this is done through the insistence of the International Monetary Fund or World Bank. The assets are frequently then sold off to reap quick profits. The Brazilian planning minister tried to calm the October market panic by announcing that "tens of billions more would come pouring in soon from the privatization of state-owned industries." ("Marketplace," National Public Radio, Oct. 30) Such privatizing creates paper profits, which are used most often to pay off debts to the imperialist banks. It does not create economic growth and development. This means that the economic boom in Latin America is fragile. As the October crash showed, Wall Street's finance capitalists sold out of the Latin markets first because this is where capital growth was the weakest. Twentieth-century imperialism was built on finance capital flowing into the "dependent" economies in Asia, Latin America and Africa in order to exploit them. But eventually their blood sucking leads to crisis, and this in turn flows back to the dominant imperialist powers. The big banks have been the source of credit for Wall Street's speculation, particularly in the Latin American markets. And it is the big banks that were the most exposed in the October crash. Despite the optimism of the big media commentators who say that the problems of capitalist crises and economic instability have been solved, there are enough signs to show that the opposite is true. - END - (Copyright Workers World Service: Permission to reprint granted if source is cited. For more information contact Workers World, 55 W. 17 St., NY, NY 10011; via e-mail: ww@workers.org. For subscription info send message to: info@workers.org. Web: http://workers.org) ================================================================= NY Transfer News Collective * A Service of Blythe Systems Since 1985 - Information for the Rest of Us 339 Lafayette St., New York, NY 10012 http://www.blythe.org e-mail: nyt@blythe.org ================================================================= nytcamer-11.07.97-03:59:58-2174