the imf, argetina, the us$ - sinclair article

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    January 17, 2003
    An IMF-amous Date?

    The Art of the Deal:
    Does Argentina Hold the "Trump" Card?
    by James E. Sinclair
    January 12, 2003

    During the real estate crash of the early 80's, an influential, popular, and aggressive New York real estate tycoon’s holdings were negatively affected, just as were other investors’ properties. Although Citicorp had wooed him for his business, they now called this gentleman in for a “Come to Jesus” conversation concerning his debts versus his cash balances at the bank. Our real estate tycoon seemed totally unconcerned by the bankers’ demands or by the remedies they claimed would be applied unless he performed, as they required, that day. Why, the demanding and stern bankers wondered, did the threat of foreclosure not make this young man uneasy? What did he know that they did not? He just sat there with the same assured smile he came into the meeting with. Finally, after he had waited quietly, when it came time for him to speak, he informed those at the meeting that not only would they not foreclose but, in fact, they would meet his demands for the additional loans to pay them as long as required. He informed them he had analyzed their present financial condition and the liquidity requirements of their institution. His accurate study clearly demonstrated that his real estate position, added to their present bad loans, would cause the bank dire problems. The market for liquidation of his assets simply did not exist at that time (I am being polite here). He received the additional funds he required and survived the recession to become one of the most successful real estate operators of the late 80's and 90's.

    What has this got to do with Argentina?

    Prepare yourself for an announcement that the IMF, with the urging of the US, has come to the rescue of Argentina. What this spin-speak will really mean is that the IMF has been held up for $3 billion to be lent to Argentina without any significant conditions. $3 billion will be the amount that Argentina will owe to the IMF on the same day. Just like the “Show-Money” lent to Brazil (that they can show, but cannot use), the IMF is again being shown up as a political tool of G7. Even worse, the IMF and World Bank have sold the Dollar Reserve Standard and Global Market concept to the oil rich big six, the Central and South American countries, plus the developing nation only to let them all down hard. It was not in the IMF and the World Bank’s agenda that commodity prices, so important to the Central & South American and developing nations, should rise in order for them to prosper. On the contrary, commodity prices had to stay low if the instant gratification economy was to stay in profitable and productive gear in the 80's and 90's. Raw materials had to remain cheap. The promised investment from the private sector failed to materialize and those that bought the Dollar Reserve Standard’s thesis are paying heavily for it now, oil boys included.

    This loan to Argentina on January 17th, should it occur without economic concessions, will be a glaring spotlight on the political agenda of the IMF and the World Bank – just at a time when their global popularity could not be any lower.

    Shame on these two organizations for their political nature and ineptitude. Do they not remember the “Genocidal Wars” in Burundi and Rwanda, one of their many previous failures. It was the IMF and the World Bank that used aid as a tool to force populous elections when the ruling tribe that controlled the army made up 10% of the population. Everyone knew the 90% opposition would win and what that meant. Yet the World Bank and the IMF would not relent. So to prevent starvation natural to the cessation of aid plus cessation of the political pocket lining which aid seduces, the election was held. The rest is history. I did not hear those organizations say oops or sorry.

    The Argentina $3 billion loan that will most likely come this week, without any price tag of performance hung on it, is another long-term dollar negative event. In time, the Dollar Reserve Standard’s thesis enthusiastically sold to the planet’s central banks by the IMF and the World Bank on behalf of the G7 will break down into the Dollar Reserve/Euro Reserve/Dinar Reserve Standards of Self-Protection economically. By 2007, few nations will be left on a Dollar Reserve standard. By 2010, the 2 Dinars will be sought after gold currencies. Many soon, like Kuwait recently, will start fiddling with the formula by which they are related to the dollar and that means they eventually move to the euro and some element of gold. This is long-term dollar negative development.

    © 2003 James E. Sinclair



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