- 2 days ago
Anthony Sampson looks at the difficulties developing countries have in repaying loans to Western banks, who fear financial catastrophe as a result.
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00:00:22Western bankers have lent hundreds of billions of dollars, which they cannot get back.
00:00:36Mexico, last year, nearly welched on its debt.
00:00:42Now Brazil, the biggest debtor, crippled by economic and social chaos, threatens the same.
00:00:48Tonight, on Frontline, how safe are the banks?
00:01:05From the network of public television stations, a presentation of KCTS Seattle, WNET New York, WPBT Miami, WTVS Detroit, and WGBH Boston.
00:01:19This is Frontline.
00:01:22With Jessica Savage.
00:01:26If you owe money to a bank and you can't pay it back, you're in trouble.
00:01:31But now suppose you owe not a few thousand dollars, but a few billion.
00:01:35Well then, ironically, you would be in a much stronger position.
00:01:39Because if you refuse to pay, the bank might go bust.
00:01:43And that's the problem.
00:01:43Developing countries have borrowed hundreds of billions of dollars from the banks.
00:01:47And some of the biggest borrowers, like Brazil and Mexico, are struggling even to repay the interest.
00:01:54Now they could repudiate their loans.
00:01:56And this could trigger the collapse of our banking system.
00:02:00Repudiation almost happened.
00:02:02Tonight's report reveals, for the first time, the details of how Mexico last summer tried to get other countries jointly to repudiate Western loans.
00:02:12Now few in the financial world really want to talk about the dangers of the debt crisis.
00:02:16Such talk shakes confidence.
00:02:19Banking and the current recovery are built on confidence.
00:02:23But this has become a crisis which affects all of us.
00:02:26And now, Money Lenders, produced by Marsh, Marshall and David Wickham.
00:02:32The reporter is Anthony Sampson, a British journalist who has written extensively on international issues and economics.
00:02:40Once a week, an economic task force meets in the White House.
00:02:44Among those present are Donald Reagan, Secretary of the Treasury, and high officials of the CIA and other agencies.
00:02:53It's a subcommittee of the National Security Council.
00:02:56And these days, its chief concern is the crisis in world banking and debt.
00:03:04It's a crisis that really started with the Iranian Revolution.
00:03:07The world's bankers were shocked by the fall of the Shah.
00:03:16The huge loans to Iran had not brought stability or prosperity, but weapons and revolt.
00:03:27Soon after the Iranian crisis, events in Poland dealt the bankers a further blow.
00:03:31When solidarity went on strike, it caused a political and an economic crisis in Poland.
00:03:41Now, lending to governments began to look much less secure.
00:03:49But the biggest crisis in world banking today is in Latin America.
00:03:52The most serious problem facing the White House meeting is Brazil.
00:03:57It's the biggest debtor of all.
00:03:59It owes 90 billion dollars.
00:04:01And it could be forced to declare a moratorium,
00:04:05postponing the repayment of its debts at any time.
00:04:12These riots in Sao Paulo happened in March.
00:04:15Soon after, the international bankers forced Brazil to curb government spending,
00:04:20to cut wages and raise prices.
00:04:22Brazil is not an isolated case.
00:04:26Several Latin American countries have had crises over their debts
00:04:29and have imposed similar austerity measures on their people
00:04:32and have seen riots in the streets.
00:04:35But U.S. administration officials deny any threat to the banking system
00:04:39and insist that the Latin American crisis is under control.
00:04:48It's not at the crisis stage now.
00:04:50The crisis has really passed.
00:04:52Obviously, we could be in another one where oil prices fall further and fall precipitously.
00:04:57But apart from that, I think the majority of the crisis has passed.
00:05:01We've successfully handled Mexico, Argentina, and Brazil.
00:05:07That's 40% of the debt of all of the developing nations.
00:05:11But in the city of London, one man who has been predicting the current banking crisis for years believes that still worse is to come.
00:05:21A prominent banker and former member of the British cabinet, he is Lord Lever.
00:05:25The financial crisis of the developing countries is in its infancy.
00:05:32All that's happened is not the solution of this crisis, but the prevention of immediate breakdown
00:05:38with the promise that we shall flounder from crisis to crisis unless there is a coherent strategy for dealing with the central problems.
00:05:47And what is worse, each new crisis will be more difficult to deal with than the previous one.
00:05:52The ponderous architecture and the pompous style of the banks are partly designed to conceal a critical truth
00:06:01that the banking system is inevitably fragile, and bankers are always anxious to avoid causing any alarm to their customers,
00:06:09whether a company, a government, or a small depositor.
00:06:17But a crisis of debt affects everyone, because savings worth billions of dollars all flow into a great global pool of funds,
00:06:25part of which is lent around the world.
00:06:28The whole system depends on confidence.
00:06:31But how far can confidence be maintained when so many of the world's debtor countries are teetering on the brink of default?
00:06:44Banks exist to lend money, and all of them lend out far more than the original capital from their shareholders.
00:06:51In some countries, the ratio goes up to 30 to 1.
00:06:54But what's more worrying is that some banks have actually lent the equivalent of more than their capital to just two or three countries.
00:07:00Manufacturers Hanover in New York, for instance, has lent three-quarters of its capital to Mexico.
00:07:07Lloyds Bank in London has lent as much as its capital to Mexico and Argentina together.
00:07:12And Citibank has lent the equivalent of nearly all its capital to one country, Brazil.
00:07:20But Brazil is so deeply in debt that all the money it borrows goes straight back to pay the interest to the bankers.
00:07:30The 25 million dollars' worth of money here is only enough to pay the interest that Brazil has to pay the world's bankers,
00:07:38not in a year or a month, but in half a day.
00:07:41Congressman Charles Schumer fears that this burden of interest could have disastrous consequences,
00:07:48not just for the countries who owe the money, but for the countries who lent it.
00:07:52There are two real worries.
00:07:53One is that some dictator, somewhere or other, is going to find that it's easier for him to repudiate debt than to repay debt.
00:08:02And if we put such severe austerity on him, someone's going to decide that sooner or later.
00:08:06And once he does and he gets away with it, then there'll be a line at the door to repudiate.
00:08:11There's a second worry, which is a greater worry.
00:08:13And that is that we, by imposing such severe austerity on all these third world countries,
00:08:20are going to so slow down the world economy that we're going to hurt ourselves.
00:08:23The British Navy set sail for the Falklands in 1982.
00:08:30It was the actions of a dictator, Argentina's General Gautier, that caused the war.
00:08:36But the war also helped to precipitate the present banking crisis.
00:08:45Gautier had seized the Falkland or Malvinas Islands, and now the British were determined to recapture them.
00:08:53And to the bankers, this wasn't just a war, but a crisis of credit.
00:09:07Not just in Argentina, which owed them more than $30 billion, but all over Latin America.
00:09:12In this war, the bankers were all too aware that the money they had lent to Argentina
00:09:27had been used not on productive investment, but squandered on a futile military adventure.
00:09:33In the last ten years, the world's banks have become much more closely interlocked
00:09:48with instant electronic communications,
00:09:50and a crisis in any one country quickly reverberates to banks across the world.
00:09:54The Falklands War made bankers more doubtful of the wisdom of lending to Latin America.
00:10:01So credit to Latin America began to dry up,
00:10:04and the first country to be really hit was Mexico.
00:10:07In July 1982, President López Portillo knew that Mexico was effectively bankrupt.
00:10:14Unable to borrow from foreign banks,
00:10:16his country could not afford to pay for essential imports
00:10:18or to meet the interest payments on past borrowings.
00:10:22A director general in the Ministry of Industry at the time was Vladimir Bralovsky.
00:10:28Well, we went from a situation where the international banks were willing to lend us,
00:10:34without any sort of accounting,
00:10:36$20 billion,
00:10:39to a situation where they just didn't lend us anything.
00:10:42I mean, the rules of the game have been for the last 40 years
00:10:45that Mexico borrowed some money from abroad
00:10:49to be able to increase its domestic production capacity.
00:10:56And if at any time the banks decided not to lend us money,
00:11:02well, then we would be in a very severe crisis.
00:11:05And that's what happened in 1982,
00:11:07from $20 billion to almost nothing.
00:11:10Mexico City is a place of huge inequalities and contrasts.
00:11:31And the city bustle conceals a growing desperation.
00:11:34The smart streets of the Zona Rossa maintain a cosmopolitan style
00:11:40and Parisian elegance,
00:11:41while the ordinary people have got poorer.
00:11:46Juan Ramilis lost his job
00:11:47and now earns a few pesos from passing motorists
00:11:50by setting fire to his mouth.
00:11:55It could give him a life expectancy of about 18 months.
00:11:58Mexico hopes to get much richer.
00:12:11In the last few years,
00:12:13Mexico has found huge new oil fields
00:12:15which have made her one of the world's five biggest oil producers.
00:12:19And the oil allowed Mexico to borrow billions from the Western banks.
00:12:23Until by 1981,
00:12:24she was owing about $60 billion.
00:12:26The Mexicans hoped that their huge loans
00:12:36would contribute to development
00:12:38and would improve the standard of living
00:12:40of their long-suffering people.
00:12:41At a small brickworks outside Mexico City,
00:12:51Teresa Sanchez, at the age of 35,
00:12:54works to feed her family of eight.
00:12:58The oil revenues and loans did bring benefits to Mexico
00:13:01with a growth rate of 8.5% for four years.
00:13:05But it didn't reach down very far.
00:13:0755% of the Mexican population,
00:13:10according to the World Bank,
00:13:11suffer from malnutrition.
00:13:13And as food prices have gone up,
00:13:15Teresa can afford still less.
00:13:19For the last four months,
00:13:20she and her family have had no meat at all.
00:13:23But according to Vladimir Brilovsky,
00:13:29Mexico's borrowed billions weren't helping the people,
00:13:3240% of whom are even poorer than Teresa.
00:13:35The international banks lent to us about $20 billion,
00:13:39around $20 billion during 81.
00:13:43Almost half of it went immediately out of the country
00:13:47in the way of capital flights.
00:13:49So in effect,
00:13:51the big banks were lending to Mexico
00:13:53without that money really staying in the country
00:13:56in a way that could be productive
00:13:58to enable them to repay the interest?
00:14:01At all, no.
00:14:02No, it just,
00:14:03especially during the second half of 81,
00:14:07it came in and went out,
00:14:08just like that.
00:14:09$400 million came to this vacation spot
00:14:16near Brownsville, Texas,
00:14:18where you can often see
00:14:19Mexican lumber plates on luxury cars
00:14:21and public signs are posted in Spanish.
00:14:31Brownsville provided a sunny climate
00:14:33for rich Mexicans
00:14:34who wanted to protect their money
00:14:36from devaluation and runaway inflation
00:14:38by investing in real estate
00:14:39in the United States.
00:14:45And this is one of our penthouse units.
00:14:47It's approximately 2,500 feet in size.
00:14:51This is a bedroom.
00:14:52We come up forward into the main living area.
00:14:55We have a fully equipped wet bar,
00:14:58fireplace,
00:14:58and a fantastic view out over the Gulf.
00:15:02But in addition,
00:15:03we have a jacuzzi tub
00:15:05with a skylight above it.
00:15:06The master bedroom suite
00:15:08is equipped with a Kohler environment,
00:15:10which is an apparatus
00:15:12that will provide sun and wind and rain,
00:15:14whatever environmental condition
00:15:16the occupant might like to have.
00:15:17He climbs in,
00:15:19closes the door,
00:15:20turns on the computer system
00:15:21and the music system,
00:15:23and he's off.
00:15:23By 1982,
00:15:25the political tension in Mexico
00:15:27was reaching a climax.
00:15:29The price of food was racing up.
00:15:31Tortillas,
00:15:32the staple food for most Mexicans,
00:15:33went up by 100% in a few months.
00:15:36With oil prices falling,
00:15:37the economic crisis deepened.
00:15:42By August 1982,
00:15:44the political atmosphere was electric.
00:15:46The president's palace at Los Pinos
00:15:47was the focus for protests
00:15:49about low wages
00:15:50and the higher cost of living.
00:15:54The Mexican government
00:15:55was under growing pressure
00:15:56to do something.
00:15:58Then suddenly,
00:15:59the Mexican crisis broke
00:16:00upon the rest of the world.
00:16:04Unable to borrow any more money
00:16:06since the Falklands War,
00:16:07President Portillo
00:16:08now had no alternative
00:16:09but to go cap in hand
00:16:11to the American government.
00:16:13His own government
00:16:14had run out of money
00:16:14and couldn't pay
00:16:16the interest due
00:16:16on its existing loans.
00:16:20Early that August,
00:16:22the stately calm
00:16:23of the Federal Reserve Bank
00:16:24here in Washington
00:16:25was rudely interrupted
00:16:26by a dramatic phone call
00:16:28from Mexico City.
00:16:31The Federal Reserve Bank
00:16:33exists to protect
00:16:34the soundness and integrity
00:16:35of the banking system.
00:16:37If an American bank
00:16:39is in trouble,
00:16:40it's the Fed's job
00:16:41to provide emergency funds,
00:16:43to stave off a collapse,
00:16:44and to preserve
00:16:45confidence generally.
00:16:50The chairman
00:16:51of the Board of Governors
00:16:52is Paul Volcker.
00:16:53Maintaining all his outward calm,
00:16:55Volcker was swiftly involved
00:16:57in a succession
00:16:58of emergency meetings,
00:16:59working round the clock
00:17:00with the U.S. Treasury
00:17:01and international bankers
00:17:03to stave off
00:17:04the collapse of Mexico.
00:17:06Volcker helped
00:17:06to put together
00:17:07a complicated deal
00:17:08to rescue Mexico.
00:17:10But it included
00:17:11one element
00:17:11which was to infuriate
00:17:13the Mexicans.
00:17:14A confidential letter
00:17:19explained that
00:17:20a billion dollars
00:17:21would be advanced
00:17:22to Mexico
00:17:23in exchange for
00:17:23Mexican oil.
00:17:27It was signed
00:17:28by both the American
00:17:29and the Mexican governments.
00:17:31But when they got home,
00:17:32the Mexicans reckoned
00:17:33that they were paying
00:17:34too much.
00:17:35One cabinet paper
00:17:36alleged that the implicit
00:17:38interest rate in the deal
00:17:39would be 40% per annum
00:17:41on the unpaid balance.
00:17:43It went on,
00:17:44it is clearly too much
00:17:45for a government-to-government loan.
00:17:47López Portillo
00:17:55proclaimed the nationalization
00:17:57of the banks
00:17:57to a crowd of a million
00:17:59in the central square
00:18:00of Mexico City.
00:18:02It appealed to all
00:18:03the popular nationalist sentiment
00:18:04of the Mexicans.
00:18:08Near the end
00:18:08of the president's term,
00:18:10it was seen
00:18:10as his popular triumph.
00:18:12Mexico, vive!
00:18:13And Mexico, vive!
00:18:14Viva Mexico!
00:18:15This bombshell faced
00:18:25the world's bankers
00:18:26just before they gathered
00:18:28for their annual jamboree
00:18:29a few days later
00:18:30at the meeting
00:18:31of the IMF
00:18:32at Toronto.
00:18:33Behind their deadpan expressions,
00:18:35many bankers were terrified
00:18:36that the Mexican crisis
00:18:38could subvert
00:18:38the whole banking system.
00:18:41But the managing director
00:18:42of the IMF,
00:18:43Jacques de la Rosière,
00:18:44took a stern
00:18:45and uncompromising line
00:18:46towards the debtors.
00:18:48Corrective policy measures
00:18:49are already underway
00:18:51in many countries,
00:18:52but considerably more adjustment
00:18:55is needed
00:18:56if external deficits
00:18:57are to be brought down
00:18:58and debt crises avoided.
00:19:02In the coded language
00:19:03of international bankers,
00:19:05talk of corrective measures
00:19:06and considerable adjustment
00:19:08meant nothing less
00:19:09than drastic austerity programs
00:19:11for the people of Mexico.
00:19:12It's strikingly evident
00:19:13by the current developments
00:19:15in Mexico.
00:19:21Back in Mexico,
00:19:23President Portillo
00:19:24was furious
00:19:24about his treatment
00:19:25at the hands
00:19:26of the American government
00:19:27and the foreign bankers.
00:19:33He appointed a new man
00:19:34to take over
00:19:35as head of the central bank.
00:19:37The new governor
00:19:38was a former minister
00:19:39who had earlier resigned
00:19:40against the terms
00:19:41of an IMF loan
00:19:42and he was now moved
00:19:43into the Bank of Mexico.
00:19:46Carlos Teo,
00:19:47the head of the central bank,
00:19:48with his radical colleagues
00:19:49in the cabinet,
00:19:50had other ideas.
00:19:52They were exploring
00:19:53the possibility
00:19:53that Mexico
00:19:54might get together
00:19:55with the other big debtors,
00:19:56Brazil and Argentina,
00:19:58at a default
00:19:58on their debts,
00:20:00simply not to pay back
00:20:01the money
00:20:01they owed to the bankers.
00:20:03It's clear
00:20:04that the inner cabinet
00:20:05in Mexico City
00:20:07was divided.
00:20:08One side in favor
00:20:09of coming to terms
00:20:10with the bankers,
00:20:12the other side
00:20:12in favor of resisting.
00:20:15And the group,
00:20:16including Carlos Teo,
00:20:18in putting forward
00:20:19the case for default,
00:20:21as these papers here
00:20:22make clear,
00:20:23argued that Mexico
00:20:24would be in a strong position.
00:20:26If Mexico announced
00:20:27the suspension of payment,
00:20:29the international financial system
00:20:30would collapse.
00:20:32Were this to happen,
00:20:33other countries
00:20:33such as Brazil,
00:20:34Argentina and Venezuela,
00:20:36who between them
00:20:36owe $130 billion,
00:20:38would probably also
00:20:39suspend payments.
00:20:40Indeed,
00:20:41if no interest
00:20:42is paid back
00:20:42on the foreign,
00:20:43public and private debt,
00:20:44Mexico could enjoy
00:20:45a current account surplus
00:20:47of over $5 billion
00:20:48within the next 12 months.
00:20:50Several people
00:20:52in the government,
00:20:53especially our group,
00:20:54was advocating
00:20:55some sort of
00:20:56unilateral action.
00:20:57on the part of Mexico.
00:21:00Now, we realized
00:21:00that there were
00:21:02many dangers
00:21:04in doing that.
00:21:07There could be
00:21:08an embargo
00:21:09on our oil exports
00:21:10and that sort of thing.
00:21:11By unilateral action,
00:21:12you mean declaring
00:21:13a default
00:21:13or a moratorium?
00:21:15Declaring a default
00:21:15or a moratorium, yes.
00:21:18So,
00:21:19the idea
00:21:20that other countries
00:21:21were in a position
00:21:22similar to ours
00:21:23prompted
00:21:26the possibility
00:21:28of doing
00:21:29some sort of
00:21:30joint action
00:21:33with other countries,
00:21:35especially with
00:21:36the Brazilians
00:21:36and the Argentinians.
00:21:38Was the president
00:21:38virtually by himself
00:21:40discussing this possibility
00:21:41with other countries?
00:21:42Yes,
00:21:43it was done
00:21:43at the highest possible level.
00:21:45probably one minister
00:21:49and the president himself.
00:21:52Yes,
00:21:52it was done
00:21:52at the very highest level.
00:21:55So,
00:21:55that other members
00:21:55of the government
00:21:56might not have been
00:21:57involved at all
00:21:57or even know about it?
00:21:58I think
00:21:59many,
00:22:01very few people
00:22:02know about that.
00:22:04We understand
00:22:05that Lopez Portillo
00:22:06held two secret meetings
00:22:08with the Brazilians
00:22:09and Argentinians
00:22:10about joint default,
00:22:12but in the end
00:22:13couldn't persuade them
00:22:14and the Mexicans
00:22:15were not prepared
00:22:16to default
00:22:16on their own.
00:22:18They decided that
00:22:18on September the 24th.
00:22:21So,
00:22:21at that point
00:22:22they had to
00:22:23accept
00:22:23the bankers' terms
00:22:24and to apply
00:22:26for a loan
00:22:27to the IMF.
00:22:28The IMF
00:22:30was now
00:22:30in the centre
00:22:31of the banking crisis.
00:22:33It had been set up
00:22:34by governments
00:22:34to cooperate
00:22:35with other governments
00:22:36to safeguard
00:22:37the world's money system
00:22:38and to provide
00:22:39emergency loans
00:22:40to member countries
00:22:41which had run out of money.
00:22:43But the IMF
00:22:44attaches harsh conditions
00:22:46to their lending,
00:22:47requiring borrower governments
00:22:48drastically
00:22:49to cut public spending
00:22:50and to remove subsidies
00:22:51from food prices
00:22:52and basic services.
00:22:56This photographic
00:22:57exhibition
00:22:58in the IMF's
00:22:59grand headquarters
00:23:00in Washington
00:23:00shows portraits
00:23:01of people
00:23:02from less developed countries.
00:23:04But many critics
00:23:05complain
00:23:06that the IMF bureaucrats
00:23:07are too detached
00:23:09to understand
00:23:09the human cost
00:23:10of the austerity programs
00:23:12they impose.
00:23:13Well, fortunately up to now
00:23:15we have not had
00:23:15to go to IMF
00:23:16and we hope
00:23:17we never do.
00:23:18We never have to
00:23:19because the conditions
00:23:20are too hard,
00:23:21far too hard.
00:23:22And they would want
00:23:23to change everything
00:23:24that we have done
00:23:24socially
00:23:25for our people.
00:23:26Everybody here is talking
00:23:27about interest rates
00:23:28and inflation
00:23:29and so on,
00:23:30whereas in fact
00:23:30development really
00:23:32for me means
00:23:32people
00:23:34and the creation
00:23:35of institutions
00:23:36that will really
00:23:37release the potential
00:23:38and energies
00:23:38of people.
00:23:39economics is not just
00:23:41lying on a graph.
00:23:43The IMF
00:23:44unfortunately
00:23:44over the last few years
00:23:46has played
00:23:46either a static role
00:23:49or to some degree
00:23:51a slightly insensitive role
00:23:53to some countries.
00:23:54And we've seen riots
00:23:55that were triggered
00:23:56by conditions
00:23:58that are attached
00:23:59to loans
00:24:01given by the IMF.
00:24:02Now it was Mexico's turn
00:24:04to submit itself
00:24:05to the IMF's conditions
00:24:06and the IMF's own documents
00:24:08reveal the harshness
00:24:09of their measures.
00:24:11The program envisages
00:24:12what can rightly be termed
00:24:13drastic adjustment
00:24:14but there is no
00:24:16genuine alternative.
00:24:21Back in Mexico
00:24:22the terms of the IMF agreement
00:24:24could only mean
00:24:24one thing for most people
00:24:26like Teresa
00:24:26greater poverty.
00:24:28Real minimum wages
00:24:29soon dropped by 30%
00:24:30while food prices
00:24:31went up still higher.
00:24:33The prospects
00:24:34of basic needs
00:24:35like fresh water
00:24:35were more distant
00:24:36than ever.
00:24:37In this barrio
00:24:40or neighborhood
00:24:41they're luckier than many
00:24:42they've got fresh water
00:24:43laid on
00:24:44but it stops in the street
00:24:45and the plan's got no further
00:24:47because they've now
00:24:48run out of money.
00:24:48The authorities have got as far
00:24:53as digging this trench
00:24:54to carry the fresh water
00:24:56into these shacks
00:24:57but each family
00:24:58is being asked
00:24:59to pay about
00:25:0016,000 pesos
00:25:01that's say
00:25:02$100
00:25:03or 65 pounds
00:25:05and of course
00:25:06they can't pay it
00:25:07so they have to go on
00:25:08using this
00:25:09very primitive pipe.
00:25:12Now that's the kind of thing
00:25:13that bankers mean
00:25:14when they talk about
00:25:14adjustment.
00:25:15it's really doing without
00:25:17essential services
00:25:18for most of us
00:25:19and it's stopping development
00:25:21dead in its tracks
00:25:22and this is only nine miles
00:25:25from the center
00:25:25of Mexico City.
00:25:28Jerry Levinson
00:25:29works for the development bank
00:25:30in Washington
00:25:31which lends to
00:25:32Latin American countries.
00:25:33if you're going to cut off
00:25:36the development component
00:25:38you are simply going to create
00:25:40a situation
00:25:41which is intolerable
00:25:43in the countries.
00:25:45That's the essential point.
00:25:46It can't be only
00:25:48a policy which is designed
00:25:50to enable the private banks
00:25:52to get repaid.
00:25:53There has to be something
00:25:55in it as well
00:25:56for the countries.
00:25:57The people in the countries
00:25:58have to see
00:26:00that they're not just simply
00:26:02working to pay the foreign banks.
00:26:05Before agreeing
00:26:06to lend to Mexico
00:26:07the IMF's managing director
00:26:09had sent a historic telex
00:26:11to all the banks
00:26:12which had already been
00:26:13lending to Mexico.
00:26:16In it he warned the banks
00:26:18that the IMF
00:26:19would only lend to Mexico
00:26:20if they resumed their lending
00:26:21and he demanded
00:26:22written assurances
00:26:23from the banks
00:26:24that they would lend again
00:26:25and he gave them
00:26:26very little time
00:26:27to comply.
00:26:28Backed with all the authority
00:26:29of its member governments
00:26:30the IMF had played
00:26:31an unprecedented role
00:26:33intervening
00:26:34in the free market
00:26:34of the banks.
00:26:35Rumer de Vries
00:26:36a respected banker
00:26:37is quite candid
00:26:38about his own concern.
00:26:40Hasn't the old concept
00:26:41of banking really changed?
00:26:43Is the market system
00:26:44really working
00:26:44as it was supposed to?
00:26:46Well it has changed.
00:26:48It's market system right.
00:26:51There is an interference
00:26:52by the government
00:26:53and these are very subtleties
00:26:55by governments
00:26:57practically telling banks
00:26:59made this loan.
00:27:03It's not the first time
00:27:04that has happened.
00:27:05It has happened
00:27:06in domestic situations
00:27:07as well.
00:27:09It is an interference
00:27:10with the market system.
00:27:12I cannot deny that.
00:27:13The IMF's intervention
00:27:18meant that Mexico
00:27:19could now borrow
00:27:20hundreds of millions
00:27:21from big banks
00:27:21like Citibank or Lloyd's.
00:27:24But small banks
00:27:25had made up 35%
00:27:26of the total loans.
00:27:30The Union National Bank
00:27:31of Laredo in Texas
00:27:32just across the border
00:27:33from Mexico
00:27:34was now told
00:27:35to lend another
00:27:36million dollars.
00:27:37The fears of the small banks
00:27:39about Mexico
00:27:40were in danger
00:27:41of shaking the confidence
00:27:42of the whole banking system.
00:27:44But the bankers
00:27:45felt safer
00:27:45after the IMF
00:27:46moved into Mexico
00:27:47forcing cutbacks
00:27:49in spending.
00:27:52In March 1983
00:27:53a representative group
00:27:55of international bankers
00:27:56met to sign
00:27:57a new agreement
00:27:58with Mexico.
00:28:00Under the agreement
00:28:00Mexico got its loan
00:28:02but had to pay
00:28:03much high interest rates
00:28:04to the banks
00:28:05and fees worth
00:28:06more than 200 million dollars.
00:28:09Mexico's Minister of Finance
00:28:10did his best
00:28:11to put on a brave face.
00:28:13It's a moment
00:28:14of renewed confidence
00:28:17and of optimism
00:28:19in the future of Mexico
00:28:21and in the future
00:28:22of the international
00:28:23economic and financial
00:28:24relationships.
00:28:29What was bad for Mexico
00:28:30was certainly good
00:28:32for the biggest
00:28:32American banks
00:28:33most of which
00:28:34are based here
00:28:35in Manhattan.
00:28:37The Mexican predicament
00:28:38actually helped
00:28:39many banks
00:28:40to make record profits
00:28:41and their profits
00:28:42appeared to be safeguarded
00:28:44by the IMF
00:28:45and the central banks.
00:28:47If the banks
00:28:48are still
00:28:49as they see it
00:28:51charging high interest rates
00:28:52because of higher risk
00:28:54is that really justified
00:28:55if the governments
00:28:57and the IMF
00:28:58are standing behind
00:28:59with a safety net?
00:29:00I would say
00:29:01obviously
00:29:04it is
00:29:07if it does
00:29:08all in the market
00:29:09and the risks
00:29:10are high
00:29:10then
00:29:11you have to pay
00:29:13the price for this
00:29:13to keep everybody
00:29:14in there
00:29:15that's market realities.
00:29:18What you're now asking
00:29:19is
00:29:19if you have a plan
00:29:21whereby
00:29:22things become clearer
00:29:24of each party's role
00:29:27well established
00:29:28for some time to come
00:29:29I think then
00:29:30the time definitely
00:29:31I think
00:29:31is come
00:29:32that these charges
00:29:33could go down.
00:29:35The banks charges
00:29:36and their higher profits
00:29:37are becoming
00:29:38an angry political issue
00:29:39in Congress
00:29:40and elsewhere.
00:29:42Citibank
00:29:42the biggest lender
00:29:43to Brazil
00:29:44announced record profits
00:29:45from Brazil
00:29:46for 1982
00:29:46up by 35%
00:29:48and while Brazil
00:29:50accounted for only 5%
00:29:51of its total loans
00:29:52it provided a fifth
00:29:53of its total profits.
00:29:55Citibank's
00:29:56senior executive
00:29:57vice president
00:29:57is George Clark.
00:30:00Well I think
00:30:01there is a lot
00:30:02of being written
00:30:03today
00:30:04about
00:30:04how much money
00:30:06the banks
00:30:06are making
00:30:07in refinancing
00:30:09these obligations
00:30:10and some of the
00:30:11reporting is just
00:30:12outright incorrect.
00:30:13there are gross
00:30:14overstatements.
00:30:16Now it is true
00:30:17that
00:30:18we are involved
00:30:20to some extent
00:30:21in the banking business
00:30:22in a risk reward
00:30:24situation
00:30:24and it strikes me
00:30:26as anomalous
00:30:27sometimes
00:30:28that people tell us
00:30:29that we're in
00:30:30a high risk business
00:30:31you know
00:30:31some of your questions
00:30:32suggest you think
00:30:34we're in a high risk business
00:30:35but people are then
00:30:36surprised that the returns
00:30:37are higher
00:30:38than they are
00:30:39in some other lines
00:30:40of business.
00:30:41Well aren't you
00:30:41having it both ways
00:30:42because you're saying
00:30:43look we must make
00:30:44higher profits
00:30:44because the loans
00:30:45the countries
00:30:46are more dangerous
00:30:47at the same time
00:30:48you're saying
00:30:48well actually
00:30:49the loans are
00:30:49perfectly safe
00:30:50and we're not
00:30:51therefore going
00:30:51to write them down.
00:30:52Well I didn't say
00:30:54that the loans
00:30:55are perfectly safe
00:30:56I say that
00:30:56we make the loans
00:30:58because we expect
00:30:58to collect them
00:30:59probably today
00:31:00given the slow
00:31:02situation in the
00:31:03global economies
00:31:04the risks
00:31:05are even higher.
00:31:06But is that a real risk
00:31:07because it looks
00:31:08as if really
00:31:09the governments
00:31:10and the IMF
00:31:11are already standing
00:31:12by with a safety net
00:31:13because they've already
00:31:14told you that you
00:31:15must keep on lending
00:31:16and once they've done
00:31:17that they have to be
00:31:18responsible to some
00:31:19extent for what goes
00:31:20wrong after that.
00:31:21Well we don't look
00:31:22at it that way at all
00:31:23Tony.
00:31:24We basically decide
00:31:25to lend into a country
00:31:27or not depending
00:31:28upon whether we think
00:31:30the country is taking
00:31:31seriously its ability
00:31:33to service the
00:31:34indebtedness it takes
00:31:35on.
00:31:36The banks are making
00:31:37record profits
00:31:38on every one
00:31:39of these restructurings.
00:31:41The IMF is so worried
00:31:43some banks will pull
00:31:44out altogether
00:31:45that what they're saying
00:31:47is well banks
00:31:47we're going to make
00:31:48this deal so sweet
00:31:49for you that you'll
00:31:50put more of your money
00:31:51into these risky loans
00:31:52to the detriment
00:31:53of both the third
00:31:54world countries
00:31:55and the lenders
00:31:55countries and the
00:31:57United States.
00:31:58What the IMF should
00:31:59be saying is banks
00:32:00we're not going to
00:32:00put together any deal
00:32:01we'll let you
00:32:02really take losses
00:32:04unless you're
00:32:05to stretch out
00:32:06your loans.
00:32:06So the IMF in my
00:32:07opinion is reading
00:32:08this wrong but who
00:32:09can expect otherwise
00:32:10they're really a club
00:32:11of bankers.
00:32:12The club faced an
00:32:13avalanche after Mexico.
00:32:15In September Argentina
00:32:16which already owed
00:32:1738 billion dollars
00:32:18had to reschedule.
00:32:20In November Ecuador
00:32:21owing 6 and a half
00:32:22billion.
00:32:23Later that month
00:32:24Costa Rica
00:32:24owing 3 billion.
00:32:26Then in December
00:32:27the biggest debtor
00:32:28of all Brazil
00:32:29which owed about
00:32:3090 billion dollars
00:32:31had to apply to the
00:32:32IMF for a new loan.
00:32:34Then in January
00:32:3483 Chile
00:32:35owing 22 billion
00:32:37had to reschedule.
00:32:38The same month
00:32:39Bolivia
00:32:39owing 2 and a half
00:32:40billion.
00:32:41In March Uruguay
00:32:42owing 3 billion.
00:32:44In April Venezuela
00:32:45owing 32 billion.
00:32:47In May Peru
00:32:48owing 11 billion.
00:32:50Almost the whole
00:32:51of Latin America
00:32:51was now close
00:32:52to the brink.
00:32:53Brazil's economic miracle
00:32:58has been a legend
00:32:59all over the world.
00:33:00But in 1983
00:33:01no country is closer
00:33:03to moratorium
00:33:04than Brazil.
00:33:05The country has not
00:33:06been able to meet
00:33:07its interest payments
00:33:07and it has had to go
00:33:09to the IMF for a loan
00:33:10and accept the IMF's
00:33:11harsh terms.
00:33:13It was a shock
00:33:13to many Brazilians
00:33:14whose country
00:33:15had surged ahead
00:33:16of most of its neighbors
00:33:17in the last 20 years
00:33:18enjoying in the 1960s
00:33:20a growth rate
00:33:21of 8% a year.
00:33:23The seething energy
00:33:38of its people
00:33:38has created
00:33:39an atmosphere
00:33:40of dynamism
00:33:40and rising expectations.
00:33:53It was the deliberate
00:33:54policy of Brazil
00:33:55under its Minister
00:33:56of Planning
00:33:57Delphine Neto
00:33:58to expand heavy industry
00:33:59as rapidly as possible
00:34:00with the help
00:34:01of huge loans
00:34:02from the Western banks
00:34:03thus locking the bankers
00:34:05into Brazil's future.
00:34:07But the speed
00:34:08and success
00:34:08of the earlier
00:34:09Brazilian miracle
00:34:09now makes it
00:34:11more perilous.
00:34:13This iron ore works
00:34:14was part of the pride
00:34:15of Brazil.
00:34:16Now it's working
00:34:17to only half capacity
00:34:18and it can't pay off
00:34:19the loans
00:34:19that were spent
00:34:20on developing it.
00:34:30The money borrowed
00:34:31from the banks
00:34:32did not reach
00:34:33the tens of millions
00:34:34of poor Brazilians
00:34:35who live in the slums
00:34:36that skirt
00:34:37the great industrial cities
00:34:38and the benefits
00:34:39from Brazil's industrialization
00:34:41have not trickled
00:34:42down very far.
00:34:45The steelworks
00:34:46at Asaminas
00:34:46in Brazil
00:34:47was built
00:34:48over the last
00:34:48eight years
00:34:49at the cost
00:34:50of four billion dollars
00:34:51almost half of it
00:34:52borrowed from American
00:34:53and European banks.
00:34:56But the plant
00:34:57has produced nothing.
00:34:58It's been lying idle
00:34:59since 1981
00:35:00at a cost
00:35:01of a billion dollars.
00:35:03It needs to borrow more
00:35:04to bring it
00:35:04into production
00:35:05but the recession
00:35:06is so deep
00:35:07and Brazil
00:35:07is already
00:35:08so far in debt
00:35:09that the banks
00:35:10won't lend anymore.
00:35:13Hardly any part
00:35:14of the Brazilian economy
00:35:15has escaped
00:35:16the IMF conditions.
00:35:17Much of industry
00:35:18is operating
00:35:18at just over half capacity.
00:35:20The port of Rio
00:35:21has fewer and fewer goods
00:35:22to transport overseas
00:35:23and it lies crippled.
00:35:29Many industrialists
00:35:30see no point
00:35:31in taking IMF medicine
00:35:32which starves the patient
00:35:33in hope of
00:35:34curing the cold.
00:35:35Do you think
00:35:36that the IMF conditions
00:35:37in fact
00:35:37have been too tough
00:35:38for Brazil?
00:35:40Yes, I do.
00:35:40I believe that
00:35:41IMF conditions
00:35:42are a kind
00:35:43of shock treatment
00:35:44and cannot be supported
00:35:46in terms of social support.
00:35:49So that the IMF
00:35:49are not sufficiently sensitive
00:35:51to the social problems?
00:35:52I believe that
00:35:53IMF solutions
00:35:54are much more economical
00:35:55is much more
00:35:56treating about numbers
00:35:57and not about people
00:35:58and not about
00:35:59the social problem
00:36:00that Brazil has.
00:36:01concerned industrialists
00:36:10like Paolo Francini
00:36:11fear that mounting
00:36:12unemployment
00:36:13could cause
00:36:13serious social problems.
00:36:19At this Ford factory
00:36:20in Sao Paulo
00:36:21some people
00:36:22have been waiting
00:36:22all night
00:36:23in line for a job.
00:36:25By 5.30
00:36:26there were 150 waiting.
00:36:27By 7 in the morning
00:36:31there were 650
00:36:32but there were still
00:36:33no vacancies
00:36:34and there hadn't been
00:36:35for weeks.
00:36:38One of Sao Paulo's
00:36:39three senators
00:36:40is Fernando
00:36:41Enrique Cardoso
00:36:42an internationally
00:36:43known sociologist.
00:36:46Senator,
00:36:46when you see
00:36:47the international bankers
00:36:48here in Brazil
00:36:49do you think
00:36:50they understand
00:36:51the social consequences
00:36:52of what's happening now?
00:36:54I think that now
00:36:56they understand.
00:36:58Why don't they do something
00:36:59to try to produce
00:37:00more reasonable terms?
00:37:02Because they are
00:37:03making good profits
00:37:04and profit is more
00:37:06important for them
00:37:07than the social welfare
00:37:09in foreign countries
00:37:11at least.
00:37:13Monaco de Ferrier
00:37:13with his family
00:37:14is a casualty
00:37:15of the cutbacks.
00:37:17He has of course
00:37:17no unemployment pay
00:37:18and odd jobs
00:37:20don't provide enough money
00:37:21for the family
00:37:21to live on.
00:37:24When he lost his job
00:37:26last December
00:37:26his crumbling shack
00:37:28blew away in a storm.
00:37:30The day we filmed
00:37:31neighbours had provided
00:37:32him with food
00:37:33but for the following day
00:37:34there's no sugar
00:37:35in the house
00:37:36no milk
00:37:36and no bread
00:37:37and they'd be
00:37:38more expensive anyway.
00:37:40The latest cuts
00:37:41in food subsidies
00:37:41as a result
00:37:42of the IMF terms
00:37:43may well push up
00:37:44the price of bread
00:37:45by a third.
00:37:46It's here
00:37:48in this square
00:37:49of the 13th of May
00:37:50that thousands
00:37:51of unemployed
00:37:51gathered to march
00:37:53to the governor's palace
00:37:54to protest
00:37:55and it was that march
00:37:56that led to the riots.
00:37:58It's still a favourite
00:37:59meeting for unemployed
00:38:00who gather here
00:38:01and the riots
00:38:02of course
00:38:03drew attention
00:38:03to many people
00:38:05to the extent
00:38:06of that unemployed problem
00:38:07that thousands
00:38:08of people
00:38:09were all the time
00:38:10being put out of work
00:38:11and were finding
00:38:12the position
00:38:12less and less
00:38:13top
00:38:14and the anger
00:38:16was simmering
00:38:16below the sentence.
00:38:23It's in Brazil
00:38:24that the IMF
00:38:25and the bankers
00:38:25now face
00:38:26their most serious crisis.
00:38:32The Brazilians
00:38:32had to borrow
00:38:33from the IMF
00:38:34on the usual stiff turns
00:38:35and soon afterwards
00:38:36came the riots
00:38:37in Sao Paulo
00:38:37doing $10 million
00:38:39of damage.
00:38:43Brazil had been
00:38:43gradually trying
00:38:44to open itself
00:38:45up to democracy
00:38:45but the cuts
00:38:47in jobs,
00:38:48wages
00:38:48and public spending
00:38:49were causing
00:38:49bitter resentment
00:38:50and there was talk
00:38:51of the dread word
00:38:52moratorium.
00:38:59A lot of people
00:39:00feel that these
00:39:01so-called austerity
00:39:02programs
00:39:03have a negative
00:39:04impact politically.
00:39:05And of course
00:39:06that can happen.
00:39:07But our experience
00:39:09has been
00:39:10that properly
00:39:12carried out
00:39:13these programs
00:39:14produce a positive
00:39:16effect rather than
00:39:17a negative effect.
00:39:18But isn't there
00:39:18a long history
00:39:19when the IMF
00:39:20brings these new
00:39:20packages
00:39:21whether it's in
00:39:22Peru or Egypt
00:39:23or Ghana
00:39:23you so often
00:39:24you get riots
00:39:25you get potential
00:39:26revolution
00:39:26often you get
00:39:27a democratic regime
00:39:28coming down
00:39:28as a result.
00:39:29Well you happen
00:39:30to have mentioned
00:39:31three of the ones
00:39:32in the long long
00:39:33record of these
00:39:34programs Tony
00:39:35where a lot
00:39:36of that did
00:39:36happen.
00:39:37But we have
00:39:37fun programs
00:39:38going on
00:39:39in probably
00:39:3935 countries
00:39:41around the world
00:39:41at any given
00:39:42time and most
00:39:43of them are
00:39:43being carried
00:39:44out very smoothly.
00:39:45At the current
00:39:51moment
00:39:52we have
00:39:55a working group
00:39:57from Treasury
00:39:58who happened
00:40:00down in Brazil.
00:40:02At the White House
00:40:03soon after the riots
00:40:04Donald Reagan
00:40:05the Secretary
00:40:05of the Treasury
00:40:06presided over
00:40:07the task force
00:40:08on debt
00:40:08which included
00:40:09the CIA.
00:40:09the Western
00:40:11governments
00:40:11were becoming
00:40:12more concerned
00:40:13about debt
00:40:13but they
00:40:14insisted
00:40:14that it
00:40:15was under
00:40:15control.
00:40:16is again
00:40:16having difficulties
00:40:17Chile
00:40:19has been
00:40:21turned down
00:40:22by Treasury
00:40:23for an ESF loan
00:40:24they are now
00:40:26looking to see
00:40:27what else
00:40:27they could
00:40:28or should
00:40:28be doing.
00:40:29I do think
00:40:30that when
00:40:31things are going
00:40:32badly and
00:40:32there's a period
00:40:33of austerity
00:40:34indicated
00:40:34that the Latin
00:40:36countries are no
00:40:37different than
00:40:37any other nation
00:40:38they must learn
00:40:39to cope with
00:40:40it.
00:40:40For most
00:40:41of the 70s
00:40:42Brazil
00:40:42and other
00:40:43developing
00:40:43countries
00:40:43were borrowing
00:40:44much more
00:40:45money than
00:40:45they paid
00:40:45out in
00:40:46interest
00:40:46but after
00:40:471980
00:40:48interest rates
00:40:49and therefore
00:40:50the interest
00:40:50payments
00:40:51shot up
00:40:51while much
00:40:52less capital
00:40:53was coming
00:40:53in.
00:40:54By 1983
00:40:55some countries
00:40:56were actually
00:40:56paying out
00:40:57to the banks
00:40:57more than
00:40:58they were
00:40:58getting in.
00:40:59The arguments
00:41:00for a moratorium
00:41:01become more
00:41:02persuasive.
00:41:04The temptation
00:41:04is definitely
00:41:05there.
00:41:06For many
00:41:07countries
00:41:07they
00:41:09receive new
00:41:10money
00:41:11from official
00:41:11and banking
00:41:12sources
00:41:13just about
00:41:13the same
00:41:15extent
00:41:15that they
00:41:15have to
00:41:16pay
00:41:16interest
00:41:16and the
00:41:17net
00:41:18resource
00:41:18transfer
00:41:19from a net
00:41:21resource
00:41:21point of view
00:41:22they get
00:41:23nothing.
00:41:29On May Day
00:41:30crowds of workers
00:41:31again demonstrated
00:41:32in Sao Paulo
00:41:33against the
00:41:33cutbacks
00:41:34of the IMF.
00:41:37The FMI
00:41:37as they call it
00:41:38in Portuguese
00:41:38which stands
00:41:39for
00:41:40Fome,
00:41:40Miseria,
00:41:41Inflation
00:41:41Hunger,
00:41:43Misery and
00:41:43Inflation
00:41:44The workers
00:41:50clamored for
00:41:51higher wages
00:41:51for more jobs
00:41:52and for land
00:41:53reform
00:41:53and they called
00:41:55for a general
00:41:55strike.
00:41:57What will
00:41:58happen if there
00:41:58are no changes
00:41:59in social policies
00:42:00and no
00:42:01moratorium?
00:42:01even moderate
00:42:08politicians
00:42:09like Senator
00:42:10Villela
00:42:10are concerned.
00:42:11you cannot
00:42:15let the debt
00:42:16rise to
00:42:17say
00:42:17150
00:42:18billion
00:42:19or 200
00:42:20billion
00:42:20dollars
00:42:21because you
00:42:22would be
00:42:22putting the
00:42:23country
00:42:23into an
00:42:24even tighter
00:42:25corner
00:42:25so there is
00:42:32only one
00:42:33honest
00:42:34sensible
00:42:35and legally
00:42:36perfect
00:42:36solution
00:42:37that's a
00:42:38moratorium.
00:42:39in the
00:42:49Mexican
00:42:49resort of
00:42:49Cancun
00:42:50the
00:42:51presidents of
00:42:51Brazil and
00:42:52Mexico met in
00:42:52April for
00:42:53their own
00:42:53summit
00:42:53meeting
00:42:54and Brazil
00:42:55as it
00:42:56talked more
00:42:56seriously
00:42:57about a
00:42:57moratorium
00:42:58now looked
00:42:59like the
00:42:59most perilous
00:43:00link in the
00:43:00chain of
00:43:00the world
00:43:01banking
00:43:01system.
00:43:03The world's
00:43:03bankers
00:43:04watched
00:43:04Cancun
00:43:04with some
00:43:05apprehension
00:43:05for the
00:43:06world's
00:43:07two biggest
00:43:07debtors
00:43:07owed about
00:43:08175 billion
00:43:10dollars
00:43:10between
00:43:10them.
00:43:14Much
00:43:14of the
00:43:14security
00:43:15of the
00:43:15banks
00:43:15now
00:43:16depends
00:43:16on a
00:43:17handful
00:43:17of
00:43:17leaders
00:43:18in
00:43:18fragile
00:43:19democracies.
00:43:22There's
00:43:23always
00:43:23a
00:43:23danger
00:43:23that
00:43:24more
00:43:24cutbacks
00:43:25could
00:43:25lead
00:43:25to
00:43:25more
00:43:26rioting
00:43:26and
00:43:27the
00:43:27return
00:43:27to
00:43:27military
00:43:28government.
00:43:32At
00:43:33Cancun
00:43:33the
00:43:34ministers
00:43:34who
00:43:34were
00:43:34in
00:43:34charge
00:43:35of
00:43:35the
00:43:35debts
00:43:35Delphine
00:43:36NATO
00:43:37from
00:43:37Brazil
00:43:38and
00:43:38Silver
00:43:39Herzog
00:43:40from
00:43:40Mexico
00:43:40met
00:43:41for
00:43:41long
00:43:42discussions
00:43:42about
00:43:42their
00:43:43common
00:43:43economic
00:43:43problems.
00:43:45The
00:43:45sheer
00:43:45size
00:43:45of
00:43:45their
00:43:45debts
00:43:46gave
00:43:46them
00:43:46a
00:43:46new
00:43:46kind
00:43:47of
00:43:47power.
00:43:49Well,
00:43:49I think
00:43:49Mr.
00:43:51Keynes
00:43:51was the
00:43:52one who
00:43:52said
00:43:52many
00:43:53years
00:43:53ago
00:43:54that
00:43:54when
00:43:55you
00:43:55are
00:43:55a
00:43:55debtor
00:43:55of
00:43:56an
00:43:56important
00:43:56sum
00:43:57then
00:43:57you
00:43:57are
00:43:58a
00:43:58partner
00:43:59of
00:43:59the
00:43:59bank.
00:44:01If
00:44:01we don't
00:44:02solve
00:44:02our
00:44:02indebtedness
00:44:03problem
00:44:03we will
00:44:04not
00:44:04be
00:44:05important
00:44:06importers
00:44:07for
00:44:08some
00:44:08years
00:44:09and
00:44:09this
00:44:10will
00:44:10hurt
00:44:11the
00:44:11recovery.
00:44:13Since
00:44:13Cancun
00:44:14a new
00:44:15round
00:44:15of
00:44:15austerity
00:44:16measures
00:44:16imposed
00:44:17by
00:44:17the
00:44:17IMF
00:44:17has
00:44:18caused
00:44:18more
00:44:19hardship
00:44:19and
00:44:19unemployment.
00:44:21Many
00:44:21international
00:44:21bankers
00:44:22and
00:44:22analysts
00:44:22now
00:44:23fear
00:44:23that
00:44:23Brazil
00:44:24might
00:44:24call
00:44:24a
00:44:24moratorium
00:44:25any
00:44:25day.
00:44:26Robin
00:44:26Munro
00:44:27Davis.
00:44:28Where
00:44:28Brazil
00:44:29formally
00:44:30repudiates
00:44:31all its
00:44:31debt
00:44:32and says
00:44:33it will
00:44:33not only
00:44:33not pay
00:44:34interest
00:44:34it will
00:44:34not pay
00:44:35repay
00:44:35principal
00:44:36and that
00:44:37is
00:44:37for instance
00:44:37followed
00:44:38by other
00:44:39Latin
00:44:39American
00:44:39countries
00:44:40saying
00:44:40well if
00:44:40Brazil
00:44:40can do
00:44:40it
00:44:41I
00:44:41can
00:44:41do
00:44:41it
00:44:41so
00:44:41you've
00:44:41got
00:44:42nearly
00:44:42200
00:44:43billion
00:44:43of
00:44:43debt
00:44:43repudiated
00:44:44unilaterally
00:44:45with no
00:44:46discussions
00:44:46with the
00:44:47banks
00:44:47or with
00:44:48western
00:44:48or
00:44:49developed
00:44:49world
00:44:50governments
00:44:53that is
00:44:56clearly
00:44:56disastrous
00:44:57how
00:44:58disastrous
00:44:59difficult
00:45:00attack
00:45:00that would
00:45:00lead
00:45:00to
00:45:01a
00:45:01trade
00:45:01war
00:45:02substantially
00:45:03higher
00:45:04interest
00:45:04rates
00:45:04substantially
00:45:06lower
00:45:06growth
00:45:06which
00:45:09leads
00:45:09to
00:45:09much
00:45:09higher
00:45:09unemployment
00:45:10in a
00:45:11worst
00:45:11case
00:45:12it
00:45:13will
00:45:14abort
00:45:15the
00:45:16recovery
00:45:16and
00:45:17send us
00:45:17straight
00:45:17back
00:45:17into
00:45:18a
00:45:18slump
00:45:18and
00:45:19a
00:45:19very
00:45:19very
00:45:19deep
00:45:19slump
00:45:20the
00:45:29problems
00:45:30of debt
00:45:30and
00:45:30recession
00:45:30are
00:45:31already
00:45:31spreading
00:45:32from
00:45:32one
00:45:32country
00:45:33to
00:45:33another
00:45:33in
00:45:37this
00:45:37rough
00:45:37empty
00:45:37country
00:45:38near
00:45:38the
00:45:39border
00:45:39of
00:45:39Mexico
00:45:39and the
00:45:40United
00:45:40States
00:45:40the
00:45:41Texans
00:45:41have
00:45:42become
00:45:42very
00:45:42used
00:45:42to
00:45:43the
00:45:43third
00:45:43world
00:45:43spilling
00:45:44over
00:45:44into
00:45:44their
00:45:44lives
00:45:45the
00:45:46Rio Grande
00:45:47is the
00:45:47river
00:45:47which
00:45:47separates
00:45:48the
00:45:48two
00:45:48countries
00:45:48and the
00:45:492,000
00:45:50mile
00:45:50border
00:45:50with
00:45:51Mexico
00:45:51is the
00:45:52only
00:45:52frontier
00:45:52in
00:45:53any
00:45:53continent
00:45:53between
00:45:54the
00:45:54first
00:45:54and
00:45:55third
00:45:55worlds
00:45:55J.J.
00:46:00J.J.
00:46:00Fulcrum
00:46:01is a
00:46:01tracker
00:46:02in the
00:46:02Texas
00:46:02border
00:46:03police
00:46:03and he
00:46:04spends
00:46:04his
00:46:04time
00:46:05searching
00:46:05for
00:46:05Mexicans
00:46:06who
00:46:06try
00:46:07to
00:46:07cross
00:46:07over
00:46:07to
00:46:08the
00:46:08relative
00:46:08prosperity
00:46:09of
00:46:09Texas
00:46:09with
00:46:18walkie-talkies
00:46:19and
00:46:19spotter
00:46:20planes
00:46:20he
00:46:21and
00:46:21his
00:46:21colleagues
00:46:21are
00:46:21catching
00:46:22about
00:46:223,000
00:46:22Mexicans
00:46:23a
00:46:23day
00:46:23that
00:46:29figure
00:46:29is
00:46:3070%
00:46:30higher
00:46:30than
00:46:31it
00:46:31was
00:46:31a
00:46:31year
00:46:31ago
00:46:32before
00:46:32Mexico
00:46:33suffered
00:46:33its
00:46:33economic
00:46:34crisis
00:46:34the
00:46:51Mexican
00:46:52crisis
00:46:52soon
00:46:53reverberated
00:46:53outside
00:46:54Mexico
00:46:54itself
00:46:55as
00:46:55the
00:46:55cutbacks
00:46:56led
00:46:56to
00:46:56a
00:46:56drying
00:46:57up
00:46:57of
00:46:57trade
00:46:57Laredo
00:47:10in
00:47:10Texas
00:47:11just
00:47:11across
00:47:11the
00:47:12border
00:47:12had
00:47:12always
00:47:13depended
00:47:13heavily
00:47:13on
00:47:14Mexican
00:47:14business
00:47:15but
00:47:20now
00:47:20the
00:47:20heavy
00:47:20trucks
00:47:21are
00:47:21lying
00:47:21idle
00:47:21and
00:47:22trailers
00:47:22worth
00:47:23millions
00:47:23of
00:47:23dollars
00:47:23have
00:47:23just
00:47:24been
00:47:24abandoned
00:47:2430%
00:47:26of
00:47:27the
00:47:27people
00:47:27Naredo
00:47:27unemployed
00:47:28three
00:47:28times
00:47:29the
00:47:29American
00:47:29average
00:47:30it's
00:47:31almost
00:47:31a
00:47:31ghost
00:47:31town
00:47:32Naredo
00:47:35is
00:47:35only
00:47:35one
00:47:35sign
00:47:36of
00:47:36the
00:47:36impact
00:47:36of
00:47:37the
00:47:37Mexican
00:47:37crisis
00:47:37on
00:47:38American
00:47:38industries
00:47:39which
00:47:40painfully
00:47:40realized
00:47:40how
00:47:41much
00:47:41they
00:47:41depended
00:47:41on
00:47:42markets
00:47:42in
00:47:42Mexico
00:47:43and
00:47:44further
00:47:44south
00:47:44according
00:47:55to
00:47:55congressman
00:47:56Schumer
00:47:56there
00:47:56there
00:47:56will
00:47:56be
00:47:56many
00:47:57more
00:47:57Laredos
00:47:58if
00:47:58Mexico
00:47:58or
00:47:59Brazil
00:47:59repudiate
00:48:00their
00:48:00debts
00:48:00basically
00:48:01what
00:48:03most
00:48:03people
00:48:03in
00:48:04America
00:48:04don't
00:48:04realize
00:48:05but
00:48:05must
00:48:06realize
00:48:06is
00:48:07that
00:48:07we
00:48:07now
00:48:07depend
00:48:08on
00:48:08exports
00:48:09we
00:48:09depend
00:48:10on
00:48:10prosperity
00:48:11in
00:48:11Brazil
00:48:11to
00:48:12keep
00:48:12that
00:48:12guy
00:48:13in
00:48:13Pittsburgh
00:48:13on
00:48:13working
00:48:14and
00:48:15austerity
00:48:16too
00:48:17much
00:48:17austerity
00:48:18will
00:48:18hurt
00:48:18us
00:48:19as
00:48:19much
00:48:19as
00:48:19it
00:48:19hurts
00:48:19them
00:48:20so
00:48:20you're
00:48:20suggesting
00:48:21that
00:48:21world
00:48:21debt
00:48:22plus
00:48:22that
00:48:22austerity
00:48:23is
00:48:23a real
00:48:23obstacle
00:48:24in a way
00:48:24of
00:48:24economic
00:48:25recovery
00:48:25in the
00:48:26United
00:48:26States
00:48:26and
00:48:26elsewhere
00:48:26the
00:48:27whole
00:48:28world
00:48:28it's
00:48:28a
00:48:28real
00:48:29recovery
00:48:29and
00:48:29that's
00:48:29why
00:48:29it's
00:48:30got
00:48:30to
00:48:30be
00:48:30handled
00:48:30from
00:48:31a
00:48:31world
00:48:31point
00:48:32of
00:48:32view
00:48:32the
00:48:33bankers
00:48:33and
00:48:34the
00:48:34IMF
00:48:34come
00:48:34in
00:48:35and
00:48:35they
00:48:35basically
00:48:35most
00:48:36charitably
00:48:36put
00:48:37they're
00:48:37looking
00:48:38at
00:48:38it
00:48:38from
00:48:38a
00:48:38bank
00:48:38system
00:48:39point
00:48:39of
00:48:39view
00:48:40and
00:48:40that's
00:48:41important
00:48:41but
00:48:41that's
00:48:41hardly
00:48:42the
00:48:42whole
00:48:42picture
00:48:42we
00:48:43don't
00:48:43want
00:48:43a
00:48:43banking
00:48:43system
00:48:44to
00:48:44fail
00:48:44but
00:48:45if
00:48:45our
00:48:46banking
00:48:46system
00:48:46stays
00:48:47strong
00:48:47and
00:48:48our
00:48:48world
00:48:48economy
00:48:48collapses
00:48:49then
00:48:50we're
00:48:50all
00:48:50not
00:48:50very
00:48:51well
00:48:52off
00:48:53and
00:48:53we
00:48:53got
00:48:53to
00:48:53worry
00:48:53about
00:48:54that
00:48:54too
00:48:54and
00:48:55we
00:48:55know
00:48:55that
00:48:56unemployment
00:48:57in
00:48:57Detroit
00:48:58or
00:48:58Birmingham
00:48:59is
00:49:00very
00:49:00much
00:49:00related
00:49:01to
00:49:01productivity
00:49:03and
00:49:04prosperity
00:49:04in
00:49:04Brazil
00:49:05and
00:49:05Argentina
00:49:06and
00:49:06Nigeria
00:49:07the
00:49:07world
00:49:07is
00:49:07one
00:49:08world
00:49:08now
00:49:08but
00:49:09Donald
00:49:10Regan
00:49:10believes
00:49:11that
00:49:11a
00:49:11strong
00:49:11economic
00:49:12recovery
00:49:12in
00:49:12the
00:49:12US
00:49:13will
00:49:13lift
00:49:14troubled
00:49:14countries
00:49:15like
00:49:15Mexico
00:49:15and
00:49:15Brazil
00:49:16off
00:49:16the
00:49:16rocks
00:49:17of
00:49:17debt
00:49:17well
00:49:18I
00:49:18suspect
00:49:19that
00:49:19we're
00:49:19not
00:49:19going
00:49:20to
00:49:20need
00:49:20the
00:49:21large
00:49:21amounts
00:49:22of
00:49:22money
00:49:23that
00:49:23we
00:49:24had
00:49:24to
00:49:24put
00:49:25up
00:49:25in
00:49:25that
00:49:26period
00:49:26from
00:49:26the
00:49:27fall
00:49:27and
00:49:28the
00:49:28winter
00:49:28of
00:49:2982
00:49:2983
00:49:29I
00:49:30think
00:49:31that
00:49:31now
00:49:32if
00:49:32additional
00:49:32sums
00:49:33are
00:49:33required
00:49:33they
00:49:34won't
00:49:34be
00:49:34nearly
00:49:34as
00:49:34large
00:49:35moreover
00:49:36all
00:49:36of
00:49:37these
00:49:37nations
00:49:37now
00:49:37have
00:49:38IMF
00:49:38programs
00:49:39and
00:49:40are
00:49:40starting
00:49:41to
00:49:41get
00:49:41their
00:49:41houses
00:49:42in
00:49:42order
00:49:42the
00:49:43net
00:49:43result
00:49:44has
00:49:44to
00:49:44be
00:49:44better
00:49:44particularly
00:49:45if
00:49:45the
00:49:46world
00:49:46economy
00:49:46recovers
00:49:47as I
00:49:47think
00:49:48it
00:49:48is
00:49:48going
00:49:48to
00:49:48there's
00:49:49not
00:49:49the
00:49:50same
00:49:50optimism
00:49:50in the
00:49:51authoritative
00:49:51monthly report
00:49:52world
00:49:53financial
00:49:53markets
00:49:54published
00:49:55by the
00:49:55most
00:49:55conservative
00:49:55of big
00:49:56American
00:49:56banks
00:49:57Morgan
00:49:57guarantee
00:49:57in
00:49:59in a
00:49:59relatively
00:49:59hopeful
00:49:59scenario
00:50:00which
00:50:01assumes
00:50:01moderate
00:50:01recovery
00:50:02in
00:50:02the
00:50:02rich
00:50:02countries
00:50:03and
00:50:03moderate
00:50:03adjustment
00:50:04in
00:50:04the
00:50:04debtor
00:50:04countries
00:50:05it
00:50:05still
00:50:06projects
00:50:06that
00:50:06the
00:50:07total
00:50:07debt
00:50:07would
00:50:08rise
00:50:08to
00:50:08$675
00:50:09billion
00:50:10by
00:50:101985
00:50:11of
00:50:13this
00:50:13extra
00:50:13debt
00:50:13the
00:50:14banks
00:50:14would
00:50:14lend
00:50:14another
00:50:15$70
00:50:15billion
00:50:15the
00:50:17IMF
00:50:17and
00:50:17other
00:50:17lenders
00:50:18would
00:50:18provide
00:50:18$55
00:50:19billion
00:50:19but
00:50:20that
00:50:20still
00:50:21leaves
00:50:21a
00:50:21gap
00:50:21of
00:50:21$49
00:50:22billion
00:50:22Morgan
00:50:24's
00:50:24more
00:50:24pessimistic
00:50:24scenario
00:50:25leaves
00:50:26a gap
00:50:26of $150
00:50:27billion
00:50:27these
00:50:28scenarios
00:50:29says
00:50:29the
00:50:29report
00:50:30cannot
00:50:30be
00:50:31realistically
00:50:31financed
00:50:32if
00:50:33their
00:50:33economic
00:50:33assumptions
00:50:34came
00:50:34to
00:50:34pass
00:50:34there
00:50:35would
00:50:35arise
00:50:35unmanageable
00:50:36pressures
00:50:37for
00:50:37yet
00:50:37harsher
00:50:38LDC
00:50:38that
00:50:39is
00:50:39developing
00:50:39country
00:50:40adjustment
00:50:41and
00:50:41retrenchment
00:50:42this
00:50:43would
00:50:43prevent
00:50:43world
00:50:43economic
00:50:44recovery
00:50:44would
00:50:45pose
00:50:45grave
00:50:46risk
00:50:46of
00:50:46widespread
00:50:46financial
00:50:47defaults
00:50:48and
00:50:48would
00:50:48threaten
00:50:48social
00:50:49and
00:50:49political
00:50:49stability
00:50:50Felix
00:50:51wrote
00:50:52in
00:50:52the
00:50:52banker
00:50:52who
00:50:53helped
00:50:53to
00:50:53save
00:50:53New York
00:50:54City
00:50:54from
00:50:54bankruptcy
00:50:55believes
00:50:55that
00:50:56economic
00:50:56revival
00:50:56in
00:50:57the
00:50:57US
00:50:57cannot
00:50:58be
00:50:58sustained
00:50:58as long
00:50:59as
00:50:59the
00:50:59developing
00:51:00countries
00:51:00remain
00:51:01choked
00:51:01by
00:51:01debt
00:51:02the
00:51:02present
00:51:02conventional
00:51:03wisdom
00:51:04is
00:51:04that
00:51:04as
00:51:04soon
00:51:04as
00:51:05we
00:51:05have
00:51:05world
00:51:05recovery
00:51:06this
00:51:07debt
00:51:07will
00:51:07begin
00:51:08to
00:51:08work
00:51:08itself
00:51:08down
00:51:09and
00:51:09become
00:51:09manageable
00:51:10and
00:51:11that's
00:51:11possible
00:51:12seems
00:51:13to me
00:51:13there
00:51:14is
00:51:14an
00:51:14alternative
00:51:14proposition
00:51:16though
00:51:16which
00:51:17is
00:51:17that
00:51:17you
00:51:18cannot
00:51:18have
00:51:18world
00:51:18recovery
00:51:19until
00:51:20you
00:51:20do
00:51:20something
00:51:20about
00:51:21this
00:51:21debt
00:51:21structure
00:51:22to
00:51:22give
00:51:22people
00:51:22some
00:51:23breathing
00:51:23room
00:51:23many
00:51:25brazilians
00:51:25like
00:51:26senator
00:51:26valeda
00:51:26believe
00:51:27that
00:51:27if
00:51:28their
00:51:28country
00:51:28does
00:51:28not
00:51:29declare
00:51:29moratorium
00:51:30the
00:51:30consequences
00:51:31will
00:51:31be
00:51:31devastating
00:51:32an
00:51:35all
00:51:35out
00:51:36revolt
00:51:36total
00:51:38total
00:51:39total
00:51:40widespread
00:51:41revolt
00:51:42i cannot
00:51:45guarantee
00:51:45what
00:51:46political
00:51:46channels
00:51:47it will
00:51:47take
00:51:48but
00:51:50it will
00:51:50be a
00:51:51social
00:51:51revolt
00:51:52at
00:51:52first
00:51:53a
00:51:54revolt
00:51:54caused
00:51:55by
00:51:55necessity
00:51:55and
00:51:56a
00:51:56lack
00:51:57of
00:51:57collective
00:51:57wealth
00:51:58which
00:52:00we
00:52:00are
00:52:01being
00:52:01deprived
00:52:01of
00:52:02daily
00:52:02to
00:52:03pay
00:52:03off
00:52:03the
00:52:03foreign
00:52:04debt
00:52:04now
00:52:09of
00:52:09course
00:52:09any
00:52:10social
00:52:10conflict
00:52:11ends
00:52:12up
00:52:12as
00:52:12a
00:52:12political
00:52:13issue
00:52:13what
00:52:14political
00:52:15steps
00:52:15can
00:52:15we
00:52:15take
00:52:16right
00:52:16away
00:52:16this
00:52:17is
00:52:17also
00:52:18a
00:52:18warning
00:52:18for
00:52:19the
00:52:19rich
00:52:19countries
00:52:20especially
00:52:21the
00:52:21United
00:52:21States
00:52:22which
00:52:23has
00:52:23already
00:52:23bungled
00:52:24in
00:52:25Cuba
00:52:25and
00:52:25Nicaragua
00:52:26and
00:52:27which
00:52:27now
00:52:27threatens
00:52:28to
00:52:28contaminate
00:52:29all
00:52:29South
00:52:30America
00:52:30because
00:52:32of
00:52:32its
00:52:32inability
00:52:33to
00:52:33understand
00:52:34Latin
00:52:34Americans
00:52:35we
00:52:36will
00:52:36not
00:52:37accept
00:52:37having
00:52:38the
00:52:38policies
00:52:38of
00:52:39others
00:52:39imposed
00:52:40upon
00:52:40us
00:52:40we
00:52:41may
00:52:42take
00:52:42a
00:52:42decision
00:52:43here
00:52:43which
00:52:44I
00:52:44repeat
00:52:44may
00:52:45surprise
00:52:46the
00:52:46North
00:52:46Americans
00:52:47and
00:52:48the
00:52:48Europeans
00:52:48don't
00:52:50treat
00:52:50us
00:52:50as
00:52:51a
00:52:51tiny
00:52:51insignificant
00:52:52incapable
00:52:53incompetent
00:52:54country
00:52:55the
00:53:01bankers
00:53:02still
00:53:02maintain
00:53:03their
00:53:03confidence
00:53:03style
00:53:04and they
00:53:05still
00:53:05make
00:53:05more
00:53:05profits
00:53:06from each
00:53:06negotiation
00:53:07of their
00:53:07loans
00:53:07while they
00:53:08rely on
00:53:09the IMF
00:53:09to enforce
00:53:10their
00:53:10discipline
00:53:10but
00:53:12western
00:53:12politicians
00:53:13and
00:53:13voters
00:53:14can't
00:53:14continue
00:53:15to
00:53:15leave
00:53:15the
00:53:15problem
00:53:16to
00:53:16the
00:53:16bankers
00:53:16alone
00:53:17in
00:53:18the
00:53:18end
00:53:18they'll
00:53:18have
00:53:19to
00:53:19intervene
00:53:19to
00:53:20ease
00:53:20the
00:53:20terms
00:53:20with
00:53:21longer
00:53:21loans
00:53:22and
00:53:22lower
00:53:22interest
00:53:22rates
00:53:23to
00:53:23conditions
00:53:24which
00:53:24the
00:53:24people
00:53:24can
00:53:25tolerate
00:53:25and if
00:53:26they
00:53:27leave
00:53:27it
00:53:27too
00:53:27late
00:53:27the
00:53:28debts
00:53:28could
00:53:28blow up
00:53:29in
00:53:29their
00:53:29faces
00:53:29for the
00:53:33people
00:53:33who
00:53:33have
00:53:33had
00:53:33to
00:53:33take
00:53:34the
00:53:34burden
00:53:34of
00:53:34the
00:53:34debts
00:53:35are
00:53:35the
00:53:35poor
00:53:36who
00:53:36can't
00:53:36take
00:53:37very
00:53:37much
00:53:37more
00:53:37the
00:53:39austerity
00:53:39measures
00:53:40have
00:53:40cut out
00:53:41their
00:53:41hopes
00:53:41for
00:53:41the
00:53:41future
00:53:42and
00:53:47the
00:53:47bankers
00:53:47are
00:53:47in
00:53:47danger
00:53:48of
00:53:48ignoring
00:53:49their
00:53:49cardinal
00:53:49rule
00:53:50which
00:53:51is
00:53:51never
00:53:51to
00:53:51kill
00:53:51off
00:53:52their
00:53:52customers
00:53:52an
00:54:00update
00:54:01this
00:54:01report's
00:54:02revelations
00:54:02on
00:54:02Mexico's
00:54:03near
00:54:03default
00:54:03last
00:54:04summer
00:54:04caused
00:54:05controversy
00:54:05in
00:54:06Mexico
00:54:06but
00:54:07the
00:54:07Mexican
00:54:07government
00:54:07has
00:54:08not
00:54:08denied
00:54:08the
00:54:09story
00:54:09the
00:54:09real
00:54:10drama
00:54:10now
00:54:10is
00:54:10in
00:54:10Brazil
00:54:11after
00:54:12fierce
00:54:12pressure
00:54:12from
00:54:13western
00:54:13bankers
00:54:13tomorrow
00:54:14Brazil
00:54:14is
00:54:15expected
00:54:15to
00:54:15sign
00:54:15a
00:54:16new
00:54:16agreement
00:54:16with
00:54:16the
00:54:16IMF
00:54:17but
00:54:18Brazil
00:54:18will
00:54:18be
00:54:19paying
00:54:19a
00:54:19heavy
00:54:19price
00:54:20making
00:54:20drastic
00:54:21cuts
00:54:21in
00:54:21wages
00:54:22public
00:54:22spending
00:54:23increasing
00:54:23food
00:54:23prices
00:54:24and
00:54:24all
00:54:24of
00:54:24this
00:54:24at
00:54:25a
00:54:25time
00:54:25when
00:54:26inflation
00:54:26is
00:54:26already
00:54:27at
00:54:27130%
00:54:28and
00:54:29one
00:54:29out
00:54:29of
00:54:29five
00:54:30unemployed
00:54:31Brazil's
00:54:32opposition
00:54:32party
00:54:32leader
00:54:33calls
00:54:33this
00:54:33last
00:54:34agreement
00:54:34quote
00:54:34a
00:54:35criminal
00:54:35assault
00:54:36on
00:54:36the
00:54:36Brazilian
00:54:37people
00:54:37many
00:54:38predict
00:54:39the
00:54:39government
00:54:39won't
00:54:39get
00:54:39approval
00:54:40from
00:54:40the
00:54:40Brazilian
00:54:41Congress
00:54:41on
00:54:41the
00:54:41terms
00:54:42and
00:54:43this
00:54:43Thursday
00:54:43millions
00:54:44of
00:54:44workers
00:54:44are
00:54:44calling
00:54:45for
00:54:45a
00:54:45general
00:54:45strike
00:54:46one
00:54:47of
00:54:47the
00:54:47demands
00:54:48repudiate
00:54:49Brazil's
00:54:52Western
00:54:52bankers
00:54:53next
00:54:55week
00:54:55on
00:54:56Frontline
00:54:56an
00:54:57investigation
00:54:57into
00:54:58how
00:54:58and
00:54:58why
00:54:59our
00:54:59government
00:55:00helped
00:55:00a
00:55:00Nazi
00:55:01war
00:55:01criminal
00:55:01escape
00:55:02justice
00:55:03inside
00:55:09this
00:55:09van
00:55:09is
00:55:10the
00:55:10ex-Nazi
00:55:11they call
00:55:11the
00:55:12Butcher
00:55:12of
00:55:12Lyon
00:55:12he
00:55:15murdered
00:55:15tortured
00:55:16to
00:55:17death
00:55:174,000
00:55:18French
00:55:19these
00:55:20former
00:55:20US
00:55:21intelligence
00:55:22agents
00:55:22later
00:55:22hired
00:55:23him
00:55:23to
00:55:24do
00:55:24their
00:55:24dirty
00:55:24work
00:55:25very
00:55:26shrewd
00:55:27extremely
00:55:28intelligent
00:55:29very
00:55:29capable
00:55:30professional
00:55:3130
00:55:33years
00:55:33later
00:55:34Klaus
00:55:35Barbie's
00:55:35past
00:55:36comes
00:55:36back
00:55:36to
00:55:37haunt
00:55:37America
00:55:37the
00:55:39program
00:55:39is
00:55:40called
00:55:40Klaus
00:55:40Barbie
00:55:41the
00:55:41American
00:55:42connection
00:55:42it
00:55:43is
00:55:43next
00:55:44on
00:55:45Frontline
00:55:45I'm
00:55:46Jessica
00:55:47Savage
00:55:47I'm
00:55:48a
00:55:49I'm
00:55:49a
00:55:49he
00:55:50a
00:55:50I'm
00:55:51a
00:55:51a
00:55:52k
00:56:04and
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00:57:30Is it killed your father?
00:57:44He's a wicked-looking young fella.
00:57:47Maybe he followed after a young woman on a lonesome night.
00:57:51There's a daring fella.
00:57:54There's the playboy.
00:57:56Rise up now to retribution and come on with me.
00:57:59Well, you're a marvel.
00:58:04That's the lad, surely.
00:58:10But I've their word to lead that lad forward for to lodge with me.
00:58:14Did you marry three wives, maybe?
00:58:18That was a hangin' crime mystery.
00:58:20He's the make of a mad dog, I'm thinking.
00:58:22If he'd seen a red petticoat come and swingin' over the hills, he'd be after hidin' the sticks.
00:58:29Flames, buddies, ears!
00:58:30You're the walking playboy of the Western world.
00:58:37Sure.
00:58:41This is Carl Sagan.
00:58:43Come with me on a voyage of discovery across space and time.
00:58:47Some 15 billion years ago, our universe began with the mightiest explosion of all time.
00:58:55The universe expand, cooled, and darkened.
00:58:58Energy condensed into matter, mostly hydrogen atoms.
00:59:02And these atoms accumulated into vast clouds,
00:59:06rushing away from each other,
00:59:07that would one day become the galaxies.
00:59:16Given 15 billion years of cosmic evolution,
00:59:20a human being is one of the things that hydrogen atoms make.
00:59:24We are star stuff, contemplating the stars,
00:59:26wondering what our fate may be.
00:59:29Join me in the adventure of cosmos.
00:59:37Sunday night at 7, WDCN 8.
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