As North American and international capital seek to drum into the heads of economists the oneness of money and blood, the push is on to formally tie the peso to the dollar, to hand over control of Mexican monetary policy to Alan Greenspan. Item #1: Steve Hanke, "Critics Err--Mexico Still Needs a currency Board" Wall Street Journal, Feb. 22, 1995, ed.page. Note: Hanke, like fellow faculty member Riordan Roett,is at Johns Hopkins. Hanke, who has written a book on the virtues of currency boards, i.e., tying a weak currency to a stronger one so tightly that the supply of the weak currency can expand only with an expansion of holdings of the stronger currency, has attacked the current bailout deal as a return to Teddy Roosevelt's methods of seizing customs houses. He argues instead for seizing the Central Bank. He prefers the kind of thing Argentina has done to limit the power of the government: "With a board, the peso's monetary base (notes and coins) would be solely determined by the free market demand for pesos, at a permanently fixed exchange rate. The base would not be determined by the Bank of Mexico..." Thus no expanding the money supply to accomodate public employment programs, no drawing down of foreign exchange reserves to finance balance of trade deficits to keep the ruling party in power. Hanke estimates financing for such a program would cost about $11b --something he says the IMF is authorized to provide. "a currency board," he writes, "would produce stability in Mexico". Item #2: Business Week editorial, February 27, 1995, p. 136. Business Week, which quotes Hanke (see p. 62), says the following: "The big victory of the conservative PAN ....and the failure to capture the leader of teh Chiapas rebellion are raising doubts about the political as well as economic leadership of President Zedillo. ...His ability to enforce harsh anti-inflation poicies on a restive publc in the face of a sharp 40% devaluation is now being sharply questioned by the marketsl ...A dramatic new gesture is needed. Enter the currency board." "...it would be tying its inflation rate and interest rates to the U.S. The Mexican government and the central bank would give up all discretionary power to pump up the money supply or to act as lender of last resort. . . The PACTO, the annual agreement on wages and prices, would have to be abolished. And state-owned assets would have to be sold off to the plrivate sector to sop up excess pesos." As usual Business Week is lucid about the political side of its economics. Unlike Riordan Roett in his infamous Chase Report, BW doesn't call for "eliminating" the Zapatistas (though implicitly it would help ease doubts about Zedillo's "political leadership") but it does join him in calling for sticking it to the Mexican working class and in calling on on the Mexican state to sell off its assets (undoubtedly to include PEMEX --although with all of PEMEX's oil revenues now obligated to the US all that would do would be to return control over Mexico's oil to US capital as it was before Cardenas nationalized it). So far, Zedillo has merely acquiesced to the old game of the 1980s, i.e., impose austerity, slash standards of living, some privatization, to pay off debt. These guys want it all. Fed up with Zedillo's lack of "leadership", they want the Mexican economy firmly in the hands of those tough enough to handle it: Alan Greenspan and American corporations. Let the Fed run monetary policy, the IMF run fiscal policy, and the multinational corporations run the private sector (from oil to banks). That would pretty much annex the whole Mexican economy to the U.S. --which is what NAFTA was really all about anyway. And annexing the Mexican economy means first and foremost annexing the Mexican working class to the needs of American/multinational capital. Next, I suppose, the Mexican army will be formally run from the Pentagon and the national police forces from FBI headquarters. But what the hell, the nationstate is dead, right? Why should any little people want to hang on to its autonomy? Why should they be allowed to? You've got to play by the rules, right? Otherwise you`re out of the game! Oh, forgot to mention: capital generally, like its more savage wing (the mafia), doesn't let people "quit". The Mexican army in in the Selva Lancandona right now to prevent a bunch of Indians from "quitting". The situation there is getting bloodier and bloodier but it's still a ways to go before it reaches the proportions of the Mantanza --the 1932 butchering of 30,000 peasants in El Salvador that brought the peace and quiet of the graveyard to that country's rulling 14 capitalist families for 30 years. Of course, if things get totally out of hand, in Mexico, if one of those little marches of 150,000 people should decide to topple the state, you can bet Zedillo, or one of his hinchmen, will put in a quick call to the Pentagon and ask for help in resisting a "communist" takeover. Oh I know the Cold War is over and communism is dead, but that hasn't stopped either Zedillo or Washington from finding enemies where it needs them. Anyway, once again, if you want to learn about the kind of strategies that may be used against you, read the business press. They have to talk frankly sometimes. They are, after all, in the deadly serious business of trying to keep control, or reestablish control, over the rest of us. Now, the question is: how can we prevent that and gain even more freedom to recraft the world the way we want? ====================================== Harry Cleaver Department of Economics University of Texas at Austin Austin, Texas 78712-1173 USA Phone Numbers: (hm) (512) 442-5036 (off) (512) 471-3211 Fax: (512) 471-3510 E-mail: [EMAIL PROTECTED] ======================================