Rescuing the Rich
U.S. Representative Bernie Sanders is quoted in the February 16, 1998 Insight magazine as saying, “I think the record is pretty clear that the impact of IMF austerity programs has been tragic for lower-income families. Very often unemployment goes up, wages go down and government programs in terms of subsidizing food and health care are cut…. I don’t think the U.S. should be part of a process that makes life worse for those living in abject poverty. I don’t think it’s any secret that the major cause of this problem is huge global institutions [primarily banks] who lent substantial sums of money to [other] banks and businesses in Asia who were unable to pay them back. The banks made a mistake, but I don’t think I should go running to [U.S.] taxpayers nor should I be punishing workers in Indonesia. We should look at restructuring the problem to ask those who caused the problem to pay for what should be done.”
The Insight article continues, “In Indonesia, for example, [President] Suharto has acted as a major distorting influence on the country’s economy. His six children have amassed [financial] holdings in virtually every sector—airlines, banks, hotels, mining, petrochemicals. As in other Asian countries, the banking system is riddled with corruption and nepotism. The Suharto clan and their friends have enjoyed sweetheart deals and tax breaks that haven’t helped the Indonesian economy and did much to bring it down. Estimates of the family’s wealth run to $40 billion—exactly the amount of the IMF’s rescue package for the country.” This favoritism towards family and friends in financial dealings is what has become known as “Asia’s crony capitalism”: leaders enriching themselves and their favorites while impoverishing the people of their country.
Indonesia’s Plight
MSNBC News Service in Jakarta, Indonesia, reported the following on January 9, 1998: “Fearing a worsening economic crisis, thousands of panicked Indonesians rushed to supermarkets where they snapped up everything in sight…. Ignoring an army appeal for calm in the world’s fourth most-populous nation, Indonesians lined up more than 20-deep at checkout counters to buy sugar, rice, cooking oil and whatever else they could grab before yet another price rise. [Local] markets have been ravaged as the IMF sends its team to Indonesia. Calls for [President] Suharto to step down, unthinkable a week ago, were published Friday on the front page of the Jakarta Post, Indonesia’s influential English-language newspaper.”
In spite of riots, violent protests and social unrest, President Suharto was re-elected by his puppet parliament on March 10 to his seventh five-year term of office. And as The Christian Science Monitor (CSM) of March 4, 1998, stated, “[Mr. Suharto] has accumulated a fortune during his three decades in power…and has no intention of stepping down—crisis or no crisis.” Yet, the article continues, “The situation is dire. Indonesia’s poor worry more and more about putting food on the table…. Take tempeh, a product made from milled soy beans that is a key source of protein for Indonesians who can’t afford more expensive foods like meat or eggs. A block of tempeh that cost 1,000 rupiah several weeks ago now costs 4,000 rupiah.”
Indonesia’s currency, the rupiah, has lost over 75 percent of its buying power since July 1997 when the rupiah’s exchange rate was 2,430 rupiah to US$1. As of March 6, 1998, the rupiah traded at an incredible 10,250 to US$1, down from an astronomical high of 14,750 rupiah to US$1 in January 1998. Only the rich have the means to avoid such a devastating currency devaluation by quickly converting their savings into a reserve currency like the U.S. dollar. However, the poor have no options, and must watch helplessly as the value in their money is literally devoured before their eyes by hyperinflation, leaving them virtually penniless.
In the March 13, 1998, CSM, Helena Cobban writes, “Indonesia…is not the only Asian nation suffering from the current downturn. The problems started in Thailand and have swept through other East Asian nations. But nowhere else except in Indonesia has the political will to solve problems been so totally stymied by the country’s internal political rot. And Indonesia is big: Asian statesmen are rightly fearful of the consequences if this 200-million person nation implodes. With its location astride key shipping lanes…and its status as the world’s largest Muslim nation, an Indonesian collapse could spark political and military unrest throughout the [Asian] continent.”
Witnessing Poverty Up Close
In Matthew 26:11, Jesus Christ said, “You have the poor always with you,” and that is certainly true. The vast majority of mankind is wretchedly poor and it will continue that way for now. Proverbs 10:15 (RSV) tells us, “A rich man’s wealth is his strong city; the poverty of the poor is their ruin.”
On March 16, my wife and I returned to America from a business trip to Guyana, South America, where we witnessed the effects of shameful government corruption and currency devaluation. We saw real poverty up close and on a personal level as we visited several small villages about 70 miles outside of the Georgetown capital. This was my second trip to Guyana and the first for my wife. Though I had told my wife about the crushing poverty in Guyana, she was unprepared for the emotional impact of what we would encounter: an impoverished society which, for most Westerners, is almost unimaginable.
In spite of an abundance of natural resources like bauxite, gold, diamonds and manganese, as well as major export crops like sugar cane, rice and coconuts, the political corruption and failed economic policies of this English-speaking country’s leaders have led Guyana into an ever-deepening pit of devastating poverty.
One of my Guyanese friends said that in 1966, when the British relinquished control of what was then known as British Guyana, the currency exchange rate for the Guyanese dollar was US$1 to Guy$1.80. Today, that exchange rate is US$1 to Guy$146.00, a grievous 99% loss of value against the U.S. dollar!
Last year, an IMF loan of $2.1 billion was arranged for Guyana. My friend says the average citizen does not know how it was spent and no improvements can be seen because of the loan. But now the poor citizens of Guyana, who are already in grinding and disheartening poverty, must repay it. Who profited from the loan? It certainly wasn’t the impoverished citizenry.
As we journeyed, we saw many people wearing clothes which were heavily worn, often repeatedly mended, and more often still in need of mending. Cleanliness is only relative in many areas because household cleaning water must be drawn by buckets from roadside ditches filled with mosquito-infested, foul-smelling, muddy, stagnant water contaminated by human waste and garbage, and in which cattle, sheep, donkeys and pigs wade and drink.
Piles of garbage line the roads because no sanitation system exists. Litter is everywhere—some new, some years or even decades old. Rusting hulks of abandoned cars lay alongside the roads, stripped bare of any usable parts and simply left where they quit running ten, twenty or thirty years ago. No one bothers to clean up the mess.
Near the pothole-filled roads one occasionally sees the rotting corpse of an animal being swarmed by vultures or packs of scavenging dogs. On the landing approach to Timehri Airport outside Georgetown, we all gagged as the plane filled with the repugnant odor of putrefying garbage and smoke from burning sugar cane fields. To say the environment is polluted would be a gross understatement.
Refrigeration of food and running water are only a sometimes thing because the electricity is on and off continually, frequently overnight. In grocery stores and homes alike, frozen food goes through repeated cycles of thawing and refreezing due to prolonged power outages.
Guyana is not a healthy place to visit, let alone live.
Over the last 30 years, incompetent, greedy and self-serving government officials and business leaders have ravaged the Guyanese economy and devalued the currency into nothingness! The same thing is occurring in Southeast Asia today, and is even being worsened by the IMF which is supposed to be “saving” the Asian people from the 1997 Asian financial meltdown. But it is only the rich and powerful who profit as they drive the poor into deeper poverty through the IMF loans. As Job 24:3-11 shows, the poor are victimized and left helpless by those in power.
Deceitful Dealings
Nationally syndicated columnist Pat Buchanan wrote in the February 16, 1998 Insight, “Like the savings and loan debacle [in the U.S. during the 1980s], Asia’s financial crisis is not some natural disaster. It is man-made and made not only in Asia but also in the United States at the Treasury Department and the International Monetary Fund, or IMF…..
“When the [Asian] crisis exploded, the IMF rushed in to bail out the banks and impose its patented medicine on the stumbling Asian regimes: austerity and [currency] devaluation…. Thus, like some quack [doctor] prescribing a regime of rigorous exercise for a patient with two fractured legs, the IMF rescue squad arrived in Indonesia and nearly killed the patient.”
Mr. Buchanan summarizes his article by saying the American people should “send a message to big money: Next time, you boys eat your losses.” He then calls for the abolition of the IMF “to ensure that in future defaults, it is the big banks and foolish investors who made the blunders, not American taxpayers and workers, who take the hit.” In closing he wrote, “Asia’s crisis has revealed the inherent risks in [the] drive for ‘global integration,’ and [the] new world order stands exposed as a rich man’s racket.”
Nothing New Under the Sun
King Solomon of ancient Israel, the wisest man to ever live, other than Jesus Christ, is quoted in Ecclesiastes 1:9 (NIV) as saying, “What has been will be again, what has been done will be done again; there is nothing new under the sun.” Truly, the impoverishment of the poor has continued for thousands of years and will continue until the system is changed by the return of Christ when He will “make all things new” (Rev. 21:5).
Almost 2,000 years ago, when Christ was in human form on this earth, He told mankind how human government works and about this present evil world (Gal. 1:4) and its Golden Rule which says, “He who has the gold rules.” Christ’s words are recorded in Luke 22:25 where He says, “The kings of the Gentiles exercise lordship over them [the people]; and they that exercise authority upon them [the kings and rulers] are called benefactors.”
According to various commentaries, those “benefactors” are “royal tyrants” who were “more often a curse and a scourge” as they ruled politicians and royalty with their money and their power, driving down the poor in the process of enriching themselves. The real power in today’s world, just as in ancient societies, is Big Money—the benefactors—who rule from behind the scenes by pulling the strings of the puppets they have put into office and whom they control with their wealth.
What Are the Fruits?
The Holy Bible says, to understand a matter we must judge “by the fruits” (Matt. 7:16-20). And what are the fruits of IMF bailouts?
The Washington Times of February 15, 1998, says in an article by Lorraine Woellert that “The International Monetary Fund is the world’s richest uncle, a generous free-spender…. But after more than half a century of fiscal nurturing, the great benefactor is going broke. In a matter of months, the economic free-fall in Asia claimed nearly all of the IMF’s $200 billion in reserves.”
As this article goes to press, the United States Congress is debating whether to replenish the IMF’s coffers with $18 billion of taxpayer’s money for future activities. The Wall Street Journal of March 13, 1998, carried an article entitled “The IMF’s Big Wealth Transfer,” in which it discussed how American taxpayers are “losing money because the [interest] rates at which [the IMF is] lending dollars are lower than the rates at which they are borrowing dollars….
“These so-called IMF ‘loans,’ then, actually offered extraordinarily generous rebates of about 10 percent below market rates. On the $117 billion lent to East Asia under IMF auspices thus far, the region is saving about $12 billion a year in interest payments. Over three years, South Korea, Thailand, and Indonesia will have received a direct wealth transfer of at least $35 billion, mostly from U.S. and Western European taxpayers….
“More specifically, much of this $35 billion will amount to a wealth transfer from middle-class Westerners to East Asian governments, banks and their rich equity owners, and from there to wealthy Western and Japanese investors who risked capital in foolish ways (or perhaps not so foolish, since there was a good chance they would be bailed out in the end)….
“The IMF, despite its efforts to push economic reforms, rewards bad regulatory regimes in the same way East Asia’s crony capitalism rewarded bad investments. There is good reason to be wary of a cure whose side effects include generating more of the same disease.”
President Yoweri Museveni of Uganda, Africa, is quoted in the March 21, 1998 World magazine as saying that “three decades of Western aid [IMF and World Bank hand-outs] have led to ‘slavery’ rather than economic improvement for Africa.”
Jesus Christ brings the matter clearly into focus when He states in Luke 6:43-45 (NKJV), “For a good tree does not bear bad fruit, nor does a bad tree bear good fruit. For every tree is known by its own fruit. For men do not gather figs from thorns, nor do they gather grapes from a bramble bush. A good man out of the good treasure of his heart brings forth good; and an evil man out of the evil treasure of his heart brings forth evil. For out of the abundance of the heart his mouth speaks.”
The “fruits” of this “great benefactor” known as the IMF speak loud and clear. The Wall Street Journal of February 3, 1998, sums it up well in an editorial entitled “Who Needs the IMF?” which states, “As is typical when the IMF intervenes, the governments and lenders were rescued, but not the people.”