The International Monetary Fund just added the first installment on an additional $30 billion in debt that Brazil owes to the banks in the United States, Japan, and other imperialist countries. The announcement of the loan package--an attempt to stave off a default on the more than $250 billion national debt and an economic collapse like that experienced in Argentina--sparked only a few-days’ rebound of the country’s currency and financial markets.

The potential for a financial collapse of Latin America’s largest country and economy--of catching the Argentine flu that has already spread to Paraguay and Uruguay--and of explosive resistance by working people have made Washington nervous. The U.S. rulers have already expressed concern over the possibility of the Workers Party candidate winning the presidential elections in September. They fear working people will see it as an opening to fight for land reform, jobs, and other burning social issues.

Some two weeks before the IMF announcement, U.S. treasury secretary Paul O’Neill had scoffed at the proposal for a loan, suggesting the billions involved would end up in "Swiss bank accounts." In fact, much of the "bailout" will end up in U.S. bank accounts, including the coffers of J.P. Morgan Chase, FleetBoston, and Citigroup. As one liberal commentator, a supporter of the package, asked: "Who, exactly, is being bailed out?"

U.S. big business siphons off billions of dollars in interest alone from loans to Brazil and other semicolonial countries around the world. This wealth comes from only one source--the superexploitation of workers and peasants. With each "bailout" comes demands for "belt-tightening" measures that bring ruination to growing numbers of toilers.

The problem for the superrich is that these profit harvests come with an overhead. In times of stagnating and declining profit rates, a default on one country’s loans can have a domino effect. And the major U.S. banking institutions are not only facing the threat of those defaults. Their giant "bubble" of trillions of dollars in stocks, derivatives, and shaky domestic loans is deflating today. That is why any one financial disaster--a default in Brazil, a banking collapse in Japan, or further nose-dive of the stock markets--can trigger a collapse of the U.S. banking system.

Pathfinder books like Cuba and the Coming American Revolution and Capitalism’s World Disorder help demystify the economic and political dynamics of the world today and offer a perspective for working people to follow the example of the Cuban toilers. The Cuban revolutionary leadership has consistently called for the cancellation of the Third World debt, a debt that now exceeds $2 trillion. This is a demand that all working people and anti-imperialist youth should champion.  
 
 
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