VIDEO STUDY GUIDE: COMMANDING HEIGHTS: THE BATTLE FOR THE WORLD ECONOMY: PART 2: - THE AGONY OF REFORM

KEY PLAYERS AND DEFINITIONS THAT YOU MAY NOT BE FAMILIAR WITH

1. JEFFEREY SACHS – CONSERVATIVE FREE MARKET ECONOMIST AND PROFESSOR AT HARVARD UNIVERSITY. HE IS A DISCIPLE OF HAYEK AND FRIEDMAN. HE EFFECTIVELY LEADS THE REORGANIZATION OF THE GLOBAL ECONOMY BY LEADING THE RESTRUCTURING OF MANY OF THE COMMUNIST AND SOCIALIST ECONOMIC SYSTEMS THAT WERE NOT WORKING - BOLIVIA, ARGENTINA, POLAND, THE SOVIET UNION

2. ANATOLY CHUBAIS AND YEGOR GAIDAR – RUSSIAN ECONOMISTS (GAIDAR ALSO A PRIME MINISTER) THE FIRST RUSSIAN ECONOMISTS TO SPEAK OUT IN FAVOR OF FREE MARKETS

3. SHOCK THERAPY – TERM USED TO DESCRIBE ABANDONING ONE ECONOMIC SYSTEM FOR ANOTHER LITERALLY OVERNIGHT

4. MIKHAIL GORBACHEV – RUSSIAN PRESIDENT WHO ENDED THE COLD WAR, ABANDONED COMMUNISM, AND DISSOLVED THE SOVIET UNION. DIDN’T MOVE FAST ENOUGH TO CHANGE RUSSIA’S ECONOMY, BUT STILL IS CONSIDERED ONE OF THE BRAVEST MEN OF MODERN TIMES, HE RESIGNED AFTER LOSING THE NATION’S CONFIDENCE DESPITE PUTTING DOWN A COUP DE’ ETAT.

5. PERESTROIKA – MIKAL GORBACHEV’S ECONOMIC REFORM PLAN FOR THE SOVIET UNION

6. LECH WALESA - AS HEAD OF THE “SOLIDARITY” LABOR MOVEMENT IN POLAND, HE LED THE REVOLUTION TO OVERTURN COMMUNISM AND WAS SUCCESSFUL. HE LATER BECAME PRIME MINISTER. WALESA IS ALSO CONSIDERED ONE OF THE BRAVEST MEN OF MODERN TIMES

7. THE RUSSIAN “OLIGARCHS” – AN OLIGARCHY OF YOUNG BUSINESS MOGULS WHO TOOK CONTROL OF THE COMMANDING HEIGHTS

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INDUSTRIES OF THE SOVIET UNION FROM THE RED DIRECTORS. THEY ALSO BOUGHT EXTREME POLITICAL POWER BY FUNDING AND BUYING BORIS YELSTIN’S ELECTION TO PRESIDENT

8. “RED DIRECTORS” OLD SOVIET COMMUNIST INDUSTRY MANAGERS WHO HELD ON TO CONTROL (ACTUALLY OWN) THE INDUSTRIES AFTER THE COLLAPSE OF THE SOVIET UNION. THEY WERE VERY POWERFUL AND ACTUALLY CONTROLLED THE COUNTRY SINCE THEY CONTROLLED THE COMMANDING HEIGHTS

9. BORIS YELTSIN - CORRUPT RUSSIAN PRESIDENT WHO FOUGHT OFF THE RESURGENT COMMUNIST PARTY BUT FAILED TO FULLY IMPLEMENT FREE MARKET REFORMS CRIPPLING RUSSIA FOR MOST OF THE 1990’s

10. DENG XIAOPING – VISIONARY CHINESE LEADER WHO REPLACED REVOLUTIONARY MAO TSE TUNG. STARTED CHINAS’s TURN AWAY FROM ITS COMMUNIST ECONOMIC SYSTEM AND TOWARD A MIX OF SOCIALISM AND CAPITALISM

THE AGONY OF REFORM

*** THE SOVIET UNION AND THE “IRON CURTAIN” - POLITICAL PRISONER/SLAVE LABOR WAS A CRUCIAL COMPONENT OF THE SOVIET ECONOMY AND SOVIET INFLUENCE WAS EVERYWHERE - - - - - - - - -

THE TRUTH BEHIND THE CURTAIN WAS THAT THE SOVIET UNION WAS ONLY INTERESTED IN __________________ PRODUCTION AND THAT THE OVERALLL ECONOMY WAS ______________________

THE BIGGEST PROBLEM WAS THAT PEOPLE DID NOT WANT TO WORK BECAUSE THERE WAS NO ______________________

***INDIA – THE MODEL OF SUCCESSFUL SOCIALISM?

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THE GOVERNMENT RUN ECONOMY HAD BECOME SO CUMBERSOME THAT IT MADE CONDUCTING BUSINESS IMPOSSIBLE. WHAT CLASSIC MARKET REACTION DID THIS CREATE?

*** LATIN AMERICA - CHILE’S SOCIALIST EXPERIMENT

PRESIDENT ALLENDE’S SOCIALISM LEADS TO A __________________ LED BY PINOCHET

PINOCHET DOES NOT HAVE AN ECONOMIC PLAN AND INFLATION SOARS TO ________________% MONTHLY!!!! WHO DOES PINOCHET CALL ON FOR HELP??

PINOCHET’S ARMY LEADERS FAVORED A __________________ ECONOMY. WHY?

FRIEDMAN TELLS PINOCHET HE IS DOOMED IF HE DOES NOT DO TWO THINGS:

1. _______________________ BUSINESSES 2. ________________________TARIFFS

IN THE SHORT RUN THE TURN TO FREE MARKETS CAUSES CHILE EXTREME PAIN AS UNEMPLOYMENT HITS ____________________%

IN THE LONG RUN THE TURN TO FREE MARKETS MAKE CHILE THE _____________________ COUNTRY IN SOUTH AMERICA

IN THE END THE ECONOMIC CHANGES ALSO CAUSE A POLITICAL CHANGE AS A ________________________ EVENTUALLY REPLACED THE JUNTA

*** THE SOVIET UNION - THE CRACKS BEGIN TO SHOW - 1985

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ANATOLY CHUBAIS AND YEGOR GAIDAR FIND A POLITICIAN WHO APPEARS TO UNDERSTAND THAT THE SOVIET COMMUNIST SYSTEM IS NOT WORKING. HIS NAME IS MIKHAIL GORBACHEV. GORBACHEV INTRODUCES HIS REFORM PROGRAM CALLED “PERESTROIKA” - - - - - - WHAT TYPE OF REFORM APPROACH WAS THIS?

1987 - IN HIS FAMOUS SPEECH AT THE BERLIN WALL, WHAT DID PRESIDENT REAGAN MEAN WHEN HE SAID, “MR. GORBACHEV, TEAR DOWN THIS WALL”?

***POLAND - THE RISE OF SOLIDARITY AND FREE MARKETS

WHAT WAS MARGARET THATCHER TRYING TO DO WITH HER VISIT TO POLAND IN 1988 AND THE DEMAND TO MEET WITH LECH WALESA?

THE SOLIDARITY LABOR UNION BECAME 10 MILLION STRONG AND WAS OPPOSED TO __________________________________________________________

***BOLIVIA – ANCHORING LATIN AMERICA’S LOST DECADE

BOLIVIA IS ONE OF LATIN AMERICA’S POOREST AND UNSTABLE NATIONS. BY THE 1980’S IT HAD EXPERIENCED ______________________ MILITARY COUP DE’ETAT

HOWEVER, BY THE 1980’S WHAT WAS BOLIVIA’S BIGGEST PROBLEM AND WHAT WAS THE PRIME CAUSE OF THE PROBLEM?

WHEN JEFF SACHS GOES TO BOLIVIA TO HELP, WHAT DOES HE FIND THE INFLATION RATE TO BE?

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GONI DE LOSADA, BOLIVIA’S FINANCE MINISTER, COMES UP WITH A PLAN THAT IS CALLED _________ _____________________- WHAT ARE THE 4 PARTS OF THIS PLAN:

WHAT WERE THE RESULTS OF DE LOSADA’S PROGRAM?

*** BACK TO POLAND – 1989

IN FREE ELECTION SOLIDARITY WINS 99% OF THE SEATS IN PARLIAMENT. THE HEAD OF POLAND’S COMMUNIST PARTY CALLS MIKHAIL GORBACHEV LOOKING FOR HELP (MILITARY HELP TO CRUSH THE OPPOSITION AS THEY HAD DONE IN THE PAST). GORBACHEV TELLS HIM TO JUST LET THINGS BE .. .. … THIS WAS CALLED THE PHONE CALL THAT ENDED THE ________________ __________________

LECH WALESA IMPLEMENTS “SHOCK THERAPY” JUST LIKE IN BOLIVIA. IN THE LONG RUN POLAND BECAME THE MODEL OF FREE MARKETS, BUT IN THE SHORT RUN .. .. …

PRICES ____________________________

_________________ OCCURRED

WHAT DID POLAND FIND MORE DIFFICULT TO CHANGE/PRIVATIZE?

THE SOVIET UNION WATCHES WHAT IS GOING ON IN POLAND AND BEGINS TO DRAW UP ITS OWN PLAN TO CHANGE, BUT DID IT?

***CHINA - 1989 THE SEEDS ARE SOWN FOR CHINA’S CURRENT GROWTH

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DENG XIAOPING HAD FIGURED THINGS OUT WHEN CHAIRMAN MAO WAS IN POWER. WHEN HE BECOMES LEADER HE QUIETLY BEGINS TO TURN CHINA AWAY FROM A COMMUNISM/CENTRAL PLANNING TO A SYSTEM OF SOCIALISM WITH CHINESE __________________

DENG SAVED CHINA FORM WHAT FATE?

***BACK TO THE SOVIET UNION/RUSSIA 1991

ECONOMIC REFORMS DID NOT MOVE FAST ENOUGH IN THE SOVIET UNION AND THIS LED TO TWO THINGS:

1. GORBACHEV’S CREDIBILITY IS SEVERELY DAMAGED BY A ________________________

2. GORBACHEV THEN ________________THE SOVIET UNION

ALTHOUGH THE NEW PRESIDENT OF RUSSIA, BORIS YELTSIN, MOVES FAST HE FACES SERIOUS PROBLEMS SUCH AS:

1. NO _______________________ 2. NO _______________________ 3. MASSIVE __________________ 4. AN INFLATION RATE OF __________________

YEGOR GAIDAR, NOW YELTSIN’S FINANCE MINISTER, MAKES REVOLUTIONARY MASSIVE CHANGES IN POLICIES AND LAWS, THE TWO MOST IMPORTANT WERE:

1. ABOLISHING __________________ CONTROLS 2. ABOLISHING THE LAW THAT PROHIBITED ________________

ENTREPRENEURISM SKY ROCKETS, BUT SO DO _______________

***BACK TO INDIA

WITH INDIA’S ECONOMY STAGNANT AND THE GOVERNMENT IN DEBT, THE COLLAPSE OF THE CENTRALLY PLANNED SOVIET UNION HAD A PROFOUND IMPACT. INDIA MOVED QUICKLY TO GET THE GOVERNMENT

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OFF THE BACKS OF THE PEOPLE. THEY MADE THE FOLLOWING 4 CHANGES:

1. STATE CONTROL OF THE ECONOMY WAS __________________ 2. SUBSIDIES WERE _____________________ 3. TARIFFS WERE ______________________ 4. REGULATION LICENSES WERE _________________________

WHAT WERE THE RESULTS?

***BACK TO RUSSIA

ALTHOUGH MANY SIGNIFICANT CHANGES HAD BEEN MADE, THE COMMANDING HEIGHTS OF RUSSIA’S ECONOMY WERE STILL IN THE HANDS OF THE GOVERNMENT. GAIDAR, CHUBAIS AND THE OTHER ECONOMISTS COME UP WITH A PLAN TO AUCTION OFF THE MAJOR INDUSTRIES INTO PRIVATIZATION, BUT WITH PEOPLE HAVING NO MONEY TO INVEST THEY COME UP WITH THE BRIGHT IDEA OF GIVING ALL CITIZENS 10,000 RUBELS (RUSSIAN CURRENCY) WORTH OF PRIVATIZATION ________________________________

PEOPLE NOW WOULD HAVE SOMETHING TO INVEST, HOWEVER WHAT WAS THE PROBLEM THAT THE PRIVATIZATION PLAN RAN INTO?

THE PRIVATIZATION PROGRAM GETS STARTED JUST BEFORE THE DEALINE THAT HAD BEEN SET FOR IT. THE DELAY IT STARTED COSTS __________ HIS JOB. ON THE OTHER HAND, THE START OF THE PRIVATIZATION CAUSES THE FOLLOWING THINGS TO OCCUR:

1. A SMALL __________ MARKET BEGINS TO GROW2. STOCK ____________BEGINS TO GROW 3. ___________ BEGINS TO RUN RAMPANT

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IN 1995 THE RUSSIAN “OLIGARCHS” APPEAR AND BEGIN TO MOVE IN ON THE “RED DIRECTORS” IN AN EFFORT TO ACQUIRE, AND PRIVATIZE, THE COMMANDING HEIGHTS INDUSTRIES. THE RED DIRECTORS ARE DEEPLY ENTRENCHES AND THE OLIGARCHS NEED WHAT TYPE OF HELP TO ACHIEVE THEIR GOALS?

YELTSIN NEEDS HELP IN HIS DESPERATE BATTLE WITH THE RESURGENT COMMUNISTS FOR THE 1996 ELECTIONS. HE AND THE OLIGARCHS NEED EACH OTHER SO THEY WROTE OUT THE “THEFT OF THE CENTURY” . WHO GETS WHAT IN THIS DEAL?

IN THE END THE OLIGARCHS OWN EVERYTHING AND THE ECONOMY IS STRANGLED. WHAT HAPPENS TO RUSSIA IN 1998 AND YELTSIN IN 2000?

***BACK TO POLAND

THE REVOLUTION IS AT FULL SPEED: THREE ASTONISHING FACTS:

_______________ MILLION SMALL BUSINESSES ARE CREATED SMALL BUSINESS EMPLOY ________________ OF POLAND’S

WORKFORCE SMALL BUSINESS PRODUCE _________________ PERCENT OF THE

NATIONS OUTPUT

*** NO NOTES FOR A FEW MINUTES AS THE FILM NOW QUICKLY UPDATES THE STORIES IN LATIN AMERICA, INDIA, AND THEN RETURNS TO RUSSIA

*** RUSSIA

SOME PEOPLE THINK RUSSIA IS TURNING THE CORNER WHEN VLADIMIR PUTIN IS ELECTED PRESIDENT AND HE MOVES TO LIMIT THE POWER OF THE __________________ AND PUTS IN MORE REFORMS

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*** SUMMARY***

CAPITALISM AND FREE MARKETS HAD WON!!! THIS SET UP A GLOBAL MARKET PLACE THAT IS NOW TIED TOGETHER KBY THREE CRITICAL FACTORS:

_____________________________________ _____________________________________ _____________________________________

THE ERA OF GLOBALIZATION HAD BEGUN!!

VIDEO STUDY GUIDE - COMMANDING HEIGHTS: THE BATTLE FOR THE WORLD ECONOMY – PART 3: THE NEW RULES OF THE GAME

TERMS THAT YOU MAY NOT BE FAMILIAR WITH

1. CONTAGION - A FINANCIAL SYSTEM VIRUS LIKE A CLASSIC “BANK RUN” OR PANIC. INVESTORS LOOSE CONFIDENCE IN A COUNTRY’S ABILITY TO PAY ITS DEBTS AND BEGIN TO WITHDRAW THEIR MONEY/INVESTMENTS

2. CALPERS - THE STATE OF CALIFORNIA’S STATE EMPLOYEE PENSION (RETIREMENT) FUND IS ONE OF THE LARGEST IN THE WORLD COVERING OVER ONE MILLION EMPLOYEES

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3. IMF – INTERNATIONAL MONETARY FUND

THE NEW RULES OF THE GAME

TWO QUESTIONS ARISE:

1. IS TERRORISM THE DARK SIDE OF GLOBALIZATION?

2. CAN PROSPERITY BE DELIVERED TO EVERYONE?

DURING THE 1990’S CAPITALISM FUELDED THE GREATEST ______________________ IN HISTORY

IT IS SAID THAT WE NOW LIVE IN A NEW WORLD AND ECONOMY IN WHICH “EVERYONE HAS A STAKE, BUT NO ONE HAS ____________________”

GLOBALIZATION HAS BROUGHT RECORD PROSPERITY, BUT ALSO NEW PERILS WE DO NOT YET UNDERSTAND. IT HAS SPARKED A GREAT DEBATE OVER _______________________ AND _____________________

*** NAFTA - NORTH AMERICAN FREE TRADE AGREEMENT - PUTTING THE IDEA OF FREE TRADE TO THE TEST

PRESIDENT CLINTON COMPLETELY CHANGES HIS POSITION ON NAFTA FROM WHAT HE SUPPORTED DURING THE CAMPAIGN. HE NOW COMPLETELY SUPPORTS NAFTA WITHOUT CONDITIONS. THIS WAS VIEWED AS A “SELLOUT” BY HIS SUPPORTERS. WHAT GROUP WAS THE MOST UPSET/ANGRY?

WHAT HAPPENED IMMEDIATELY AFTER THE NAFTA AGREEMENT WAS SIGNED?

WHAT PERCENTAGE OF THE TV’S THAT ARE BOUGHT IN THE UNITED STATES COME FROM MEXICO?

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*** TIAJUANA MEXICO - THE BALL STARTS ROLLING .. .. .. ..

HOW MANY WORKERS FOUND JOBS ALONG THE BORDER?

WHAT PERCENTAGE OF MEXICO’S POPULATION LIVES IN POVERTY?

UNION LEADERS SAID THAT NAFTA SHIFTED THE BALANCE OF BARGAINING POWER TO FAVOR ___________________________

SINCE NAFTA WENT INTO EFFECT IT HAS HAD AN ADVERSE IMPACT ON OVER ________________ AMERICAN JOBS, YET EFFORTS TO OTHER COUNTRIES HAVE CREATED OVER ___________________ JOBS AND THE VOLUME OF TRADE HAS _________________

THE BIGGEST THING THAT IS NOW TRADED, BUT IS REALLY NOT VISABLE TO THE GENERAL PUBLIC IS ____________________

*** SACRAMENTO, CALIFORNIA

CALPERS (THE CALIFORNIA STATE WORKERS PENSION FUND), WAS INVESTING HEAVILY OVERSEAS AND AT ONE TIME ACTUALLY CONROLLED _________ PERCENT OF FRANCE’S STOCK MARKET

PENSION FUNDS HAVE BECOME THE “FINANCIAL POWERHOUSES” OF THE WORLD BECAUSE THEY NOW CONTROL HUGE SUMS OF _______________

“THIRD WORLD” NATIONS HAVE BEEN RENAMED TO REFLECT INVESTMENT OPPORTUNITY. THEY ARE NOW CALLED ______________

_______________________

MANY DEVELOPING NATIONS HAVE BEGUN TO VIEW BIG MONEY POWERS (NATIONS AND CORPORATIONS) AS THREATS TO THEIR _____________________

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*** THE FIRST “REAL TIME” GLOBAL FINANCIAL CRISIS OF THE 21ST CENTURY - THE MEXICAN CRISIS OF 1994

WHO BEGINS TO FLEE MEXICO WHEN THE SANDINISTA REBELS LAUNCH THEIR UPRISING?

SENIOR UNITED STATES GOVERNMENT OFFICIALS ADVISE THE PRESIDENT THAT IT IS VERY LIKELY THAT:

1. THE MEXICAN PESO WILL _____________________________

2. A MASS EXODUS OF _______________ TO THE UNITED STATES WILL START

AS MEXICO IS ABOUT TO DEFAULT ON ITS FOREIGN DEBT THE UNITED STATES SETS A HORRIBLE PRECEDENT BY GIVING MEXICO A _____________

AS MOST OF THE HOLDERS OF MEXICO’S DEBT WERE AMERICANS, THIS BAILING OUT OF AMERICANS BY THE UNITED STATES GOVERNMENT REALLY SENT THE WRONG MESSAGE…. …… …. IT ENCOURAGES AMERICANS NOT TO WORRY ABOUT, OR CONSIDER ____________________ WHEN MAKING INVESTMENTS

THE MEXICAN CRISIS ALSO PROVIDED THAT _________________ HAD BECOME A TREMENDOUS FORCE AND HAD TRANSFORMED THE FINANCIAL MARKETS AS MASSIVE AMOUNTS OF MONEY COULD BE MOVED IN SECONDS

****THE TECHNOLOGICAL REVOLUTION AND THE DEVELOPMENT OF THE GLOBAL VILLAGE

THE TECHNOLOGICAL REVOLUTION OF THE 1980’S AND 1990’S CREATED A COMMUNICATIONS EXPLOSION. IN TWO DECADES THE NUMBER OF INTERNATIONAL PHONE CALLS MADE WENT FROM 200 MILLION ANNUALLY UP TO _____________________

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THE TECHNOLOGICAL REVOLUTION CREATED A BORDERLESS WORLD AND GAVE POWERFUL TOOLS TO A NEW TYPE OF BUSINESS PERSON, THE __________________ WHO COULD THINK AND ACT LIKE A MULTINATIONAL CORPORATION BY VIEWING THE WORLD AS A _____________________ ____________________________

TODAY OVER ________________ PERCENT OF THE WORLD’S SOFTWARE ENGINEERS ARE FROM ___________________

THE CEO OF INFOSYS DEFINES “GLOBALIZATION” AS:

1. PRODUCING WHERE IT IS MOST ____________________________

2. SELLING WHERE IT IS MOST ______________________________

3. SOURCING CAPITAL WHERE YOU CAN GET THE ______________________________

WHAT PLACE IS CONSIDERED THE SPIRITUAL CENTER OF THE GLOBAL VILLAGE?

________________________________________________________________________

*** ARE WE GROWING TOO FAST, MAKING TOO MUCH PROGRESS????

SHANGHAI, CHINA

FOR THE FIRST TIME OVER 1/4TH OF THE GLOBAL POPULATION IS ENTERING THE GLOBAL MARKET!!! THE IMPACT IS THAT OVER __________________________ CHINESE PEOPLE HAVE BEEN LIFTED OUT OF POVERTY

THIS ERA OF TRUE GLOBALIZATION HAS SEEN THE LARGEST AMOUNT OF HUMAN ________________________ IN HISTORY

IT IS ESTIMATED THAT OVER 80% OF FUTURE ECONOMIC GROWTH IS EXPECTED TO OCCUR THROUGH ________________ RATHER THAN THE ___________________________

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*** SINGAPORE

WHEN THE BRITISH ARRIVED IN THE 1800’S THEY FOUND A FISHING VILLAGE OF 120 PEOPLE AND INFERTILE GROUND. TODAY SINGAPORE IS ONE OF THE WORLD’S FINANCIAL CENTERS, AND LIKE MOST SOUTH ASIAN ECONOMIES, IS GROWING AT OVER _____________ PERCENT A YEAR!!

**** TOKYO

EARLY IN THE TECHNOLOGICAL CAPITALIST REVOLUTION, JAPAN, THE WORLD’S ___________________ LARGEST ECONOMY WAS AN EXCEPTION.

THE REASON FOR THIS WAS THAT JAPANESE BANKS HAD HELD OVER ________________ IN BAD DEBTS

ADDITIONAL MISTAKES BY JAPAN:

1. TRADITIONALLY JAPAN HAD BEEN A CLOSED SOCIETY BASED ON STRONG ______________ TYPE VALUES

2. WITH THEIR EXPORTS SKYROCKETING THEY MISTAKENLY DID NOT PERMIT ENOUGH ___________________ TO ENTER THE COUNTRY AND THEY REGULATED THE COMMANDING HEIGHTS

**** A GLIMPSE OF POTENTIAL FUTURE HORROR - GLOBAL CONTAGION AND POSSIBLY A NEW FORM OF COLONIALISM

BANGKOK, THAILAND

DURING THE BOOM TIMES OF THE 1990’S , THAILAND OPENED ITS CAPITAL MARKETS AND HAD AN EASY MONEY POLICY. IN JUST 4 YEARS FINANCIAL INSTITUTIONS TRIPLED THE AMOUNT OF LOANS ISSUED TO _____________________

THAILAND MADE THE MISTAKE OF NOT HAVING ITS ECONOMIC INFRASTRUCTURE KEEP PACE WITH THE CAPITAL MARKETS - IT DID NOT DEVELOP ITS FINANCIAL REGULATORY SYSTEM, ETC. PROBABLY

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THE BIGGEST PROBLEM WAS THE “BOK” (THAILAND’S CURRENCY) WAS FIXED TO THE UNITED STATES DOLLAR AND KEPT ________________ VALUE

PRESSURE MOUNTS AND FINALLY IN 1997 THE BOK HAS TO BE DEVALUED AND THE ECONOMY GOES INTO A FREE FALL. THE IMF (INTERNATIONAL MONETARY FUND) CAN NOT HELP BECAUSE THE PROBLEM IS TOO BIG, SO THAILAND TURNS ONCE AGAIN TO THE _________________________________

PANIC SETS IN AS PEOPLE BEGIN TO WONDER IF ALL THE ASIAN ECONOMIES ARE IN THE SAME SITUATION - THE RUN ON THE BANK STARTS JUST LIKE IT DID IN MEXICO, BUT NOW ON ALMOST A GLOBAL SCALE. OVER ______________ QUICKLY BEGINS TO FLOW OUT OF JUST SOUTHEAST ASIA

THE IMF TAKES THE LEAD IN TRYING TO CONTAIN THE PANIC AND REQUIRES THE SOUTHEAST ASIAN COUNTRIES TO:

1. CUT ____________________ SPENDING

2. RAISE ________________ RATES

3. ELIMINATE ______________ IN THEIR SYSTEMS

**** MANY PEOPLE BEGAN TO BE DISTURBED BY WHAT THEY WERE SEEING IN SOUTHEAST ASIA. THEY CAME TO UNDERSTAND THAT THERE WAS THE POTENTIAL, VIA RUMOR, TO DESTABILIZE A GOVERNMENT BY QUICKLY UNDERMINING THEIR CURRENCY, MAKING IT POOR, AND MAKING IT BEG FOR HELP. FOR THE HELP, THE HELPING NATION WOULD GET CONTROL OF THE POLICIES OF THE COUNTRY …….THIS IS NOW VIEWED AS A POSSIBLE NEW KING OF COLONIALISM - CONQUERING A COUNTRY WITHOUT MILITARY FORCE

SOUTH KOREA

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THE PANIC IS STILL SILENTLY SPREADING AND THE 11TH LARGEST ECONOMY IN THE WORLD, SOUTH KOREA, SAYS THAT IT HAS BEEN LYING ABOUT THE AMOUNT OF MONEY IT HAS AND IS ALSO READY TO DEFAULT ON ITS FOREIGN DEBT. THE IMF AND THE UNITED STATES COME TO ITS AID AND UNDERWRITE THE LARGEST BAILOUT IN HISTORY TOTALING _____________________________________

RUSSIA

AFTER THE FALL OF COMMUNISM RUSSIA WAS SEEN AS THE PREMIER “EMERGING MARKET” AND AN ABSOLUTE SAFE BET. HOWEVER, IT ALSO DEFAULTS AND THE PANIC IS NOW RAGING. UNITED STATES SECRETARY OF THE TREASURY ROBERT RUBIN AND FED CHAIRMAN ALAN GREENSPAN ADVISE PRESIDENT CLINTON THAT THESE CONDITIONS HAVE _____________________________ SEEN BEFORE

UNITED STATES

CONTAGION NOW BEGINS TO HIT THE UNITED STATES, A HEDGE FUN CALLED LCTM (LONG TERM CAPITAL MANAGEMENT) IS NEAR DEFAULT BECAUSE OF ITS OVERSEAS INVESTMENTS ( FOREIGN BONDS, ETC.) , IT IS ABOUT TO LOOSE OVER ____________________________________

THE FEDERAL RESERVE BANK OF THE UNITED STATES SAYS THAT IT CAN NOT HELP BECAUSE LCTM IS A PRIVATE FIRM AND IT WOULD NOT BE FAIR IN THE LONG TERM PUBLIC INTEREST. THE FED LEAVES THE RESCUE OF LCTM TO THE _____________________________________

*** THE GLOBAL DEBATE AND DIVIDE

ANTIGLOBALISM SENTIMENT IS RISING OUT OF FEAR. THE _______________________________________ LED THE PROTESTS AND RIOTS

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DURING THE SEATTLE WTO (WORLD TRADE ORGANIZATION) MEETING IN THE LATE 1990’S

THE COSTS OF OPENING WORLD MARKETS WAS MASSIVE UNION JOB LOSSES. DESPITE THIS, THE OPENING OF MARKETS CREATED OVER ______________________________ NEW JOBS IN THE UNITED STATES

THE DEVELOPING WORLD/NATIONS ____________________________ THE PROTESTORS AND WANT MORE ________________________

PRESIDENT CLINTON, WELL KNOWN FOR SUPPORTING WHATEVER WOULD HELP HIM WITH AN ELECTION OR MAINTAIN POPULARITY, WAS UP FOR RE-ELECTION. HE ABANDONS HIS FREE TRADE POSITION TO SUPPORT THE UNIONS AND THIS CAUSES THE WTO SUMMIT TO BE A ______________________________

AS POVERTY BECOMES THE FOCAL POINT, AND THE WORLD BANK THE NEXT TARGET, THOSE WHO FAVOR FREE TRADE AND OPEN MARKETS CLAIM THAT ______________ DID NOT CAUSE GLOBAL POVERTY, IT JUST HAS MADE MORE PEOPLE MORE AWARE OF IT

HOWEVER, THE FACT IS THAT THERE IS A BIG GAP IN “WELL BEING” ACROSS THE GLOBE AS _____________ OF HUMANITY LIVES IN THE DEVELOPING WORLD

THE FAMOUS ECONOMIST, HERNANDO DE SOTO, CLAIMS THAT CAPITALISM IS A GREAT TOOL FOR HELPING POOR PEOPLE ATTAIN PROSPERITY, HOWEVER, HE SAYS THE REASON WHY CAPITALISM HAS NOT BEEN ABLE TO HELP THE POOR IS BECAUSE THE POOR IN ALL “EMERGING/DEVELOPING NATIONS/ MARKETS” DO NOT HAVE _____________________ ___________________

DE SOTO BELIEVES THAT PEOPLE ARE _________________ BY NATURE, BUT IN THE DEVELOPING WORLD THEY ARE LOCKED OUT OF THE SYSTEM AND THE GLOBAL MARKET PASSES THEM BY

WITHOUT PROPERTY RIGHTS PEOPLE ARE EXCLUDED FROM:

1. GETTING A ______________________

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2. OBTAINING __________________

FORMER PRESIDENT CLINTON MAKES A GOOD POINT ABOUT THE FUTURE. HE SAYS THAT IT IS NOT SUFFICIENT TO BUILD A PEACEFUL FREE WORLD, YOU ALSO NEED ____________________, IT IS AN ABSOLUTE NECESSITY

THEN CAME THE 911 EVENTS AND THIS LEAVES US WITH THE CONSIDERATION THAT WE MAY STILL NOT REALLY UNDERSTAND THE NEW RULES THAT THEY MAY STILL NOT HAVE BEEN ALL DEFINE!!

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