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The News - Novedades Editores - Mexico City
10 de septiembre de 1996
©1996: Suzanne Cane y Olvera

30 BILLION DIRTY DOLLARS WORK WONDERS

Anyone who has read a newspaper in the past couple of years should have a good idea of the problems that Mexico has been facing: a general economic imbalance with its accompanying high unemployment and the resulting crime in the streets, the failure of social programs, inadequate funding for education - and all the human misery that is associated with all of the above.

To rub salt in the wound, the United States forever finds fault with Mexico for not doing enough to control the drug trade. The latest threat by Helms and Company (the amendment to the foreign aid bill was actually sponsored by New Mexico Republican Pete Domenici) is to cut off U.S. aid if, within the next six months, Mexico does not arrest the ten most wanted drug lords. In an apparent attempt not to seem overly harsh, however, the Senate said it would accept the arrest of three from the list of the twenty-five almost-as-wanted in exchange for each of the fabulous top ten that cannot be caught. Three mid-level fish per one big, big fish - not bad. Sounds like the old Gong Show. Miss the right door, and you still have a chance.

There is an easier solution.

Recently, Texas Attorney General, Dan Morales, estimated that some 30 billion dollars of drug money is being laundered by U.S. banks. The estimate was no invention. It was reached in collaboration with the U.S. Drug Enforcement Administration (DEA) and other federal agencies. Needless to say, American bankers, in denying the accusation, sounded just like Mexican bankers denying the same accusation.

Why has it taken so long for U.S. officials to begin to come clean on these estimates? Pure embarrassment is one possible reason, but surely, that cannot be the whole explanation. Thirty billion extra dollars in a financial system can make all kinds of nice things happen if the correct macroeconomic steps are taken to prevent inflation. Thirty billion extra dollars on deposit can translate into more than 25 billion dollars (after bank reserve requirements are met) in additional credit, money that can be lent out by the same banks. And be sure that they lend it out; that is how banks made the profits that they do.

Thus, more than 25 billion dollars of credit can be made available to American companies to keep up and expand production and, in the process, create jobs. Having that much extra credit available also helps to keep interest rates down, and lower interest rates further encourage investment. It's that old supply-and-demand thing at work, you know.

It may not be politically correct to say so, but the American economy can continue to thrive, in part, thanks to all that nice money going around and around in the national washing machine.

At this news, Mexico should yes, "No fair!" Whose money is it anyway?" Mexico is eternally scolded by the United States for the drug trade, but it seems to be the U.S. that may be enjoying the advantages. No fair, indeed.

Thirty billion dollars in Mexico could work a world of wonders. Imagine all the credit that could become available for investment and how many jobs that could create - and how that could lead to a decline in immigration, both legal and illegal. There could be enough money to train more police and build more prisons to help convince the street criminals to go and find real jobs. There could be enough money to improve education and convince the younger generation to look for real jobs in the first place. There could be enough to pay back the United States the money Mexico had to borrow since so much of its own cash was in American banks in the first place. And there could even be enough to do something to halt the drug trade which grew partly as a result of the ease with which the money could be cleaned up - which is where we came in.

Of course, none of this will plug up Popocatepetl, the volcano that keeps threatening to blow its top. And if the IMF goes through with its proposal for a global anti-laundering mechanism, the party could be over before it even begins.

No laundering, no money. No money, no drugs. And no drugs? What would Helms and company do?