Imposing the New World Order
207
’WE’LL GET BY WITH A LITTLE HELP FROM OUR FRIENDS’ On October 19, 1987, the bubble burst. On that day the prices on the Dow Jones Index traded at the New York Stock Exchange collapsed more than in any single day in history, by 508 points. The bottom had fallen out of the Reagan ‘recovery.’ But not out of the strategy of the Thatcher–Bush wing of the Anglo-American establishment. They were determined to ensure that sufficient funds kept the bubble afloat until the new Bush presidency could impose the grand strategy for the century’s end. While many comments have since been made about how the October 1987 crash proved that depressions of the 1930s sort were a thing of the past, it did indeed signal the beginning of the end of the deregulated financial speculation which had kept the AngloAmerican century afloat since the early 1970s. George Bush, facing a presidential election the following November 1988, enlisted the efforts of his former campaign manager and close friend, Treasury Secretary James Baker, along with a powerful faction of the American establishment, to guarantee that, despite the implications of the October 1987 crash, foreign capital would continue to flow into U.S. bond and stock markets to keep the illusion of a Reagan–Bush economic recovery alive in the minds of voters. Direct Washington appeals to the Japanese government of Prime Minister Nakasone, arguing that a Democratic president such as Gephardt would damage Japanese trade to the U.S., were successful. Nakasone pressed the Bank of Japan and the Ministry of Finance to be accommodating. After October 1987, Japanese interest rates fell progressively lower, making U.S. stocks and bonds, as well as real estate, appear ‘cheap’ by comparison. Billions of dollars flowed out of Tokyo into the United States. During 1988, the dollar remained strong and Bush was able to secure his election against his Democratic opponent, Dukakis. To secure this support, Bush gave private assurances to senior Japanese figures that a Bush presidency would improve U.S.–Japanese relations. The Bush presidency was intended to be the first direct rule by an insider of the monied East Coast establishment since Franklin D. Roosevelt in the early 1940s. Bush’s task was to steer the American century through its most dangerous waters since 1919. In his first weeks in office, he gave the appearance of decisiveness in tackling some of the nation’s most urgent problems. He proposed a drastic reorganization of the nation’s collapsing savings and loan banking
Engdahl 03 chap11 207
24/8/04 8:17:33 am
