‘We’ll get by with a little help from our friends’

’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 suffi cient funds kept the bubble afl oat 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 fi nancial speculation which had kept the AngloAmerican century afl oat 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 fl ow 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 fl owed 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 fi gures that a Bush presidency would improve U.S.–Japanese relations.

The Bush presidency was intended to be the fi rst 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 fi rst weeks in offi ce, 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

system, and he used the popular outcry following a bizarre accident of the Exxon Valdez oil tanker to win approval for a radical new series of punitive laws which would, for the fi rst time since Jimmy Carter, make environmentalism a priority of the presidency. Both initiatives later turned out to be catastrophes, but the all-important message in the early months was that, unlike the aging Reagan, in George Bush, America fi nally had a president who was personally on top of world events.

The actual plan of the new Bush administration was to direct pressures onto select U.S. allies for increased ‘burden sharing’ to manage the huge U.S. debt burdens. The argument was put forward that the Soviet Union was collapsing and that, as a result, only one superpower with overpowering military might and size remained— the United States. In this situation, the argument was offered that Germany, Japan and other major economic and military allies of America should increase their fi nancial support to maintain this superpower. It was a thinly veiled attempt at blackmail.

It soon became clear that Bush’s call for a ‘kinder and gentler America’ was little more than a rhetorical appeal to an aging voting population. The Bush who occupied the White House moved quickly to establish his ‘tough guy’ policies, by creating a major media pretext for a military invasion of a tiny central American republic, Panama, during the Christmas days of his fi rst year as President, December 1989. According to eyewitness accounts, upwards of 6,000 Panamanians, mostly poor civilians, were killed as U.S. Special Forces and U.S. bombers invaded the small country on the pretext of arresting the de facto ruler, General Manuel Noriega, on charges of being a drug cartel kingpin.

Bush’s attorney general, Richard Thornburgh, who as governor of Pennsylvania played such a controversial role during the Three Mile Island nuclear emergency, had formulated an incredible new U.S. doctrine. The Thornburgh Doctrine stipulated that the American FBI and the Justice Department had authority to act on foreign territory, if deemed necessary, ‘in the course of extraterritorial law enforcement.’ Translated, this meant that the U.S. government, by executive fi at, using the pretext of tracking international narcotics or terrorist criminals, had declared its unilateral right to come into Germany, France, Panama or any other place it deemed necessary, without concern for the laws of the sovereign country involved. But the Panama invasion, incredible as it was, produced a stony silence