Chapter 251 Foreign Debt and Economic Transformation 1 Package Solution
Jeffrey Sachs was hired by Columbia Bank to market his "shock therapy" in Eastern Europe. This was not the whim of Seryozha. Seryozha thought deeply about his plan.
From the current point of view, it is impossible to rule the vast Eastern European region by political or military means. The people in this land chose to abandon the Stalinist system of economy that they had insisted on for decades. As one country after another fell, these countries gradually got rid of the control of the Soviet Union and began to face the world alone.
Most of the ruling governments of Eastern European countries feel at a loss when the newly elected new regimes start to take over their countries. Because what is before them is not a vibrant country, the first thing they have to face is huge foreign debts, rising prices, and a domestic economy that is on the verge of collapse. The Stalinist system left behind a large number of low-efficiency state-owned enterprises that cannot generate profits, and because of the shrinkage of the light industry and food industry brought about by the Stalinist economic model, the prices of daily necessities urgently needed by the domestic people have risen, and the people cannot even afford the high prices. cost of living. Under such circumstances, the leaders of the nascent regime have no choice but to continue printing money to subsidize the purchase of daily necessities for their own citizens. But subsidies can only make the inflation situation worse.
Facing their huge foreign debts, the governments of Hungary, Poland and other countries feel at a loss. They are simply unable to repay these loans on their own strength, but if they cannot obtain new financing, they will not be able to import sufficient consumer goods from abroad to meet the needs of the domestic people. Under such circumstances, there are only three roads before them. One is to seek financial support from the United States to repay their foreign debts. This road seems simple but is actually very complicated. After all, the money bag of the United States is not determined by the president but by the Congress. In the face of countries like Poland and Hungary that lack their own hematopoietic capabilities, the US Congress will not agree to throw taxpayer money into these puddles. Therefore, Walesa has nothing to do except scold the U.S. government for its dishonesty.
The second way is to request an emergency loan from the International Monetary Fund, but the terms of the loan are very harsh, and it is very likely that the Polish government will lose its taxation, customs and other rights. In addition, it is actually an international organization controlled by the United States, and it is very likely that it will also carry some private goods of the Americans. For example, the deployment of US missiles in Poland, or the establishment of US military bases in Poland and other additional conditions. Once Poland chooses to cooperate with China, it means that Poland will become the frontier to block the Soviet Union and become the watchdog of the United States. Even if Walesa doesn't understand this truth, those intellectuals in Poland will understand it, so this road is actually a dead end.
As for the third way, it is to issue treasury bonds to those powerful international financial institutions and private investors. This road is also an impossible task for countries such as Poland and Hungary, because their credit ratings are now all junk, and normal investors will never lend them a penny, and those The interest offered by creditors who are willing to lend them money is not much better than usury, so this road is still a dead end.
Is there a fourth way other than the three ways? Of course there is, that is the foreign debt and economic transformation package proposed by Columbia Bank and Jeffrey Sachs.
Specifically, this set of plans means that the Bank of Columbia will take over the central banks of these countries and provide funds to allow these countries to repay their debts. At the same time, these countries will carry out economic reforms without compromise in accordance with the economic policies proposed by the Bank of Columbia and Jeffrey Sachs. This will inevitably involve "shock therapy".
For the governments of host countries, the funds provided by the Bank of Colombia can cope with the huge foreign debts of these countries. At the same time, Glencore, as well as a large number of agricultural, animal husbandry and food companies acquired by Sergei in the United States, can also participate in providing sufficient food and light industrial products for these countries. This is simply a set of programs customized for these countries.
As for the Columbia Bank, once a certain country accepts the Columbia Bank's plan. The Bank of Colombia will automatically be upgraded to the country's central bank. It will monopolize the right to issue banknotes in the country where it is located, the power to manage reserve assets such as foreign exchange and gold, and the power to regulate inflation in the country where it is located through interest rates. In addition, the bulk commodities and livestock products under Sergei Sha can also be dumped in Eastern Europe to obtain a stable market. This plan is definitely an opportunity for the Gorky Consortium to dominate Europe.
Jeffrey Sachs first came to Poland to meet Walesa to discuss Poland's economic issues. Why choose Poland as the first stop? First of all, this is the place where the Gorky Group has been operating for many years. Secondly, it is located at the doorstep of the Soviet Union, and its geographical location is very important. Finally, Glencore has now used Poland as a dumping ground for agricultural products, and has practically realized its plan to control the supply of the Polish market.
Walesa naturally welcomed the arrival of Jeffrey Sachs. Because Jeffrey Sachs has just achieved great success in Bolivia, and even a layman in economics can see how similar the situation in Bolivia is to Poland now. So when Jeffrey Sachs proposed a package solution to foreign debt and economic transformation in front of all Walesa's cabinet members, most of Walesa's cabinet members felt a little moved.
"Professor Sachs, do you really think that the Columbia Bank's plan can save the Polish economy?" Walesa still asked a little worried.
"Mr. Prime Minister, I have repeatedly discussed this plan with the Bank of Colombia, which contains my experience and lessons in the reform process in Bolivia. I believe that as long as your country accepts the plan of the Bank of Colombia, within a week, Inflation in Poland will be under control. And I know that in a few months, your country will have a large amount of debt due. If the debt defaults at that time, I think you don’t need to tell me about the situation.” Jeff Sax said confidently.
These words really shocked Walesa. Now Poland needs to import a large amount of food and daily necessities from abroad to maintain people's lives. However, if the debt defaults, Poland will no longer be able to raise funds from the international community. The money for imported flour is gone.
"Mr. President, the situation is already like this anyway, why not give us Bank of Colombia a chance? I think that besides us, basically no one is willing to lend money to Poland, right?" said the president of Bank of Columbia, who has been silent all the time. Hayle suddenly smiled and whispered to Walesa. ()