[Chapter 790: Must Extend a Hand]
Two big shots from the U.S. Federal Reserve chatted, hardly concerning themselves with William White's trivial matters. They certainly weren't as wealthy as White; the gap between them was substantial. However, when it came to wielding power, White was simply beyond their reach.
"Alan, we absolutely cannot afford an economic crisis next door in the U.S. They're already dealing with enough trouble. If anything else goes wrong, the big bosses at the Immigration Service are really going to have headaches."
Greenspan thought to himself that this conversation was a bit late; in fact, they were already abandoning their own residence.
The history of human development was, essentially, a migration story. People would never move to a worse place to live, and no matter how much one tried to stop it, it would always be in vain.
"Paul, I just don't get it. Who the hell negotiated this North American Free Trade Agreement? They didn't realize they needed to protect their agriculture? Didn't we know that?"
...
Take the workers and their work attitude: those were completely different concepts. In manufacturing, who wouldn't work overtime? The assembly lines and management structures were established, and extending working hours naturally reduced production costs.
The ideal situation involved a twelve-hour shift; if you hired two shifts, that worked just fine.
But they refused.
Yes, even when overtime pay was offered, the response remained a flat refusal. Come on, that would mean at least a 50% increase in income. Why on earth would they refuse? My cars are just barely selling!
Expand the factory, buddy. Overtime is just too harsh. I need to hit the bar to watch the game.
Okay, expanding the factory is feasible. Once production reaches a certain level, the line investments wouldn't be such a big deal. There just aren't many suitable workers; high-quality blue-collar workers are scarce.
To expect a bunch of farmers to produce cars was simply unrealistic. Mexico hadn't prepared for this; they lacked proper schools to train suitable candidates.
Facing this situation, which investor would you even count on? It was downright insane.
The so-called middle-income trap referred to exactly this. Simple handicrafts could only sustain you for so long. To earn more, there had to be an upgrade in industry.
But the problem was your workforce quality just wasn't there. Using a file and a sewing machine? Sure! But hand them a CNC machine and watch the chaos.
It seemed Mexico wasn't ready yet. Given that, how could you maintain this situation? Agriculture had already collapsed, and farmers had no source of income. The growth of industrial products had stalled; there wouldn't be any more development.
The idea of high-end self-branded products was simply wishful thinking, just casual thinking, really.
In any case, the U.S. still planned to lend a helping hand to old neighbor next door. This wasn't out of goodwill; this North American Free Trade Agreement was intended to slap Europe in the face. If it collapsed in no time, oh boy, that would be a major embarrassment.
...
"Sir, Goldman Sachs seems to be showing signs of withdrawing their investments. Though the moves are small, they are quite resolute."
"What is it? Is the peso still at 3.47?" William White surely understood what Filson was saying. He remembered now that the Asian financial crisis wasn't just a random occurrence.
Starting with Mexico, the entire emerging market was beginning to face a crisis. Mexico was just a starting point; the nightmares for these countries were just beginning.
"Filson, aren't we the ones handing them a boatload of cash?"
"Yeah, nearly every Wall Street big shot participated in those investments. It's not just us; almost all developed economies have substantial investments there."
"Well, well, Goldman Sachs, huh? When it's the end of the road, it's always Goldman that makes the first move. Wow, that's definitely their baby."
Filson had no idea how to respond. Goldman Sachs' partnership model had initially been widely mocked. Now, looking back, that approach was quite brilliant.
"Sir, they're just a platform, and the people performing on it change each time. These emerging markets will definitely run into some trouble."
"Did you know, Filson, that I actually admire them for daring to fully open their financial sectors right from the start?
"They don't need the U.S. Federal Reserve to step in -- just a George Soros is enough."
"Then, in that case, Filson, let's not hold back. We'll keep pace with Soros. Hahaha, that bastard must be feeling so depressed right now."
Filson forced a smile. Soros was the watchdog of the U.S. Federal Reserve, so what did that make them?
...
In reality, the U.S. society was full of contradictions. Some hoped for Mexico to face disaster, even wishing all emerging markets would suffer. Because only then could they reap major benefits. Others saw the current American economy as quite good, preferring to avoid any chaos if possible.
If so much U.S. dollars lost their way, just trying to imagine how its assets would inflate was nearly inconceivable.
Paul Volcker was clearly a representative of these people. Their major concern was serious inflation. As for his successor, Greenspan was more of a moderate.
Slightly allowing some inflation was seen as beneficial for the U.S. economy. Otherwise, the U.S. dollar's status as a super currency would lose all significance.
Of course, neither of these two could decide everything. In the end, capital was what ruled. Why did Paul Volcker leave his position early? Simply because his policies harmed some interests.
If Greenspan did the same, getting ousted would be only a matter of time.
*****
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