Hold the Cynicism

Now that the government of President Ernesto Zedillo has begun spending some of the $20 billion it was loaned by the U.S. Treasury to help Mexico through the peso crisis, listen for a loud chorus of “We told you so” from critics of the loan package.

Documents made public in Mexico City this week indicate that the first $4 billion from the U.S. loans was used to pay off high-risk Mexican bonds held by U.S. insurance companies, brokerage houses and mutual funds and some of Mexico’s richest investors. That makes it look as if dollars from hard-working U.S. taxpayers are indeed being used to bail out Wall Street, as critics of the loan package on Capitol Hill warned would be the case when the plan was proposed by President Clinton. But before anyone self-righteously condemns financial aid for “Wall Street” he should remember that those same insurance companies, brokerage houses and mutual funds invested dollars in Mexico on behalf of thousands, if not millions, of small investors who happen to be U.S. citizens. So in this case, help for Mexico is also help for a lot of Americans who are saving for retirement or other important financial goals.

And by paying off once-shaky bonds, Zedillo is helping restore investor confidence in a fundamentally sound Mexican economy that is just going through a difficult period of modernization. Confident investors should eventually put more capital into Mexico--not just in dollars but in yen, marks and other strong currencies--where it will be used to start up new businesses or open factories where Mexicans can find work. And we’re sure most Americans would agree, if they think about it long enough, that creating jobs in Mexico is far preferable to having Mexicans sneak across the border to look for work in the United States.

It is all too easy for political demagogues to rail against Wall Street as an impersonal villain. But their shouting cannot drown out the simple truth, and utter logic, behind U.S. financial aid to an important neighbor.