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...President George Bush, Secretary of State James Baker is one of the most powerful men in Washington. But his tenure as Ronald Reagan's Treasury Secretary has left a sorry legacy: the failure of the so-called Baker plan, the 1985 policy designed to ease the debt burden of Third World nations. The 15 largest borrowers, most of them in Latin America, have seen their debt climb to more than $500 billion, from $350 billion in 1981. The debt load has left local economies a shambles and fragile democracies threatened. After 300 people died in Venezuela two weeks ago ( during...

Author: /time Magazine | Title: Enter The Brady Plan | 3/20/1989 | See Source »

...unveiling a sweeping new approach to the crisis last week, Treasury Secretary Nicholas Brady all but repudiated Baker's program, which promised new loans for debtor countries once they instituted economic reforms. Instead, he called for measures that would help reduce Third World debt. "Our objective," said Brady, "is to rekindle the hope of the people and leaders of debtor nations that their sacrifices will lead to greater prosperity in the present and the prospect of a future unclouded by the burden of debt...

Author: /time Magazine | Title: Enter The Brady Plan | 3/20/1989 | See Source »

...minimize the change, but the break with past policy is dramatic. The Baker plan adamantly rejected the notion that debt reduction should be achieved by commercial banks writing off a significant portion of their loans. But the Administration is now encouraging U.S. commercial banks to reduce some of their Third World loans by allowing debtor countries to make smaller payments on their principal and interest obligations. Brady left many of the plan's details vague, and the initial response from bankers, Congress and Latin American finance ministers was guarded. The Mexican government called the plan a "first positive step...

Author: /time Magazine | Title: Enter The Brady Plan | 3/20/1989 | See Source »

...everyone was so enthusiastic. Venezuelan President Carlos Andres Perez called the new proposals "encouraging" but only "very timid steps." Paul Volcker, former chairman of the Federal Reserve Board, warned against looking for a "magic elixir" to solve the crisis. In a speech before a conference on Third World debt in Washington, Volcker explained, "If not well managed, a process of debt reduction clearly could be hazardous to the health of debtors and creditors alike...

Author: /time Magazine | Title: Enter The Brady Plan | 3/20/1989 | See Source »

...unlike the flood of Third World immigrants, the Irish come with advantages: white skin, good education, a knowledge of the language and a talent for politics that would make Boston's legendary Mayor James Michael Curley beam with pride. On the East Coast, they have revitalized neighborhoods deserted by their American cousins. Local shops sell everything from soda bread to Irish candies and bacon. The bleachers are filled for Irish football at Gaelic Park in the Bronx and Dilboy Field near Boston. In New York's Irish neighborhoods, pubs are packed on weekends. "At home in County Offaly, the bars...

Author: /time Magazine | Title: The Re-Greening of America | 3/20/1989 | See Source »

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