-Caveat Lector- from: http://www.aci.net/kalliste/ <A HREF="http://www.aci.net/kalliste/">The Home Page of J. Orlin Grabbe</A> ----- US Current Account Deficit Greenspan's Conundrum by Paul E. Erdman An excerpt from the Humphrey-Hawkins Senate hearings: SENATOR BUNNING: Do you think the present trade deficit is a cause of concern? MR. GREENSPAN: There is a tricky problem here, which we have not been able to solve. We do know that the trade deficit creates a very large so-called current-account deficit, which is really the net borrowing from the rest of the world. And invariably, what we are seeing is a major increase in dollar asset holdings by non-Americans, which is clearly the other side of the trade deficit. As of now, the appetite to hold U.S. dollar-denominated assets seems quite extensive, and there is no evidence that I'm aware of which is suggestive of any individual's eschewing dollar asset holdings. But we nonetheless do have the problem of projecting how far into the future this particular type of current account deficit can continue without impacting on the exchange rate and, as a consequence, on the whole structure of the American economy. * * * * * SAN FRANCISCO (CBS.MW) How much of our national debt is in foreign hands? A lot. In the decade prior to 1994, it had remained at around 20 percent or less. Since then, foreign ownership as a percent of total privately held public debt has rocketed up to 38 percent. With our trade deficit projected to be in excess, maybe well in excess, of $200 billion in years ahead, that may rise to a level approaching 50 percent. Among the largest holders are Japan, mainland China and OPEC nations, which many would regard as hardly the safest of hands. So how to solve Mr. Greenspan's problem? There are only two ways that I know of. If foreign investors begin to get skittish, the Fed could raise dollar interest rates to entice them to keep the money pouring in. The other way is to allow for a major devaluation of the dollar, in order to "correct" the trade imbalance. The trouble with this is that it takes a long time to really accomplish that end. When the word gets out that this is the new direction the United States is taking, rather than suffer severe foreign exchange losses on the dollar holdings, many foreign investors, and especially the Japanese, might decide to pull out of U.S. Treasurys and back into the yen en masse. One conclusion making the rounds is that the $200 billion-plus needed to finance our trade deficit, and an immense Japanese budgetary deficit that will approach 10 percent of their gross domestic product, will require an extraordinary tapping of global savings. It has been suggested that this could drive the Japanese bond yields toward 3 percent, and our 30-year Treasury yield toward 6 percent. Such higher U.S. bond yields would provide the needed enticement for foreigners to stay put, preclude the need for the Fed to change short-term interest rates, and allow the United States to maintain its bias in favor of a strong dollar. This world is getting complicated. CBS Marketwatch, Feb. 24, 1999 Unindicted FLOTUS Hubbell Trial Will Haunt First Lady Cow patties smelling of Rosewhitewater WASHINGTON (AP) -- If Hillary Rodham Clinton runs for the Senate, she will be campaigning amid the continuing legal saga of Whitewater. Mrs. Clinton's legal work back in Arkansas will be a key issue in the pending trial of her former law partner, Webster Hubbell. Mrs. Clinton is referred to 36 times in a fraud indictment against Hubbell, signifying that her name will be brought up repeatedly in her old friend's trial, scheduled to begin June 14. It could get more complicated. She could be called as a witness, either by Kenneth Starr's prosecutors or Hubbell's defense team. Starr alleges Hubbell concealed his own and Mrs. Clinton's work during the 1980s on a failed Arkansas land deal, known as Castle Grande, that federal regulators say was riddled with ``insider dealing, fictitious sales and land flips.'' The Clintons' Whitewater partner, Jim McDougal, tried to sell off pieces of Castle Grande to prop up his collapsing savings and loan. ``It seems that one side or the other's got to call Mrs. Clinton as a witness because if she's inextricably bound up in these affairs, she's got information that one side or the other would want,'' said George Washington University law professor Mary Cheh. The first lady's name also could come up in next month's criminal contempt trial of former Whitewater partner Susan McDougal, who is accused of obstructing Starr's probe. The indictment against Mrs. McDougal details a series of grand jury questions about Mrs. Clinton and Castle Grande that Mrs. McDougal refused to answer. University of Virginia political scientist Larry Sabato said the Hubbell case is one of many obstacles to Mrs. Clinton's potential run for a New York Senate seat. "She will be target No. 1 not just for the New York press corps but for, as Mrs. Clinton calls it, `the vast right-wing conspiracy,'" Sabato said. ``The truth is that over the past six years she has been at least a peripheral figure in many of the Clinton administration scandals.'' Among the controversies involving Mrs. Clinton: --Her investments. At the urging of Arkansas friend Jim Blair in the late 1970s, she invested $1,000 in the commodities market, collecting a profit of nearly $100,000 in 10 months. Before the commodities profits were disclosed in 1994, the Clintons had released almost all their tax returns for their years in public life. But they hadn't released the returns showing Mrs. Clinton making a killing by trading in cattle futures. --The White House travel office firings. Her denials of involvement in the dismissals were contradicted by a presidential aide's memo that surfaced in 1996, some 2 1/2 years after the firings. Starr says he is trying to wrap up his investigation of the matter. --The work Mrs. Clinton and her law firm did for McDougal's failing savings and loan. That work, first revealed in the 1992 presidential campaign, is at the heart of Hubbell's trial. "The minute she runs, all that stuff is coming back," said Democratic political consultant Vic Kamber. Starr would have to weigh the risks of calling Mrs. Clinton as a witness before a jury in the District of Columbia, where the ratio of Democrats to Republicans is more than 10-1. Hubbell's lawyers might call her to the stand if Starr doesn't. "It's a way to bring in a popular witness for the defense and a potential character witness, but once they put Hubbell's character into evidence, he does get opened up and he's got a lot of baggage," said St. Johns University law professor John Barrett. Mrs. Clinton testified by videotape before a grand jury investigating Castle Grande last year. In 1996, she appeared before Starr's grand jury in Washington to discuss the still-unexplained discovery of her billing records, which had vanished after the 1992 presidential campaign. Investigators knew almost nothing about the roles that Hubbell and Mrs. Clinton played in her Whitewater partner's fraudulent land development until the first lady's long-lost law firm billing records mysteriously turned up inside the residential portion of the White House two years after Starr subpoenaed them. Confronted with the billing records, Mrs. Clinton said she was unable to recall her legal work in 1985 and 1986. A part-owner of the Castle Grande development, Hubbell's father-in-law Seth Ward, collected $300,000 from McDougal's S&L. The billing records identify 15 conversations between Mrs. Clinton and Ward, but both say they don't remember them. The development ended up costing the S&L $3.8 million in unpaid principal and interest, according to federal regulators. Hubbell, the No. 3 Justice Department official during Clinton's first term, pleaded guilty to tax evasion and mail fraud in 1994 and promised to fully cooperate with Starr. He served a year and a half in prison. Suspicious that Hubbell was withholding information, Starr began investigating him again in 1996, trying to determine whether Hubbell was being paid ``hush'' money to stonewall Starr's probe of the Clintons. In addition to the Castle Grande case, Hubbell now also faces new tax evasion charges. Former Clinton political consultant Dick Morris suggests the first lady should postpone running for office until 2004, when ``she will be able to confront doubters and accusers with a clean bill of health.'' For next year, said Morris, ``One can imagine a situation where Hubbell is convicted and questions linger about Hillary.'' The Financial Times, Feb. 24, 1999 ----- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, Omnia Bona Bonis, All My Relations. Adieu, Adios, Aloha. Amen. Roads End Kris DECLARATION & DISCLAIMER ========== CTRL is a discussion and informational exchange list. Proselyzting propagandic screeds are not allowed. Substance—not soapboxing! These are sordid matters and 'conspiracy theory', with its many half-truths, misdirections and outright frauds is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. 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