-Caveat Lector- from: http://www.aci.net/kalliste/ <A HREF="http://www.aci.net/kalliste/">The Home Page of J. Orlin Grabbe</A> ----- Today's Lesson from The Year of the Rat by Edward Timperlake & William C. Triplett II Among those who made money on the Beijing Enterprises disaster were the Riadys. They have two powerful allies in Beijing/Hong Kong financial circles: Shen Jueren, leader of China Resources, and Li Ka-shing of the ill-fated Beijing Enterprises. They are all connected as partners in the Riady's Hong Kong Chinese Bank. Just before the Asian meltdown, Lippo Ltd. and China Resources Ltd. announced share placement with a Beijing Enterprises subsidiary. It appears that, in essence, Beijing Enterprises acquired a stake in a Lippo company listed in Hong Kong. Lippo received HK$897 million in net proceeds (approximately US$122 million) from its deal with Beijing Enterprises. The money was then moved to Lippo/China Resources Limited, which had previously been identified as an associate of Chinese military intelligence. This means that Li Ka-shing, a senior player with Beijing Enterprises, is connected in a move of more than US$100 million to Mochtar Riady's empire, which in turn is connected to Chinese military intelligence. ----- Gold Market European Central Banks Ban Gold Sales Good news for the gold price. Fifteen European central banks including the Bank of England last night announced a surprise five-year moratorium on all new sales of gold held in official reserves. The move was organised by the G-10 group of central bankers, chaired by Eddie George, governor of the Bank of England, and was announced by Wim Duisenberg, European Central Bank president, who is attending the annual International Monetary Fund annual meeting in Washington. The price of gold has seen heavy falls and volatility since the decision announced by the UK Treasury earlier this year to sell 415 tonnes of their reserves out of a total of 715 tonnes. So far it has sold 50 tonnes. Expectations that official holders of gold would sell more have been important in depressing the price. The central banks involved in the moratorium hold about 70 per cent of the global official holdings of gold. Together with the US, which publicly disavows any intention of selling gold, and the IMF, which has recently cancelled a plan for open market gold sales after opposition in the US Congress, the amount of gold apparently safe from official sales comprises 90 per cent of official holdings. The moratorium extends to further gold leasings by the central banks. Leasings have enabled speculators to drive the price of gold down by taking short positions - borrowing and then selling the commodity. Mr Duisenberg said that the intention of the sale was to maximise certainty in the gold market following recent volatility. He said that central bankers "had not been immune" to the intense lobbying by the World Gold Council and gold exporting countries following the UK's decision, which he blamed for the price volatility. The UK Treasury said yesterday it strongly welcomed the move, but said that the UK would continue with its planned sales over the next three years. The Financial Times, September 27, 1999 Japanese Finance Japan Agrees to Debase the Yen Money creation ex nihilo The Bank of Japan has responded to domestic and international pressure to ease monetary policy to weaken the yen, enabling Japan to win an unexpected expression of concern from other Group of Seven governments. Masaru Hayami, the governor of the BoJ, said in Washington on Saturday: "We are exploring how we could improve money market operations so as to assure the further permeation of liquidity in the context of a zero interest rate policy." The statement was a clear sign by the central bank that it was not resisting moves to ease monetary policy. Last week, differences between the BoJ and the Japanese government emerged over the issue of undoing the effect of foreign exchange intervention, driving stocks down sharply and making the yen rise. The bank's statement, together with a reiterated commitment from the Japanese government to a further fiscal stimulus, were sufficient to win an admission from the G7 finance ministers and central bank governors meeting in Washington that they shared Japan's concern about the impact of the yen's appreciation. An unexpectedly explicit G7 statement left open the possibility of co-ordinated international action to head off the Japanese currency's appreciation. The communiqu� said the group "shared Japan's concern about the potential impact of the yen's appreciation for the Japanese economy and the world economy". It added that they welcomed indications by the Japanese authorities that "policies would be conducted appropriately" in view of this potential impact. "We will continue to monitor developments in exchange markets and co-operate as appropriate," the G7 said. Paul Chertkow, head of global currency research at Bank of Tokyo-Mitsubishi, said: "I am impressed with the language, which is stronger than I had expected." He suggested it could herald more official foreign exchange intervention, with an outside chance of international support, as early as today. Mr Chertkow said the G7 statement could make traders think twice about driving the yen higher. But it was not backed up with action, or if the action was only half-hearted, its effect could be very short-lived. Larry Summers, the US treasury secretary, said Japan had been the focus of discussion at the G7 on Saturday. The conference was preceded by an hour-long meeting between Mr Summers and Kiichi Miyazawa, the Japanese finance minister. Mr Miyazawa reiterated his intention to continue stimulating Japan's economy with public spending. The government is planning an additional spending package of �4,000bn-�5,000bn ($37.4bn-$46.7bn) in the fiscal year. Participants at the G7 meeting said the BoJ would work hard to minimise the apparent rift between itself and the Japanese ministry of finance. The BoJ has been accused by many of undermining the ministry's attempts to weaken the yen by refusing to countenance a more aggressive easing of monetary policy. The apparent rapprochement between the two on Saturday may help to keep the yen from rising. The Financial Times, September 27, 1999 G7 Uber Alles Bad Russia! No Money! Clueless Stanley Fischer: "They lied to us." FINANCE ministers from the world's seven most powerful economies delivered an unprecedented public rebuke to Russia at the weekend and called on the Russian government to combat corruption. The G7 ministers said there would be no new money for Russia until they were convinced that money provided by the International Monetary Fund and the World Bank would be used as intended and was safe from embezzlement by the Russian mafia. They also issued a specific request to the Russian government to introduce anti-moneylaundering legislation into the Duma "at the earliest possible opportunity". The seven, the United States, Japan, Germany, France, Britain, Italy and Canada, will use their blocking votes in the IMF and the World Bank to prevent further disbursements to Russia under a $4.5 billion standby facility agreed in the summer. So far only $640m has been paid out under the facility, with the money being used entirely to make loan repayments to the IMF, in effect moving from one account to another and back again. The ferocity of the G7's attack on Russia reflects mounting disquiet, particularly in the United States, at evidence of a huge build-up of "Red Mafia" money in illegal bank accounts in New York. The IMF has been fighting a rearguard action to convince Congress and the American public that the illegal funds are not western taxpayers' money. It nevertheless admits that the Russian Central Bank produced misleading figures a year ago to persuade the IMF to go ahead with a massive $4.8 billion loan. Stanley Fischer, the IMF's deputy managing director, said: "They flat out lied to us." In a communiqu� issued late on Saturday, G7 ministers stopped short of accusing the IMF of being insufficiently vigilant but demanded important changes in its loan disbursement procedures. It said the Central Bank of Russia would have to improve its internal controls and would need to be audited every three months if new money was to be made available. The G7 ministers also fired a warning shot across the bows of the World Bank, which makes project finance available to Russia. It said the World Bank needed to tighten its controls and should cease to make general purpose loans for the time being. Meanwhile, years of argument over how to ease the problem of Third World debts came a step closer towards resolution with the launch yesterday of a $100 billion rescue package for the world's poorest countries. The package was announced by G7 finance ministers after a weekend of haggling over the contributions to be made by individual governments, the International Monetary Fund and the World Bank. Chancellor Gordon Brown, who has turned debt relief into a personal crusade, said: "This should make the millennium year a year in which the rich countries of the world and the poor countries come together in a new alliance to deal with the issue of poverty." He made it clear, however, that the true test of the deal was how fast eligible countries would benefit and whether it would improve the lot of the poor. For the first time, western goverments are linking debt relief with social goals. Mr Brown said: "We are trying to build a new relationship between debt relief and poverty relief." The London Telegraph, September 27, 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! 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