Evelyn Hunt

Former MEP Ashley Mote explains what happened to British physical gold assets...

Why did Gordon Brown sell our gold?
April 9th, 2010

http://www.ashleymote.co.uk/?p=2893

In recent days The Daily Telegraph has been making enquiries about the sale of our gold reserves ten years ago. Despite using the Freedom of Information Act they are having trouble getting to the truth.

 

Pakistan has appointed a new acting minister of finance- Abdul Hafeez Shaikh. His title will be "chief of the Finance Ministry". He wasn't appointed "minister" because he isn't yet a member of parliament, so presumably the "chief" title is a way of getting around the law until a willing constituency can be found.

Past finance ministers have also had a knack for law-avoidance. Shaukat Aziz, the finance minister from 1999-2007 left a sparkling career at Citibank's New York office to take up the drudgery of public service. The only odd thing about his departure was its timing: he left when Citi NYC was being investigated for laundering Mexican drug money.

Yeah, that bad. An unusually large surplus (US$ 3 billion) at the Dallas Federal Reserve helped law enforcement uncover a laundering ring. During the investigation, Citibank's alleged money-laundering on behalf of the (then) Mexican first family, Raul and Carlos Salinas, were of particular interest to the congressional committee.

Shaukat went on to become Pakistan's prime minister- and the first one to complete a full term in office.

Since Shaukat's advancement, the position of "finance minister" has been a hot potato. His successor, Ishaq Dar, lasted less than two months. The following minister, Naveed Qamar, did better with five months' tenure.

Shaukat Turin was the next man to hold office more than half a year. Turin, who is also a veteran of Citibank, seems to have had less finesse than his predecessor Aziz. He wasn't a member of parliament when he was appointed as an adviser to the government, but that was fixed by July 2009. Seven months later he resigned.

So, Dr. Abdul Hafeez Shaikh- who is described as a non-controversial World Bank technocrat- has big oven-mits to fill. I'm sure Mr. Geithner feels his pain.

-- Evie

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It wouldn't be out of place in Vaudeville: China's premier slaps the U.S. Treasury over weak debt performance, then the Treasury tweaks China's nose by allowing the "currency manipulator" letter to gain traction.

Both accusations are right, but it's these sort of economic shenanigans that have allowed a favored few on both ends of the Pacific to profit from China's trade surplus. Ironically, the Treasury and China are money-making partners.

China's Yuan peg has helped it maintain favorable exchange rates with developed countries. Manufacturers build in China and export their products abroad. The profits from this can only be realized as long as Chinese production plus transport costs are less than U.S. production costs.

So it's in China's interests to have the value of the dollar stay high and the value of the Yuan stay low.

U.S. production costs are measured in dollars. In the United States, we control the value of the dollar by buying and selling government debt. The Treasury and the Federal Reserve have been running a very inflationary monetary policy for almost a decade. It's so bad that the Fed stopped reporting our total money supply in 2006.

Our massive government debt issuance has lead to a problem: how do we maintain the value of our currency? The profits from lending to Washington can only be realized as long as somebody is willing to buy the debt.

So it's in the Treasury's interest to have an inexhaustible buyer of U.S. currency -- er, debt. China has been the latest "trading partner" to step up to the plate. China makes, America buys; America prints, China buys.

This elegant quid pro quo is made possible through cooperation between U.S. and Chinese government officials and the banks that extend them credit.

These are the same banks which control U.S. monetary policy via their influence at the Federal Reserve; and which are also voraciously expanding into China. We shouldn't assume Henry Paulson's business interests have left the White House with him. Little has changed in Beijing either.

The squabbling between Wen Jiabao and Tim Geithner should be seen for exactly what it is: squabbling amongst gangsters. Perhaps China fears that the Obama administration will not be sophisticated enough to keep up their end of the business deal? The most likely result is that both parties will stop rocking the boat and get back to leaching off their respective constituents.