You are here

Attack on South African currency gets recognition

Section: Daily Dispatches

By Bill Murphy, Chairman
Gold Anti-Trust Action Committee Inc.
February 16, 2001

Below is a Reuters story from a Frankfurter Allgemeine Zietung
interview with U.S. Treasury Secretary Paul O'Neill.

It seems clear to me that a change is in the wind when it comes to
U.S. government interference in the world gold market.

Secretary O'Neill knows what GATA knows. Through sources GATA
knows that he knows that GATA has alerted South Africa and other gold-
producing Afican nations that they have been defrauded for the past
six years or so.

Money has been taken from the economies of the African
gold-producing nations and directed to the certain bullion
dealers and their clients. The poor have suffered at the
expense of the rich.

GATA will maneuver to eliminate any safe retreat
by the gold cartel and will alert Africans how they
will know for sure that they have been had. All of Africa
will be alerted what to look for when the collusion and immoral gold
market manipulation is exposed. By closing the back end of
the quot;enveloping horn,quot; we will make the scoundrels pay the

* * *

Friday, February 16, 4:39 AM ET

O'Neill Remark Confuses Financial Markets

By Swaha Pattanaik

LONDON (Reuters) -- U.S. Treasury Secretary Paul
O'Neill was quoted on Friday as saying the United States
was not actively following a strong dollar policy,
throwing financial markets into confusion.

The policy, which has held that a strong dollar is in
U.S. interests, underpinned the rally in U.S. financial
assets during the second half of the 1990s.

quot;We are not pursuing, as it is often said, a policy
of a strong dollar. In my opinion a strong dollar is
the result of a strong economy,quot; O'Neill said in an
interview with Germany's Frankurter Allgemeine Zeitung,
published a day before a Group of Seven industrial
nations meeting in Palermo, Italy.

The dollar took an immediate hit on the comments,
losing half a cent to the euro and nearly half a yen,
but rebounded after the U.S. Treasury said that there
had been no change in the strong dollar policy.

quot;There has been no change in a strong dollar policy
at all,quot; a U.S. Treasury spokesman said, adding Treasury
O'Neill had not said anything different from before in
an interview with Germany's Frankfurter Allgemeine Zeitung.

He added that the strong dollar was a reflection of the
strong U.S. economy.

Foreign Exchange Policy In Focus

Currency markets went on high alert when U.S. President George W.
Bush picked O'Neill for the top job at the Treasury, with speculation
rife that the former chairman of aluminum giant Alcoa would be more
sympathetic than his predecessors to the pain inflicted on U.S.
exporters by a strong dollar.

But against a backdrop of slowing U.S. growth, traders became
concerned that O'Neill would distance himself from a policy,
had been crafted and maintained by Robert Rubin, a former investment
banker, and Lawrence Summers, an academic.

O'Neill sought to put such worries to rest after he said a month
at his confirmation hearing before the Senate Finance Committee that
there would be no sudden shift in the United States exchange-rate

quot;I thought, in the interest of not wasting a lot of television
footage, I should say at the very outset I am in favor of a strong
dollar. I can't imagine why anyone would think to the contrary.quot;

Intevention The Exception

O'Neill said in the FAZ interview that intervention in currency
markets was not right in principle but there could be exceptions.

quot;To intervention I only want to say this much: In principle there
should not be intervention in markets. But there can be
he was quoted as saying.

O'Neill said the U.S. Federal Reserve's 1-percent rate cut in
January had been very useful but said he was not sure whether it
would have an effect soon.

quot;I'm not sure whether we will soon see the first signs of a
in the economy or whether we will have a zero growth rate for some
time,quot;he said.

When asked whether the economy in the euro zone was weak, O'Neill
answered by referring to the single currency:

quot;I don't understand all this talk about a weak euro.
Who wants to say with certainty where the `right'
rate for the euro against the dollar is?quot;'

He said he had told Congress it was important to bring
in President Bush's plans for a $1.6 trillion reduction in taxes
soon as possible.

O'Neill said the tax reform could be financed without
eating into that portion of the U.S. budget surplus
earmarked for Social Security and pensions.

But he signaled that this act of fiscal loosening was
not the beginning of a trend.

quot;We must maintain discipline and not allow ourselves
to fall into huge new spending programs,quot; O'Neill said.

He said the financial markets would do well to price
the future into their current calculations. quot;At the
moment the data shows that the market is assuming
another rate cut. That is good for the economy,quot; he said.

O'Neill reiterated his dislike for intervening to help other
countries out of financial crises.

quot;In the future it will be important to show countries who
threaten to fall into difficulties that the rest of the
world will not be ready to help them.quot;

Asked whether the U.S. government would buy up private
investments if there were further budget surpluses and
no more debts to pay off, O'Neill said:

quot;That is a terrible idea. In a capitalist system like
ours it is not the business of the government to own